(B) Where the cable system, at least one month before the date of secondary transmission, has not recorded the notice specified by su'see* (d).

(3) Normal Copyright Liability.

(A) Any secondary transmission of a primary transmission not escene by the compulsory license granted by clause (1) of this subarction, abi le actionable as an act of infringement under subsection (b) unless the on system and the copyright holder agree on the retransmission of the primary transmission and have notified the Register of Copyrights of that agre ment. Any such existing secondary transmissions of primary trakam as si by a cable system as of the date of enactment will not be actionabir az sa 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 ang portion of any primary transmission unless required to do so by nuts 12 of part 76 of the regulations of the Federal Communications CommÇALA (d) COMPULSORY LICENSE FOR SECONDARY TRANSMISSIONS BY CABLE SYSTEMS.―

(1) For any secondary transmission to be subject to compulsory licensing i der subsection (e), 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, w* £ ever date is later, record in the Copyright Office, a notice including a sta's of the identity and address of the person who owns or operates the secontam transmission service or has power to exercise primary control over it together with the name and location of the primary transmitter, or primary trans and thereafter, from time to time, such further information as the Register så Copyrights shall prescribe by regulation to carry out the purposes of this cine (2) A cable system whose secondary transmissions have been subject to com pulsory licensing under subsection (c) or have been the subject of agreement with the copyright holder shall, during the months of January, April, Juip, 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 speeft ing the number of channels on which the cable system made secondary trans missions to its subscribers, the names and locations of all primary trai snitters whose transmission were further transmitted by the cable system, the non-er and addresses of other cable systems directly or indirectly in control of, contt und by, or under common control with the cable system filing the statement the names and addresses of any other persons who directly or indirectly oem or eve trol any other cable system or systems, and the names of the systems soojened a controlled; and the total number of subscribers to the cable system, and the grims amounts paid to the cable system irrespective of source and separate statements of the gross revenues paid to the cable system for advertising leased chat ea and cable-casting for which a per-program or per-channel charge is made and 1 subscribers for the basic service of providing secondary transmissions of pritari 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 trans mitting facility whose signals are being received and further transmitted by De secondary transmission service, regardless of where or when the performance of display was first transmitted

A "secondary transmission" is the further transmitting of a primary treeam a sion simultaneously with the primary transmission or nonsimultatów (qs'y wh the primary transmission if by a "cable system” not located in whole or in part within the boundary of the forty-eight contignons States Hiwall or Party Ris Provided, however. That a nonsimultaneous further transmission by a calle sts tem located in a television market in Hawaii of a primary transmission al deemed to be a secondary transmission if snch further transmissioni is Levysat?t to enable the cable system to carry the full complement of signals g" med 1 under the rules and regulations of the Federal Communications Cop ↑

A "cable system" is a facility, located in any State. Territory. Trust Terárt or Postestoni that in whole or in part receives signals transmitted or pe gri broadenst by one or more televisión broadcast stations licensed by the Fistera. Communications Commission and makes secondary transmissions of sia les grais

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 ope 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 retrans mitted 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 lean 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 systema

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,

March 30, 1976 Hon ROBERT W KASTEN METER, Chairman, Subcommittee on Courts, Civil Liberties and the Administration of Justice, Committee on the Judiciary, House of Representatives, Washington, DC

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 provisionis of Section 111 of 8-22 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 sigħi ils to underserved areas. It is now an industry being developed by major corporatiotyk in the large cities and far from being a struggling infant is showing substantial economie health and strength. Moreover, and this is most important it has re cently 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 pro Jected to reach over 6 million homes by 1980 and almost 15 million by 19%

But for the subsidizing of cable by free televisionis programming which costa the networks and stations hundreds of millions of d llars each year and for which cable makes no payment the cable televisions and pay cable television Indstries would not exist.

