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charge higher advertising rates, which in turn results in higher coprra po
Television advertising rates are determined by the size and compost: !"
Even if the rating services could, and vid, fully and accurateir eye!! "outside" viewing, the station's advertising rates would not automatically riwa it commensurate amount. About half of an average station's rerentes fent "C local advertisers, retailers in the station's home community. Addittotal 1.* hundreds of miles away are not a market for them, and they will not get 1.*** rates for the privilege of exposing their messages to these far away we'r other part of station advertising revenues come frut national adsertines products presumably are available almost everywhere. But even they w !a higher rates for that possible extra audience, because their busing
! criteria are based on the audience delivered in the so-called "Area of I *:* Influence," or that area close in to the station's home market.
I realize that this is a highly detailed and technical concept, but it is saat to understand it in order to refute the cable intereste simple ante ! because of their additional coverage, broadcasters are charging higher rare paying additional copyright fees. That just isn't so.
I hope you will call this to the attention of the committep's membeli and
FULL WIGGINS, * ** * in courts, Ciril Liberti
1. MAX Cins: Jr. J • mails concerning outu"!!111 He was particularly i
costs because of t Bo, y sami adrertisers W *). * bare no interest in
mrs buying concept is * !***atre ADI). Additi 1:"7+1.32 it may receive ( Ti lbe World Football le 31.1 . is Monabans, Texas
Tras have happener e n local station 22 L orried on cable
Yer York, NY, JUNE 20, 19*5
Justice, 1.8, House of Representatires, Washington, D.C.
Netrumenia Televi-11111 Okrutterit television introtax, fie elutubats are *** tendent that is not affiliated with any major betwork.
Both ful and national «*f advertiup in the past have not had anı sim 11*: interest in reaching a distant home outside of the market whici 11.5 for REVIT ing their m age via calielf in pd they were interd. they burner willing in the past to fall higher rates for any additional viewing hati
In fart most foal adverti*** are interpated onlr in reaching viewers in '® metropolitan area in whirh they conduct their business renting that tomerwential from distant hotels minimal at let
National and regional advertisers plan their advertising einture Il **** television lamp on the ADI ( Area of Ihminant Intlurnar Therefore hon fallink outside the ADI simply are not a factor in the price they art W.17
The emble (overage also has tu baring on the price that station par "**
JUNE 27, 1975. Hon. CHARLES E. WIGGINS, Subcommittee on Courts, Civil Liberties and the Administration of Justice, t'.8.
House of Representatives, Washington, D.C. DEAR CONGRESSMAN WIGGINS: Mr. John Mercer of your office has contacted me for additional details concerning out-of-market homes reached by television stations via CATV. He was particularly interested in the relationship of advertising rates to film program costs because of the out-of-market coverage.
As previously stated advertisers will not pay for these out-of-market homes. Loxal advertisers have no interest in people located far from their retail area. National advertiser's buying concept is based on those homes located in the home market of the station (ADI). Additionally there is no accurate way to credit a station the viewing it may receive on a cable system. For example, last year KTIT carried the World Football League Games. Our signal was blacked out by the cable system in Mona hans, Texas, because the local station was also carrying the telecasts. This may have happened on other cable systems of which we are not aware. Because of this local station protection, we cannot be sure which of our prograins are being carried on cable. This uncertainty further precludes advertisers from paying additional money for cable coverage. Therefore, our advertising rates have not increased because of cable coverage. And, in fact, if cable Qurerage were eliminated the rates would remain the same since this coverage in no way affects our pricing which is based on the home market viewing audience (IDI).
Vor does cable figure in the price we pay for film program costs. Film distributors base the price they charge for their product on the market rank. The market price for film in Dallas-Ft. Worth, the eleventh television market, will be less than the price in Washington, D.C.... the 9th market, but greater than the price in Houston, the 14th market.
I hope this additional information will be of help in your deliberations,
JAMES R. TFRRELL,
INDEPENDENT TELEVISION STATIONS, Inc.
New York, N.Y., June 17, 1975. Hon. ROBERT W. KASTENMEIER, Chairman, Subcommittee on Courts, Ciril Liberties and the Administration of
Justice, 1'.8, House of Representatives, Washington, D.C.. DEAR CHAIRMAN KASTENMEIER: It is my understanding that during last week's hearings on CATV copyright before your Subcommittee, witnesses representing the cable television industry presented testimony concerning the sales value of out-of-market homes reached by television stations via CATV. Hopefully, the following information will be of assistance to you in your deliberations.
It is true that the Association of Independent Television Stations (INTV) has sought to interest advertisers in purchasing those out-of-market cable subscribers reached by independent television stations. As depicted in this week's issue of Broadcasting magazine, the cable industry actually displayed copies of the coverage maps which INTV uses in its sales presentation.
