How we got here...
In ASCAP’s early days, composers had to “qualify” for membership in ASCAP by establishing themselves as songwriters or by being represented by a publisher member. Since ASCAP was the only performing rights organization (“PRO”), its member publishers and composers had significant control over who could profit by writing music for public performance, and since ASCAP was the only significant source of music, ASCAP had tremendous leverage in licensing negotiations with users. ASCAP’s aggressive use of this leverage led the United States Department of Justice (“DOJ”) to commence antitrust actions against ASCAP beginning in the 1930s.
First, television developed as a commercial medium, and ASCAP began licensing radio broadcasters, who were the owners of the first television stations, to perform music in their television programming.
Second, ASCAP’s licensing practices concerning motion picture theater exhibitors were declared unlawful. ASCAP had begun licensing motion picture theater exhibitors in the 1920s during the “silent movie” era, when the only music performed in a theater was played live (such as by a piano player). Because theaters did not know in advance what music was going to be played, it made sense to cover these performances under a blanket license in order to avoid any question of copyright liability. Even after the creation of “talking pictures,” in which music was pre-recorded with the motion picture, ASCAP continued to license performance rights to the motion picture theater exhibitors. Thus, when a motion picture theater exhibitor received a movie from a producer, all of the rights needed for that exhibitor to display the film came “in the can” of film, except for the music performing rights.
In the 1948 Alden-Rochelle case, the court found that ASCAP was in violation of the Sherman Antitrust Act in its dealings with motion picture theater exhibitors. The Court decided that the practice of withholding performance rights from movie producers in order to require licenses from movie theater exhibitors (who had no control over the music in the films they displayed) was unlawful. ASCAP was enjoined from licensing motion picture theater owners, and ultimately, ASCAP’s members were forced to negotiate directly with movie producers for payment of music performance rights in films shown in movie theaters.
Third, although the 1941 ASCAP Consent Decree prohibited ASCAP from entering into “exclusive” arrangements with composers and publishers, ASCAP had created a series of rules and restrictions on its members that had the effect of granting to ASCAP exclusive rights to license performances of its members’ music.
Among the 1950 revisions to the ASCAP Consent Decree were provisions that strengthened composers’ and broadcasters’ rights. Most notably, the Amended Decree established a “rate court” affording users the protection of automatic licenses and freedom from copyright infringement concerns, as well as the right to ask a court to set “reasonable” fees for ASCAP licenses in the event that ASCAP and such users were unable to reach an agreement.
Interestingly, although the 1950 amended ASCAP Consent Decree (referred to as the “Amended Final Judgment” or “AFJ.”) carried forward the Alden-Rochelle injunction preventing ASCAP from licensing motion picture theater exhibitors, this limitation did not apply to films or other pre-recorded programs broadcast on television. ASCAP was able to convince the government that these limitations should not apply to the new television industry at least in part because television was still a live medium.
While the Voice of Alabama proceeding was pending, ASCAP and the Television Committee reached agreement on ASCAP blanket and per program licenses for the local television industry running from 1954 to 1961. Both blanket and per program license fees under the Voice of Alabama agreement were based on a percentage of revenue, with the per program rate set at more than four times the blanket rate. Since ASCAP music was included in most programs and the per program rate was so high in comparison to the blanket license, virtually no television station used the Voice of Alabama per program license.
Throughout this early period of television, BMI’s share of music was smaller than ASCAP’s share. BMI’s licenses were similar to ASCAP’s but at a lower percentage of revenue rate.
The Second Circuit Court of Appeals reversed this decision, but the United States Supreme Court ruled in 1979, in BMI v. CBS, that the blanket license was not a “per se” antitrust violation and sent the case back to the lower courts. The appeals court this time determined that CBS had failed to prove an antitrust violation.
After the reversal of the District Court’s decision in the Buffalo Broadcasting antitrust proceeding, the Television Committee commenced a proceeding in 1985 before the ASCAP rate court to establish reasonable ASCAP blanket and per program license fees for the local television industry. Specifically, the Committee sought fees for a local television blanket license priced at a fixed dollar amount (rather than under the percentage of station revenues structure of prior ASCAP-local television station blanket licenses); a sizeable reduction in overall industry license fees; and a “meaningful” per program license.
In 1993, Magistrate Judge Dolinger ruled in the Buffalo Broadcasting rate proceeding that stations were entitled to a blanket license that was not based on revenue. He set a fixed, annual industry-wide fee that established fees at a level significantly below that of the Shenandoah license and established a per program rate structure that allowed broadcasters, for the first time in history, to subscribe to an alternative form of license. While appeal of this matter was pending, ASCAP and the Television Committee negotiated the terms of blanket and per program license agreements that were based largely on Magistrate Judge Dolinger’s decision. These licenses covered the period 1985 through 1997.
In 1994, the All-Industry Committee changed it’s name to the Television Music License Committee.
