In the last few weeks, the press has been buzzing with speculation that the Department of Justice is moving toward suggesting changes in the antitrust consent decrees that govern the operations of ASCAP and BMI.  Those consent decrees, which have been in place since the 1940s, among other things require that these Performing Rights Organizations treat all songwriters alike in distributions based on how often their songs are played, and that they treat all services alike with users that provide the same kind of service all paying the same rate structure.  Rates are also reviewed by a court with oversight over the decrees when the PROs and music services cannot come to a voluntary agreement to arrive at reasonable rates.  The decrees have also been read to mean that songwriters, once part of the ASCAP or BMI collective, cannot withdraw with respect to certain services and negotiate with those services themselves while still remaining part of the collective with respect to other music users (see, e.g., our articles here and here about the desires of certain publishing companies to withdraw from these PROs to negotiate directly with certain digital services while still remaining in these PROs for licensing broadcasting and retail music users).

With this talk of reform of the consent decrees, Congress, particularly the Senate Judiciary Committee under the leadership of Senator Lindsey Graham, has reportedly stepped in, telling DOJ not to move to change the consent decrees without giving Congress the chance to intervene and devise a replacement system.  In fact, under the recently passed Music Modernization Act, notice to Congress is required before the DOJ acts.  Already, both the PROs and user’s groups are staking out sides.  What are they asking for?
Continue Reading ASCAP and BMI Consent Decrees Under Review – How Performing Rights Organizations, Antitrust Policy and Statutory Licenses Could Create a Controversy

RMLC, the organization that represents most commercial radio stations in the US in negotiating music license agreements for the public performance of musical compositions, has filed an antitrust lawsuit against GMR (Global Music Rights). GMR is a new performing rights organization (PRO), founded by music industry heavyweight Irving Azoff.  As we wrote here and here, GMR has signed agreements to represent songs from the catalogs of many prominent songwriters, including Adele, Taylor Swift, some of the Beatles, Madonna, Jay Z and many other big names.  RMLC (the Radio Music License Committee) is asking in its lawsuit that, initially, GMR be enjoined from licensing its catalog of songs for more than a rate that represents the pro rata share of its catalog to those of the other PROs while its broader antitrust action is litigated to establish an appropriate mechanism for determining those rates in the future.

Currently, the two largest PROs, ASCAP and BMI, are subject to antitrust consent decrees that govern their operations – decrees that the Department of Justice recently refused to substantially modify at the request of these groups (see our articles here and here.).  SESAC recently entered into a settlement of with RMLC, following an antitrust action similar to the one filed Friday against GMR, imposing restraints on SESAC’s ability to unilaterally impose its rates on radio stations, requiring instead that such rates be set by arbitrators if they cannot be voluntarily negotiated (see our articles here and here).  The songs in the GMR catalog are covered by ASCAP, BMI and SESAC licenses through the term of the current licenses with those organizations, but those licenses for radio all expire this year (see our article here).  Thus, RMLC argues that, if there is no injunction, starting January 1, 2017, a radio station will either be forced to pay whatever rates GMR demands for songs that are being withdrawn from the catalogs of ASCAP, BMI and SESAC, or risk being sued for copyright infringement (and potential damages of up to $150,000 per infringement). 
Continue Reading RMLC Files Antitrust Lawsuit Against GMR And Seeks to Enjoin New Music License Fees on Radio Stations

SESAC was, until recently, the only one of the three major performing rights organizations (PROs) that was not subject to an antitrust consent decree – meaning that it could set the rates that it wanted without any oversight by any court or other judicial body. For practical purposes, that ended when the radio and television industries separately sued SESAC claiming antitrust violations. Both the radio and TV industries felt that the SESAC royalties were too high in relation to those charged by ASCAP and BMI given the far greater amount of music controlled by these two larger PROs. As we wrote here (television) and here (radio), both antitrust cases ended with settlements where SESAC agreed that its rates would be subject to review by an arbitration panel to assure their reasonableness, if voluntary negotiations between the groups representing the industries and SESAC were not successful in arriving at mutually agreeable rates. So far, it appears that the rate-setting process for radio and TV are going in different directions.

