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Thus, over 11 hours of KMEX-TV's weekly prime-time programming-which is obviously crucial to its continuing viability--would be duplicated by the signal of XEWT-TV. Several cable television operators in the Los Angeles area are now proposing to "import" the signal of XEWT-TV on their cable systems. In such circumstances KMEX-TV faces the possible loss of some 40% of its primetime audience.

While in a normal situation involving English-language broadcast signals, pervasive duplication in programming of this magnitude would entitle the local television station to substantial program exclusivity protection (as provided by the Commission's cable television rules; see sections 76.151 et seq.), the applicability of the Commission's program exclusivity rules to Spanish language signals is unclear at best, and has never been determined by either the Commission or its staff. In this connection, many questions still remain unanswered. For example, are Mexican copyright holders subject to the notification requirements of section 76.155? Indeed, are the "copyright holders" referred to in sections 76.153 and 76.155 intended to include foreign nationals? If so, are Mexican copyright owners who desire to retain exclusivity privileges required to notify cable systems in the United States of programs broadcast in Mexico which are later to be licensed to U.S. television stations? What if the foreign copyright owner does not know when, or even if, such programming will be licensed to U.S. television stations or carried by U.S. cable systems? The Commission obviously has not faced these matters-yet the protection afforded to copyright owners under this scheme (even assuming such protection would be adequate for domestic Spanish-language stations given the significant competitive disadvantage faced by them) was intended to offset the possible inequities in the cable carriage rules. Thus, their resolution is paramount to a meaningful national copyright policy.

II. PRESENT COPYRIGHT LIABILITY OF CABLE TELEVISION SYSTEMS WHICH IMPORT MEXICAN BROADCAST SIGNALS AND THE PROPOSED 8. 1361

Although there is no "international copyright" as such, protection against unauthorized use in a particular country of a copyrighted work of a foreign national is usually provided through an international agreement among nations. Both Mexico and the United States are signatories to several international and bilateral agreements which provide essential international protection to copyright owners of the respective countries; most notably, the Universal Copyright Convention and the Buenos Aires Convention of 1910, among others. As a general rule these treaties require a participating country-in our case, the United States-to give the same protection to foreign works-i.e., those broadcast programs produced by Mexican nationals-as it gives to works produced domestically, i.e., in the United States (see Article II, Universal Copyright Convention of 1952, and proposed section 104 (b) (1) and (2) of S. 1361).

Thus, as a general rule, Mexican copyright owners of broadcast program fare carried by U.S. cable television systems are entitled to the same copyright protection as American copyright owners whose programs are also carried by those cable systems. Under the doctrine laid down by the United States Supreme Court in Fortnightly Corporation v. United Artists Television, Inc., 392 U.S. 390 (1968), cable television systems were, in the limited circumstances then before the Court, held not to "perform" the copyrighted material within the meaning of the Copyright Act of 1909 (17 U.S.C. § 1), and thus, in effect, escaped copyright liability for the cablecast of copyrighted works which were part of the broadcast signal carried. Under Fortnightly, therefore, U.S. copyright owners were entitled to no protection from cable carriage of their works. In this way, Mexican copyright owners were entitled to no greater protection-and received none.

Subsequently, however, in Columbia Broadcasting System, Inc. v. Teleprompter Corporation, 476 F. 2d 338 (1973), the Court of Appeals for the Second Circuit distinguished the holding in Fortnightly as to the cable carriage of distant-i.e., non-local-signals, holding that when a cable television system distributed signals that were beyond the range of local television receiving antennas, the cable system was then functionally equivalent to broadcasting and would, in such cases, be deemed to "perform" the programming on the imported signals distributed to subscribers within the meaning of the Copyright Act of 1909 (476 F.2d at 349).

Under the Teleprompter decision, therefore, the cable carriage of "distant signals" subjected the cable operator to full copyright liability to U.S. copyright

owners, including injunctive action for infringement. The Teleprompter case is now before the U.S. Supreme Court and, if sustained, would provide complete copyright protection to U.S. copyright owners-and, hence, to Mexican copyright owners as well. Yet, despite the fact that the Court of Appeals decision in Teleprompter is the law today, numerous cable television systems in the southwestern United States continue to import "distant" Mexican signals without any accountability to the Mexican copyright owners whatsoever. While the Commission's cable carriage and program exclusivity rules (see pages 2-4, 10-11, supra) are designed to reach some compromise in this regard, as we point out above, the applicability of the Commission's cable carriage rules to Spanish-language programming is considerably different than it is to English-language programming (see page 2, supra), and the extent of the applicability—indeed, if any is contemplated-of the program exclusivity rules to Spanish-language stations is considerably in doubt (see pages 10-11, supra).

