The Radio Music License Committee (“RMLC”) has announced terms of a settlement agreement that brings an end to almost three years of antitrust litigation commenced by the RMLC against SESAC. This agreement is related to the public performance by radio stations of musical works in the SESAC repertory.
The settlement is historic insofar as it represents the first time in SESAC’s 85-year history with radio broadcasters that the performing right organization’s license fees will be subject to determination by a third-party arbitration panel. The highlights of the settlement include:
- In the absence of a voluntary agreement on industry rates, the parties will participate in binding arbitration to set reasonable license fees to be offered the radio industry through the RMLC. The binding arbitration period will encompass 22 years commencing 2016 and no historic SESAC rates may receive precedential value.
- 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.
- SESAC will continue to offer its existing All-Talk Amendment discount of 75 percent.
- SESAC will refrain from pursuing pending audit claims or instigating new audits.
- The RMLC will be reimbursed by SESAC for the legal fees it incurred in prosecuting the antitrust case against SESAC.
- The scope of rights to be covered under future SESAC licenses will mirror the coverage that traditional operators currently enjoy with SESAC’s competitors (ASCAP and BMI), and SESAC commits to consolidating (as of 2016) its current three separate license structure for over-the-air, HD radio and streaming into a single license.
- SESAC’s writer and publisher affiliates will have greater ability to license works directly to radio station operators.
- In terms of pressing copyright infringement claims against non-licensed stations, SESAC will honor more stringent notice requirements.
- SESAC will enhance its online repertory search offerings in order to support more user-friendly identification of SESAC works.
- SESAC will facilitate a process that will enable the RMLC to achieve funding to support the cost of future arbitrations.
The immediate impact of this settlement is that, pending resolution of license fees effective as of 2016, stations will not have exposure to further SESAC rate increases and the industry now has the opportunity to obtain sustained SESAC fee relief. Stations wishing to avail themselves of the benefits of the settlement will need to execute an authorization form [to be mailed out shortly.
In announcing the agreement, RMLC Chairman Ed Christian said, “Litigation is always a last resort, but the RMLC felt compelled to file this lawsuit in order to impose some rate setting parameters upon SESAC that would mirror the antitrust consent decree process that has been in place with ASCAP and BMI for decades and that has achieved equitable license fees for the industry.
Echoing this sentiment, the RMLC’s Vice-Chairman, John VerStandig, stated “This settlement effectively bars SESAC from arbitrarily seeking unreasonably high rates from a radio operator at the risk of copyright infringement exposure. The process of arriving at reasonable fees now agreed to eliminates that exposure.”
Christian further noted that “the RMLC received excellent representation in its antitrust action from lead counsel Margaret Zwisler and her team at the Washington, DC firm of Latham & Watkins. The RMLC’s longstanding music licensing counsel, Bruce Rich, of the New York City firm of Weil, Gotshal & Manges LLP, acted as settlement agent to negotiate the final terms of the settlement.”