Imposing normal copyright liability for distant signals would help remove the current inequities in the cable-broadcasting relationship, and would give copyright holders a fair value for their product, instead of imposing a formula which would not adequately compensate them. 4. Right to sue for infringement The House bill includes a provision in section 111 that would give the broadcaster a right to sue for infringement of copyright. We believe this House language could, as part of the overall package, be qualified by the language of the Senate bill allowing suit only where the violations are willful or repeated. Broadcasters have no desire to go into court unless the violations involved are serious ones that demonstrate disregard for FCC regulations. The costs of litigation would deter suits except in such cases. This provision is extremely important to the industry since it provides us with a way to make certain that cable systems adhere to the retransmission rules of the Federal Communications Commission. We have found in the past that FCC enforcement has little or no effect on violations by the cable industry. Even when the FCC has issued cease and desist orders compliance can only be assured by follow-up from the Justice Department. The entire process is drawn out and ineffective and the right to sue is much needed by the industry to protect broadcast rights. 5. Full signal integrity Recently the study by the staff of the House Communications Subcommittee suggested that cable systems could delete commercial film rights once copyright was agreed upon. Broadcasters find this suggestion one that could mean the destruction of our service as we know it today. We believe the Congress should make it clear that such unfair alteration of broadcast signals will not be tolerated. For examples, under such a proposal a cable system could sell spot announcements on all the best programs that television has to offer, including the Super Bowl, the World Series, and dozens of other highly-viewed programs. This would have a serious impact on radio advertising and would, in effect, be putting cable interests in the broadcasting business as well as the cable business. If cable wishes to act as a broadcaster, then there can be no excuse for cable being accorded any special copyright advantages such as compulsory license. Broadcast signals, when carried by a system, should be complete and unaltered. SECTION III. LIMITATIONS ON EXCLUSIVE RIGHTS: SECONDARY TRANSMISSIONS (c) SECONDARY TRANSMISSIONS BY CABLE SYSTEMS. (1) Subject to the provisions of clause (2) of this subsection, secondary transmissions to the public by a cable system of a primary transmission made by a broadcast station licensed by the Federal Communications Commission and embodying a performance or display of a work shall be subject to compulsory licensing upon compliance with the requirements of subsection (d) in the following cases: (A) Where the signals comprising the primary transmission are exclusively aural and the secondary transmission is permissible under the rules, regulations or authorizations of the Federal Communications Commission; or (B) Where the community of the cable systems is in whole or in part within the local service area of the primary transmitter; or (C) When the carriage of the signals comprising the secondary transmission is permissible under the rules, regulations or authorization of the Federal Communications Commission. (C) Where the carriage of the signals comprising the secondary transmission is permissible under the rules, regulations or authorizations of the Federal Communications Commission as published in Volume 37, Federal Register, page 3252 et seq. on February 12, 1972, and the cable system is a small independent cable system. (2) Notwithstanding the provisions of clause (1) of this subsection, the willful or repeated secondary transmission to the public by a cable system of a primary transmission made by a broadcast station licensed by the Federal Communications Commission 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, in the following cases: (A) Where the carriage of the signals comprising the secondary transmission is not permissible under the rules, regulations or authorizations of the Federal Communications Commission ; or (B) Where the cable system, at least one month before the date of the secondary transmission, has not recorded the notice specified by subsection (d). (3) Normal Copyright Liability. (A) Any secondary transmission of a primary transmission not covered by the compulsory license granted by clause (1) of this subsection, shall be actionable as an act of infringement under subsection (b) unless the cable system and the copyright holder agree on the retransmission of the primary transmission and have notified the Register of Copyrights of that agreement. Any such existing secondary transmissions of primary transmissions by a cable system as of the date of enactment will not be actionable as an act of infringement for six months following the date of enactment. (b) Nothing in this Act shall permit a cable system to delete or alter any portion of any primary transmission unless required to do so by subpart F of part 76 of the regulations of the Federal Communications Commission. (d) COMPULSORY