The resulting injury to domestic (i.e., U.S.) Spanish-language broadcast stations is obvious--in exchange for unlimited and unfair competition from Mexico. domestic Spanish-language broadcast stations have received little or no copyright protection for their programming. Moreover, the current Copyright Act does not permit such sacrifice at the expense of the copyright interests of foreign nationals; and as we discuss in more detail below, neitber should the proposed legislation (S. 1361).

Other Spanish language businesses are also being “burdened" by the Commission's Mexican importation policy. In a letter to the Commission dated December 20, 1971 (copy attached), Azteca Films, Inc., a California corporation engaged in the business of Spanish-language feature film distribution in the United States, demonstrated the adverse effect that the Commission's policy would have on Spanish-language theatres operating in border states. Azteca notes that in several cases U.S. cable systems have imported such recent Mexican motion picture films that they have not yet been exhibited even in the U.S. Spanish language theatres, and that additional years would pass before these films would normally become available to domestic Spanish-language television stations (Azteca, page 5). This situation will become increasingly more frequent if the Commission's "Mexican importation" policy is allowed to continue. Spanish language theatre exhibitors in CATV areas would be forced to close their theatres, and film distributors, such as Azteca, no longer able to guarantee the first run and exclusive provisions essential to their operation, would be forced out of business.

Similarly, in a letter to the Commission dated December 21, 1971 (copy attached), the Asociación de Productores y Distribuidores de Peliculas Mexicanas (Mexican Motion Picture Producers Association), comprising the more than sixty Mexican companies whose business is the production of Spanishlanguage feature motion picture films, showed the consequences of the Commission's "importation" policy on the Mexican motion picture industry. As described by the Association on pages 1-2 of its December 21 letter, virtually every Mexican produced feature motion picture is licensed by American-based distributing companies (such as Azteca) to theatres located in U.S. communities with large Spanish speaking populations. Thereafter they are licensed to U.S. television stations also serving Spanish speaking communities. The fees received from the licensing of these pictures range from several thousand dollars, in large theatres for the most important motion pictures, to a few dollars from small town theatres and television stations. The total fees received by the Mexican producers for U.S. theatre and television licenses amount to between fifteen and fifty percent of the total revenues of the Mexican motion picture producers from the entire world, including the Republic of Mexico. The "receipts from within the United States are absolutely vital to the recovery of the cost of production of the said Spanish-language motion pictures, and, in turn to the continued existence of the Mexican motion picture industry, at least in its present form." (Association. page 2). While the greater part of such revenue within the United States derives from licenses to Spanish language theatres, an increasing portion comes from the licensing to U.S. television stations.

As briefly discussed above, related to this same problem, of course, is the matter of international copyright, and in this regard the reaction of the Mexican movie industry to the Commission's proposed policy is noteworthy:

"There is a vital and essential difference between the capture and dissemination of copyrighted material by cable television systems that originates within the United States and that which originates outside the borders of the United

States. In respect to copyrighted material licensed for broadcast within the United States, there is, in fact, a license for the copyright jurisdiction within which the cable dissemination is made. Furthermore, the copyright owner can negotiate a fee commensurate with the extent of the use.

"In respect to copyrighted material licensed for broadcast solely outside of the United States (in this case the Republic of Mexico only) the United States cable system is taking and using literary property within the United States which is not licensed for exploitation within the United States at all. The copyright owner cannot negotiate a license requiring the Mexican television station to pay any additional fee for the exploitation within the United States-a jurisdiction, in fact, not within the license granted to the Mexican station.

"Seemingly the rules of the Commission permit the United States cable system to take the property of the Mexican owner of the Mexican and United States copyrights without the necessity of anyone having obtained a license to exploit the material within the United States. This is particularly grave inasmuch as there is no apparent legal recourse, and there is no apparent impelling public interest need for such punitive regulations in respect to the motion picture industry of a friendly country." (Mexican Producers Association, December 21, 1971, letter to FCC, emphasis added).

Nevertheless, the Commission remains unpersuaded by the growing anxieties of Mexican copyright owners who feel that they have been treated unfairly. It is apparent that the Commission has totally ignored the international political consequences of its policy. In this connection, the Mexican Producers Association states at page 5 of its December 21 letter:

"It is the final opinion of the Association that the Commission has not taken into consideration at all the grave and unwarranted economic damage to an important industry of a friendly, neighboring country by permitting the taking of its property without compensation insofar as actual television exploitation within the United States is concerned and the endangering of its entire revenue from the United States market from both television and theatrical exploitation."

