"A successful UHF television station operation in Charleston, W. Va., does not appear financially possible in the immediate future. The three national networks are already affiliated with stations providing service to Charleston. Availability of program product other than from the networks of a quality adequate to attract viewers to the extent of purchasing UHF converters or all-channel sets, and consequently advertisers who would make the operation profitable, is today insufficient.

"However, several factors are just now beginning to take shape which lead the applicant to view with considerably more optimism than for the past 10 years the possibility of reestablishing station WKNA-TV and maintaining its operation on a regular, continuing basis in the interest of the public of the Charleston area.

*

"The Commission's new regulations requiring microwave-served CATV systems to carry the signals of local stations without duplication, and its proposal to extend the substantive provisions thereof to nonmicrowave CATV systems, if finally adopted, will be of great benefit to independent UHF television licensees. It is a matter of time before a CATV system is in operation in Charleston, and as a matter of fact the applicant herein is one of the applicants to the city of Charleston for a CATV franchise.

"The combination of quality programing and available audience which would be created by the realization of one or more of the foregoing factors [including commencement of CATV service] could well make the difference between success or failure of the operation of a station in Charleston on channel 49."

In oral argument in the same proceeding, Mr. Smith's counsel stated as recently as May 13, 1965, that "*** the possibility of establishing an immediate market on a CATV service in Charleston ***" could well lead to an economically viable UHF operation. In other words, Mr. Smith believed that the networks' refusal to make programs available to his station was primarily responsible for unprofitable operations, and that CATV would enhance UHF stations' success probabilities by providing an immediate and built-in market. As this subcommittee will recall, this is precisely what NCTA contended was CATV's effect on the development of UHF."

Allegation by copyright interests.-CATV systems are, in effect "pay TV"; therefore, copyright proprietors should receive a percentage of any payments made.

Fact.-CATV systems are different in concept and function from pay TV-a fact which has been recognized by broadcasters in their contracts with television artists.

It appears that broadcasters themselves recognize that CATV systems are by no means economically or functionally similar to pay TV. All television networks negotiate with the American Federation of Television & Radio Artists (AFTRA) for the services of artists who perform live or taped television programs. The collective bargaining agreement which has been in effect from 1960, and which will continue in effect through 1966 provides:

14

"(c) 'Pay television' as used in this paragraph means a system of release, broadcast, or exhibition of television programs (whether by wire, relay, or other method of transmission) in which the members of the viewing audience are charged for the privilege of viewing a particular program, excluding theatrical exhibition. It is expressly understood that 'pay television' does not include methods such as community antennas and community television systems when used to supplement free television transmission in order to serve limited population areas or to overcome technical geographical difficulties."

It is thus clear that broadcasters have acknowledged that CATV audience reception is part and parcel of “free television transmission," for which no

13 Mr. Krim's citation of an "interoffice memorandum" from one UA employee to another with reference to WCMC-TV, Wildwood, N.J., which allegedly shows film purchase recisions similar to "many written communications" which were available (transcript, p. 1603), immediately raises the question of why such written communications (presumably from independent sources) were not read into the record.

14 The National Code of Fair Practice for Network Television Broadcasting.

additional fee need be paid to the performing artists, because the viewing audience makes no payment for the right to receive a program signal. Having thus acknowledged that CATV is not pay TV, and having contracted with artists that this CATV reception is contemplated, it is illogical for broadcasters to contend that community antenna systems should pay additional fees to broadcasters. CATV is not, in fact, a "purveyor of copyrighted materials," as Mr. Nimmer suggests (transcript, p. 2242). It is a method of facilitating home reception of television signals broadcast for public reception. CATV systems provide a connection to an antenna service and charge a flat rate for this service. They do not purvey programs at a fee. There is no charge related to or for programs. The affidavit of Mr. Cullum (attachment A) demonstrates that the community antenna performs the same function as any other antenna.

Where community antennas go beyond the signal reception function by originating their own programs, then they should and, in fact, do pay copyright royalties on the programs originated in the CATV studio (transcript, p. 2127). But instances of origination are scarce, and the basic function of the CATV remains that of a receiving device.

Allegation by copyright interests.-CATV systems are a detriment to broadcasting stations.

Fact.-Broadcasters constantly seek CATV reception of their signals in an effort to increase circulation and thus increase advertising revenues.

The brochures, letters, and materials attached hereto are adequate evidence in support of the fact that broadcasters seek out CATV systems in order to increase their viewing audience, and thus their total advertising revenue.

Mr. Krim read into the record a speech by Mr. Frederick W. Ford, on June 18, 1964, while he was a member of the FCC, which Mr. Krim used to support his argument that CATV prevents copyright owners from making a profit "in syndication which follows network distribution and *** direct syndication to the individual stations" (transcript, pp. 1600-1601). It must be pointed out that Mr. Ford spoke only of "the competitive impact which CATV could have on television." Dr. Seiden has found that no impact presently exists and had recommended that the Commission study the problem. Instead the Commission has promulgated and proposed rules which will give television stations absolute protection against the possible future impact of CATV-rules which are in effect at present although no such impact exists. Any protection for broadcasters which Mr. Ford might have foreseen as potentially necessary in futuro has already been provided by the FCC in its first report and order. In his speech, Mr. Ford spoke in contemplation of regulation of community antennas by the Federal Communications Commission in theh context of the national public policy embodied in the Communications Act. Thus his speech cannot be considered as having any relation to a system for control of CATV by copyright owners.

CONCLUSION

The opportunity to provide this statement for the consideration of the committee is very much appreciated. We respectfully submit that upon careful consideration of the record, the committe must conclude that the overall public interest will best be served by recognizing the true concept of CATV as an antenna service facilitating public reception of broadcast signals intended for that reception.

Finally, the committee is strongly urged to consider carefully the attached affidavit of A. Earl Cullum, Jr., an eminently qualified television engineer in which he describes the technical function of broadcasting and of community antenna reception and completely refutes the inaccurate, misleading, and selfserving description of community antenna systems both in Mr. Nizer's prepared statement and in his impromptu responses to questions of the committee.