In an article in Sunday's Outlook section it was suggested that former representative Peter H. Kostmayer (D-Pa.) had written a letter published in The Washington Post opposing a royalty on video recorders without identifying himself as a consultant to the video industry. He did identify himself as such. A chart accompanying a report in Sunday's Outlook section about the lobbying battle on video royalties should have listed Roger Jones of Carl Byoir & Associates, representing RCA, with the anti-royalty coalition.
Scenes from a Washington movie:
The high-ceilinged Senate hearing room is aglow with kleig lights. Every seat is filled, and tourists strain to see over the rows of three-piece lobbyists. The senators are poised behind microphones at the dias. The cameras are rolling.
At the witness table sits the star of the occasion, and for a change in Washington it is a real star: Charlton Heston, whose roles in "Ben-Hur" and "The Ten Commandments" prepared him well for this assignment. Now he is a front man in the Ben-Hur of Washington lobbying extravaganzas.
On this day Heston's part calls for an eloquent, booming oration on the newest threat to the movie industry. He lambasts the companies (all of them Japanese) that manufacture video cassette recorders for "gobbling up films and programs millions of times a week." In Heston's version of this movie, they are the villains in a plot to steal Hollywood's box-office proceeds with space-age technology.
Heston finishes his speech and gets up to leave. The camera lights dim; most of the audience files out of the room. For them, the scene is over. But for those who remain behind -- those who are paid to operate outside the public spotlight -- the story is just beginning.
They are the real stars of this carefully staged production, the people who will determine the outcome of one of the most hotly contested lobbying wars ever seen on Capitol Hill.
This is no low-budget picture. It features a gold-plated cast of hundreds, including nine senior members of the Carter administration, seven former members of Congress, two former chairmen of the Federal Communications Commission, 17 downtown law firms, 13 consulting firms, and a wide assortment of publicists, fundraisers and foreign agents. Every administration of the last 20 years is represented, and new lobbyists are joining the fray nearly every week.
"It's like an arms race," says Charles D. Ferris, who headed the FCC under President Carter. "Each side is fearful of the other side ramming through something fast, and so it keeps escalating."
The battle is over how to divide the huge profits from the expected sale of 40 million video recorders over the next decade. Heston and his Hollywood allies already have convinced a quarter of the Senate to support a royalty on the increasingly lucrative home taping of movies, records and television shows. Ferris is leading the charge against the proposed royalty, which could cost consumers more than $3 billion in the next 10 years.
The movie studios and their friends in the music industry have signed Robert Strauss, a veteran of many starring roles in the Carter White House; Anne Wexler, a political adviser to Carter; Lloyd Cutler, Carter's White House counsel, and Robert K. Gray, who was co-chairman of President Reagan's inaugural.
They also have hired Alan Greenspan, President Ford's chief economic adviser; Dean Burch, the FCC chairman under President Nixon; three former congressmen, a former aide to Vice President Mondale and a well-known Harvard law professor.
On the video recording coalition side, the leading players include Stuart Eizenstat, Carter's chief domestic adviser; David Rubenstein, Eisenstat's White House deputy; Ferris, the former FCC chairman, and Thomas H. Boggs Jr., in his familiar role as superlobbyist.
The coalition's supporting cast includes President Ford's Senate lobbyist, President Kennedy's postmaster general, two former senators and the widow of a Supreme Court justice. And in the wings, as the struggle heads for a showdown in the Senate Judiciary Committee, are Emory Sneeden, fresh from his role as the committee's Republican chief counsel, and Ronald Brown, once the committee's Democratic chief counsel.
Each side is following its own script. The movie companies argue that the 3 million Americans who have bought video recorders are illegally taping their programs, and that this eventually will discourage the production of quality films. They say Congress should compensate them by imposing a royalty of $50 or more on every video recorder and up to $2 on every blank tape sold in this country.
