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Senator MCCLELLAN. All right.

Thank you very much.

[The prepared statements of the Professional Baseball Leagues, National Hockey League, American and National Football League and the National Basketball Association follow:]

STATEMENT ON BEHALF OF MAJOR LEAGUE AND MINOR LEAGUE BASEBALL, BY BOWIE K. KUHN, COMMISSIONER OF BASEBALL, BEFORE THE U.S. SENATE COMMITTEE ON THE JUDICIARY, SUBCOMMITTEE ON PATENTS, TRADEMARKS AND COPYRIGHTS, IN SUPPORT OF S. 1361

Mr. Chairman, I appear here today in strong support of the provisions of Section 111 (c) (4) (C) of S. 1361. I am appearing on behalf of the 24 Major League Clubs of both the American and the National Leagues as well as the 127 Minor League Clubs comprising Professional Baseball's system of 17 Minor Leagues.

The matter before the Subcommittee, of course, is the Copyright Revision Bill, S. 1361, for the general revision of the copyright law.' Those portions of Section 111 which we support would, in effect, allow professional sports organizations like Baseball to continue to determine when and where their sporting events will be telecast.

Specifically, Section 111 (c) (4) (C) of S. 1361 would ensure that professional sports will retain complete control over the transmission of a Club's games by cable television.

As you know, Professional Baseball over the past few years has provided this Subcommittee and successive Congresses dealing with the problem of copyright revision detailed evidence that the indiscriminate transmission of sports signals by cable television systems could do serious violence to attendance at Major League and Minor League games as well as critically undermine telecasting revenues upon which Professional Baseball's economic viability clearly depends. I appear here today for two compelling reasons:

(1) To urge the Subcommittee to hold fast to the letter and the spirit of Section 111 (c) (4) (C) as the Subcommittee has drafted it and as the Subcommittee reported it when it last took formal action on the bill.

(2) To submit, for the Subcommittee's record, a detailed survey constituting dramatic new evidence illustrating that the uncontrolled and unlimited transmission of sports broadcasts by cable systems could totally disrupt Baseball's historic local and regional telecasting patterns-with the most serious consequences for Baseball's future.

At the outset, nevertheless, I want to emphasize that there are obvious public interest benefits inherent in the newly emerging cable television technology. Cable offers an opportunity for extending more programming, and more programming choices, to the American viewing public, especially in rural and other under-served areas. We will be most aware in times ahead of opportunities to experiment with all forms of the new technology-as long as we can assure that no fundamental damage is done to our existing television packages and the home gate. It must be recognized that Baseball's tradition as the national pastime has been considerably enhanced by the game's extensive exposure on network, regional, and local over-the-air telecasts. Today close to 60 percent of all Major League Baseball games are telecast, and this programming obviously constitutes a crucial ingredient in the maintenance of Baseball's economic health. Thus, we must strike the most careful balance in any experiments with the new technology. The present provisions of Section 111 retain for us control over the telecast of our games. This will permit us to proceed in negotiations with the new technology in a fashion which will preserve the essential over-the-air role in our telecasting. As we point out, to give cable an across-the-board compulsory license to our telecasts would deprive us of the ability to proceed with controlled experimentation. I can assure you that the Commissioner's office will move forward reasonably and responsibly in any negotiations with cable interests.

I. SUMMARY OF BASEBALL'S POSITION

Baseball's basic position on the merits of the copyright issue remains as follows: A. Unrestricted cable transmission of Baseball games could seriously dilute

1 S. 1361, 93rd Cong., 1st Sess. § 111 (1973). See specifically Section 111 (c) (4) (C). 20-344-73-35

the value of Baseball's television revenues and devastate home game attendance in both Major League and Minor League cities:

(1) Baseball's television revenues currently constitute about 25 percent of its total operating revenues. Unrestricted cable transmission will surely have a crippling effect on this vital source of revenue underpinning Baseball's economic health. Unlimited cable carriage will destroy the exclusivity of local Baseball programming which each Club presently offers in major metropolitan areas, thus diluting the value of each Club's local and network broadcast package.

(2) Further, if there is no prohibition of unrestricted carriage of games, cable carriage can have a devastating effect on home gate attendance in Major League cities.

(3) Even if some form of a blackout restriction is adopted, this would leave cable free to import distant signals of competing games any time that a team is on the road despite the fact that most Major League teams telecast only away games back to the home city. These cablecasts would be in direct competition with-and seriously depreciate the value of the television package that a local club has to offer.

