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Federal Court OKs Radio Settlement With BMI

New deal returns radio music to revenue-based fees

Radio is getting more certainty and a new agreement with BMI and ASCAP on music royalties thanks to a judge’s okay.

Federal District Court Judge Louis Stanton approved a settlement that ends two years of litigation between the Radio Music License Committee and BMI.

The new deal lowers the fees stations would pay for music licensing and returns stations to paying a revenue-based, rather than a flat-based fee. It covers the period from Jan. 1, 2010 through Dec. 31, 2016.

RMLC Chairman Ed Christian, who’s also the chief executive officer of Saga Communications, said the new BMI license “reflects the reality of our industry’s economy and puts the industry back on a sound footing insofar as its licensing relationship with BMI is concerned.”

License fees had grown to some three percent of industry revenues for each of BMI and ASCAP in the post-2008 environment. The settlement approved by the court effectively rolls back annual industry fees payable to BMI by more than $80 million for 2012 (compared to where they stood at the end of the prior license in 2009) and provides for a return to a revenue-based fee structure at a level of 1.7% of gross revenue. In addition, the new agreement covers — at the same 1.7% rate — the range of new media platforms in which the radio industry is increasingly engaged.

The impact of this settlement was taken into consideration in BMI’s June 2012 billing statements that reflected substantial fee decreases, according to the RMLC.

Some highlights of the deal are that a $70.5 million industry fee credit against 2010-2011 industry payments is immediately available to the industry. The agreement also includes a 1.7% of gross revenue fee structure for stations on the blanket music license format, less a standard deduction of 12% for revenue derived from terrestrial/analog and HD multicasting broadcasts and a 25% standard deduction for revenue attributable to new media uses.

The deal covers expanded rights coverage to accommodate the industry’s developing new media platforms related to Internet websites, smart phones and other wireless devices.

New BMI license forms will be made available to stations shortly.