US performing rights organization SESAC has won an increase in the fees it collects from US radio stations, after an arbitration panel ruled on an ongoing dispute between SESAC and station owners.
The panel ruled that stations represented by the Radio Music License Committee (RMLC) will pay a new rate of 0.2824% of net revenues, up from the previous rate of 0.2557%, according to a report at Radio Ink. That amounts to a 10.4% increase in the money paid out, relative to radio station revenues.
The new rate will apply from January 1, 2023, through December 31, 2026. Because the rates apply retroactively, radio stations can expect to see an adjustment to the rates they have paid going back to the beginning of 2023.
The RMLC represents around 10,000 terrestrial radio stations in the US, and its governing body is made up of station owners and managers.
“The arbitration award reflects another failure of the RMLC to impose regulated rates on SESAC.”
Scott Jungmichel, SESAC
Both the RMLC and SESAC painted the outcome of arbitration as a win, with SESAC declaring it had defeated the radio stations’ efforts to reduce payments to similar levels paid to the US’s two other major PROs, ASCAP and BMI.
“The arbitration award reflects another failure of the RMLC to impose regulated rates on SESAC since SESAC and the RMLC concluded their settlement in 2015,” SESAC President and COO Scott Jungmichel said in a statement.
“The panel awarded SESAC an over 10% increase while rejecting the RMLC’s attempts to lower the rate, turn back the clock, and yoke SESAC to the regulated rates paid by ASCAP and BMI. In addition, the revenue base subject to the fee is significantly greater than the revenue upon which station groups had sought to pay under the 2017 award.”
However, the RMLC had said that SESAC had been aiming to double the rates it was receiving from US radio stations, according to Inside Radio, and in that context, the industry group declared victory.
“Despite the fact that no increase was warranted, the arbitration decision reported here constitutes a significant victory for RMLC-represented radio stations.”
Ed Atsinger, RMLC
“Despite the fact that no increase was warranted, the arbitration decision reported here constitutes a significant victory for RMLC-represented radio stations given SESAC’s demands, and comes at a challenging economic time for the industry,” RMLC Chairman Ed Atsinger said in a statement.
“The RMLC intends to continue to defend and protect the interests of its members at a time when all of the performing right organizations are seeking to aggressively increase their fees.”
The RMLC also noted that not all aspects of the arbitrated deal have been completed, but it’s widely expected that non-music radio stations will continue to enjoy a 77.5% discount on the rate paid for licensed music, and that the deal will cover over-the-air broadcasting, HD multicasting, and simulcast streaming.
SESAC is able to negotiate rates different from those paid by ASCAP and BMI because of a 2015 settlement of an antitrust case brought against by the RMLC. SESAC paid $3.5 million to settle that case, but also won the right to commercial arbitration of the fees it collects from RMLC members if future negotiations fail.
In the latest round, those negotiations did indeed fail, leaving no agreement in place beyond the end of 2022 and bringing the negotiations to arbitration.Music Business Worldwide