Federal Court Approves Radio Industry Settlement With ASCAP

Story by All Access

Judge DENISE L. COTE, of the Federal District Court for the Southern District of NEW YORK has approved a settlement that ends two years of litigation between the RADIO MUSIC LICENSE COMMITTEE (RMLC) and THE AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS (ASCAP) concerning the fees paid by radio to publicly perform ASCAP's 8.5 million plus musical works through 2016.

The settlement had been agreed upon in DECEMBER (NET NEWS 12/5/11).

The RMLC represents the vast majority of the nation’s radio stations (some 10,000 radio stations) and ASCAP represents some 425,000 songwriter, composer and music publisher members.

Radio had faced a serious challenge in terms of "restoring reasonable license fee levels" during difficult economic times. License fees had increased to some 3% of industry revenues for each of ASCAP and BMI in the post-2008 environment. The settlement approved by the court effectively rolls back annual industry fees payable to ASCAP by more than $80 million for 2012 (as against where they stood at the end of the prior license in 2009) and provides for a return to a revenue-based fee structure at a level of 1.7% of revenue.

In addition, the new agreement covers (at the same 1.7% rate) the range of new media platforms in which the radio industry is increasingly engaged.

The new ASCAP license covers the period JANUARY 1, 2010 through DECEMBER 31, 2016 and includes the following highlights:

* A $75 million industry fee credit against 2010-2011 industry payments, to be credited in annual installments of $15 million each over 2012-2016 (this, in addition to the industry's retention of $40 million in fee reductions that had been ordered by the same Court at the interim fee stage of litigation in calendar year 2010)

* Going forward, for blanket/music format license-reporting stations, a 1.7% of gross revenue fee structure (with simplified revenue reporting), less a standard deduction of 12% for revenue derived from terrestrial/analog and HD multicasting broadcasts and a 25% standard deduction for revenue attributable to new media uses

* Retention of the per program (or program period) license that benefits many talk-formatted stations, with a base fee of 0.2958% of gross revenue, less the same standard deductions

* Expanded rights coverage to accommodate the industry’s developing "new media" platforms related to Internet websites, smart phones, and other wireless devices.

The immediate impact of this settlement was reflected in ASCAP's JANUARY 2012 billing statements that reflected a fee decrease of about 30% for the vast majority of radio stations across the country (at least those stations that were not in arrears to ASCAP). The new ASCAP license forms are expected to be made available to stations next month.

"This is a gratifying result for the radio industry. The new ASCAP license reflects the reality of our industry’s economy and puts the industry back on a sound footing insofar as its licensing relationship with ASCAP is concerned," commented RMLC Chairman ED CHRISTIAN, CEO of SAGA COMMUNICATIONS. "We appreciate the good will which ASCAP has demonstrated in working with our industry to get this resolution."