SESAC Faces Class-Act Lawsuit

On November 4th a group of television broadcasters came together to file a class-action anti-trust complaint against performance rights organization, SESAC. The Television Music Licensing Committee, a non-profit organization that negotiates music licensing fees with performance rights societies on behalf of television broadcasters, stated that SESAC has used price-fixing along with various anti-competitive acts to unjustly raise their fees.
Previously SESAC negotiated licensing for local broadcasters through the Television Music License Committee, which represents 1,200 local television broadcasters. However in 2008 SESAC decided to individually license local television stations. The Television Music Licensing Committee stated, “the complaint alleges that essentially all television stations are compelled to pay SESAC the price it demands for a license because they cannot control what music is used in most of the programs and commercials they broadcast, and they cannot remove the music; thus, to avoid broadcasting music without a license–a violation of copyright law–they have no choice but to accept SESAC’s licensing terms.” Allegedly, SESAC had also been signing popular television composers with the incentive of a higher income, which potentially escalated the size of annual fees paid by television broadcasters without regard to the amount of music a station uses.
ASCAP and BMI, the other two predominant music-licensing companies, operate under what is known as voluntary consent decrees. The consent decree allows for courts to set fees should the parties not be able to reach a mutual agreement. These agreements were signed in 1941 and amended again in 1950 after ASCAP was sued for violating terms of the Sherman Antitrust Act. Due both to (i) a lack of consent decrees and (ii) the recent implementation of individual broadcasters licenses, the Television Music License Committee now believes that ASCAP too is taking advantage by setting fees that would be considered excessive of the industry standard.
As Charles Sennet, Chairman of the Television Music License Committee, said, “SESAC’s actions are an unlawful restraint of trade. The antitrust laws prevent the other two [performance rights organizations] from using their collective power to extract coercive rates for music from broadcasters. We believe those same antitrust principles should be applied to SESAC.” The charges in the class-action suit filed against SESAC resemble those that brought about the regulation modifications within ASCAP and BMI. It is likely that similar results will come from this hearing and SESAC will have to overhaul its licensing negotiation policies.
The suit was filed in the U.S. Southern District Court of New York by Weil, Gotshal & Mangles LLP. SESAC spokesperson, Shawn Williams, said that the group had been served on November 5th, “and are currently reviewing the documents so we have no comment at this time.”

By Sawyer Stoltz




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