owner of the United States exploitation rights to said material, is deprived of his property without compensation. Said owner cannot protect even its United States licensees, to which it may have previously licensed the exclusive right to perform via televiison, the same property which the domestic CATV system now brings into the market from outside the United States, free of cost and without license. With the unrestricted permisison given by the Commission to Valley Cable TV to import as many Spanish language signals from Mexico as it may elect, there is small or no incentive to Valley Cable TV to carry domestically originated Spanish language signals. Azteca Films has in its possession written information, dated January 29, 1971, to the effect that Valley Cable TV was carrying the San Antonio, Texas Spanish language television station, KWEX-TV, on a full time basis only in the towns of Alice and Falfurrias among the fourteen, or more, communities it was serving with Spanish language signals. It seems quite apparent that Valley Cable TV has been largely by-passing the Spanish language programs transmitted by the San Antonio station in favor of the Mexican originated signals. Valley Cable TV seemingly has elected to completely by-pass Spanish language signals originating from other domestic stations which are available to it. There is another reason why Valley Cable TV elects to import said Mexican originated signals instead of carrying domestically originated Spanish language programs. The two Mexican television network stations in Monterrey, whose signals are imported and carried by Valley Cable TV, include among their programs very new and important Mexican feature motion picture films. Azteca Films has been informed that Valley Cable TV has imported from Monterrey and carried to its subscribers, Mexican motion picture films of such recency of production that they have not yet been exhibited even in the numerous Spanish language theatres in the United States, operating within the communities served by Valley Cable TV. Motion picture films of this recency would not be licensed by the owners thereof for broadcast by domestic United States Spanish language television stations for, perhaps, two to three years following the theatrical exhibition of the same in the United States, which is a policy similar to that common within the greater English language motion picture film market. The consequence is that Valley Cable TV is attracting subscribers in the Spanish language community by offering to such subscribers feature motion pitcure films obtained from Mexican originating signals, before such motion pictures have been made available to Spanish language moton pictures in theatres along the border and before such motion pictures are available for licensing by the United States-based Spanish language television stations. It is worth remarking that the Commission's rules in this area permit the Spanish language subscribers to the Valley Cable TV service to obtain benefits that no English language community obtains from direct, or cable, television. Such unforeseen benefit consists of the availability of feature motion pictures films via cable before those films are available to the community in theatres or by direct television transmission. The above mentioned inducements to Valley Cable TV, and other similarly situated border CATV systems, to utilize Mexican signals rather than domestic Spanish language signals, causes irreparable damage to both the owners of the United States rights to the literary property (motion pictures and other filmed material) which are imported by the border CATV systems and to the domestic television stations attempting to serve Spanish American communities with domestically produced programs. 2. United States based television stations transmitting in the Spanish language It has been stated above that Valley Cable TV, and similarly situated border CATV systems, have no incentive and small interest in carrying the signals of domestic television stations broadcasting in the Spanish language when they are permitted to import from Mexico all of the Mexican network signals as well as the best Mexican franchised Spanish language programs. The domestic Spanish language television stations must license Spanish language filmed material, including Spanish language feature motion picture films, from the owners of the rights to exploit the same in the United States. They must pay a license fee, and they must await availability of the feature motion picture films until those films have been exhibited in the Spanish language theatres in the community. The result is that the border CATV systems supply to their subscribers recent Spanish language films, and other taped programs, the signals of which are imported from Mexico without payment or permission (other than that granted by the Commission's rules), while the domestic stations cannot program the same films and other material until some later time and after having paid a license fee for such material to the owners of the rights. It follows that such border CATV systems increasingly will ignore the carriage of domestic Spanish language stations to the economic damage of said domestic stations. 3. Owners of rights to exploit in the United States Spanish language filmed and taped material Azteca Films is one of several companies that have spent millions of dollars to acquire the rights to exploit within the United States theatrically and by means of television Spanish language motion picture films principally from the Republic of Mexico. It has spent a very substantial additional sum in making negatives and prints of said films. It maintains a large organization to license the rights to exploit such films. The principal licensors of such films for television are the VHF and UHF stations within the states of Texas, New Mexico, Arizona and California which broadcast in the Spanish language. Such said stations obtain such films from Azteca Films, and from other owners of rights to exploit Spanish language films in the United States, by paying a negotiated license fee to Azteca Films and to others. Azteca Films has invested in the said rights for the United States to such said films under the belief that the market for such product was stable and was increasing. Azteca Films has considered that the number of Spanish language domestic stations, both VHF and UHF, would increase substantially to cover areas within said border states not yet covered by Spanish language programming, and that the economic strength of such stations would improve as service improved. Azteca