However, it is significant that advertisers will not pay for these out-of-market homes. First, local advertisers have no interest in buying homes at such a dix. tance. Second, national and regional advertisers are interested only in those homes located within the market (this area is known as the Area of Dominant Influence (ADD). Homes outside the station's ADI simply do not figure in the price of the advertising. It may be that in certain cases an advertiser may select an independent station over a competing network affiliated station owing to the extension of the independent's signal via CATV. But this factor does not affect the price which the advertiser pays for the station's time, be it an affiliated or inde. pendent station, and it does not affect the price the station pays for its programming.
The foregoing information was confirmed in discussions with several other members of our association, located in both large and small markets. If I can be
of further assistance, please do not hesitate to call on me or the Prendent of a Association, Mr. Herman Land, at the above address Very truly yours,
Board of Direkt
#* vrtul types of cable systems and also as
Tap In addition, the proposal would
na there is not now in existence any r ** **Teeprompter formula is based. In sb 17 yeters a complete windfall at the
the sterns and local broadcast statio **Doucy.
Sports (BC has three fundamental object * It would impose the duty to pay cop someone that import a limited kind of dis TESTI'virtually no liability to copyright ow
ved sider as relevant to the payme > an to'al programming costs expender 922" est substantial television program **** s to their program suppliers.' Third, **** d proses serious problems of administ
JUST W 193 Hon, ROBERT W. KASTEN MEIER, Chairman, Subcommittee on Courts, firil Liberties and the Administratie
Justice, U.S. IIouse of Representatiree, Washington, D.C. DEAR CHAIRMAN KASTEN MEIER: As reported in the trade press, it ageant cable television witnesses who testified before your Sulevinmittee on Juix 1 may have generated some erroneous impressions relative to the value n a station derives from extension of its signal to cable subscriber residing kene the station's norinal over-the-air coverage area. I hope this letter will str. correct these impressions.
To the best of our knowledge, WGX-TV is currently arried on 170 cal le trio vision systems whose subscribers total 576,000. Aproximately 112 of the i tems, with a total of 101.700 subscribers, are lourd beyond the (103 AT of Dominant Influence. This area, known as the ADI, represents thu wherein the Chicago television stations have s preponderant of frietis viewing.
Without going into detail regarding the methods used in the buying and se of television commercials, I would like to advise you that the price of adiratis purchased on our station retierts only the homes me reach within the (1:1 ADI. We do not receive extru (onsideration by virtue of those bomo l a be ADI which are reached via cable television.
I will be pleased to discuss this further with any metubers of tbe Sulu t or their staffs. Sincerely,
* TTIPROMPTER PROPOSAL IS UNFAIR TO
Motriebt royalties paid by such syster
a te that the system serving Carlsbad,
*arine approximately $3,000 quarterly. S hin that under the proposed H.R. 2 F utus Teleprompter Manhattan would tonn tbe tee would be based on gross ri
**Yep, under the Teleprompter propos Haus would not pay a penny in copyrigh
distant Bonnetwork signal into its
i suuber of broadcast signals alread LINY
praed amendment thus discriminates a " Tu.nation bears absolutely no relat con uairrial by the cable operator.
WASHINGTON, DC., Norrmber 14. 19% Bon. ROBERT W. KASTENMEIER, (8 House of Representatires, Washington, D.C.
DEAR MR. CHAIRMAN: Although NBC' did not testify directly on the issue and by the recent Teleprompter proposal, it is, as you know, a matter of the interest within the broadcasting industry. We have examined the prognai and find it defective in several important and I have enciona copy of var analysis in the belief that it may be of assistance to you in your deliberations Best wishes,
STATEMENT OF NATIONAL BROADCASTING (e. Inc., ox PROPOSAL O
T (ORP. PROPOSIXO AMENDMENTS TO SXTIONS 111(die) OF BR ***
National Broadcasting Company, Inc. ("XB0**) ***tially reports that these comments relating to the amendments to the (Copricht Resimden Ball R
3) recently prowned by Teleprompter Corporation be made part of the reard of this Subcommittee's hearings.
The Teleprompter proposal would substantially alter Section 111 of the free bill. That Nextion has, of course, ben the subject of extensie debate ala troversy for many years and for this rem Be wariousir question whether it would be productive at this stage to future still another new eleturn ibifu 11. dispute NBC, which has lonk believed that cable should be subjected to the wi.