The TV Music License Committee and SESAC have announced that they have reached an agreement in principle as to rates for the TV industry. See the press release here. While the agreement has not been finalized or made public, if negotiations of the final documents are successful, the TV industry and SESAC appear to avoid having their rates set by the arbitration process. So far, that does not seem to be the case for the radio industry.
Continue Reading Update on the SESAC Royalty Arbitration Proceedings with the Radio and TV Industries

November is another of those months with no regular filing obligations – no EEO public file and Mid-Term reports, no noncommercial ownership reports, and no quarterly issues programs lists or children’s television reports. EEO public file reports and noncommercial station ownership reports, being tied to renewal dates, will be back in December. See our Broadcaster’s Calendar, here, for information about the states where stations have such obligations. For all commercial radio and TV stations, November also means that they should be completing their Biennial Ownership Reports, which are due on December 2 (extended from the November 1 due date by FCC action noted, see our article here). Those reports submit a snapshot of broadcast station ownership as of October 1, so they can be filed at any time in November.

The end of November also brings the effective date of the requirement that TV stations convert the text of their emergency alerts run in entertainment programs (like weather alerts) into speech, with that audio to be broadcast on the station’s SAP channel. See our articles here and here on that requirement.
Continue Reading November Regulatory Dates for Broadcasters – Incentive Auction and Biennial Ownership Report Preparation, Reg Fee Comments, Music Issues, Text to Speech Emergency Information and More

This week, many radio stations received a letter from SESAC, asking the stations to renew their last SESAC agreement for three years at a rate 5% lower than the rate at which they are currently paying. Sounds like a deal? But is there a catch? The SESAC letter makes clear that, by renewing the current agreement and accepting the discount, the station is agreeing that it will not be a part of any attempt by the Radio Music License Committee (“RMLC”) to negotiate a rate with SESAC. The SESAC letter has drawn a strong response from the RMLC in a letter dated today, signed by Ed Christian from Saga Communications, the Chairman of RMLC, suggesting that stations not sign the SESAC renewal requests. What is this all about?

As we wrote several months ago, SESAC and the RMLC recently settled antitrust litigation where the RMLC argued that SESAC violated the antitrust laws by charging monopoly pricing for the multiple musical compositions that it bundled together for licensing purposes, and making it virtually impossible for stations to avoid paying these royalties as SESAC did not reveal its entire catalog, and licensed music that was almost impossible to avoid playing (like the jingles in some McDonalds commercials). SESAC agreed to settle the litigation – agreeing to negotiate industry-wide deals with the RMLC, and, if such deals could not be reached through voluntary negotiations, to have its rates set by an arbitration panel. SESAC has never before had its rates subject to oversight as, unlike ASCAP and BMI, SESAC is a for-profit company and is not subject to an antitrust consent decree that includes rate review by a US District Court. Many thought that the RMLC agreement with SESAC would result in a moderation of the SESAC rates. Many broadcasters considered SESAC rates to be too high relative to the fees paid for the much larger ASCAP and BMI catalogs given the limited catalog of music that SESAC licenses. So if SESAC agreed to negotiate rates with the RMLC, why is it now writing letters suggesting that stations not participate in the RMLC negotiations?
Continue Reading Dueling Letters about SESAC Radio Station Royalties – What’s A Station to Do?

Yesterday, it was announced that the Radio Music License Committee (RMLC) settled its lawsuit with SESAC (see the press release here, and the full agreement here), where the RMLC had charged that SESAC’s practices in collecting its music royalties from the radio industry violated the antitrust laws (we wrote about the filing of the lawsuit here). While there was no admission of guilt by SESAC, it did agree that, between now and 2037, it will negotiate royalties with RMLC on an industry wide basis (up to now, SESAC could negotiate on a station-by-station basis). If RMLC and SESAC can’t agree to a royalty, the royalty rate will be set by an arbitrator – and past SESAC royalties would not have any precedential value in such proceedings (broadcasters have contended that past SESAC rates are far more, in comparison to those charged by ASCAP and BMI, then would be warranted based on the percentage of music from SESAC writers that is played on most radio stations). In subjecting SESAC to industry-wide negotiations and potential arbitration, the settlement is very similar to the deal reached in antitrust litigation between SESAC and the TV Music License Committee (about which we wrote here).