Films believes that the Commission's present regulations, permitting CATV systems, with microwave connections, to import signals from Mexican stations and to carry such signals to subscribers will bring to an end any prospect of the growth and of the economic strengthening of domestic Spanish language stations. This, of course, will greatly inhibit the possibility of Azteca Films of recovering its investment, and will also bring to an end the purchase by Azteca Films, and others, of rights to exploit Spanish language films in the United States. In this event the domestic Spanish language stations no longer will be able to obtain licenses for the Spanish language films that are today a vital part of their Spanish language programming. Such will have a substantial economic impact as well on the entire Spanish language motion picture industry of Mexico which depends to a considerable degree on patronage by Spanish language communities within the United States for recovery of the production costs of its motion picture films. 5. Summary-The Public Interest It is the opinion of Azteca Films that the Commission has not taken into consideration to a sufficient degree the substantial damage occasioned by the Commission's rules permitting border CATV systems to pick up, import and disseminate to its subscribers within large areas of the United States broadcast signals from Mexican stations carrying filmed and taped material intended for the Spanish speaking communities in Mexico itself. Without commensurate benefits, the following harm can be described. (a) The domestic Spanish language stations cannot prosper or expand their markets when exposed to the flood of Spanish language television material picked up and imported from Mexico by the border CATV systems and disseminateď by microwave over large areas. (b) United States advertising sponsors are precluded from reaching a potentially wide market by the present rules which induce the CATV systems to utilize Mexican originated Spanish language signals rather than domestic Spanish language signals. If the CATV systems were precluded from picking up the Mexican signals, such systems would pick up the many available domestic Spanish language stations, the consequence being that the advertisers would reach a much wider audience. In turn this would permit the domestic Spanish language stations to increase their fees and be able to provide better Spanish language programming. (c) The owners and distributors of Spanish language, Mexican-produced, feature motion picture films have invested very substantial sums in reliance on a United States market for their rights. The unlicensed, free importation of this same material by border CATV systems is rendering these rights worthless. Such owners cannot protect even the domestic television stations to which they have licensed, for a reasonable fee, such material against the prior, free dissemination of such material by the border CATV stations throughout the expanding microwave areas. (d) The cable television industry is permitted by the present rules of the Commission to receive a free windfall of copyrighted material from a foreign country to the substantial damage of many Mexican and American interests without fulfilling any purpose which could not be fulfilled at this time from domestic sources of Spanish language programs. For example Azteca Films would be willing to license Spanish language films to Valley Cable TV for reasonable license fees. (e) Under the present rules the Spanish American communities are exposed to a flood of foreign broadcasts from Mexico, none of which is under the surveillance of the Commission and some part of which is designed to politically influence the Spanish speaking audiences for which such Mexican broadcasts are intended. The commercial attractiveness of much of the Mexican-originated signals make it competitively difficult for programs produced and originated by Spanish American groups to be disseminated inasmuch as the border CATV systems show little interest in carrying domestic Spanish language stations. In summary, it would seem to Azteca Films that the public interest would be served by prohibiting the importation into the United State by cable television of the signals of Mexican based television stations, thereby inducing the border cable television systems to rely on the available domestically based Spanish language programming and feature films. Respectfully submitted, Mr. HENRY GELLER, RICHARD H. DUNLAP, RICHARD H. DUNLAP, ATTORNEY AT LAW, Federal Communications Commission, DEAR MR. GELLER: Yesterday I mailed to you a copy of a letter to the Commission on behalf of Azteca Films, Inc., and today I enclose a copy of a second letter, this one on behalf of the Mexican Motion Picture Producers Association. Both letters attempt to explain the substantial economic harm being done to the Mexican motion picture and television industry, and to the American Spanish language VHF and UHF sations, by the Commission's regulations permitting the importation of Mexican television signals into the United States by border cable television systems. I hope I have been successful in putting into readable language the fact that a prohibition of such importation would not deprive the border cable television systems of anything other than an inequitable time priority over domestic stations inasmuch as the last named, in fact, license the same material for broadcast at a somewhat later date. Such material is, and would continue to be, available to the cable systems. However the other side of the coin-the damage to all other entities aside from the cable systems-can be corrected only by requiring (by deprivation of the imported product) such cable systems to utilize the domestic Spanish language signals. It is understandable that Valley Cable TV will use all its resources to continue to enjoy the present unwarranted and unnecessary bonanza; however I hope that these documents will show that the slight additional benefit to Valley Cable TV made available by such importation permission will be shown to be wholly outweighed by the grave economic injury to all the other entities involved in this problem. I still appreciate your attentive and courteous consideration of this at the time of our personal conference in your office some weeks ago. Very truly yours, RICHARD H. DUNLAP. Mr. BEN F. WAPLE, RICHARD H. DUNLAP, ATTORNEY AT LAW, Secretary, Federal Communications Commission, DEAR MR. WAPLE: This letter is written on behalf of Asociacion de Productores y Distribuidores de Peliculas Mexicanas (Mexican Producers Association), a