TIL TELETROMPTER PROPOSAL IS UNFAIE eres mor Teleprompter's positio * *** only for imported distant
Bb Solmittee return to groun * Are wen extensively debatedto ou programs without paying any b ere may carry local programs wit! my beach which is currently emb
A fee schedule that Congres **! *Ders of all copyrighted wor Ham . It is ironic that Teleprompte
*.* system to retransmit sim i 1 1 by stations in the cable sy
ki » ve that the owners of copyri: A ll The Teleprompter proposal th
** lodend, it would permit on ** thrive royalties. License fee
La performed on programs ( y a Na Kould not receive any in *** gmWe suggest that at
risht liabilitas any other tot Tative poort, met als gral puma
mutter of imply the (onkre of the luled Statesbotid taand to» a distinction for rule that is in stent with the overall attenti
nal The Teleprompter propal wonid, if adopted, it is to an eingruer degree the (tempat that pricht owners are entitled to remuneration for the use their prorts and for that man alur SBO O ps it in addison Wet the progam nujerted to close ruliny, it becomes au rent that it dis Timbari
2. w in Constitutional questi ******115 All manners who are (17
**Hond be eitled to share in the
1.*** e for
o procramming is lice
* and the cres bare studer the latest Telepromp
against certain types of cable systems and also a gainst certain classes of copy. right owners. In addition, the proposal would create serious administrative problems since there is not now in existence any reliable way to obtain the data on which the Teleprompter formula is based. In short, the proposal seeks to give certain cable systems a complete windfall at the expense of copyright owners, smaller cable systems and local broadcast stations, without serving any compelling public policy.
Specifically, NBC has three fundamental objections to the Teleprompter proposal. First, it would impose the duty to pay copyright royalties only on those Cable systems that import a limited kind of distant signals and leave other systems with virtually no liability to copyright owners. Second, the Teleprompter proposal would consider as relevant to the payment of copyright royalties only the share of total programming costs expended by local broadcasters, thus excluding the most substantial television program costs, namely, the prices paid by networks to their program suppliers.' Third, the Teleprompter formula is inequitable and poses serious problems of administration.
THE TELEPROMPTER PROPOSAL IS UNFAIR TO CERTAIN CABLE OPERATORA
The Teleprompter proposal discriminates against certain types of cable systems, particularly those which carry broadcast signals to remote and inaccessible a reas. The copyright royalties paid by such systems would increase dramatically. For example, under the royalty schedule embodied in Section 111 of H.R. 2223, NBC estimates that the system serving Carlsbad, New Mexico would pay approximately $1,000 quarterly. Under the Teleprompter proposal, the same system would be paying approximately $5,000 quarterly.
It is obvious that under the proposed H.R. 2223 royalty fee schedule, urban systems such as Teleprompter Manhattan would pay large compulsory licensing royalties since the fee would be based on gross revenues from subscribers. Interestingly enough, under the Teleprompter proposal, a system like Teleprompter Manhattan would not pay a penny in copyright royalties unless it decided to import a distant nonnetwork signal into its service area which-given the substantial number of broadcast signals already available in that market--is unlikely.
The proposed amendment thus discriminates against classes of cable operatore and the discrimination bears absolutely no relationship to the amount of use of copyrighted material by the cable operator.
THE TELEPROMPTER PROPOSAL IS UNFAIR TO COPYRIGHT OWNERS
NBC strongly opposes Teleprompter's position that cable systems should pay copyright royalties only for imported distant signals. Teleprompter is really asking that the Subcommittee return to ground zero and reverse itself on two subjects that have been extensively debated-first, whether a cable system may carry network programs without paying any royalties, and second, whether a cable system may carry local programs without paying any royalties. VBO supports the approach which is currently embodied in Section 111 of H.R. 2223.
Any fee formula or fee schedule that Congress adopts should provide for license payments to all owners of all copyrighted works that are carried under the compulsory license. It is ironic that Teleprompter still seeks a compulsory license permitting a cable system to retransmit simultaneously all network and local programs carried by stations in the cable system's local service area. Yet, it takes the position that the owners of copyrights in those works should not be paid royalties. The Teleprompter proposal thus discriminates among classes of copyright owners. Indeed, it would permit only a very limited number of copsright owners to receive royalties. License fees would be paid only to owners of copyrighted works performed on programs originated by broadcasting stations and even this class would not receive any fees unless a distant cable system imported the program. We suggest that adopting the Teleprompter proposal would raise a serious Constitutional question with respect to the compulsory licensing provisions. All moners who are compelled to license their copyrighted property should be entitled to share in the compulsory license fees.
