Late last week, the Radio Music License Committee (RMLC) learned that RMLC-represented stations were awarded a more-than-60% discount off of the SESAC radio station license rate card. The substantial fee reduction applies for the license period January 1, 2016 through December 31, 2018.
The RMLC points out that SESAC had offered stations that chose not to arbitrate only a 5% discount. “In contrast, many of the RMLC-Represented Stations that chose to participate in the arbitration, and that overpaid SESAC on an interim basis since 2016, will now receive a combined credit worth tens of millions of dollars,” the RMLC says.
The RMLC continues, “The arbitrators’ decision is a significant favorable step in the right direction for the radio industry, bringing SESAC’s license fees and rate structure more into line with the rate formulas used by ASCAP and BMI. The percentage-of-revenue license structure is an improvement over SESAC’s long-criticized rate card.”
As the RMLC notes, highlights of the decision include:
- For the first time ever, the SESAC license agreement will transition to a percentage of revenue license structure. Rather than relying on SESAC’s rate card, the arbitration panel determined that SESAC’s blanket fee for the 2016-18 license period should be set at 0.2557% of the same net revenue reported to ASCAP and BMI.
- SESAC will continue to maintain its so-called All-Talk Amendment at an even greater discount of 5%. This will enable eligible non-music-format stations to receive an increased discount from the SESAC blanket license rate. And it remains the case that this license form does not require the radio operator to file any music usage reports.
- Unlike the ASCAP and BMI licenses, SESAC’s license will not contain a minimum fee.
- For the first time ever, the SESAC license structure will transition from 3 separate agreements to a unitary license that will include coverage for over-the-air, HD multicasting and streaming. This demonstrates yet another similarity with the ASCAP and BMI license forms.
- The arbitrators’ decision is retroactive to January 1, 2016; RMLC-Represented Stations that have paid SESAC interim license fees at 2015 rates will receive a credit for payments exceeding the now-final rates.
But, it is the RMLC’s contention that SESAC is being “highly misleading” in its claim that the arbitrators’ decision represents a substantial premium over the rate that ASCAP is now offering stations as a result of the recent RMLC-ASCAP negotiations.
“The outcome is nowhere near the status quo result SESAC sought,” RMLC says.
Asked for comment, the RMLC’s Co-Chairmen, Ed Christian and John VerStandig, said in a joint statement, “Binding rate arbitration for SESAC was a giant first step for the industry. The arbitration decision reported here constitutes a significant correction in the level of SESAC’s fees and many RMLC-represented stations will now experience substantial financial relief in the form of fee credits dating back to the beginning of 2016 (totaling tens of millions of dollars across the industry by our estimates). The RMLC intends to continue to defend and protect the interests of its members at the next arbitration (for the 2019-22 period), which is right around the corner.”
For its part, SESAC Chairman/CEO John Josephson said, “While we believe that the value of our music substantially exceeds the amount of the award and the nature of the arbitration process made it inevitable that we would see a reduction in our fees for terrestrial radio, the panel’s decision is a resounding affirmation of the fact that ASCAP rates in radio do not reflect fair market value. We are pleased to create a benchmark that we hope will benefit all songwriters and publishers.”
Josephson added that, in SESAC’s view, “Songwriters are amongst the most heavily regulated small businesspeople in the United States, and this agreement marks an important step in SESAC’s ongoing effort to assure that they receive fair compensation for their works.”
The arbitration was the result of longstanding antitrust litigation instigated by the RMLC against SESAC in 2012. The matter was settled in 2015 on the basis that SESAC would agree to have its license fees determined by binding rate adjudication for the next 20 years. The initial arbitration concluded in May of this year.
The costs SESAC incurred in connection with the arbitration proceeding, as well as the one-time adjustment in its radio license fees from the date of the award retroactive to Jan. 1, 2016, will be funded by SESAC’s shareholders, and not by its affiliated songwriters and publishers, the music licensing organization said.
The RMLC was represented in the arbitration proceeding by lead counsel Kenneth Steinthal and his team at the firm of King & Spalding.
The firm also represents the RMLC in ongoing negotiations with BMI.
