Radio Royalty Bill’s Odds Seen Unchanged Despite Administration Support

Prospects for passage of legislation requiring terrestrial radio stations to pay a royalty to performers for the music they broadcast seem little changed after the administration backed it (CD April 2 p10), said six broadcast industry officials we surveyed. Music label representatives said they're hopeful that the Performance Royalty Act (H-848 and S-379) will pass this Congress or that their industry and broadcasters will agree on a framework for royalties. Discussions have taken place between industry representatives, said people from both businesses. The Commerce Department Thursday offered “strong” support for performance royalties and said the Office of Management and Budget didn’t object to that view as reflecting the administration of President Barack Obama’s “program."

The talks are “substantive and serious,” said President Rich Bengloff of the American Association of Independent Music. “We see it as a good sign that the NAB is having these discussions with us. To me it would indicate that they have a concern about the legislation and may want to come to an agreement without legislation. For now Congress is deferring legislation subject to our negotiations.” A spokesman for MusicFirst, whose supporters include the RIAA, said “very substantive discussions between MusicFirst and NAB” are taking place: “We're hopeful that those discussions will produce an agreement."

Some broadcast officials weren’t as upbeat. “It’s hard to imagine a deal NAB could sign on to, particularly given the economic climate for radio stations, unless the music copyright owners would give up a piece of what they already have,” said a lawyer with radio station clients. “Although that is for the most part [the view of] the record companies as well, I can’t see that deal happening.”

"There’s a pile of money we pay to the songwriters every year,” said an NAB spokesman. “If you want to come to a way to redistribute the money, put a proposal forward. To my knowledge there’s been nothing proffered on paper.” Representatives of the sides declined to discuss other details of how the talks have progressed. They began meeting last year at the request of lawmakers (CD Nov 19 p 7).

Congress probably won’t have time to debate royalties, said broadcast industry lawyers and lobbyists. The Senate might be distracted by consideration of a nominee to the Supreme Court, a lobbyist said. But the industry continues to be wary that a royalty could be included as an amendment to must-pass legislation (CD Feb 11 p5), officials said. “There is always the possibility that supporters of the PRA will look to find ways to insert the language of the bill into some piece of legislation making its way through Congress,” said lawyer David Oxenford of Davis Wright, representing radio stations opposed to the bill. “Will one letter make a difference? I doubt it, but that doesn’t mean that the bill is dead."

The legislation hasn’t been scheduled for floor time by Senate leadership, said a staffer. Judiciary Committee Chairman Patrick Leahy, D-Vt., who received the Commerce letter, couldn’t be reached for comment. Spokespeople for Ranking Member Jeff Sessions, R-Ala., who also got the letter, and bill co-sponsor Orrin Hatch, R-Utah, didn’t reply to requests for comment.

MusicFirst thinks the improving financial condition of radio stations bodes well for passage of the bills. But broadcast lawyers said the business hasn’t fully recovered from the recession. “Radio’s rebound is really a very, very compelling story,” said the MusicFirst spokesman. “It’s a very, very compelling argument. We think we've addressed the strongest argument the broadcasters have” of the financial effects. He cited a BIA/Kelsey report that industry revenue, down 18 percent last year, will rise 15 percent to $16 billion in 2014 (CD March 25 p18). “I'm inclined to say that any improvement is probably going to be going from horrible to bad,” said lawyer Francisco Montero of Fletcher Heald, who’s a director of the Spanish Broadcasters Association. “Radio broadcasters are still hurting out there and the performance royalties are really going to hurt the little guys. Those are the ones who are really struggling.”