The manufacturers and suppliers counter that the movie studios already are compensated several times over by the networks, cable stations and retailers. They say most people use their video recorders to view TV shows at their convenience -- not to stockpile a private library of first-run films -- and that any royalty would be a double payment to Hollywood.
The issue has proved far more critical to the companies involved than to most of the viewing public, and the 18 members of the Senate Judiciary Committee -- who are expected to vote on the royalty later this month -- now find themselves caught in the lobbying crossfire.
"Obviously, if this thing goes on the rest of the year, our side will spend well over a million dollars and their side will too," says Rubenstein, the former Carter aide who now represents 11 Japanese video firms. "You could say the amount of legal fees is outrageous, but it's infinitesimal compared to the hundreds of millions of dollars that are at stake for both sides."
Act One, Scene One: It is late October, and Sen. Dennis DeConcini (D-Ariz.) is introducing a bill to exempt all non-commercial video taping from the copyright laws. Rep. Stanford E. Parris (R-Va.) writes out a similar exemption by hand and sponsors it on the House side.
Both are reacting to the morning's news: A federal appeals court in California, ruling in Universal Studios v. Sony, has found that the home taping of copyrighted programs is illegal. The legislators are taking the popular stance, trying to protect their constituents from this troublesome decision.
This was not welcome news for Jack Valenti, president of the Motion Picture Association and a former top political aide in Lyndon Johnson's White House. For years, Valenti had been holding regular private movie screenings for selected Washington notables, deftly using one of the best political perks in town to court congressmen, White House aides and journalists.
He moved quickly to hire the law firm of his old Democratic Party friend, Robert Strauss. The firm, which would be paid $23,000 for its lobbying duties over the next six months, assigned the case to Joel Jankowski, once an aide to former House Speaker Carl Albert. They began to search for someone in Congress to champion their cause.
Valenti took his case for a $50 royalty to Sen. Charles McC. Mathias (R-Md.), who feels strongly about protecting an artist's intellectual property. Valenti laid out his arguments in a memo to Mathias, but the senator balked at endorsing a specific royalty. Instead, he proposed that a federal commission study the video issue and set the royalty. Valenti reluctantly agreed, and Mathias introduced the measure on Dec. 16.
The record companies also were clamoring about the damage inflicted by home taping of albums, but Valenti wanted to restrict the bill to movies only. He changed his mind, however, after he and Strauss talked to Senate Majority Leader Howard H. Baker (R-Tenn.) -- who was worried about the ailing music industry in Nashville -- and Minority Leader Robert C. Byrd (D-W.Va.), a fiddle player whose state is a center of country music.
"Baker and Byrd told Mathias they did not want to be left standing at the station while the train pulled away," said one Mathias aide. Mathias agreed to extend the royalty to music taping, and his revised measure soon was backed by the rest of the Senate leadership.
Valenti hired another Carter aide, Anne Wexler, who rounded up 20 private interest groups to start campaigning for the royalty. Wexler, who was paid an initial lobbying fee of $2,000, also began working her contacts in Congress.
"Knowing people on the Hill and having entree always helps," Wexler says.
The personal letter arrives on Charlton Heston's stationery. "What you do in the next five minutes," he says, "could well determine whether you will see movies like these classics ever again: 'Gone With The Wind;' 'The Godfather;' 'To Kill a Mockingbird'. . . .
"A group of wealthy, powerful Japanese electronics firms have invaded the U.S. recording market -- trampling U.S. copyright laws and threatening one of America's most unique and creative industries . . . . These foreign companies are very powerful in Washington. Their well-paid lobbyists and enormous national advertising budgets far exceed our resources."
Despite the poor-mouthing, these letters are the creation of Rob Smith, a direct-mail specialist in Virginia. Smith originally was approached by the Japanese coalition to sell the public on its side of the video story, but he decided to go to work for the movie industry instead.
