9:47am PT by Eriq Gardner
Music Licensing Co. Wants Final Approval on $58.5 Million Settlement With TV Stations
Performance rights organization SESAC and a group of local TV stations have asked a New York federal judge to move up a hearing that will likely mean the end of a long-running antitrust dispute.
In 2009, Meredith Corp. and Scripps Media brought a class action lawsuit that charged SESAC with unlawfully using its monopoly power to force TV stations into paying high fees to clear music in syndicated television shows.
The complaint used the Fox show, House, as an example.
"A single episode of the syndicated drama House, for instance, can have forty or more embedded musical compositions, including compositions from each of the three PROs," said the complaint, referring not only to SESAC, but also ASCAP and BMI. "This single episode could not be lawfully broadcast without a license for each composition — effectively requiring licenses from all three PROs."
The problem, asserted the plaintiffs, was that SESAC only offered "all-or-nothing blanket licenses," meaning that to clear a mere few songs meant ordering and paying for the entire menu. SESAC had no alternative, and if a TV station wanted to carry a show like House, it meant paying big licensing fees or risking a copyright infringement lawsuit. SESAC was targeted because unlike ASCAP and BMI, it is not beholden to a conduct-regulating consent decree with the U.S. Department of Justice. The complaint alleged that SESAC took "full advantage" of its freedoms.
Last autumn, after five years of litigation where the judge rejected SESAC's attempts to dismiss the lawsuit, the parties announced they had reached a deal.
SESAC agreed to pay out $58.5 million to settle the lawsuit, including $16 million in attorney's fees and expenses. The bulk of the money would go to the television stations, including affiliates of ABC, CBS and NBC which weren't direct parties in the case but covered by the class.
But the settlement is more than just a refund on the cost of doing TV syndication.
As part of the deal, SESAC agreed that for the next 20 years, it will be obligated to offer alternatives to its blanket licenses, barred from preventing affiliated composers and publishers from entering into direct licenses with local stations, and prevented from threatening local stations with copyright infringement lawsuits during license negotiations. The deal also contemplates that disputes over reasonable license fees will be submitted for resolution in binding arbitration.
U.S. District Judge Paul Engelmayer has already given preliminary approval to the settlement, and according to a letter submitted to the judge late last week, there hasn't been any objection from a class member. A hearing was scheduled on March 13 for final approval, but the parties appear ready to get the judge's ultimate nod as quickly as possible.
The plaintiffs are represented by Steven Reiss, Bruce Rich, Benjamin Marks and Eric Hochstadt at Weil Gotschall & Manges. SESAC had attorney Gregory Joseph in its corner.