SESAC Suit Settled

Props to Bill Velez for striking a good deal for the radio industry!

Bill Velez and the gang at the Radio Music License Committee (RMLC) have struck again. Having targeted SESAC in an antitrust suit in 2012, they have now used the leverage of that suit to gain a settlement with SESAC that should prove extremely beneficial to radio broadcasters.

Under Bill's able and dedicated leadership, RMLC has certainly fulfilled its mission to "achieve fair and reasonable license fees with the music licensing organizations (such as ASCAP and BMI) on behalf of radio stations." In a settlement announced on July 23, 2015 the two organizations seem to have achieved significant certainty surrounding the SESAC radio licenses for years to come. The full Settlement Agreement is 33 pages of legal jargon; that's why we're happy that the press release hits the high points - and makes it evident that radio stations are not only getting certainty out of this deal but also relief on some key aspects of the SESAC licensing system that have frustrated broadcasters for years.

Among the most interesting aspects of the settlement are (with my commentary in parenthesis):

• SESAC's license fees will be subject to determination by a third-party arbitration panel if the two sides cannot reach agreement on reasonable fees. (This voluntary resort to third-party resolution of differences is different from the judicial oversight imposed on ASCAP and BMI by a decades-old court order. Still, the RMLC approach should provide a significant backstop against attempts by SESAC to increase royalty rates by an unreasonable amount.)
• SESAC's rates will be frozen at existing 2015 levels, with no further rate changes until the parties' negotiations or arbitration are concluded covering rates for the license term 2016 through 2018. (Bottom line: No rate increase in the near term!)
• SESAC will continue to offer its existing All-Talk Amendment discount of 75%. (This has been a cornerstone of the ASCAP/BMI agreements as well and is necessary to ensure that talk/news/sports radio pay royalties that are reasonably proportional to their uses of copyrighted music.)
• SESAC will enhance its online repertory search offerings in order to support more user-friendly identification of SESAC works. (This is intended to resolve a key complaint about SESAC and one of the motivating factors for RMLC's lawsuit: historically, SESAC's repertoire has been so hidden that it was impossible to know what music was in fact subject to SESAC licensing. This has be a vexing problem for all broadcasters, and especially talk/news/sports stations that make very limited use of music.)
• The scope of rights to be covered under future SESAC licenses will mirror the coverage that traditional operators currently enjoy with ASCAP and BMI. Moreover, SESAC is committing to consolidate (as of 2016) its licensing structure. As matters now stand, you need three separate SESAC licenses to cover, respectively, over-the-air, HD radio and streaming transmissions. Starting in 2016, new SESAC licenses will cover all three in a single license, like ASCAP and BMI licenses already do.)
• The RMLC will be reimbursed by SESAC for the legal fees it incurred in prosecuting the antitrust case against SESAC. (This is not small potatoes. According to the Settlement Agreement itself, the RMLC will be reimbursed $3,564,087.39. That they were willing to put themselves out there to that extent demonstrates that the RMLC really does have the radio industry's best interests at heart.).

Coming on the heels of the recent settlement of the TVMLC/SESAC lawsuit, the settlement negotiated by RMLC means that SESAC, like ASCAP and BMI, will now, at last, be subject to some significant independent oversight with regard to all broadcast media. As I opined in a post last year regarding the DOJ's (still pending) review of the ASCAP and BMI Consent Decrees, the court-imposed constraints on ASCAP and BMI have greatly benefitted the broadcast industry by keeping royalty fees at a more or less reasonable level. Radio and television broadcasters should realize the same benefits from the SESAC settlements as well.