Smith's firm, Targeted Communications, mailed thousands of these letters from Charlton Heston to carefully selected cable television viewers in South Carolina and Iowa. Heston urged each recipient to call a toll-free number to send a pro-royalty message to his senator, but callers found the phone operators would not disclose what that message was. Still, hundreds of form messages were sent to two Senate Judiciary members, Chairman Strom Thurmond (R-S.C.) and Sen. Charles Grassley (R-Iowa), on personalized stationery bearing each caller's name and address.
Heston insists the letter was not overly dramatic in characterizing the video companies. "They are violating our copyright," he said in an interview. "It's just as valid as if you owned a piece of land."
The actor sounded surprised, however, that callers were not told what message would be sent to their senator. "I think that's a mistake," he says. "I think it's wrong."
Act Two, Scene One: The video companies are becoming unnerved at Valenti's initial show of strength. "We were afraid we would get run over," says Sony executive William Baker.
After Christmas, they rushed to raise $140,000 to form the Home Recording Rights Coalition. Sony Corp. of America gave $20,000; Matsushita (makers of Panasonic equipment) gave $25,000; 3M Co. (makers of tape cassettes) gave $10,000; Pfizer Inc. (which makes chemicals for the tapes) gave $10,000; Sears, Roebuck (which sells the equipment) gave $5,000; McCann-Erickson (Sony's advertising agency) gave $10,000; and the Electronic Industries Association gave $50,000.
The coalition's first move was to hire Charlie Ferris and to pay his firm $53,000 for the first quarter of the year. Ferris, who worked in the Senate majority leader's office for 13 years before heading the FCC, acknowledges that he was hired in part for his contacts.
"I know a lot of people on Capitol Hill," Ferris says. "This isn't a burning social issue like cutting school lunches, but if I tell someone I want to come in and talk to them, they'll say sure, Charlie. It's human nature."
At Ferris' suggestion, the coalition also hired Robert R. Bruce, who had been his chief counsel at FCC, and Nina W. Cornell, his former chief economist at FCC. Bruce's firm includes Cathy Douglas, the widow of Supreme Court Justice William O. Douglas, who discussed the issue with consumer groups.
Ferris also steered the coalition to former Sen. Marlow Cook (R-Ky.), whose firm was paid an initial $4,400. But Sony officials wanted to make sure every congressman knew they have 6,000 employes throughout the country. So they joined forces with Mitsubishi, Sanyo and eight other Japanese subsidiaries to hire both David Rubenstein's firm and Patton, Boggs and Blow.
Tommy Boggs put six of his lawyers on the case at up to $250 an hour, including former Sen. William Hathaway (D-Me.) and Ronald Brown, who was the Senate Judiciary counsel when Edward M. Kennedy (D-Mass.) was chairman. In bipartisan fashion, Sony also hired Emory Sneeden, the panel's former Republican counsel, who has long been close to the new chairman, Strom Thurmond.
Next, former Carter adviser Stuart Eizesenstat was hired by Elmer Cooper, who sells and rents movie cassettes at Video Supermarkets in Washington. Eisenstat was asked to defeat a part of the Mathias measure that would give movie studios a share of the burgeoning rental market, even after they have sold the cassettes to retailers.
"This is a live-or-die issue for these people," Eisenstat says. "It helps to have someone who knows how Congress operates and has some experience with substantive issues."
Soon video equipment stores were putting up thousands of signs denouncing a royalty, and Sony was asking customers at a trade fair to record their protests on a Betamax and send the videotapes to Congress. But some senators grew so tired of the subject that they refused to see any more lobbyists.
"This issue is just over-lawyered," says an aide to one Judiciary Democrat. "But the lawyers keep finding more affected parties and bringing them in."
When the movie studios needed someone to make the legal case against video recorders, they hired Laurence Tribe, a Harvard legal expert and author, who produced a treatise saying that home taping violates the Constitution.
The record companies hired Alan Greenspan, President Ford's chief economic adviser, whose study found that the industry lost nearly $1 billion last year to home taping.