LICENSE FOR SECONDARY TRANSMISSIONS BY CABLE SYSTEMS. (1) For any secondary transmission to be subject to compulsory licensing under subsection (c), the cable system shall at least one month before the date of the secondary transmission or within 30 days after the enactment of this Act, whichever date is later, record in the Copyright Office, a notice including a statement of the identity and address of the person who owns or operates the secondary transmission service or has power to exercise primary control over it together with the name and location of the primary transmitter, or primary transmitters, and thereafter, from time to time, such further information as the Register of Copyrights shall prescribe by regulation to carry out the purposes of this clause. (2) A cable system whose secondary transmissions have been subject to compulsory licensing under subsection (c) or have been the subject of agreement with the copyright holder shall, during the months of January, April, July, and October, file with the Register of Copyrights, in accordance with requirements that the Register shall prescribe by regulation— (A) A statement of account, covering the three months next preceding, specifying the number of channels on which the cable system made secondary transmissions to its subscribers, the names and locations of all primary transmitters whose transmission were further transmitted by the cable system, the names and addresses of other cable systems directly or indirectly in control of, controlled by, or under common control with the cable system filing the statement; the names and addresses of any other persons who directly or indirectly own or control any other cable system or systems, and the names of the systems so owned or controlled; and the total number of subscribers to the cable system, and the gross amounts paid to the cable system irrespective of source and separate statements of the gross revenues paid to the cable system for advertising leased channels. and cable-casting for which a per-program or per-channel charge is made and by subscribers for the basic service of providing secondary transmissions of primary broadcast transmitters; and (e) DEFINITIONS. As used in this section, the following terms and their variant forms mean the following: A "primary transmission" is a transmission made to the public by the transmitting facility whose signals are being received and further transmitted by the secondary transmission service, regardless of where or when the performance or display was first transmitted. A "secondary transmission" is the further transmitting of a primary transmission simultaneously with the primary transmission or nonsimultanoeusly with the primary transmission if by a "cable system" not located in whole or in part within the boundary of the forty-eight contiguous States, Hawaii, or Puerto Rico : Provided, however, That a nonsimultaneous further transmission by a cable system located in a television market in Hawaii of a primary transmission shall be deemed to be a secondary transmission if such further transmission is necessary to enable the cable system to carry the full complement of signals allowed it under the rules and regulations of the Federal Communications Commission. A "cable system" is a facility, located in any State, Territory, Trust Territory or Possession that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission and makes secondary transmissions of such signals or programs by wires, cables, or other communications channels to subscribing members of the public who pay for such service. For purposes of determining the royalty fee under subsection (d)(2) (B), two or more cable systems in contiguous communities under common ownership or control or operating from one headend shall be considered as one system. The "local service area of a primary transmitter" comprises the area in which a television broadcast station is entitled to insist upon its signal being retransmitted by a cable system pursuant to the rules and regulations of the Federal Communications Commission. A small independent cable system is a system with revenues of $25,000 or less per quarter or $100,000 or less per annum, and not directly or indirectly, by stock ownership or otherwise, under common ownership or control with any other cable system or systems. NOTE. (Since under this proposal the tribunal will have no jurisdiction over any fees involved, all references to section 111 should be stricken in Chapter 8.) TELEVISION AFFILIATES ASSOCIATION, Hon. ROBERT W. KASTEN MEIER, DEAR MR. CHAIRMAN: This letter is written on behalf of the ABC TV Affiliates Association representing 185 television stations which are the primary affiliates of the ABC Television Network. We are very much concerned with the provisions of Section 111 of S. 22, a bill for the general revision of the Copyright Law, which is now before your Subcommittee. Section 111 is directed, as you know, to the cable television industry. As you also know, the issue of copyright liability for cable television has been before the Congress, the courts, and the Federal Communications Commission for a decade or more. During this period, the cable television industry has greatly expanded and greatly improved its financial