TMLC announces reduced performing rights fees

posted on 2.13.2013

BMI MUSIC PERFORMING RIGHTS FEES REDUCED!

As was just announced, the Television Music Licensing Committee has reached a settlement with BMI for performing rights fees payable by local television stations. The settlement, covering the period 2005 through 2017, avoids a trial that was scheduled to begin in the “rate court” in New York. BMI and TMLC have signed a memorandum containing the principal terms of the new licenses. Once the final written agreements are complete, licenses will be sent to stations and posted on the TMLC website.

BMI REDUCED BLANKET FEES BEGINNING JANUARY 1, 2013

Under the settlement, interim industrywide annual blanket fees of $85,558,333 become final for the period from January 1, 2005 through December 31, 2012.  These annual blanket fees are reduced to $78,650,000 beginning January 1, 2013 and remain at that level through December 31, 2017.  This is an 8% reduction from BMI interim blanket fees and follows a recent 3% reduction in ASCAP blanket fees.  Stations are being billed at interim rates for January and February 2013, and will receive a credit to adjust for the difference in March.

Combined industrywide 2013 and 2014 blanket fees for BMI and ASCAP will total $170 million, a reduction of 6% from the 2004 total of $183 million. Combined BMI and ASCAP annual blanket fees will remain at a $171 million level for the years from 2015-2016 (the current ASCAP license ends in 2016).

ALL-INCLUSIVE LICENSE

Another important benefit to the new BMI blanket licenses is that they cover BMI performances on all digital platforms that are owned or operated by local television stations, including multicast channels, websites and mobile applications.  Only limited internet rights were included in the previous license with BMI.

THE NEW ADJUSTABLE FEE BLANKET LICENSE (AFBL) OPTION

Beginning July 1, 2014, an “Adjustable Fee Blanket License” (AFBL) option will give stations an additional opportunity to reduce the fees they pay BMI by paying owners of music directly for performing rights. Under this new fee structure, a station that licenses individual performances from music owners or program suppliers will be able to reduce the blanket fees it owes to BMI.  Details and procedures to implement this new license are being negotiated between TMLC and BMI.  They will be announced once the terms are finalized.

The parties have agreed that all of the stations represented by the TMLC will be assessed a one-time industrywide capital charge of $425,000 to cover BMI’s start-up costs related to the development of the systems and mechanisms required to administer the AFBL. That cost will be allocated to stations from January 1, 2014 through December 31, 2015 using the current blanket fee allocation methodology.  This is the same method that was used to allocate the initial costs of the BMI per program system in 1994 and will cost the average station approximately $15 per month over the 24 month period.

BLANKET LICENSE ALLOCATION

The TMLC will continue to use the same market and audience based methodology to allocate industrywide blanket fees among participating stations.  Under that methodology, an individual station’s license fee may vary from year to year depending on the relative size of the station’s market and changes in an individual station’s share of the audience within that market.

REDUCED PER PROGRAM FEES BEGINNING JANUARY 1, 2013

There are three significant reductions in BMI per program license fees beginning January 1, 2013, including a $3.5 million offset against future per program payments (see below), a reduction in the per program base fee and a reduced per program multiplier.  Interim per program fees for the period from 2005 to 2012 will become final, although these fees are subject to normal per program adjustments based on revisions to cue sheets and other historical adjustments normally included as part of the per program reporting process.

PER PROGRAM OFFSET (DISCOUNT) OF $3.5 MILLION

Stations that filed per program reports during the interim period from 2007-2012 will be entitled to an offset or “discount” totaling $3.5 million applied as a credit to monthly fees over a 24 month period. This discount is based on the overpayments that resulted from using the ASCAP blanket license as the BMI per program base rather than the BMI blanket as the base. The discount will be allocated to individual stations by the TMLC according to a formula that will account for per program station payments made to BMI for each of the years from 2007-2012.  Those discounts will begin in March of 2013.

REDUCED PER PROGRAM BASE FEE

From 2005-2012, the interim BMI per program base fee was the ASCAP blanket license fee, which was higher than the BMI fee.  Under that formula, the BMI industrywide per program base for 2012 was $91.5 mil.  Beginning January 1, 2013, the BMI per program base will be reduced to the BMI blanket fee, which on an industrywide basis is 78.7 mil., indicating a 14% decrease from the 2012 level. The per program base will remain at this level through 2017.

REDUCED PER PROGRAM MULTIPLIER

As indicated above, there will be no change in the per program license from 2005-2012. 

Beginning January 1, 2013, the per program license formula will change to match the methodology used in calculating ASCAP per program fees, although there will be a different per program multiplier used.  Starting January 1, 2013, the per program multiplier will be 1.50 (the ASCAP multiplier is 1.45) and will be applied against 85% of the station’s blanket fee (rather than against 100% of the blanket fee as had been the case under the previous BMI per program formula). Had the 2005-2012 BMI per program license formula matched the 2013 formula, the effective multiplier would have been 1.62, which means the multiplier has been reduced by about 7%, further reducing net per program fees.

THANK YOU!

The Committee’s negotiations with BMI were unusually long and complex, and included the assistance of a mediator selected by the parties. They took place while both sides were preparing with attorneys, economists and huge amounts of data for a trial that would have set new BMI fees, subject to appeals and further delay and uncertainty. TMLC’s evidence made a strong case that BMI fees should be reduced. Without your financial support for the Committee’s litigation and negotiation activities, this settlement, which brings an end to years of litigation and sets fixed blanket fees through 2017, would not have been possible.

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