Page Appendix 2.—Additional MateriALS PROVIDED BY THE WITNESSES Letter from Robert W. Ross to Hon. Robert W. Kastenmeier (March 23, 1984) with attached memorandum in amplification of testimony on 2. Letter from Jack Valenti, Edward O. Fritts, Bowie K. Kuhn, John A. Ziegler, Jr., and Lawrence F. O'Brien to Hon. Robert W. Kastenmeier 1. Ladd, Schrader, Leibowitz & Oler, "Copyright Cable, and the Compulso- ry License: A Second Chance," Communications and the Law, Summer 2. Announcement from the Copyright Office: Adjustment of the Royalty 3. Announcement from the Copyright Office: Statement of Views, Com- pulsory License for Cable Systems Inquiry, 48 Federal Register 13166-7 4. Announcement from the Copyright Office: Final Regulations, Compul- 5. Announcement from the Copyright Office: Interim Regulations, Com- pulsory License for Cable Systems, 49 Federal Register 14944-14954 531 546 6. Announcement from the Copyright Office: Final Regulations, Compul- 566 1. Letter from Stephen R. Effros to the Subcommittee on Courts, Civil Liberties, and the Administration of Justice (October 27, 1983) with Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968).. Teleprompter Corp., et al. v. Columbia Broadcasting System, Inc., 415 U.S. 394 615 APPENDIX 4.-PREVIOUSLY PUBLISHED MATERIALS Letter from Russell Chapin to Hon. Robert W. Kastenmeier (February 23, 1984) and attached article: Geller, "The Copyright Controversy: Making Cable TV Pay?," Regulation, May/June 1981 at 35. "A Small Tribunal and Its Big Decision," New York Times, March 22, 1983 Special Report, "Baseball 1983," Broadcasting, February 28, 1983, at 51. Special Report, "Baseball 1984," Broadcasting, February 27, 1984, at 45.. APPENDIX 5.-MISCELLANEOUS CORRESPONDENCE and MATERIALS Letter from Hon. Robert J. Olson, Mayor, city of Monona, WI, to Hon. Robert W. Kastenmeier (January 30, 1984) with attachments: Resolution No. R1- 84-404 and Dorn, "Hundreds Complain About Viking Dropping Channel Letter from W. Robert Felder, president, CableVision Service Co., Inc., to Subcommittee on Courts, Civil Liberties, and the Administration of Justice Letter from Peter H. Feinberg, Esq. to Michael Remington, Esq. (April 27, 1984) with attachment: Arbitron Ratings Co., Television Market Reports, Letter from Hon. Lee H. Hamilton to Hon. Robert Kastenmeier (February 8, 804 COPYRIGHT ROYALTY FEES FOR CABLE SYSTEMS WEDNESDAY, OCTOBER 19, 1983 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COURTS, CIVIL LIBERTIES, AND THE ADMINISTRATION OF JUSTICE OF THE COMMITTEE ON THE JUDICIARY, The subcommittee met, pursuant to call, at 10 a.m., in room 2226, Rayburn House Office Building, Hon. Robert W. Kastenmeier (chairman of the subcommittee) presiding. Present: Representatives Kastenmeier, Mazzoli, Synar, Schroeder, Glickman, Frank, Berman, Moorhead, Hyde, DeWine, Kindness, and Sawyer. Staff present: Michael J. Remington, chief counsel; Deborah Leavy, counsel; Thomas E. Mooney, associate counsel; and Audrey K. Marcus, clerk. Mr. KASTENMEIER. The committee will come to order. This morning we are holding a hearing on the general issue of copyright royalty fees for cable television. Two legislative proposals-H.R. 2902 and H.R. 3419-are on the table. Rather than inserting those bills in the record at this time, I will recognize the bills' chief sponsors for that purpose, as well as to briefly describe the bills. Under the provisions of the Copyright Act of 1976, a compulsory license system was created, authorizing the retransmission of distant broadcast television signals by cable television systems. An entity in the legislative branch, the Copyright Royalty Tribunal, sets rates for the Nation's almost 6,000 cable television systems in return for retransmission rights. The royalty fees are redistributed to copyright holders by the Copyright Royalty Tribunal. In 1982, after a fairly lengthy series of hearings, the tribunal decided to raise the royalty fees for cable systems many times the existing rates. As I recall, the basic statutory fee was set in 1976 at 0.625 percent-five-eighths of 1 percent. Ultimately, under the complex formula devised in 1982, rates for distant signals were in some cases raised as much as 3.75 percent, nearly 4 percent, of gross revenues on fees supporting cable systems. These fees are, of course, not charged for individual programs, but for the right of a cable system to carry a distant television signal. The dramatic increase in rates created a noticeable impact in the marketplace. The decision also provoked the debate about whether the Copyright Royalty Tribunal had acted within its statutory au (1) thority. In this latter regard, a lawsuit was filed in the court of appeals for the Federal circuit. As a matter of fact, I participated in that suit as amicus curiae for the petitioner, and the case is now under advisement. In addition, by express statutory act, the 97th Congress delayed the effective date of the new fees until March 15, 1983-a symbolic act, since nothing could truly be achieved within a matter of 2 or 3 months. Since that time, the new rates have been in effect. With 6 months of experience, the subcommittee is now in a position to assess the impact of the new fees. And, indeed, the two bills before us frame the debate. The two bills before the subcommittee do not raise the issues of compulsory license or must carry or any of the other thorny issues that have occurred in the past, but rather the question of distant signal rates, particularly as they apply to so-called superstations. With these thoughts in mind, I would like to introduce the first panel. The first panel of witnesses consists of two highly respected Members of the House of Representatives, and both are member; of the Judiciary Committee. They are well known to all of us, of course, on this subcommittee. We sit with them on various other measures. First, Congressman Mike Synar, who represents the Second District of Oklahoma, is a chief sponsor of H.R. 2902; and Congressman Sam Hall, who represents the First District of Texas, and is a sponsor of H.R. 3419. Since Congressman Synar is, in fact, also a member of this subcommittee, I will recognize him first. Obviously, we are very pleased to greet our colleagues. TESTIMONY OF HON. MIKE SYNAR, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OKLAHOMA Mr. SYNAR. Thank you very much, Bob. Mr. Chairman and committee, I want to thank you all for today's hearings because, as you all know, I have introduced H.R. 2902, which is the Cable Copyright Reform Act. This is a very narrowly focused piece of legislation which addresses the clear problem created by the CRT's new royalty rate for distant television signals carried by cable systems. In my mind, the CRT rate increase poses two particular problems that should be called to the attention of our subcommittee. The first is that cable subscribers in rural areas are being denied the variety of programming that is available to urban viewers. Cable systems in rural areas are discouraged from expanding their programming. Literally millions of cable viewers have actually lost channel options. Second, in a larger sense, we face the problem of process. This situation is a classic example in our Government where the right hand is not knowing what the left hand is doing. The CRT rate increase runs counter to the whole deregulation policy of the FCC, which is effectively reregulating a deregulated aspect of the cable industry. Now, the bill I have introduced, H.R. 2902, would help solve both of the problems which I have just talked about. First, it would require that the new rate be applied evenly among cable systems and |