condition. It is no longer characterized by small systems bringing additional broadcast television signals to underserved areas. It is now an industry being developed by major corporations in the large cities and, far from being a struggling infant, is showing substantial economic health and strength. Moreover, and this is most important, it has recently begun to develop as a pay cable service. From only a few thousand homes a year ago, pay cable now is in 600,000 homes. With increasing use of satellite interconnections, much greater growth is reliably forecast, with pay cable projected to reach over 6 million homes by 1980 and almost 15 million by 1985. But for the subsidizing of cable by free television's programming, which costs the networks and stations hundreds of millions of dollars each year and for which cable makes no payment, the cable television and pay cable television industries would not exist. We emphasize these current circumstances as the basis for urging that whatever may have been a fair copyright solution for the small "Mom and Pop" cable system is not an equitable copyright solution for the cable industry as it exists today a major communications competitor, emphasizing, increasingly, pay television services. We do not believe that an industry of this proportion and character is entitled to the unprecedented subsidy privileges of a compulsory license with but token payments, as recently passed by the Senate in S. 22. We believe the time has come for the Congress to stop babying the industry and treat it in the same fashion as its competitors are being treated. Under S. 22, the entire cable industry would pay approximately $7-8 million annually in copyright fees. Under an alternative put forth by TelePrompTer, this annual amount would be reduced to about $2 million. Compare that to what the television industry is required to pay for its programming. A single showing of "Poseidon Adventure" cost the ABC Television Network $3.3 million. The amounts paid by other networks for "Godfather", "Gone With The Wind", and like premium programming equal or exceed the total amount which it is proposed to have the entire pay cable industry pay each year. You would not seriously consider taxing broadcast corporations at 50 cents on the dollar and cable corporations at less than 1 cent on the dollar. But the economic disproportion of the current copyright proposals virtually amount to this. It would continue what is an essentially unfair competitive advantage. We therefore have three specific proposals which we respectfully urge for your consideration: First, an industry of these characteristics should be required to compete under normal and traditional copyright obligations. We see no reason why cable television should not be required to go into the marketplace and bargain and pay for all of its program product (including that appearing on television signals) just as television stations do. Any contrary course exemptions based on size or the extraordinary privilege of compulsory licensing-dangerously interferes with and dramatically changes marketplace considerations. If cable wants to "compete" (as it so frequently claims) then Congress should let it compete-normallu Second, we recognize, however, that developments in the consideration of these problems over the past years may preclude enactment of full copyright liability legislation. We think it unfortunate if that is so. But if it is so, at the very least, the legislative solution should be fashioned in a more realistic manner than now contemplated. Specifically, the legislation should be drawn along lines recently elaborated upon by the National Association of Broadcasters, as follows: (1) All cable systems would be granted a compulsory license without any copyright payment for all local signals, now or in the future. (2) The spirit of the Senate proposal granting small cable systems a reduction in the fees to be paid would be retained and expanded. A compulsory license without any copyright fee would be granted for all present, FCC-authorized signals, distant and local, for cable systems with revenues of $25,000 or less per quarter or $100,000 or less per annum. (3) Normal copyright liability would be imposed for all distant signals carried by large systems which do not qualify for the small system exclusion, and for any additional distant signals authorized by the FCC in the future. (4) The language giving broadcasters the right to enforce copyright through appropriate infringement remedies would be qualified to conform with the Senate bill. Under S. 22 broadcaster court action would only come where the violations are willful or repeated. (5) The bill would clearly state that no signal carried by a cable system could be changed or altered in any way by the cable operator unless required to do so by the FCC's non-duplication rules. Third, the issues before you are not limited to copyright considerations alone. They are intimately associated with broader questions of communications policy and what you decide here will profoundly affect the future development of national telecommunications. For these reasons, we respectfully suggest that you consider referring Section 111 of this bill to the appropriate House committees for further consideration