Lawsuit begun in 2009 could be wrapped up next March. Check your mailbox for more details.
If you’re a full-power TV licensee, in the near future you can expect to be receiving (or you may already have received) a note from the Television Music License Committee (TVMLC) notifying you that a court has preliminarily approved a settlement the Committee has reached with SESAC. You have the option of objecting to the settlement or opting out of it, but if you do neither you’ll be bound by its terms (unless you happen to be Univision or Telefutura, in which case you’re not part of the Settlement Class).
In any event, this is something you should pay attention to. (Spoiler alert: I generally agree with the TVMLC’s assessment that the settlement is “fair and a good result, providing long-term protection” for television broadcasters.)
The settlement represents the near-culmination of a lawsuit brought by a number of broadcasters and funded by the Committee. In 2009, Meredith Corporation, The E.W. Scripps Company, Scripps Media, Inc. and three Hoak Media companies – “individually and on behalf of all other similarly situated local television stations” – sued SESAC. They alleged various violations of federal antitrust law. (Such allegations have previously been raised by radio broadcasters as well. It will be interesting to see what effect, if any, the TVMLC settlement may have on radio’s lawsuit against SESAC.)
Until 2007 the rates and terms for performance, by TV broadcasters, of musical works in the SESAC catalog had been subject to an industry-wide deal. But that deal expired in 2007 and no extension or replacement deal was cut. So since then broadcasters have been left to negotiate individually with SESAC while the litigation chugged on.
But the settlement gives rise to the prospect of avoiding the trial that had been scheduled to start next March. Perhaps more importantly, it could provide television broadcasters with certainty about their royalty obligations to SESAC for the next two decades. It would protect broadcasters from going it alone against SESAC, though that option does remain available to those unsatisfied by any future TVMLC negotiated efforts.
The settlement was first announced on October 15, when the parties filed a copy with the U.S. District Court for the Southern District of New York. They asked the judge to: certify the “settlement class” (i.e., the universe of folks who will be eligible to join in the settlement); preliminarily approve the deal; authorize the parties to notify all members of the settlement class of the terms of the settlement; and set deadlines for those members to object or opt out of the class. The finish line will theoretically be reached next March, when the court will hold a hearing to determine whether the settlement should be finally approved.
You can read the settlement in full here (although at a hefty 86 pages, including attachments, it’s not the easiest read in the world). There are also plenty of settlement-related materials on the TVMLC website. For the Cliffs Notes version, the highlights include:
- Payment by SESAC to the television industry in the amount of $58.5 million. Taking out the lawyer’s cut, that amounts to $42.5 million to be distributed to television stations based on the royalties each station paid during the years 2008-2014. So the good news is that you can expect some money coming your way sometime in 2015.
- The settlement otherwise effects no change to the SESAC rates for the rest of 2014 and 2015. So expect to pay the same amount through the end of next year that you’re paying this year (though, again, you should be getting money back for prior years).
- The TVMLC will resume negotiations with SESAC on behalf of the television industry next year, with an eye toward getting a deal covering the rate period 2016-2020, just like it negotiates on behalf with ASCAP and BMI on behalf of the TV industry as a whole.
- The deal covers performance of musical works on both your main over-the-air channels and your multicast channels and station websites. It also reinstates the “per program” license option which can be helpful to any station that does not, as a conscious choice, use a lot of music.
- You’ll still be able negotiate directly with a SESAC-represented composer for rights on an individualized basis. So, for instance, let’s say you make a conscious effort not to play any copyrighted music on your station. But you happen to carry Boston Red Sox games and you feel obliged to show the eighth inning from Fenway which – for reasons that aren’t obvious to me – involves the crowd singing “Sweet Caroline”, a song penned, of course, by SESAC-repped composer Neil Diamond. Under the terms of the settlement you could conceivably go to Neil Diamond’s people, sign a direct deal with him for a license for that one song (thereby cutting SESAC out of the process). That one-song-only license would not, however, give you any protection if other music happened to slip through onto the air.
What do you have to do vis-à-vis the settlement? The information packet you’ll be receiving (or may already have received) will provide detailed information, including how to object to the terms of the agreement or how to “opt out” entirely (but if you opt out, you’ll be going it alone against SESAC). After any objections and “opt outs” are collected, the District Court will decide whether to give a final stamp of approval.
I can’t tell you what to do. But I can say that on its face, this seems like a positive development for both sides.
SESAC avoids a consent decree like the one imposed decades ago on ASCAP and BMI. That consent decree subjects ASCAP and BMI to the continual oversight of the courts. SESAC dodged that bullet because, when the consent decree was entered back in the 1940s, SESAC was so small that it was not deemed to pose a threat to competition, unlike ASCAP and BMI. While the current SESAC/TVMLC settlement does require court approval, that’s a one and done situation. Once approved, the settlement would not be subject to further judicial oversight, so SESAC would remain free from continual court oversight. SESAC would not be free of oversight entirely, though: If negotiations do not result in an agreement, the parties will move to binding arbitration. (This will be the case through 2035, long past the time that many of you are still working in this field…)
There’s probably an even greater benefit to the broadcasters. Individual television stations, especially those that aren’t network-owned-and-operated or owned by larger corporations, will once again enjoy strength in numbers and strong representation at the negotiating table through TVMLC. The binding arbitration component will afford independent oversight of the process should SESAC refuse to play ball.
While I know that not everybody has historically been 100% happy with the results produced by TVMLC (or its radio counterpart, the RMLC), my experience has shown that, in the long run, these organizations achieve better overall results when negotiating on behalf of the industry. The reinstatement of the per-program option alone should prove beneficial to a number of stations.
So keep your eyes peeled for formal notification of the settlement from the TVMLC and make sure to consult with your attorney if you have any questions about how this will specifically affect your station(s).