RMLC And SESAC Claim Victory In Arbitration Ruling

Both Companies Happy

An arbitrator has ruled on the longstanding antitrust litigation instigated by the RMLC against SESAC in 2012. The matter was settled in 2015 on the basis that SESAC would agree to have its license fees determined by binding rate adjudication for the next 20 years. The initial arbitration concluded in MAY of this year. Both sides are claiming a victory.

THE RMLC reacted to the ruling, writing in a press release, "Late last week, THE RADIO MUSIC LICENSE COMMITTEE (RMLC) learned that the RMLC-Represented Stations were awarded a more-than-60% discount off of the SESAC radio station license rate card. The substantial fee reduction applies for the license period JANUARY 1, 2016 through DECEMBER 31, 2018. SESAC had offered stations that chose not to arbitrate only a 5% discount. In contrast, many of the RMLC-Represented Stations that chose to participate in the arbitration, and that overpaid SESAC on an interim basis since 2016, will now receive a combined credit worth tens of millions of dollars. The arbitrators’ decision is a significant favorable step in the right direction for the radio industry, bringing SESAC’s license fees and rate structure more into line with the rate formulas used by ASCAP and BMI." 

Asked for comment, the RMLC’s Co-Chairmen, ED CHRISTIAN and JOHN VERSTANDIG, said in a joint statement, “binding rate arbitration for SESAC was a giant first step for the industry. The arbitration decision reported here constitutes a significant correction in the level of SESAC’s fees and many RMLC-represented stations will now experience substantial financial relief in the form of fee credits dating back to the beginning of 2016 (totaling tens of millions of dollars across the industry by our estimates). The RMLC intends to continue to defend and protect the interests of its members at the next arbitration (for the 2019-22 period), which is right around the corner.”

VARIETY reports SESAC is, "touting its success in increasing its rate relative to its market share. Even its fees were lowered, in aggregate, as a result of the proceeding. The arbitration panel awarded SESAC a fee of 0.2557 percent of radio station net advertising revenue. Based on the fact that SESAC had only about a tenth of the market share at the time of the industry’s dominant player, ASCAP, at the time of the computation – about four percent to ASCAPs 45-50%, adjusted for SESAC’s market share, ASCAP’s actual fee of 1.73% would be 0.173% of station net revenue. By that calculation, SESAC is proclaiming an arbitrated rate 'approximately 50% higher' than the radio industry rates commanded by ASCAP. BMI receives roughly the same 1.73% rate, and the two control market share of some 85%."

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