By: David Oxenford,
Wilkinson Barker Knauer LLP
A conditional settlement of the long-running litigation between Global Music Rights (GMR), a relatively new performing rights organization formed to license the public performance rights to certain musical works, and the Radio Music License Committee (RMLC) was announced this week. The terms of the agreement are confidential, so we can’t comment on the specifics of the deal. But each commercial radio station represented by RMLC should have received a proposed license agreement from GMR. The settlement will only be effective if an undisclosed number of radio broadcasters agree to the terms of the agreement by January 31, 2022. For stations that do not agree by that date, or if not enough stations opt into the agreement causing the settlement to fail, the press release about the agreement says that GMR has made no commitment to extend the current interim license (about which we wrote here) beyond its current expiration date of March 31, 2022. Thus, stations would need to otherwise negotiate an agreement with GMR, pull GMR music from their stations, or risk a lawsuit for playing the music without permission. If your commercial radio station did not receive a communication from GMR in the last few days, and if you play any GMR music and you are not covered by an independently negotiated agreement, you should discuss with counsel whether you should reach out to GMR to see why you were not offered a license. Similarly, if not all your stations were included in the offer you received, discuss with counsel whether to communicate with GMR.
While we cannot comment on the specifics of the deal because it remains confidential, there are some observations that can be made based on the public statement released by RMLC and GMR. One of the first questions is why the settlement is conditioned on enough stations agreeing to it by January 31. First, it is important to note that the agreement by RMLC to any royalty with any music rights organization does not bind all commercial broadcasters, or even RMLC’s members, to accept the deals that it has negotiated. See, for instance, the agreements in the last few years with ASCAP, BMI and SESAC, all of which required broadcasters who wanted to be covered by the negotiated agreement to opt in by a date certain. While a wide cross-section of broadcast companies is represented on the Board of RMLC which approved this agreement, the Board members do not bind their companies or the rest of the radio industry to accept the terms that were negotiated.
Instead, commercial broadcasters who are represented by RMLC have the opportunity by January 31 to opt into this deal. If they do not agree to the deal, they must otherwise attempt to reach their own agreement with GMR (or pull all GMR music from their stations or attempt to litigate with GMR over issues such as those that RMLC raised in its still-pending lawsuit). Presumably, GMR has made the calculation that, if too many broadcasters opt out and it is forced to negotiate or litigate with too many declining stations, the savings in time and legal fees that it hoped to achieve by this settlement would not be realized. In that case, it appears that the calculation is that GMR might as well continue the litigation with RMLC. Thus, the importance of stations observing the January 31 date is clear. Each station group must decide for itself as to whether the agreement makes sense for them.
In addition to the litigation savings that RMLC would achieve from the settlement, the agreement’s biggest plus is that it would bring certainty to the industry. While the length of the agreement is not specified in the public statements, it is characterized as “long-term.” Right now, the commercial radio industry is operating under the shadow of unknown rates and potential liability for the playing of GMR-licensed songs that could reach back several years. Because of COVID, the litigation has been stalled. If the settlement does not occur and litigation continues, even were the trial to occur this year, appeals of any decision could stretch on for many more years. The settlement agreement would likely quantify the amounts due to GMR and, for the period of the agreement, would end the uncertainty over the potential liability that broadcasters face.
The proposed settlement agreement also seems to recognize that an industry-wide approach makes sense and is best for all parties. One of the issues that GMR raised in its countersuit against RMLC (see our article here), was that RMLC was a buyer’s cartel that should not be negotiating on behalf of independent broadcasters. RMLC has served this role with respect to ASCAP, BMI and SESAC (a role not questioned by the Courts or Department of Justice, which oversee the antitrust consent decrees that govern ASCAP and BMI), and this agreement seems to tacitly endorse that role for RMLC in GMR negotiations as well.
The public statements about the agreement do not indicate any conclusion on what seemed to be RMLC’s biggest goal in the litigation – i.e., having some oversight of the rates set by GMR. ASCAP and BMI rates are overseen by US District Courts as part of long-standing antitrust consent decrees (see some of our many articles on those decrees, here and here). SESAC rates are subject to review by an arbitration panel, following the settlement of a lawsuit that RMLC brought against that organization (see our article on the SESAC settlement here, and on the results of the first arbitration here – and a recent SESAC settlement here). No such mechanism has been announced as part of this proposed settlement.
One other important note – on which I have already received questions. These rates apply only to commercial broadcast stations. Rates for all of the performing rights organizations for musical compositions used in noncommercial over-the-air broadcasting are governed by the Copyright Royalty Board. We wrote about the last CRB decision on those rates here. The CRB is currently in the process of setting those rates for ASCAP, BMI, SESAC and GMR for the period 2023-2027. Settlement agreements have been submitted to the CRB for consideration which should resolve the case – and final rates for all PROs, including GMR, for over-the-air noncommercial broadcasting should be set soon.
Commercial broadcasters need to read the GMR agreement, consult with their attorneys and advisors, and decide what they want to do with respect to this proposed settlement. Remember, this decision should be made by January 31 – and if your group agrees to the deal, the signed agreement should be returned to GMR by that date.
David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access). There are no additional costs for the call; the advice is free as part of your MAB membership.