Sony paid Nina Cornell, the former FCC economist, $24,000 for a study which found that home taping of movies isn't that much of a problem. Cornell helped Sony lobbyist Sadami Wada explain her findings to various senators.
In similar fashion, the movie industry hired Robert R. Nathan Associates to refute arguments that a $50 video royalty would be marked up to as much as $125. Nathan concluded the Japanese companies would absorb most of the royalties themselves and would not pass the cost on to consumers.
This drew a sharp rejoinder from Sony's Cornell, who said that Nathan's study "would not pass an exam in undergraduate economics."
"It isn't surprising that such criticism would be coming from the other side," responded Nathan associate John Glennie.
"It's just like a murder trial," one movie industry official admitted. "The prosecution hires a psychiatrist who says the killer is sane, and you have to keep looking until you find someone who says your client is insane."
Act Three, Scene One: By the spring, the music industry's lobbyists are descending on the Hill in record numbers.
The National Music Publishers Association hired former FCC chairman Dean Burch and and paid liberal lobbyist Liz Robbins $39,000 for the first quarter of the year. Veteran lobbyist J.D. Williams and lawyers at Arnold and Porter weighed in for the Recording Industry Association. Former White House counsel Lloyd Cutler began working the issue for CBS Records.
Several of these lobbyists visited Rep. Don Edwards (D-Calif.), who had introduced a video royalty proposal in February after talking to Jack Valenti. Edwards soon agreed to expand his bill to cover music taping.
Opponents cried foul, saying the entertainers have a big advantage because they are such prominent fund-raisers. "It's tough," says a lawyer for Sony. "A lot of liberal Democrats who might ordinarily be against a royalty also have been politically close to the movie and recording industries for a long time."
But many of the antiroyalty lawyers also have done their share of campaign work, and Rubenstein noted that "99 percent of being an effective lobbyist in this town is through fund-raising." For example, both Tommy Boggs, representing the Japanese companies, and Robert Strauss's firm, working for the movie industry, have sponsored fund-raising events this spring for Sen. Paul Sarbanes (D- Md.). Sarbanes, while not on the Judiciary Committee, is one of many undecided senators still being courted by both camps.
The two sides also have mounted a subtle campaign to shape media coverage of the issue. Former Rep. Peter Kostmayer (D-Pa.), for instance, denounced the video royalty in a letter to The Washington Post. What Kostmayer didn't say is that he was working for John Adams Associates, a public relations firm hired by Sony.
Adams and a host of other PR firms -- Hill & Knowlton for the movie companies, Robert Gray and Co. for the music industry -- have been sending out press releases, editorials and cartoons, all designed to paint the opposition in the least flattering light. Japan's electronics industry paid Baron-Canning Co. $45,000 last year, among other things, to stage a cocktail buffet with Japanese officials, set up interviews with the chairman of Sony and cultivate key journalists.
In recent weeks, the frenzied lobbying has speeded up like an old newsreel running at fast-forward.
Charlie Ferris takes a dozen Judiciary staffers to lunch at the Monocle. Sony chairman Akio Morita flies in to host a luncheon for a group of senators. Jack Valenti gives Sen. Baker video cassettes of "Star Trek," "The Empire Strikes Back" and other films for his trip to China. Charlton Heston meets privately with 13 Judiciary members and then presses his case with White House aide Michael Deaver.
"It's obviously easier for me to get in to see a U.S. senator than the average citizen," Heston said. "I suppose you'd have to characterize it as an unfair access. I've never hesitated to take advantage of it.
"But the other side has more high-priced law firms. There's a lot of clout there. You don't pay that kind of money for no action."
As the denouement approaches, the battle now appears to be at a stalemate, and a lawyer for the Japanese companies explained why.
"Most members of Congress could care less about these copyright issues," he said. "They would rather stay away from them. They have friends on both sides and they don't want to anger anyone. It doesn't get you elected and it's not an issue of conscience. It's just a question of which part of the private sector should get more money."