We emphasize these current circumstances as the basis for urging that what ever may have been a fair copyright, we fuffon for the snall Mor and Pop-calle system is not an equitable copyright w/795on for the cable Industry as it exists today a major communications competitor, empl sizing increasingly pay tele vision services. We do not believe that an industry of 11.18 proportion and charac ter is entitled to the unprecedented and sady privileges of a cong alwry li mo ng with bat token pasments, as recently passed by the Notiate in % 22. We bel ove the time has come for the Congress to stop babying the industry and treat it in the same fast loni as its competit rw are being treated

Under 8-22 the entire cal'e industry would pay approximately 87 & m 115-n annually in copyright fees. Under an alternative put forth by TeeProng Ter this annual amount would be reduced to about 82 multon Compare that to what the television Industry is required to pay for its programming. A single show a goof "Pomeld in Adventure" cost the ABC Television Network 8.1 mln amoun's paid by other networks for Godfather Gote With 15e Wri like premium programming equal or exceed the total amount which If 19 proposarel to have the entire pay cable industry pay each year

You would not seriously for wider faxing Froudest corporations at 50 cet fi of the dollar and cat de eorporationis at less fan 1 ivnd on the d Lar Hyr the eco nomie disproportion of the current expyright proposals virt ially an ...it to this It would cont,fiue what is an essential's unfar our petitive advant

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 catie tem vision should not be required to go into the marketplace and bargain and pas fit all of its program product (including that appearing on television signalso just as television stations do. Any contrary course-exemptions based on size of the extraordinary privilege of compulsory licensing-dangerously interferes with atd dramatically changes marketplace considerations. If cable wants to ‘e-zjete" (as it so frequently claims) then Congress should let it compete-normaliu Second, we recognize, however, that developments in the consideratiod 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 "be very least, the legislative solution should be fashioned in a more realistic Han ner than now contemplated. Specifically, the legislation should be drawn a' tg lines recently elaborated upon by the National Association of Broadcasters, as follows:

(1) All cable systems would be granted a compulsory license without a27 copyright payment for all local signals, now or in the future.

(2) The spirit of the Senate proposal granting small cable systems a redu» tion in the fees to be paid would be retained and expanded. A compulsory licens 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 car ried by large systems which do not qualify for the small system exclusion, aini for any additional distant signals authorized by the FCC in the future.

(4) The language giving broadcasters the right to enforce copyright throug appropriate infringement remedies would be qualified to conform with the Sen ate bill. Under S. 22 broadcaster court action would only come where the Vanations are willful or repeated.

(5) The bill would clearly state that no signal carried by a cable system evid 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 al ze They are intimately associated with broader questions of communications pe.. 9 and what you decide here will profoundly affect the future developart? d national telecommunications. For these reasons, we respectfully suggest fat you consider referring Section 111 of this bill to the appropriate House comid tees 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 Aflates Association; Tom Goodgame, Vice President and General Mið ager KTUL-TV, Tulsa Okla.; John G Conomikes. Vice Prelet and Station Manager, WTAE TV, Pittsburgh, Pa., Eigene H Bohi, General Manager WGHP TV, High Point, NC; George Lyons, Vice President and General Manager WZZM TV, 6754 Rapids, Mich.; William F Turner, Executive Vice President and General Manager KCAU TV, Sioux City, Iowa, Jay Gandurt General Manager KRDO TV, Colorado Springs Colo, Robert M. Bennett, Vice President and General Manager WCVB TV Need ham, Maine; Walter M. Windsor, General Manager WFTV 02lando, 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 NOTA AND MPAA AS TO TERMS OF COPYRIGHT LEGISLATION 1. Basis of liability

Cable systems will incur copyright liability by virtue of their retransu..AN,AN distant non network programing. The fee will be expressed as a percentage

3

A distant signal is defined as one which is not required to be carried under present PC 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 1⁄4 of an equivalent signal.) The royalty rate agreed to is as foLOWS