1 Since the bulk of network programming is licensed by the networks from outside program suppliers, it is thus suppliers and the creative people they deal with who would suller the greatest harm under the latest Teleprompter proposal,
THE TELEPROMPTER FORMULA 18 INEQU'ITABLE AND EXPENSIVE
og systems haring gross revenues in excess of $160,000
ayable by the larger cable systems could be computer
s wt forth above, we oppose the proposals of Tele
THE NATIONAL COLLEGIATE ATHLETIC Assoc
Mission, Kans., Norem
***Representatitex, Rayburn House Office Building, Wa
W RAMAS KATTEN MEIER: I have your letter of Sovem
Bidandie) of H.R. 2:23.
*** papirframleitual football telecasts described by Sectie
NBC opposes the formula that Teleprompter has devised because the ! . is inequitable and would be expensive and burdensome to admaitsier , criticizes the elements of the formula proposed by Teleprompter b i elements do not retlect the economic value to the cable system of the form carried under the compulsory license.
The second element of Teleprompter's formula, for example, provider revenues from subscribers would be multiplied by the percentage of ouds revenues spent on programming by broadcasters, but not be the friv' p*** by networks. Networks expend a much higher percentage of gruns retrant & programming and such costs should be included in any formula.
NBC strongly objects to the third element in the Teleprompter forcula m. Teleprompter terms an inder of "popularity". In order to analyze the line ment of the Teleprompter formula, it is important to recall that Terr, ** proposes to pay copyright royalties only for imported distant signals tres . ratio of county-wide viewing rather than merely viewing to the ('ATI yale. De need only consider the following example to determine the type of ide, result which would result under the promised formula Take the case of a ***** having 1.000 subscribers located in a county with 1000 telerixion home at 3 imports a distant signal which in turn is viewed by 10% of the cable ca len Applying the formula proposed lor Teleprompter to determine the "mark 2 of the distant signal, would produce a market share of 1 perrent net lope since the percent of noncable homes Oliviouslr cannot watch the distant .. The Teleprompter formula would dilute the "popularity" in cable bit of the imported signal because of the existence in the county of 9.00 teintima bu not one of which could view the distant signal
NBC agrees that "popularity" mar he a significant fartor, bot the sw3*7*1 that is relevant in the popularity of the broadcasting signals carried by them! operator in relation to all other materinl carried by the cable operate. W the cable system does nothing other than transmit netirark and indepenen! telerixion programming to subscribers, the ralue of the compulsory lanun * be ertremely high. Absent such license, the cable operator simply has Dit!."9" sell to suboribers. In contrast, where a cable system sells for its ha ese mic! charge not only boosted broadcast signals, but als alternatire programm "D" value of the compulsory licensino should le adjusted to reflet the relativt f* * ity to cable subscribers of the broadcast signal and the alternative preb.". A formula in which such popularity could be refleted would pruride p rik** royalties more directly related to the value to the cable operator of (art 4 copyrighted works.
It should also be noted that the information retired for the third eleber ( the Teleprompter projwal is not presently compiled by the Freal foto tions Commission or by any independent rutine or suries Arsim A' ... Arbitron publishes at irregular interinis out-of-date information on certat. " viewing. the reports do not contain information alont rieting of Mt. J programa The Teleprompter formula require soch informatii n Gallen **** necessary data to compute the third element in the Triepromfrr form.. ! be extremely expensive and may well pose signifiant administrative Dr W all the Federal ('ommunications Commission, which Teleprompter charges the responsibility.
OTITIA OMISTS OX MATION 111 VBC Tergnizes that the Subeommittee might deride to retain a free in Nortion 111id). The royalty f«**provided for the initiat
e pe 11140) nr in the opinion of VBO inordinator Berw Thrip mylife ** psinblish at a time when the maturity of cable oferiton were millors***
clothe problems which I discussed in my testimo
.s atuns on cable carriage of such sports events.
Pot be t'atimission has apparently once again refus
* per the art levt denying petitions for reconsideration of das nelierarriage of sports event broadcasts.
i nd.vidual NCAA member institutions in collegi . *ale a potential interest in the royalty provisions
e t pale in comparison with the XCAA's pr 9. 12. ant.issions of sports events, it is sufficient
V"'ait to comment on the merits of the Telepro
4. That proposal is faulty in several respects,
ist Telepompter would make completely open-
Flients. (able system appropriate such
na entr. ing concerned.
*** who are successful in “networking"
tire at a number of important poin
fut the proposed deletion of several
" il base setransmission of all broadcast si
** !all caps righted programining retransm *,
that is presented by Teleprompter Corpor
anime at all, but merely an ingenious des
believes that alle stels with large gran rinj trlnfert prar' enrringe of pyrighted material held not have the twent out a **** free on parut nt amte of* ********
tion of a statuten free Wholule and a firmon lontaranch an app l e