Victory For CATV

Among executives in the entertainment industry, the worst four-letter word in television is CATV, otherwise known as Community Antenna Television, or Cable TV. Companies in the CATV field sell two services: extra channels that are not otherwise available, and interference-free TV pictures in poor reception areas. The CATV operators pick up the signals from TV stations with a high master antenna, and then feed the programs straight to subscribers' television sets through relay cables or microwave connections.

If CATV is so useful, why the objections? Opponents argue that the CATV operators gross about $300 million a year (typical charge: $15 for installation, $5 a month service fee) but pay nothing to the people who originate the programming. In the view of the critics, this action is roughly comparable to reprinting somebody else's book without permission. To test the broadcasters' right to require payment from the cable firms, United Artists Television Inc. sued a West Virginia CATV company that had retransmitted to its subscribers several United Artists films and cartoons from three out-of-town channels. Last week the U.S. Supreme Court held 5 to 1 that CATV is free to operate without paying any royalties. Unlike a station or a network, said the court, CATV does not "perform" a copyrighted program, but merely "enhances the viewer's capacity to receive the broadcaster's signals."

Future Fees. The verdict startled not only the losers but also the victors. The CATV industry was so convinced that it would ultimately have to accept some sort of copyright royalty arrangement that a representative five-man committee was already in the process of negotiating a payment formula with TV and film companies.

Such a formula will still probably be required. The court's decision does not prevent Congress from legislating a copyright fee to protect the broadcasters and producing firms, and some CATV leaders publicly concede that this would be fair. Says Irving B. Kahn, president of TelePrompTer Corp., a cable franchise holder in New York City and Los Angeles: "We're not looking to be freeloaders. We still have an obligation to knock out a sensible and fair solution to the copyright problem." But the Supreme Court has strengthened the CATV bargaining position when negotiations resume. The cable owners are now no longer threatened with a demand for retroactive payments, and future fees might well be less onerous than CATV had expected. One possible settlement scheme: each CATV firm would contribute 2% or, so of its gross into a pool to be divided annually by the copyright-holding film studios and networks.

Wire Machines. So far, CATV services about 6% of U.S. set owners--10 million or so Americans in 2,400 communities. But industry experts calculate that half of the U.S. TV homes will be wired in by 1972 and 90% by 1980. One reason for the growth--apart from the ghost-free studio-quality reception of what may eventually total 30 VHP and UHF channels--is that CATV in some markets offers its own programming on unused channels. Typical example: a cable firm might display a clock for an instant time check on one channel, and carry running weather forecasts, news and stock market reports on others. In Athens, Tenn., CATV covers local city and county council meetings and high school sports events. A few of the more enterprising CATV outfits are even programming old movies and peddling commercial time.

CATV's next move could well be into first-run movies, opera or theater from Manhattan and sports events that are blacked out in some communities. All of this would add up to another anathema of the broadcast industry--pay television. But broadcasters know a snow-free screen when they see it. CBS, NBC and such large station groups as Cox, Westinghouse, Time-Life and Storer have all moved into the CATV business. As a consequence, about 30% of the nation's operating cable systems are owned by conventional broadcasters.

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