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Justice Challenges BMI, ASCAP Fractional License Decision

Judge had said nothing in consent decrees barred fractional licenses

The Department of Justice has challenged the Southern District Court of New York decision that DOJ was wrong in concluding it did not need to modify the ASCAP and BMI consent decrees that circumscribe how performance rights licensing organizations (PROs) like ASCAP and BMI collectively negotiate the rights to music on TV, radio and the internet.

The appeal was filed with the U.S. Court of Appeals for the Second Circuit.

ASCAP and BMI aggregate rights from a host of musical works and provide a blanket license for their performance at a single price, regardless of whether an individual work is actually performed. Without the consent decrees, which were struck with the Department of Justice in 1941 following complaints of anticompetitive activity, broadcasters argue, such control over music licenses would be a de facto antitrust violation.

Under the current system, TV stations pay $150 million per year and radio stations $350 million to songwriters and publishers, according to the National Association of Broadcasters.

DOJ informed songwriters and composers that it was leaving the consent decrees intact and interpreting them to mean that ASCAP and BMI have to provide 100% licensing. Broadcasters were happy with that call, saying that fractional licensing “would significantly disrupt the day-to-day operations of local radio and television stations.”

That is because music users, like broadcasters, would have to license fractional interests held by each of a work’s co-owners rather than be included under the current full-work license.

In September, federal Judge Louis Stanton rejected DOJ’s interpretation, concluding that the consent decree “neither bars fractional licensing nor requires full-work licensing.”

“While we hoped the DOJ would accept Judge Stanton’s decision, we are not surprised it chose to file an appeal,” said BMI in a statement. “It is unfortunate that the DOJ continues to fight for an interpretation of BMI’s consent decree that is at odds with hundreds of thousands of songwriters and composers, the country’s two largest performing rights organizations, numerous publishers and members of the music community, members of Congress, a U.S. governor, the U.S. Copyright Office and, in Judge Stanton, a federal judge. We believe Judge Stanton’s decision is correct and look forward to defending our position in the Court of Appeals for the Second Circuit.”

Broadcasting & Cable