(1)-006 of basic subscriber revenues for the first imported equivalent signals; (HD)-00425 of basic subscriber revenues for each of the second, third and fourth imported equivalent signals; and

om 002 of basic subscriber revenues for each imported equivalent signal in excess of four '

All cable systems, whether or not they import distant signals, will pay .006 of their basie 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 (1) distant programing substituted pursuant to the FCC » syndicated exclusivity rules shall not be subject to the rate schedule; and (11) 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. Defination of network, mgnals

The definition for network signals will be based on the definition contained in Section 73.65% of the FCC's rules

5 Changer 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 chatige

6. Changes in FCC rules governing the permisible 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 chut only toi such additional signals. However, the original statutory rates are "grand fathered in each of the following instances

(1) in the case of any signal presently carried,

Ol) in the case of any signal substituted for a signal presently carried pro vided that the substituted signal is of the satte 'class 'as the signal for which it is substituted.

(111) 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 ÞUX » existing rules

7. Time for tribunal retiese

In the event of any of the regulstory changes referred to in paragraph 5 and 6 above any party affected wili have an intneha'e right to petition the Iriminal Any rate change made by the Iribunal purmant to mach a petition may be recon sidered in the year 1:20) and in each wilmsequent fifth calet, lar year

M. Trybunal retses of royalty rater in light of changes in average home ashariyber

rate

The Tribunal may alm ad ant stalatory rates to reffee • 11. fertim of const cut deuars in the average base mu mwriter tale through of the cute italum try The Tribunal fray endnuder ali factors relating to làm ta sing Me reslovn atant dollar copyright paymetal jær mutim riler and its realiohmij to tlər imam

Tring the formula fractions of an imported signal equivalent Hill be rouhind at

subscription rate structure. Those factors which affect or limit the charge a basic subscription rates and which are beyond the control of the partes lat be considered to be extenuating. Any rate adjustment pursuant to this perse may be made in 1980 or in any subsequent fifth calendar year.

9. Tribunal review limited

Except as specified in paragraphs 5 through 8 above, the statutory royalty rate shall not be adjusted.

10. Review of tribunal decisions

Tribunal decisions will be subjected to judicial, but not congressional, renew 11. Changes in FCC rules relating to commercial substitution and simultanersa retransmission

No compulsory license will be extended to any cable system which deletes org inally broadcast commercials or which retransmits broadcast programming & other than a simultaneous basis (except as permitted by the present FCC rules: 12. Private negotiations

The legislation will contain a provision allowing cable systems to negotiate privately with copyright owners for copyright rates below those established by or pursuant to, the statute.

Each of the undersigned, authorized by his respective association, agrees to the foregoing and further agrees to use his best efforts to effect the seeds passage of legislation embodying all the terms of such agreement by both. Hous of Congress.

DEAR MR. CHAIRMAN: This is written to seek your support in connection with three matters now being considered by your subcommittee in connection with general copyright revision (H.R. 2223).

In brief, I hope you will support:

1. Reducing the mechanical royalty paid by record makers to the owners of music copy rights back to 2 cents where it belongs.

2. Including a performance royalty for those who create sound recordings 3. Amending the bill to insure that state anti-piracy laws are not inadverten")) preempted.

Here is some background on each of these matters.

First, Section 115 of the general revision bill provides for a substan' al in crease in the mechanical royalties paid by record makers to the owners of most copyrights. This section increases the present rate from 2 cents per tune to 3 cents per tune, or 3⁄4 cent per minute of playing time, whichever is greater

While this may sound like a modest change, it is not. In fact, the 'penny” In crease would result in added payments of nearly $50 million a year to the ev right holders This could result in higher retail costs for consumer buyers A recordings, to the tune of nearly $100 million a year, if the increase were passed along through the distribution chain.

The recording industry feels that it cannot absorb sneh a substantial increase In payments. It would wipe out much of their profit, and could cause unen péy