John Josephson, chairman and CEO of SESAC.
Performing rights organization SESAC has settled the antitrust litigation brought against it by the Radio Music Licensing Committee, the commercial radio industry group which alleged that the PRO violated provisions (specifically, sections one and two) of the Sherman Act and of the Clayton Act (section 16).
In settling the lawsuit, SESAC is agreeing to most of the actions that the RMLC was seeking in its suit for injunctive relief. In the Federal court filing with the Eastern District of Pennsylvania, the RMLC wanted SESAC to negotiate with the radio organization, instead of forcing individual radio stations to cut separate deals with the PRO; to submit to a judicial rate-setting procedure; to provide better transparency on what songs are in the SESAC catalog; and called for per-program and adjustable rate licenses which would make direct licenses with songwriters more feasible.
The RMLC said it was seeking injunctive relief, not monitory damages, though it did seek reimbursement for legal fees.
As part of the settlement, SESAC is paying $3.5 million to cover RMLC’s legal costs and has agreed that if the two parties couldn’t come to a deal on rates then, beginning in 2016, an arbitration process would be enacted. Moreover, that arbitration process would exist for the next 22 years, through 2037, and past rates paid to SESAC will not be considered precedential.
In addition, 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; and it will enhance its online repertoire search offerings. Moreover, the settlement will give SESAC writers and publishers greater ability to license works directly to radio station operators.
“With this settlement, we’ve secured commercial arbitration for the next 22 years as the basis for setting SESAC’s license fees for commercial radio stations represented by the RMLC,” SESAC chairman and CEO John Josephson said in a statement. “This guarantees a level playing field in establishing the fair market value of our creators’ musical works for the broadcast radio industry… We are confident in our ability to achieve a positive outcome for our affiliated composers and music publishers in radio based on our historical arbitration experience in the local television market with the Television Music License Committee.”
While the RMLC was seeking a rate-setting process and was rewarded with arbitration, this is not the first time that arbitration has been discussed by SESAC and the RMLC. Twice before, between 2008-2010, SESAC raised the possibility of using arbitration, but was rebuffed by the RMLC, which was engaged in negotiations with ASCAP and BMI at the time and looked to wait two years, according to a SESAC spokeswoman.
“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, RMLC Chairman Ed Christian said in a statement.
SESAC, through its spokeswoman, says it engages in rate arbitration with the Television Music Licensing Committee and was pleased with the outcome of its last two arbitration proceedings with that group, adding that the organization welcomes the opportunity to utilize the same mechanism to set rates for the radio industry in the event the parties aren’t able to reach agreement through negotiation.
The RMLC was represented in the lawsuit by the Washington, DC firm of Latham & Watkins while the settlement was handled by the New York City firm of Weil, Gotshal & Manges LLP.
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