These important political questions and the international consequences of the out-of-hand rejection of these concerns should be carefully considered by the Congress before allowing the Commission to continue on a course that could severely impair if not destroy the economic well-being of numerous businesses in both the United States and Mexico.

The so-called, and much heralded, OTP-FCC Consensus Agreement which gave rise to the Commission's cable carriage and program exclusivity rules and the proposed section 111 of S. 1361, obviously was not concerned with the type of problem which we find to be substantial. Nor did we ever really expect it to be. Nevertheless, in the circumstances in which Spanish International now finds itself, we must conclude that no justification manifests itself which would warrant changing the current provisions of the Copyright Law to permit cable television systems an unfettered right to use the lawfully copyrighted works of friendly foreign nationals without the accountability to which they are entitled. There is no necessity or benefit received from giving cable systems preferential treatment in this manner. Cable television systems should be required to obtain licenses from foreign copyright owners just as do the movie theaters and broadcasters with whom they compete.

It is the marketplace which should decide the supply and distribution of program fare and not some regulatory scheme filled with virtually insurmountable administrative burdens, not to mention a multitude of uncertainties, vagaries and the like.

The compulsory licensing scheme envisioned by section 111 (c) of the proposed copyright bill is no answer to this problem. We have already shown (see pages 11, 15-18, supra) the great burdens placed upon the Mexican copyright holder by the Commission's program exclusivity rules. In addition, there are the requirements imposed by the proposed bill, itself; for example, section 111(d) (3) (A). Indeed, sections 111 (c) (2) and (e) (2) (B) of S. 1361 do not appear to allow the unrestricted carriage of Mexican signals-i.e., without counting against the distant signal quota (as set forth in the definition of "adequate television service" in 111 (c) (3))—as the Commission's current rules permit.

Spanish International Communications Corporation, therefore, urges that the Committee clarify the provisions of S. 1361 to exclude from the compulsory licensing provisions of section 111, the carriage of foreign signals, with the result that current copyright requirements will continue in effect so as to require cable television systems to secure a proper license before they could distribute in the United States program fare produced and licensed in Mexico.

More specifically, section 111 (c) should be amended to add a subsection (5) which would state as follows:

"(5) Notwithstanding any other provisions of this section, the secondary transmission to the public by a cable system of a primary transmission made by a broadcast station licensed under the laws of a foreign nation that is a party to the Universal Copyright Convention of 1952, and embodying a performance or display of a work, is actionable as an act of infringement under section 501, and is fully subject to the remedies provided by sections 502 through 506, and no such transmission shall be subject to the compulsory licensing provisions of this section."

In addition, section 602 (a) of S. 1361 should be amended to state that [the italicized portion is the suggested amendment]:

"(a) Notwithstanding any other provision of this Act, except as set forth in subsections (1), (2), (3) and (b) below, the importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work or any other literary, dramatic or musical work in the form of motion pictures or other audiovisual format that have been acquired abroad is an infringement of the exclusive right to distribute or perform the work under section 106, actionable under section 501. . . ."

It is important to emphasize that we are not asking for more protection than is available to other U.S. stations. Indeed, if the Commission had sought to limit the carriage and distribution of foreign signals as it has in teh case of Englishlanguage stations (see pages 2-4, supra), additional relief might not be required here. The Commission, however, has not seen fit to treat U.S. foreign-language stations on a par with English-language stations and thus we are left with no protection at all.

Mr. BEN F. WAPLE,

RICHARD H. DUNLAP,

Los Angeles, Calif., December 20, 1971.

Secretary, Federal Communications Commission,
Washington, D.C.

DEAR MR. WAPLE: This letter is submitted on behalf of Azteca Films, Inc., a California corporation, having its head office in Los Angeles, California, and with four other regional offices. The business of Azteca Films is the distribution within the United States of Spanish language feature motion picture films most of which are produced in the Spanish language within the Republic of Mexico. Such films are licensed to theatres within the United States catering to Spanish speaking persons and to domestic television stations serving the large Spanish speaking communities within the United States.

A substantial portion of such Spanish speaking communities are located within the states adjoining the Republic of Mexico, i.e.: Texas, New Mexico, Arizona and California. Each of these states contain large populations of Spanish speaking Americans of Mexican descent.

For many years Azteca Films has served the Spanish-American populations in this market by licensing its Spanish language films to theatres and to television stations within the said border area. Owners of domestic Spanish language television stations-in particular the small UHF stations catering to the Spanish language communities-have advised Azteca Films that the mainstay of their Spanish language programming consists of Spanish language Mexican-produced films they license from Azteca Films.

