Page:H.R. Rep. No. 94-1476 (1976) Page 360.djvu

 In working out this formula, the committee has arrived at a solution which, I submit, is workable and is fair and equitable to both the owners and the users of copyrighted materials and which also protects and serves the public interest.

Over the years it has been decided, and it is now settled, that it is the “performance of a copyrighted work which gives rise to the liability to pay a royalty to the owner of the copyright.” It has also been decided that the broadcast of a work by radio or television constitutes a “performance” and invokes copyright liability. The vastness and anonymity of the audience, the uncontrollable public access to programming once broadcast, the inability to identify and to impose a direct charge upon the viewers, our public policy that “the airwaves belong to the public”, all of these gave rise to complex royalty problems arising out of radio and television broadcasts, but most of those problems have been resolved. The advent of cable television re-opened and compounded those problems, and added another. What is the nature of the service provided by a cable system? Is it a “performance” which invokes copyright liability? Admittedly its role is passive, for it does not control the original broadcast. It is argued that cable merely intercepts the signal which has already been broadcast and then carries it to the subscriber’s television receiver. It is argued that cable is merely an extension of the viewer’s antenna. But the copyright owners and the copyright licensees argue that the cable systems are distributing the broadcast signals to a vastly greater audience than the broadcaster could reach and that this constitutes a “performance” and should invoke a copyright liability.

Being compelled to work with the existing copyright law, which was enacted in 1909, before radio and television, let alone cable, the Supreme Court has had a difficult time deciding the cases and controversies involving copyright which have heretofore arisen between copyright owners, broadcasters and cable television systems. In the Fortnightly and Teleprompter cases cited in the body of this report, the Supreme Court held that the role played by cable was not that of a performer but, rather, the passive role of the viewer and as an extension of the viewer’s antenna and that since this did not constitute a “performance” copyright liability was not invoked. In my opinion those were correct decisions under the facts of those cases. If the cable system does no more than intercept a broadcast signal and deliver it to the subscriber’s television receiver, within the broadcasting station’s local market area, then the cable system is only an extension of the viewer’s antenna, should not be considered as a “performer” of the copyrighted material and no liability to pay a royalty should attach. Under such circumstances the copyright owner has been able to bargain for a royalty payment with the knowledge that the performance may be viewed and heard by all persons within the local market area. Also, the broadcast station which purchases the right to use the copyrighted material is in an excellent position to estimate the number of viewers/listeners who will witness the performance and is able to bargain for the mix of royalties which he pays and advertising rates which he charges which will meet his commercial needs.

Today cable is able to do more, and often does more, than merely to intercept a signal and deliver it to the subscriber’s receiving set located within the local market area of the primary transmitter. With advances in the state of the art, cable systems are now able to transmit