June 15, 2000

Good morning, Mr. Chairman. I am Thomas J. Ostertag, General Counsel of the Office of the Commissioner of Baseball. I appreciate the opportunity to appear before you and your Subcommittee to discuss the intellectual property issues related to the transmission of copyrighted programming over the Internet. I am presenting this testimony on behalf of the thirty clubs engaged in the sport of Major League Baseball ("Baseball"). However, the views that I express are shared by other professional and collegiate sports leagues that provide the American public with a vast array of sports programming. This includes the National Football League, the National Basketball Association, the National Hockey League, The National Collegiate Athletic Association, Major League Soccer, the PGA TOUR and the National Association for Stock Car Auto Racing.

Baseball agrees with what we believe are the Subcommittee’s objectives – to protect the rights of copyright owners in a digital world while promoting the development of the Internet as a secure, efficient and reliable means for the delivery of a wide variety of copyrighted works to the American public. To achieve those objectives, we believe that:

Congress should not extend government-mandated compulsory licensing to the retransmission of video programming over the Internet.

Congress should not weaken copyright laws that prevent the unauthorized reproduction and transmission of programs over the Internet, regardless of whether those programs originate on free over-the-air television or another communications medium.

Like other sports interests, Baseball has a long history of dealing with new communications technologies and increasing the amount of sports programming available to the American public. We have successfully negotiated licensing agreements with numerous broadcast stations, broadcast networks, national and regional cable television networks, cable systems and satellite distributors, both C-band and DBS. Virtually every one of Baseball’s more than 2400 games is televised each year – often by more than one source. DBS subscribers, for example, now have access to an average of 7-8 different telecasts of Major League Baseball games each day during the baseball season. All of these licensing arrangements are the product of arms-length transactions freely negotiated in the marketplace between willing licensors and willing licensees.

I am confident that we will enter into similar licensing agreements for the transmission of Baseball telecasts over the Internet. These arrangements will benefit not only Baseball and its Internet licensees but Baseball fans as well. Indeed, we already have licensed a webcaster to stream radio broadcasts of our games. Millions of fans with access to the World Wide Web thus are able to listen on Baseball’s Web Site to the radio broadcast of almost any baseball game that is played by any club throughout the season – as well as to receive an enormous amount of Baseball information, news, statistics and video highlights.

Our efforts to make use of the Internet have been very popular with our fans. Currently, the Baseball Web Site receives more than 2 million hits per day – up from fewer than one million hits just one year ago. But we do not intend to become complacent with that success. Our clubs recently voted to centralize in Baseball all Internet telecasting rights. We are actively exploring opportunities to exercise those rights in a viable manner – again, through a variety of marketplace negotiated agreements, with the goal of expanding the availability of Baseball to our fans. We believe that the end product of those negotiations, which we hope to conclude either this season or before the start of next season, will be to provide our fans with a wealth of exciting and entertaining options to experience Baseball.

Some have urged Congress to afford webcasters (like cable operators and satellite carriers before them) a compulsory license to retransmit broadcast television programming. The Internet, however, is different. Unlike cable and satellite, the Internet permits digital transmissions that can be instantaneously reproduced, stored, altered, compiled and further retransmitted throughout the world. A government-mandated Internet compulsory license is the antithesis of a free market. It would undermine Baseball’s local, national and international contractual relationships; would impair Baseball’s ability to pursue successfully legitimate business opportunities both on and off the Web; and inevitably would decrease the incentives for Baseball to license its telecasts to free over-the-air television.

In this regard, Baseball strongly supports the recent decision of a federal court to enjoin iCraveTV from retransmitting broadcast television programming over the Internet, without the consent of affected copyright owners. The court correctly concluded that iCraveTV’s activities are contrary to U.S. copyright laws. Congress should be vigilant to ensure that it does not weaken those laws that are critical to encouraging Baseball and other program owners from working with legitimate Internet companies to provide consumers with a vast array of programming choices.

Thank you, Mr. Chairman, for the opportunity to express Baseball’s views on issues related to the delivery of programming over the Internet. Baseball is embracing the digital world. Our goal is to satisfy the demands of our consumers, the fans who have an unbounded love for the game. We are working diligently to develop strategic relationships that will enable us to provide our games to our fans, wherever they are located. But these relationships should be developed in the free market and not on terms dictated by the government. We look forward to working with you and your Subcommittee in this area, which is critically important to Baseball and the other sports interests.