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tion, distant U.S. Spanish-language stations can be "overlooked” by cable systems in favor of Mexican stations—no such "leap-frogging" policy is now permitted for English-language stations. As noted earlier, this cannot serve the public interest in an effective and viable local television service for the SpanishAmerican population in this country.
We thus concluded that while importation of foreign signals may, in some few instances, be appropriate, it should not be allowed where the viability of U.S. Spanish-language television is jeopardized, or where U.S. stations offering similar program fare-e.g. foreign language--are available off-the-air or via microwave. And, we urged the Commission to adopt such a prohibition. In essence, we asked that where cable systems have the choice of carrying U.S. or Mexican foreign language stations, they be prohibited from importing Mexican stations.
Illustrating our point: many cable systems in Southern California receive both Mexican and Los Angeles signals off-the-air--including, for example, Spanish International's KMEX-TV-yet, many carry the Mexican station to the exclusion of KMEX-TV. There are also numerous cable systems in the fourstate southwestern border area carrying Mexican stations via microwave where U.S. Spanish-language signals are also available. In each of these cases, however, the cable system is not carrying the U.S. Spanish-language station even though English language signals from the same market (Los Angeles, for example) are being carried on the cable system. This situation has proliferated under the Commission's cable rules.
Although recognizing that "foreign language stations fulfill an important need for what generally is an audience limited in number," the Commission, nevertheless, ignored the merits of Spanish International's arguments. In a footnote to its Cable Report the Commission stated :
6:50 Following our August letter to Congress, the licensees or permittees of Spanish-language stations in Los Angeles and Hanford, California, San Antonio, Texas and Miami, Florida, wrote to the Commission requesting that importation from Mexico of Spanish language stations not be allowed where U.S. Spanish language programming is available either off the air or potentially available via microwave. We recognize the arguments in favor of supporting domestic stations. However, above all, we are attempting to encourage carriage of foreign language stations. Therefore, absent the unusual situation, we do not think any additional burden should be imposed on the cable
systems involved." (36 F.C.C.2d 143 at 180; emphasis supplied) At that time we found it difficult to understand, if the Commission indeed does "recognize the arguments in favor of supporting domestic stations”, how it could ignore these arguments solely because an "additional burden“ of unspecified magnitude would be imposed on cable television systems. We still find the Commission's determinations to be somewhat perplexing and irrational.
On March 13, 1972, Spanish International filed a Petition for Reconsideration of the Commission's Decision, noting its earlier arguments in this matter-principally, that a significant burden is being imposed upon domestic UHF Spanish language stations as a result of the Commission's Mexican importation policy, and that this policy fosters a grossly unfair competitive situation—and, in addition, pointing out that other domestic [i.e., U.S.] Spanish language businesses would be similarly “burdened” by the Commission's importation policy. In response the Commission stated, referring to our Request for Reconsideration :
"As we noted in the Cable Television Report and Order at footnote 50, petitioner requested following the issuance of our letter of intent, that importation from Mexico of Spanish-language stations not be allowed where U.S. Spanishlanguage programing is available either off the air or potentially available via microwave. The petition for reconsideration restates that request. But we considered the request in finalizing the rules and see no reason to alter our view. We are attempting to encourage the carriage of foreign language programing. Where there is a local Spanish-language station, it will of course get carriage priority. But outside its own market, where there is no "right" of carriage and no special need for protection against other stations programed in the same language, it is in the public interest to make foreign language programing available without impediment. In unusual situations where a domestic Spanish-language station makes a compelling demonstration for relief with respect to a particular application, we can afford such relief under $ 76.7. This should serve to maintain the vitality of local foreign language services without general restrictions on the right of cable systems to distribute the programing of foreign stations." (emphasis supplied ; Reconsideration of Cable Television Report and Order, paragraph 23; 36 F.C.C. 2d 326.)
The Commission, however, was far from being in complete accord on the matter of its Mexican importation policies. We would note particularly the dissent of Commissioner Robert E. Lee:
"The majority treats the U.S. foreign language stations most shabbily. These are struggling UHF stations, some losing money, some barely making it. The majority lets CATVs import Mexican foreign language stations into the U.S. without restriction-even though the Mexican fare is the same as appears on the U.S. stations, only a year more recent. The majority says that the local UHF foreign language can object. Why should the burden be on the UAF to undertake relatively expensive proceedings? And what about the community where there will now never be a local foreign language station because a CATV imports Mexican stations?
“Further, these U.S. stations get no anti-leapfrogging benefits. A CATV can be located 100 miles away from the U.S. foreign language station and yet can go 600 miles to Mexico if it wants to do so. How does the majority square this with its desire to help UHF, with its insistence that an ordinary UHF independent could not be bypassed if located within 200 miles (in the case of the third inde pendent) ?" (Emphasis supplied.)
Commissioner Reid expressed similar concerns :
"Another problem which was brought to the attention of the Commission by Petitions for Reconsideration was the problem of importing a foreign station for foreign language programs under the provisions of Section 76.58 (4) (b); 76.59 (2) (d); 76.61 (2) (e)..
.. I believe we should have permitted cable systems to carry only those foreign stations whose signals were available off the air, and prohibit the importation of such signals by microwave, from a foreign station. This is especially true when non-English broadcast stations are readily available to the cable system ..., especially so when they are Domestic Stations and it seems reasonable to me to protect them.
“... We attempt to answer this problem by that-'In unusual situations where a domestic Spanish-language station makes a compelling demonstration for relief with respect to a particular application we can afford such relief under Section 76.7.'
“While I recognize that they probably will file for special relief, and I would hope we would welcome it and grant favorable relief. I firmly believe that a general policy would have been more beneficial.” (emphasis supplied ; Concurring Statement of Commissioner Charlotte T. Reid, page 4).
Since the Commission's new cable rules became effective about a dozen additional cable system operators have proposed to import Mexican signals into some 25 different U.S. communities--some of which already have a local Spanish language station.
In these latter situations especially, a particularly onerous burden upon our stations is fostered by the Commission's cable rules. For example, Spanish International's KMEX-TV (Los Angeles) obtains significant quantities of its Spanish language programming from Spanish International Network Sales, which is the United States representative of V. T. Latin Programs, Mexico, whose associated company also supplies programming to XEWT-TV, Tijuana. Thus, both stations receive major amounts of programming from the same source and thus carry essentially similar program schedules. For example, XEWT-TV and KMEX-TV are both carrying the following Spanish-language programs during their current broadcast week:
Loco Valdez Show (30 min.).
Saturday, 7:30 p.m..
Monday, 7 p.m.
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 require ments 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 B. 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, neither 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 ard 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.