B. Televised Baseball is already widely available to the American public. Indeed, there is no lack of Baseball broadcasts over the air currently. Of the total of almost 2,000 scheduled Major League games during the 1971 season, close to 60 percent were televised. Nationally televised games over the 190 affiliates of the National Broadcasting Co. (NBC) include the NBC Game of the Week, the 15 Monday Night Games also carried nationwide, the two League championships, the All-Star Game, and the World Series.

Beyond the national network, each Club authorizes additional local and regional telecasts of its own games-in 1973 some 1,093 regular league games telecast on 173 different television stations.

Nevertheless, Baseball recognizes that there can be legitimate experimentation of televised Baseball on cable television systems so long as Baseball retains control of bargaining rights over cable carriage of Baseball games to ensure that its over-the-air broadcast package is not compromised.

C. Unrestricted cable carriage could destroy the Minor League system. In 1971, the 17 Minor Leagues (comprised of 127 individual U.S. teams) played more than 7,300 games before some 11 million fans. In many cities across this country, Minor League Baseball is the only live professional sports event available in the local community. Moreover, this extensive Minor League system is essential as a training ground for the Major Leagues-which spend approximately 25 percent of operating revenues ($31 million in 1969) for player development. Unrestricted cable-casting in Minor League communities would decimate home attendance. New evidence confirms our earlier fears that unrestricted access to sports programming by the rapidly growing cable industry poses for Baseball problems of catastrophic proportions.

In order to secure a further factual foundation to our concerns, I commissioned a survey of each of the hundreds of cable television authorizations issued by the FCC over a year-long period to determine the extent to which the home territories of the various Major League Clubs are open to invasion by the importation of distant broadcast signals transmitting Baseball games.

The results of this survey dramatize Baseball's plight.

The FCC authorized 304 cable systems in territories of Major League Clubs during the first year following the adoption of its new cable rules (from March 31, 1792, to April 1, 1973). At least 171 of these cable systems-or 56 percent-will import signals of a distant TV station which telecasts the games of other Clubs. For instance, cable systems in the heart of the Philadelphia and Boston home territories have already been authorized by the FCC to carry the extensive telecast schedules of the New York Yankees and Mets from stations WPIX-TV and WOR-TV in New York. There is nothing either the Mets or Yankees can do to prevent this.

In the Boston Red Sox's home territory, eleven communities within 35 miles of downtown Boston have received authorizations from the FCC under the new cable television rules to carry the distant signals of the two New York television stations carrying the Yankees and the Mets, WPIX-TV and WOR-TV. In the Philadelphia Phillies' home territory, the New York invasion is also significant. Cable systems in twelve communities within 35 miles of the heart of Philadelphia will carry the Mets, and six cable systems will carry the Yankees. The Minnesota Twins, thanks to the importation of WGN-TV, Chicago, into

suburban Minneapolis-St. Paul, will compete with the cablecasting of 148 Chicago Cubs games on a cable system in Bloomington, Minnesota, home of the Twins' Metropolitan Stadium.

The Pittsburgh Pirates, the Cleveland Indians, the Kansas City Royals, the Cincinnati Reds, and several other Clubs will suffer similar invasions by cable importing distant signals of major independent stations. The most dramatic example of this "super station" syndrome,, so far as revealed by our study, is WOR-TV, New York, which will carry regularly the Mets' games to cable television systems as far West as Ohio and as far North as New Hampshire."

II. BACKGROUND OF THE COPYRIGHT REVISION BILL

Before presenting Baseball's position in detail, it is useful to review the history of the Copyright Revision Bill's sports-cable provision which affords professional sports control over the transmission of its games.

You will recall that in 1967 and 1968 the Commissioner of Baseball expressed his grave concern that Baseball would be seriously prejudiced if it did not receive full control in the Copyright Revision Bill of the dissemination of its television broadcasts.

After the most careful consideration, in the spring of 1969 the Subcommittee reported out a copyright revision bill which included provisions comparable to Section 111 (c) (4) (C). The Subcommittee's draft concluded "that the transmission of organized professional sporting events requires special consideration." ."3 The Subcommittee Report stated further that: *

"Unrestricted secondary transmission by CATV of professional sporting events would seriously injure the property rights of professional sporting leagues in televising their live sports broadcasts. Unregulated retransmission of live sports events could also have serious consequences on gate attendance, such as major and minor league baseball games."

Most emphatically, there are no new economic facts which would alter the Subcommittee's initial determination.