formal association of the more than sixty Mexican corporations, whose business is the production of Spanish language feature motion picture films, and which is located in Mexico, D.F., Mexico. Its content and its submission have been authorized by Sr. Fernando de Fuentes, President of the Association, and its Board of Directors. Reference to the said Mexican Producers Association will be made hereinafter to the "Association”. For over forty years Mexican motion picture producers have been producing feature motion picture films for exploitation in the many countries and areas of the world in which the Spanish language is spoken. For many years the producer members of the Association have been producing between 70 and 120 new feature length, Spanish language, commercial motion pictures, all of which are duly copyrighted in Mexico and in the United States of America. Virtually every such feature motion picture is licensed by American-based distributing companies to theatres located within the large Spanish speaking communities within the United States, and later to United States VHF and UHF television stations serving such Spanish speaking communities within the United States. The license fees received from the licensing of the said motion pictures range from several thousand dollars per exhibition license in connection with the first exhibition in large theatres in the United States of the most important motion pictures to a few dollars per license received from licenses to small town theatres and VHF or UHF television stations in the United States. The total fees received by the Mexican motion picture producers, through their United States distributors, for such licenses of such copyrighted motion pictures within the United States, amount to between fifteen and fifty percent of the total revenue received by said Mexican motion picture producers from the entire world, including the Republic of Mexico. Said 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. The greater part of such revenue from within the United States derives from licenses to Spanish language theatres serving Spanish speaking communities in the United States. However an increasing portion of such revenue derives from the licensing of such Spanish language feature motion pictures to United Statesbased VHF and UHF television broadcasting stations which serve the SpanishAmerican communities in the states of Texas, New Mexico, Arizona and California. The Association has become acutely aware of a practice, apparently approved by the Federal Communication Commission of the United States, which permits the importation of Mexican television signals from Mexican television stations into the United States and their dissemination to ever-widening markets within the United States by means of expanding and inter-connected cable television systems. No permission is requested, and no license fee is paid, by such cable television systems for the unauthorized taking and exploitation for economic gain of the Spanish language motion pictures belonging to the producer-members of the Association. The Association is informed that an American corporation located in Harlingen, Texas, and known as Valley Cable TV, is capturing signals broadcast from three Mexican stations in Monterrey, Mexico and from one Mexican station in Matamoros, Mexico and disseminating these signals to many thousands of Spanish-speaking homes, via microwave connections, in South Texas. The Association, respectfully but urgently, calls the following factors in connection with this unlicensed use of this Mexican and United States copyrighted motion picture film property to the Commission's attention. 1. The filmed and taped material broadcast by the four Mexican stations in Mexico is broadcast under licenses delimiting the territory and use to be made of such material. In no case does the license include any part of the United States. 2. Much of the filmed material broadcast by the Mexican stations consists of feature motion pictures belonging to the producer-members of the Association. Many of said motion pictures are of very recent production date and the Mexican television stations broadcast them even before their theatrical exploitation within the United States. 3. All of said motion pictures are also licensed later and separately for television exploitation within the United States to various United States entities, in some cases distributors and in many cases directly to United States television stations serving the Mexican-American, Spanish speaking communities in the states of the United States bordering the Republic of Mexico. 4. Valley Cable TV, and other similarly situated cable television systems located on the United States side of the Mexican-American border, obtain no license from the owners of the copyright of such filmed and taped material either in Mexico or in the United States to exploit such copyrighted material. 5. 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. 6. The Association understands the desire of the Commission to assist the rapidly expanding United States cable television industry and understands the aim of the Commission to bring Spanish language entertainment to the Spanish speaking, Mexican-American communities within the United States. It is the opinion of the Association, however, that the Commission has not adverted to the fact that such entertainment is presently available to the border cable television systems from Spanish language full time broadcasts originating within the United States. For example, Valley Cable TV has access to KWEX-TV, San Antonio, Texas, a full time, high-quality Spanish language station, and has access, via microwave, to other excellent and growing Spanish language, United Statesbased television stations as well. To adequately serve the Spanish language communities reached by Valley Cable TV, and other similar situated border cable systems, the importation of Mexican originated signals is not necessary. It is the further opinion of the Association that the Commission has not adverted to the actual and potential harm done to the Commission's own domestic VHF and UHF Spanish language station licensees by permitting border cable television systems to import and disseminate widely Spanish language programs from Mexico instead of utilizing fully the excellent Spanish language programming originating within the United States. The Association does not need to direct the Commission's attention to the importance of supporting its domestic VHF and UHF Spanish language stations. 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. |