It has recently come to the attention of Azteca Films that the Commission has permitted, and by letter to Congress dated August 5, 1971 proposes to continue to permit, community antenna television systems to import without resrictions the signals of Mexican-based Spanish language television stations into markets not within the top 100 markets and into the top 100 markets with some limitations. It is the considered opinion of Azteca Films that said unrestricted importation of Spanish language signals, particularly the unrestricted importation of Spanish language feature films by CATV systems into the United States, will destroy the independent Spanish language television broadcasting industry in the United States. Such a policy cannot serve the public interest inasmuch as the United States Spanish American population is certainly entitled to be served by a healthy and effective United States-based television industry attuned to the needs and aspirations of the Spanish-American communities in the United States.

Spanish-language television programs originating in Mexico are created for and directed to the Mexican people in Mexico and the broadcasting stations are closely controlled by the Mexican government. The program content is supervised by the

Mexican government and the Mexican television stations are required to broadcast Mexican government originated programs imbued with Mexican government points of view on a daily basis. Some portion of this material may be assumed to be of less interest and of less benefit to the Spanish-American populations within the United States than Spanish language material selected by, and broadcast by, United States-based television stations.

Inasmuch as the decisions of the Commission in respect to the carriage of signals by its licensees, including CATV operations, are based upon the public interest, Azteca Films believes that a brief analysis of the effect of the unrestricted permission granted to CATV operations to carry into the United States foreign language programs originating in the Republic of Mexico is in order.

As illustrative of general conditions along the Mexican-United States border, Azteca Films directs the attention of the Commission to the situation existing in the Southern Rio Grande River Valley in Texas.

Valley Cable TV, Harlingen, Texas, directly and through microwave connections, operates its CATV systems in the Texas communities of Pharr, McAllen, Mission, Edinburg, San Juan, Alamo, Westlaco, La Feria, Donna, Mercedes, Harlingen, San Benito, Raymondsville and Brownsville, all of which contain a high percentage of Spanish-speaking persons and homes. Said Valley Cable TV presently is importing and providing to its subscribers the following full time Spanish language signals from Mexico:

XHAV-TV-Matamoros, Mexico
XHX-TV-Monterrery, Mexico
XET-TV-Monterrery, Mexico

XESB-TV-Monterrery, Mexico.

In addition said Valley Cable TV carries, only on a part time basis, the signals of your licensee, KWEX-TV, San Antonio, Texas, a Spanish-language station, belonging to Spanish International Broadcasting Company. Southwest CATV, Inc., a company affiliated with Valley Cable TV and the licensee of the CARS system which services the said communities, on December 10, 1970, requested the Commission to renew its Community Antenna Relay Station licenses indicating that it desired to continue to provide the above described signals to its subscribers.

From written information Azteca Films has obtained, and which it believes to be true, it appears that Valley Cable TV is experiencing a surging growth, much of which is believed to be the result of the importation of the Spanish language signals from the Mexican stations in Monterrey, Mexico.

The effect of the different business entities affected by said unrestricted importation of signals in the Spanish language from Mexico is commented upon immediately below.

1. Valley Cable TV. There would seem to be no doubt but that said permission presently benefits the stockholders of Valley Cable TV.

Two of the Monterrey, Mexico stations picked up by Valley Cable TV broadcast the programs of the two existing Mexican nation-wide television networks and the third Monterrey station broadcasts the best franchised independent material available in Mexico. Said Mexican-originated signals include many feature motion pictures in the Spanish language each week, the same feature motion pictures for which the exclusive exploitation rights for the United States have been acquired by Azteca Films for licensing within the United States.

It is the belief of Azteca Films, based upon its own experience and upon interviews with other owners of right to exploit Spanish language films in the United States, that Valley Cable TV makes no arrangements for the use of said Spanish language motion picture films, but, in fact, transmits them to its subscribers via microwave at no cost to itself for said material and without seeking or obtaining permission for such use.

At this point it is pertinent to point out vital differences between a domestic CATV system's use of domestically broadcast literary property and a domestic CATV system's unauthorized and unlicensed use of literary property broadcast from Mexico.

When a domestic CATV system carries literary property originating with a domestic station, the owner of said laterary property has licensed the use of said material to the domestic station. The owner can have access to the public records concerning the broadcast range of the said station, including its CATV connections, and can negotiate a license fee commensurate with the extent of the use. In the case, however, of a domestic CATV system carrying literary property originating from a Mexican station far into the United States to its subscribers, the

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