On February 3, 1972, the Federal Communications Commission announced it was lifting the freeze on cable television development by promulgating a new regulatory structure effective March 31, 1972. On that same date, February 3, the FCC in a separate rulemaking proceeding proposed a sports-cable rule framed in the narrower terms of the Sports Broadcasting Act of 1961.5 The rule provided protection from imported distant signals carrying distant sports events only when a team was playing at home—a proposal parallel to the blackout provisions in the 1961 Sports Broadcasting Act. Baseball appeared in FCC proceedings to press for the Commission to adopt regulatory provisions comparable to those in Section 111 (c) (4) (C). There are clear indications that the Commission feels that it is restrained in the development of rules by the policies set forth in the Sports Broadcasting Act of 1961 and believes that Congress should resolve the underlying policy issues in the copyright revision bill. Thus, in promulgating its rulemaking on the sports-cable question, the Commission said:

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"This is a complex area involving the effect of telecasting on gate receipts of sports teams and their ability to survive or thrive. Consequently, we welcome Congressional guidance."

The Commission, then, shows every disposition to defer to this Subcommittee and the Congress in their consideration to extend to sports complete control over the dissemination of sports telecasts. The FCC has never completed final action on its proposed sports-cable rule, although it promised prompt action at the time broad-scale hearings held before the full Commission in July 1972.

In the meantime, Baseball and other sports are being put in a highly prejudicial position as the FCC continues to approve hundreds of authorizations to cable systems which are planning to use sports as a major factor in selling their service. Indeed, the cable industry's trade association has said that "proposed systems

2 In Ohio, WOR-TV and the Mets are on a cable television system in Ashtabula; the system has 6.184 subscribers. In New Hampshire, WOR-TV and the Mets are on a cable system in Nashua; the system has 3,073 subscribers.

3 Draft Report of the Subcommittee on Patents, Trademarks, and Copyrights, U.S. Senate Committee on the Judiciary, on S. 543 (now S. 1361), Spring. 1969.

4 Id.

5 Cable Television and the Carriage of Sports Programs, Docket No. 19417, 36 F.C.C. 2d 641 (1972).

6 Id.

7 Cable Television and the Carriage of Sports Programs, Docket No. 19417, Oral Argument Before the Federal Communications Commission en banc, July 20, 21, 1973.

in major markets, already faced with heavy exclusivity for movies and series, have counted on sports as the redeeming factor to develop the planned operation." Of course, these cable authorizations have been granted with the recognition that their rights to carry sports broadcasting can be limited or eliminated by FCC rule or Congressional action.

III. MASSIVE DISRUPTION OF THE SYSTEM

Unrestricted Cable Transmissions Will Cause a Massive Disruption of the Present System of Distribution of Baseball Telecasts.

The plight Baseball faces can be understood only against the background of the distant signal rules which the Commission adopted on February 2, 1972, and made effective the following March 31. Essentially, the rules would permit CATV systems operating in metropolitan communities in which Major League Baseball teams are located to import the signals of two or three distant independent (non-network) stations. The distant signals could be imported from any market in the nation which is not in the top twenty-five markets. However, if the distant signal is to be imported from one of the top twenty-five markets, then the system would have to use signals from stations located in either of the two nearest of the top twenty-five markets. As a practical matter, most of the importation of distant signals which will affect Baseball will come from the top twenty-five markets. 10 This is because the major independent television stations in the largest metropolitan centers happen to be the wealthiest independent television stations in the country with the best and most lucrative movie and sports contracts offering the most popular programming. This development is inherent in the structure of the new cable television rules, a structure which favors a very few, well-established independent television stations like WOR-TV in New York and WGN-TV in Chicago.

The following examples illustrate the point:

Chicago is the nearest of the twenty-five largest metropolitan areas to Milwaukee and would be the logical source of independent station signals to be carried by a Milwaukee CATV operator. The Chicago Cubs' broadcast rights are held by WGN-TV, an independent, which this year is telecasting 148 of the 162 regularseason Cubs' games. A second independent, WSNS-TV, holds broadcast rights to the White Sox games and will telecast 129 games this season. These independent stations are likely candidates to be selected by CATV for distribution in Milwaukee's home territory. Thus, added to the telecasts which the Brewers have authorized, an additional 277 Baseball games could be made available in Milwaukee's home territory, only some of which would be required to be deleted when the Brewers were playing at home under proposed FCC rules.

