A pending increase in copyright royalty rates has canceled the New York Mets' televised baseball season in Hartford, Conn.
The same rate hike is taking Atlanta-based WTBS Superstation off the air in Rochester, N.Y.
Closer to home, Arlington Telecommunications Corp. (Artec), which owns Metrocable, has postponed a decision to add to its services New York-based WOR -- the same station that brought the Mets to Hartford. The WOR addition would be too expensive under the new rate, Artec officials say.
In all, about 6.2 million cable television subscribers in hundreds of communities around the country soon may miss some of their favorite programs. They are victims of an air war, fought with money and lawyers, between the cable television industry and an alliance of commercial broadcasters and motion picture producers.
Right now, the cable forces are losing. They have been hit with what they call a devastating increase in required payments for rights to rebroadcast programs usually carried by commercial stations.
The new rate, effective March 15, was approved by the congressionally created Copyright Royalty Tribunal (CRT) on Oct. 20, 1982. The fairness of the increase currently is being argued in U.S. District Court in Washington. However, neither side expects an initial ruling on the question before next October.
Cable operators say the increase will add $20 million annually to the total amount of royalties they pay to carry distant signal programming -- shows picked up from outside television markets, usually from commercial stations, and rebroadcast in local communities, such as Arlington and Hartford.
Many of the affected 1,500 cable operators, out of an estimated 6,000 nationwide, have chosen to drop signals rather than pay the extra cost. They say they could pass the copyright rate increase on to subscribers. But such pass-throughs often must be approved by local regulatory bodies -- a time-consuming process at best.
"I'm angry about this. I think it's wrong. The CRT has undone what the Congress and the Federal Communications Commission set out to do -- make available to the public as many broadcast signals as possible," said John D. Evans, executive operating officer of Artec, which has 25,000 subscribers.
"We're carrying signals from Baltimore, and we were planning on adding WOR from New York. But we had to back off from WOR because of the extra cost. This is unfair to us and our subscribers," Evans said.
"That's hogwash," said Michael D. Berg, associate general counsel for the National Association of Broadcasters. The NAB represents the commercial stations who say they have been paying full copyright royalty costs, while the cable stations have been allowed a free ride.
"The current situation is grossly unfair to the broadcasters and copyright owners," Berg said. "Most cable stations pay nothing for distant broadcast signals -- just a nominal rate of about $8 per signal," Berg said.
In percentages, it works out this way: The new copyright royalty rate amounts to 3.75 percent of a cable system's gross receipts for each distant signal carried. The current rate is substantially lower -- about 0.7999 percent of gross receipts for the first distant signal, 0.503 percent for for each of the next three signals, and 0.237 percent for each additional signal.
Broadcasters and officials of the Motion Picture Association of America have argued for years that the cable operators' copyright payments have been so low that they amounted to a virtual right to steal programs from producers and from the commercial stations that had to pay far higher rates for the same properties.
"The cable people want a massive exemption from traditional copyright principles, which require anyone who wants to use someone else's material to bargain for that material. Cable systems have not had to do that at all," Berg said.
Before 1976, cable systems legally could rebroadcast distant signals without incurring copyright liability. But Congress approved the Copyright Act of 1976, which required cable televisionlicensees to pay a fixed royalty fee for each distant signal carried. The law also created the CRT, which in turn set new rules for the number of distant signals a cable system right carry, and which also required cable operators in the top 100 commercial television markets to black out distant syndicated programming on certain occasions, such as a National Football League home game.
The CRT's signal restriction and syndicated exclusivity rules were repealed by the Federal Communications Commission in 1980, on the ground that they deprived cable viewers of diversity in programming. The Second Circuit Court of Appeals on June 25, 1981, upheld the FCC's ruling.
But the producers and commercial stations retaliated by going back to the CRT, which last October granted their request that cable systems pay higher copyright royalty rates.
The CRT's rate decision effectively overturned the rulings by the FCC and the federal court, says Thomas E. Wheeler, president of the National Cable Television Association. He said the tribunal "made a serious error in judgment."
"The final decision of the Copyright Royalty Tribunal is anticonsumer" Wheeler said. "Through its outrageous increases in copyright royalty fees, the tribunal has abandoned the pre-existing communications policy of abundance in consumer viewing choices in favor of more money for Hollywood producers.
Wheeler and other television industry sources say a total of 6.2 million subscribers may lose programming as a result of the CRT decision.
Fritz E. Attaway, vice president of and counsel to the Motion Picture Association, says Wheeler and his supporters are exaggerating.
"It's not true that all of those subscribers will lose service. At the very least, they will experience a change of service, because cable systems will offer substitute programming" for the dropped distant signals, Attaway said.
There are 30 million cable subscribers in the United States, and only large cable systems, those with semiannual revenues of about $214,000 per distant signal, will be affected, he said. Cable systems that choose to pay the higher royalty fees would increase individual subscriber fees by 35 cents per month for each distant signal carried, Attaway said.
"If a cable system can't pass along a 35-cents-a-month increase to its subscribers without a major loss of business, it must be doing something wrong," Attaway said.