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Radio industry settles lawsuit with SESAC performing rights org

The Radio Music License Committee (RMLC), which represents most of the commercial radio stations in the U.S., has reached a settlement in its three-year-old lawsuit against SESAC, a performing rights organization which represent 400,000 songs on behalf of 30,000 members.

The lawsuit, filed in the U.S. District Court for the Eastern District of Pennsylvania in October 2012, alleged anticompetitive behavior that allowed SESAC to charge radio stations monopoly prices to publicly perform musical works in the SESAC repertory.

The scope of rights to be covered by the settlement will mirror the coverage that radio operators currently have with the leading performance rights organizations, ASCAP and BMI.

The settlement also establishes a rate-making procedure comparable to those required of ASCAP and BMI, which are subject to consent decrees established with the Department of Justice. Those decrees permit music users to apply to federal court to resolve rate disputes the parties cannot resolve voluntarily.

The settlement makes SESAC’s license fees subject to determination by a third-party arbitration panel which would set license fees to be offered the radio industry through the RMLC. This provision was one of the key demands in the RMLC’s lawsuit.

Other terms of the settlement give SESAC’s writer and publisher affiliates greater ability to license works directly to radio station operators.

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.

“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,” said RMLC’s vice-chairman, John VerStandig.

Performance rights fees are a hot topic in Washington. In April, Reps. Jerrold Nadler (D-NY), and Marsha Blackburn (R-TN.) introduced the Fair Play Fair Pay Act, a bill to revamp music performance royalties for terrestrial, satellite, cable and online radio.

The act would create for the first time a terrestrial performance right so that AM/FM radio would have to pay performance royalties. It also would put Sirius/XM and cable music services on the same payment standard as Pandora.

Also in April, Reps. Anna G. Eshoo (D-Calif.) and Marsha Blackburn (R-Tenn.) reintroduced a bill that would keep TV broadcasters who own radio stations from collecting TV retransmission consent payments if their radio stations don’t pay performance royalties.

The National Association of Broadcasters counters with the Local Radio Freedom Act, supported by a long list of lawmakers which would block any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air.

Outside the halls of Congress, the Copyright Royalty Board is also reviewing royalty rates for streaming music and the Department of Justice is considering altering the antitrust consent decrees that govern the Performing Rights Organizations, ASCAP and BMI.