as part of a broader legislative scheme. Thank you for your consideration of this letter. Very truly yours, Tom Goodgame, Chairman, Board of Governors ABC-TV Affiliates Association; Tom Goodgame, Vice President and General Manager KTUL-TV, Tulsa Okla.; John G. Conomikes, Vice President and Station Manager, WTAE-TV, Pittsburgh, Pa.; Eugene H. Bohi, General Manager WGHP-TV, High Point, N.C.; George U. Lyons, Vice President and General Manager WZZM-TV, Grand Rapids, Mich.; William F. Turner, Executive Vice President and General Manager KCAU-TV, Sioux City, Iowa; Jay Gardner, General Manager KRDO-TV, Colorado Springs, Colo.; Robert M. Bennett, Vice President and General Manager WCVB-TV, Needham, Maine; Walter M. Windsor, General Manager WFTV, Orlando, Fla. The above named members of the ABC Affiliate Board were present and voted unanimously to support this letter. MEMORANDUM (Received by the Subcommittee on April 13, 1976) AGREEMENT BETWEEN NCTA AND MPAA AS TO TERMS OF COPYRIGHT LEGISLATION 1. Basis of liability Cable systems will incur copyright liability by virtue of their retransmission of distant non-network programing. The fee will be expressed as a percentage of 1 1 A distant signal is defined as one which is not required to be carried under present FCC rules. basic subscriber revenue for each imported equivalent signal. (In determining the number of "imported equivalent signals" independent and specialty stations will count at full value and national network and non-commercial educational station will count as 4 of an equivalent signal.) The royalty rate agreed to is as follows: (i) .006 of basic subscriber revenues for the first imported equivalent signals; (ii) .00425 of basic subscriber revenues for each of the second, third and fourth imported equivalent signals; and (iii) .002 of basic subscriber revenues for each imported equivalent signal in excess of four.2 All cable systems, whether or not they import distant signals, will pay .006 of their basic subscriber revenues for the privilege of being able to import distant signals, such percentage of revenues to be credited against the fee, if any, payable with respect to distant signals actually imported. 2. "Cherry Picking" Each distant signal authorized by the FCC will be subject to the rate schedule regardless of the amount of that signal's programing which is actually carried by the subject cable systems; provided, however, that (i) distant programing substituted pursuant to the FCC's syndicated exclusivity rules shall not be subject to the rate schedule; and (ii) distant signals carried on a part-time basis, where full-time carriage is not possible because of insufficient channel capacity, and distant signals carried pursuant to the FCC's late night programing rule, up to the number of distant signals carried during the regular broadcast day, shall be counted as a fraction of a signal equal to the percentage of their broadcast hours which are retransmitted. 3. Small system exemption The Hathaway exemption will apply to small systems. 4. Definition of network signals The definition for network signals will be based on the definition contained in Section 73.658 of the FCC's rules. 5. Changes in FCC exclusivity rules Any change in the FCC exclusivity rules will enable the Tribunal to adjust the statutory royalty rates insofar as they relate to cable systems and signals affected by the change. 6. Changes in FCC rules governing the permissible number of imported signals Any change in the FCC's rules which permit additional distant signals to be carried will enable the Tribunal to reconsider royalty rates applicable to (but only to) such additional signals. However, the original statutory rates are “grandfathered" in each of the following instances: (i) in the case of any signal presently carried; 3 (ii) in the case of any signal substituted for a signal presently carried, provided that the substituted signal is of the same "class" as the signal for which it is substituted; (iii) in the case of any signal (whether or not now carried) which would be permitted to be carried by the FCC rules as now in force; and (iv) in the case of any signal subsequently permitted to be carried because of an individual waiver of the FCC's existing rules. 7. Time for tribunal review In the event of any of the regulatory changes referred to in paragraph 5 and 6 above, any party affected will have an immediate right to petition the Tribunal. Any rate change made by the Tribunal pursuant to such a petition may be reconsidered in the year 1980 and in each subsequent fifth calendar year. 8. Tribunal review of royalty rates in light of changes in average basic subscriber rate The Tribunal may also adjust statutory rates to reflect changes, in terms of constant dollars, in the average basic subscriber rate throughout the cable industry. The Tribunal may consider all factors relating to maintaining the real constant dollar copyright payment per subscriber and its relationship to the basic 2 In applying the formula fractions of an imported signal equivalent will be counted at their fractional value. 3 All television signals are divided into four classes: (1) network signals, (ii) noncommercial educational signals, (iii) independent signals and (iv) specialty stations. |