Current Status of Local Television Industry Licenses
In April 1998, the local television industry’s ASCAP blanket and per program licenses expired, and after failed negotiations, stations commenced a rate court proceeding. In November 2004, just prior to the commencement of trial, ASCAP and the TVMLC reached a negotiated settlement for local television station licenses for the years from 1998 through 2009. Under that agreement, the ASCAP blanket fees remained at the industry interim annual license rate of $98 million for the period from January 1, 1998 through November 30, 2004 and were reduced to an annual fee of $85 million beginning in December of 2004 through December 2005. The agreement provided that blanket fees for 2006 through 2009 were to be adjusted at the rate of inflation capped at 3% per year. These new licenses included copyright coverage for television station digital signals as well as limited copyright clearance for music used on a station’s website.
In October 2009 ASCAP and the TVMLC began negotiations on license fees and terms for a final license effective for the period beginning January 1, 2010. In December 2011, TVMLC filed for an ASCAP rate court proceeding to determine ASCAP license fees for the period beginning in January of 2010 through December of 2016. In June of 2012, ASCAP and TVMLC reached agreement on licenses and fees for the period from 2010-2016. Blanket fees for 2010 and 2011 were set at the interim rate of $94.3 million and per program fees were also finalized at the interim level for those two years.
Beginning in 2012, ASCAP industry wide blanket fees were reduced to $91.5 million (a 3% reduction from 2011) for 2012-2014 and at $92 million for 2015 and 2016. Per program fees for those years were also revised downward based on a reduction in the per program multiplier factor, a key ingredient in the formula used to determine per program fees.
Two other critical elements were included in these licenses. The first broadened the coverage of the licenses by including all public performances broadcast on local television station channels (including multicast), streamed on station-affiliated websites or delivered as part of programming supplied by stations via mobile, wireless or any other digital platform on a through-to-the-audience basis. The second was an agreement to provide for an Alternative Blanket License for local television beginning in June of 2015. This ABL license provides stations with the opportunity to reduce ASCAP blanket fees by direct or source licensing individual performances rather than having to clear all of the performances in a program in order to get any credit against the ASCAP license.
The ASCAP licenses expired December 31, 2016 and are currently being negotiated.
In 2002, the TVMLC reached a negotiated agreement with BMI on final blanket and per program license fees covering the period April 1999 though December 2004. In November of 2009, after several years of failed negotiations, TVMLC filed for a rate court proceeding against BMI. In January of 2013, prior to the beginning of the rate court proceeding, BMI and TVMLC reached a settlement for license fees for the 2005-2017 period.
Interim blanket fees of $85.6 million and per program fees for the interim period from 2005-2012 became final. Beginning in 2013, industry wide blanket fees were reduced to $78.650 million and will remain at that level through 2017.
Per program fees were also significantly reduced beginning in 2013. First, the per program base fee which had been set at the ASCAP blanket fee level ($91.5 million for 2012) would be set at the BMI blanket fee level of $78.7 million. In addition, the formula was changed to further reduce BMI per program fees and could result in a 20% reduction in these per program fees.
In 2002, while an arbitration between SESAC and TVMLC was pending, the parties reached agreement on final SESAC blanket license fees for the local television industry covering the period 2001 through 2004. After expiration of this industry license on December 31, 2004, SESAC exercised its right to arbitrate reasonable industry-wide fees for 2005-2007. After a lengthy hearing, the arbitrators set industry fees for those years and also provided for the first SESAC per program license. Another first was the arbitrators’ decision that the industry fee would be allocated among stations based partly on the amount of SESAC music used by individual stations. Both parties favored such a music use based allocation proposal, although they disagreed on how the formula should be applied.
At the end of 2007, the SESAC industry licenses expired. SESAC and TVMLC were unable to reach an agreement on terms for a new license, and SESAC elected to negotiate licenses with individual stations and groups rather than continue to negotiate with TVMLC. Unlike ASCAP and BMI, SESAC does not currently operate under a consent decree with the federal government so stations do not have the right to automatic licenses upon request, interim licenses, or a rate court proceeding to determine reasonable fees.
In December 2009, a group of broadcasters commenced an antitrust class action lawsuit against SESAC in federal court in New York, charging that local television stations were being overcharged for SESAC music in their programming as a result of anticompetitive practices by SESAC. In February 2015 the court overseeing the lawsuit approved a settlement that provides local stations with much of the relief found in the ASCAP and BMI consent decrees. The settlement, which covers the period 2016-2035, provides stations with protection against copyright infringement lawsuits while license fees and terms are being negotiated, calls for interim fees while negotiations are ongoing, and requires that SESAC offer a meaningful per program license beginning in 2016. Although the settlement does not include federal court determinations of reasonable fees, it does establish the right to binding arbitration if TVMLC and SESAC cannot agree on license fees and terms. Fees established in arbitration will be binding for four-year periods. The settlement also netted the TV Committee $58 million, of which $42.5 million (paid to stations first quarter 2015) was to make up for overpayments stations made to SESAC.
The Committee now has industry-wide blanket and per program license agreements in effect with SESAC through December 31, 2019 that are available on our website.