Chicago and Milwaukee are the nearest of the top twenty-five markets to Minneapolis-St. Paul, home of the Minnesota Twins. Since rights to the Milwaukee Brewers games are held by a network station, a cable system operating in Minneapolis could not obtain those games, but the same service from Chicago could be provided in Minneapolis as in Milwaukee with the same impact on the Twins." Indeed, the cable television system recently authorized and now abuilding in Bloomington, Minnesota (pop. 81,761), site of the Twins' Metropolitan Stadium, has already received FCC authorization to import the distant signal of WGN-TV. This means that any cable subscribers living in the shadow of the Twins' Stadium can have access to 148 televised Chicago Cubs games. A CATV system operating in San Diego (the fifty-second market) could also bring in two distant independent signals. It would most likely select those from

8 NCTA legislative letter, Apr. 11, 1972.

Cable Television Service, Part 76, 47 C.F.R. § 76.5 et seq. (1972).

10 That the problems are critical for Baseball is clear from these additional facts. There are 151 Major and Minor League teams in the United States which play in almost as many different communities. An analysis of Television Factbook's 1972-1973 Services Volume reveals that, in all but a handful of communities which have Professional Baseball teams, there are CATV systems in operation; franchises outstanding for CATV systems; or franchise applications pending and under active consideration.

11 Chicago is also one of the two top twenty-five markets nearest Kansas City where the Royals play.

San Francisco and Los Angeles, the nearest of the top twenty-five markets which carry Giants, Dodgers and Angels games.'

12

Both the New York Yankees' and the New York Mets' broadcast rights are held by independents. WPIX-TV is telecasting 69 Yankees' games this season, and WOR-TV is telecasting 112 Mets' games. The signals of these stations are plums for cable systems which are eligible to carry them under FCC regulations. Systems operating in the heart of the Philadelphia and Boston home territories have already been authorized to carry these signals-and their consequent impact upon attendance and broadcast rights of the Phillies and Red Sox. Boston is perhaps experiencing the most dramatic invasion from the New York teams. Eleven communities within 35 miles of downtown Boston have received authorizations from the FCC under the new cable television rules to carry the distant signals of the Yankees' and the Mets' flagship stations, WPIX-TV and WOR-TV. This means that these 11 Boston area cable television systems are authorized to carry all 181 televised games of the Yankees and the Mets.

To date there has been no cable development in the City of Boston itself. However, one nearby Boston suburb, Somerville, Massachusetts, from where across the Charles River one can see Fenway Park, has received one of the eleven FCC authorizations, and construction of a cable system is underway. Today the Somerville cable system has only 69 subscribers; but the potential in Somerville, with a population of 88,779, is far greater.

The Montreal Expos are carried on Canadian television stations in both French and English. Presumably, every CATV system in this country could lawfully carry the signal of a foreign language station carrying Expos Baseball.1

The foregoing are, of course, illustrative only and do not exhaust the potential for conflicting telecasts of Baseball games from distant markets. As pointed out next, unless Baseball controls the distribution of its product, there is a substantial threat that numerous teams, both Major and Minor Leagues, and ultimately Professional Baseball itself, may well be irreparably injured.

IV. ECONOMIC HARDSHIP FOR BASEBALL

Unrestricted Cable Transmissions Will Seriously Undermine the Ability of Baseball to Obtain Substantial and Essential Revenues From the Sale of Telecasts of Sports Contests.

The critical concern of Baseball with unrestricted cable transmissions is that it will almost certainly undermine the potential sales value of current Baseball telecasts-both on the league and individual team levels. The dangers which this situation poses to the continued health and vitality of Baseball cannot be overstated.

1. The Widespread Presentation of Baseball Telecasts Under the Present System. A discussion of the effect of unrestricted cable transmissions must be presented in the context of the current pattern of distributing Baseball contests. The most obvious point is there is no shortage of telecasts of Major League Baseball games. Nationally, at least one game (the NBC Game of the Week) is carried over a national network each week during the season in approximately 190 television markets. In addition, there are 15 Monday night games carried nationwide. These games are selected for maximum audience interest based upon the current state of the various pennant races. And of course the most significant events in Baseball-the World Series, the two League Championship Series, and the All-Star Game-are also carried by NBC throughout the nation. Beyond this, each major league team determines the extent to which it will authorize local telecasts of its own games, and these telecasts provide additional viewing fare for millions of Americans. Every Major League team has authorized telecasts of some of its schedule. These individual contracts (exclusive of that of the Montreal Expos, whose games are not telecast in any United States market) in 1973 will result in 1,093 regular league games telecasts on 173 different television stations. The tables set forth below reflect the extent of such individually authorized telecasts planned for the 1973 championship season.

1 The Los Angeles independents which hold the rights to the Dodgers and Angels games, may in any event, be "significantly viewed" in San Diego and the signals would not be counted against the two distant station allotment.

13 Section 76.61 (e), 47 C.F.R. § 76.61 (e) (1972).

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