New Contracts Are Music To Station Budgets

I get really excited when I find out that an expense is less than I budgeted. Chances are your TV stations are receiving that kind of news as a result of the recent settlement reached between the American Society of Composers, Authors and Publishers (ASCAP) and the Television Music License Committee (TMLC).

The agreement addresses fees payable by U.S. television stations for a license to publicly perform ASCAP’s more than 8.5 million musical works from Jan. 1, 2010, to Dec. 31, 2016. MFM asked Alixandra Steier, TMLC director, broadcaster relations, and Willard Hoyt, TMLC executive director, to update our members on how the agreement will affect their bottom lines. Since TMLC represents most of the country’s TV stations, I thought you be interested in hearing what they shared during last week’s Distance Learning Seminar.

Lower Fees for 2012-16

Most important for stations struggling with rising costs and a challenging ad sales market, the agreement reduces the fees paid by station to ASCAP for both blanket and per-program license (PPL) fees for 2012 through 2016.

The agreement also finalizes the interim fees stations had paid for 2010 and 2011, whether they elected the blanket or the PPL.

Under the agreement, the interim blanket fee of $94.3 million per year drops by 3% to $91.5 million in 2012 and will remain at that level for 2013 and 2014. For 2015 and 2016, the industry blanket fee will increase 0.5% to $92 million, which is also a savings over the interim fees stations have been paying to ASCAP.

“The immediate good news is that you don’t have to pay any additional fees for 2010 and 2011 and you will receive six credits for each of the six months of 2012 that have already been paid to reflect the lower license fees for 2012,” TMLC’s Aix Steier reported. Stations should see these credits and the lower fees for the remainder of 2012 on the July-December statements, which went out in the mail on June 15, according to Steier.

Stations on the PPL are also entitled to a reduction. “In addition to the lower blanket license fee, the per program multiplier used for calculating PPL fees will be reduced from 1.62 to 1.45 for 2012-16,” noted Steier. “Since most stations pay these fees through a per program provider, such as MRI [Music Reports Inc.] and Bill Slantz [the W.G. Slantz Co.], the credits for 2012 and lower fees going forward will be reflected in the statements and invoices received by their customers.”

Digital Performance Rights

The other major outcome in TMLC’s settlement agreement with ASCAP pertains to music rights for digital media. As Steier said: “The new licenses will cover all broadcasts by local stations, including both primary channel broadcasts and those made on [multicast] secondary digital channels.”

She went on to say that the rights also cover, on a “through-to-the-audience” basis, all audio-visual content on station-affiliated websites or delivered as part of programming supplied by stations via mobile, wireless and any other digital platforms. “This applies so long as each entity has an economic relationship to the licensed station. We are working with ASCAP on the specific language of the grant of rights, and the details should be available within the next few weeks,” Steier explained.

Coming in 2015: The Adjustable-Fee Blanket License

TMLC’s Hoyt outlined a new music licensing opportunity that may prompt many stations to look into opting for PPLs. As part of the settlement, ASCAP and the TMLC reached a provisional agreement concerning the timing and availability of an adjustable-fee blanket license (AFBL).

This option has the potential to reduce performance fees by directly negotiating with music content owners, syndicators or networks that do not already clear performance rights for your station.

“The AFBL option is potentially attractive to stations that cannot currently take advantage of the PPL since it will not require them to clear all of the music in a particular program,” Hoyt explained. In addition, each music performance that is direct or source-licensed will earn a station a partial credit against its blanket fee, according to Hoyt.

Hoyt cautioned that establishing the AFBL for local TV is still not a done deal. The option has been delayed pending the outcome of ASCAP’s appeal of another court case against a different music user. If the appellate court in that case rules that ASCAP must offer an AFBL to music users, ASCAP will make an AFBL available to stations with a start date of Jan. 1, 2015. “In the meantime, ASCAP and the TMLC will have to negotiate the rules to implement the license, including station reporting obligations,” Hoyt said.

Steier and Hoyt advised that this is also a good time for stations to look into direct licensing for particular music content. Using the example of music’s integral role in building brand recognition for a station’s news programming, Hoyt said purchasing the license helps to ensure the station won’t need to pay higher fees for that music in the future. “The potential savings and security of knowing you own the music can open up a new world of possibilities,” he said.

Performance Rights aren’t the same as Synchronizations Rights

Hoyt and Steier reminded seminar attendees that TMLC’s agreement with ASCAP addresses performance rights and not synchronizations rights. “Synchronization rights are required in order to attach a particular piece of music with a particular video and the performance right addresses the on-air play of that music,” Steier explained. “In the case of network and syndicated shows that air on your stations, the producers have typically secured the synchronization rights for any music that’s used in their programs.” 

Added Hoyt: “These are two very separate copyrights and it’s important that you check to confirm your station has the synchronization right for any music that you are attaching to locally produced programming, such as news shows and advertising.”

In my opinion, it’s also a good idea to confirm that your programming agreements clearly outline who is responsible for synchronization rights. A quick call to your legal adviser now can save you a lot of time and money later.

BMI and SESAC

Now that the agreement with ASCAP has been reached, TMLC will be stepping up its efforts to reach a multi-year settlement with BMI and its support for an industry agreement involving SESAC, which elected to negotiate current licenses with individual stations. For more information about this and the other activities of TVMLC, I encourage you to contact Alix Steier ([email protected]) or Will Hoyt ([email protected]) or to call the TVMLC office at 212-308-9040.

I think it’s also important to remember the fees paid to ASCAP benefit the more than the 435,000 U.S. composers, songwriters, lyricists and music publishers it represents. The same is true for the fees paid to the other performing rights organizations, BMI and SESAC, which represent other music creators. Their work has been an integral part of television programming since the beginning; we would be hard pressed to imagine the success of television without music.    

So, I hope you will join me in celebrating this new agreement and the industry representatives that have made it possible to budget less money for music rights across more media platforms for multiple years. Let’s also tip our hats to the musical artists without whom television would be a very different experience.

Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary. Her column appears in TVNewsCheck every other week. You can read her earlier columns here.