The settlement also tracks the structure of RMLC agreements with ASCAP and BMI (see our articles here and here) in that future SESAC licenses will cover broadcasters not only for their over-the-air programming, but also for their Internet streams and their HD channels (which were charged separately by SESAC for many stations). However, the agreement provides that the unitary license should not diminish the total royalties that would have been paid by the industry to SESAC if these rates were negotiated separately.   In other words, the effect of the unitary license is simply administrative convenience – everything is covered by a single license, so each station does not need multiple licenses from SESAC for its normal broadcast activities. However, unlike the ASCAP and BMI agreements, this agreement puts limits on this unified coverage for a broadcaster’s business that is outside the retransmission of the broadcaster’s over-the-air signals, excluding on-demand subscription services (presumably ruling out Rdio, in which Cumulus has an interest, from being covered by the radio license), and also excluding music-intensive custom radio, specifically ruling out Pandora and iHeartRadio from relying on this license for their online services. The agreement also says that other music users that are not primarily radio operators cannot get coverage for these other non-broadcast businesses simply by buying a radio station. What else does the agreement provide?
Continue Reading Radio Music License Committee Settles Antitrust Suit Against SESAC – What Does it Mean for the Radio Industry?

SESAC is the one major performing rights organization whose rates have not, until now, been subject to judicial review as part of an antitrust consent decree.  Perhaps because of that fact, broadcast stations have often complained about the rates they charge for the music that they license, as there is currently no cap on what SESAC can charge, and there is no requirement that SESAC treat all similar licensees in the same way.  In fact, because of this dissatisfaction, both the TV and Radio Music License Committees have filed antitrust suits against SESAC seeking relief from the rates they charge.  In a settlement announced this past week, the Television Music Licensing Committee has entered into a settlement by which SESAC will pay the TVMLC $58.5 million and agree that, over the next 20 years, SESAC will negotiate license agreements with TVMLC.  Under the agreement, if rates can’t be reached as a result of negotiations, SESAC and the TVMLC would submit to an arbitration process to arrive at the appropriate rates.  The full settlement can be found on the TVMLC website, here

Under the terms of the settlement, commercial TV stations (except for those owned by Univision, which appear to have opted out of the class of stations covered by the TVMLC settlement) will have their SESAC obligations covered for the rest of this year and next, including website SESAC music use and use in digital multichannel programming.  In 2015, TVMLC will negotiate with SESAC over rates for the period from 2016-2019.  If no rates are agreed to by the parties, an arbitration panel will set the rates.  The same process will continue for 4 year periods through 2035, as long as ASCAP and BMI are also subject to either rate court or arbitration review of the rates charged by those organizations.  While the Department of Justice is reviewing the ASCAP and BMI consent decrees that require rate court review of royalty rates charged by these groups (see our article here), it appears that they are not asking for an end to all rate review.  Instead, they are asking that the review be done by an arbitration panel, not the US District Court that currently reviews such rates.  So it would appear likely that the “out” in the deal would not give SESAC an escape from this agreement to be bound by arbitration any time soon.
Continue Reading TV Music Licensing Committee Settles Antitrust Action with SESAC over Music Licensing Rates and Terms – Radio Watches and Wonders if It Can Get a Similar Deal

The House of Representatives Judiciary Committee last week finished its second hearing on music licensing (written witness statements and a link to the webcast can be found here).  Congressional hearings usually are not in-depth proceedings looking to establish detailed facts as done in a hearing in a court proceeding.  Instead, they are formalized proceedings where parties get to make their canned statements setting out positions on issues.  Congressional representatives themselves make statements setting out their positions on the issues, and ask pointed questions to selected witnesses to reinforce those positions.  Minds are rarely changed, and the truly undecided are rarely illuminated on the issues.  But the hearings do serve to set out the issues that are going to be considered by the Committee in ultimately crafting legislation.  And last week’s hearing did just that – highlighting the issues likely to be considered in legislation promised by the Committee Chair, Representative Goodlatte, who promised an omnibus bill on music licensing, dubbed the “Music Bus,” to address the many issues on the table.

Note that any bill that is ultimately introduced will address many seemingly minor issues – details of process and procedure that don’t make the headlines.  But the big issues are the ones that will cause the most industry argument before the lawyers work out the details.  It’s also important to note that it is very late in the legislative calendar right now, with the Senate not putting the same emphasis on copyright issues as it the House.  With elections coming up in the Fall, and scheduled upcoming summer recess, Congress has much must-pass legislation that will fill up their legislative days before the next Congress is sworn in in January.  The start of a new Congress means that all legislation will have a fresh start.  Thus, any Omnibus bill that is introduced this year will most likely not become law, but instead will set the agenda for discussions for next year in the new Congress.  Certainly, there may be more limited bills that sponsors may try to get stuck on other legislation that must move before the end of the Congressional session, so interested parties will remain vigilant during the final days of this session of Congress.  But what are the issues that are on the table for inclusion in any Music Bus?
Continue Reading The Summer of Copyright, Part 2 – The House Judiciary Committee Plans Omnibus Music Licensing Bill – The “Music Bus”