APPENDIX 5.-LETTER FROM DIANA WATERMAN, WASHINGTON REPRESENTATIVE, TELEVISION MUSIC LICENSE COMMITTEE, TRANSMITTING A STATEMENT OF THE TELEVISION MUSIC LICENSE COMMITTEE, TO HON. WILLIAM J. HUGHES, CHAIRMAN, MARCH 16, 1994

Music Licensing Practices of the Performing Rights Societies
March 11, 1994

The Television Music License Committee has represented local television broadcasters from all across our nation for the past five decades. Today, virtually all local television stations rely on the efforts of the Committee to pursue fair and equitable license arrangements with both ASCAP and BMI.

We would like to commend Chairman Hughes for conducting hearings on music licensing practices of performing rights societies and to thank him for the opportunity to submit this statement for the record.

The issue of music licensing practices of the performing rights societies as it applies to television broadcasting has been a singular dedication of the TV Music License Committee since its inception. We have dealt with almost every aspect of this debate at the bargaining table, before Congress, and, of course, in court.

We believe we offer a unique perspective on two specific issues of focus raised by Chairman Hughes and by several witnesses in these hearings regarding:

1) ASCAP's adamant resistance to a meaningful per program license; and,

2)

the critical need for users to have ready access to the societies repertoire database.

These issues raised by the witnesses on February 23 and 24, 1994 are not new. In fact, they are the very same issues and the very same problems that were the subject of hearings before this sub-committee in 1986 when we testified in support of source licensing.

At that time, Congress suggested that we might find recourse to a meaningful per program license through a case we had pending before the ASCAP rate court. The TV Music License Committee has recently concluded that long and drawn-out ASCAP rate

court proceeding -- now on appeal to the Second Circuit. We believe that after 10 years of litigation we bring a truly unique perspective to bear on these issues.

It is actually somewhat dismaying that in the eight years since we originally testified before this subcommittee some things just haven't changed. You heard overwhelming testimony in 1986, and again in 1994, about ASCAP's persistent bully tactics. You heard in 1986, and again in 1994, about ASCAP's stalwari resistance to allowing for a meaningful per program. You heard in 1986, and again in 1994, about ASCAP's refusal to provide the essential repertoire information, that only they hold, and still will not make available.

One important thing has changed for the television industry -- that is the first-ever utilization of ASCAP and BMI per program license by hundreds of local television stations. This inaugural per program experience did not come about easily for the television industry. It has taken a long, tough, costly, legal battle and it's not over yet as ASCAP has appealed the decision.

A review of the history of ASCAP's negotiations with the television industry over the last 12 years specifically with respect to the per program license, makes it abundantly clear that ASCAP has consistently done all they could to block local television stations from pursuing the per program license. Indeed, throughout the course of the court proceeding, ASCAP maintained that the per program license "was never contemplated" to be for the typical television station, but instead was intended only for an "oddball" station, such as one "that carries stock ticker reports all day long that may have some music behind them." Trial Tr. at 494-503.

In fact, ASCAP's specific per program proposal to the rate court calling for a license rate four times that of the blanket license - was intended to ensure that only such "oddball" stations would find resort to this license option economically feasible. Just to make sure, however, that no station could actually utilize its proposed per program license, ASCAP also took the position that a full per program payment was due if only a single commercial announcement within or adjacent to a program contained a few bars of ASCAPlicensed music such music is typically selected and incorporated by the producers of commercial announcements, not by the stations. ASCAP failed to persuade the rate-court of the merits of this position. The Court rejected ASCAP's 4-to-1 per program-to-blanket ratio in favor of a per program option priced at 1.4 time the blanket rate.

Despite all of this, ASCAP continues to engage in a variety of tactics to keep television stations from utilizing a per program license. The following examples are only the most recent in an historical series of actions adopted by ASCAP with the goal of denying the economic relief afforded by a viable per program license option:

ASCAP's conditioning of prior settlements on both blanket and per program license terms on broadcaster agreement to a proviso that few, if any, local television stations would operate under the per program form of license;

ASCAP's historical refusal to accede to requests by the Antitrust Division of the Department of Justice to modify aspects of the per program license so as to make that license option a more meaningful one;

ASCAP's attempt to modify its consent decree so as to relieve it from the obligation to offer a per program license to any television network which maintained a blanket license with BMI. The request was rejected in a Court opinion which reflects a resounding endorsement of the competitive goals underlying the Decree's requirement that ASCAP offer this option to its "preferred" blanket license, and price these license so as to provide users with a "genuine choice" between the two license forms;

ASCAP's unsuccessful attempt -- after significant rate court efforts by local television broadcasters had resulted in a viable interim per program license to be relieved of its obligation to offer this very interim license option because some 250 local stations had actually elected to operate under this Court-mandated per program format; and,

ASCAP's refusal to offer a per program license to cable program services (such as CNN, ESPN, USA Network and others) on the purported theory that its consent decree obligations with respect to per program licensing did not extend to "cablecasters" as opposed to "telecasters." When challenged in Court, ASCAP's interpretation was rejected in an opinion affirmed per curiam by the Second Circuit Court of Appeals.

Although ASCAP has made every attempt to block resort to the per program license, the courts and the Department of Justice have consistently recognized the competitive need for this license option. Our industry's experience shows that -- unless dragged kicking and screaming into the world of per program licensing (and the more competitive licensing arrangements resulting therefrom) by legislative or judicial fiat the music licensing societies will forever attempt to impede the licensing of their repertories under any system other than a blanket license system.

Part and parcel of such efforts is a continuing insistence on restricting users' knowledge and ability to obtain information about the specific compositions in these licensing organizations' respective repertories. As the radio representatives appropriately emphasized in their submissions to this subcommittee, such knowledge is essential if users are to make informed choices regarding their music needs and licensing options.

With per program licensing opportunities becoming more and more of a reality for our industry, access to full information regarding the song titles licensed by ASCAP, BMI and SESAC is crucial to television stations' ability to make use of this license form and related competitive licensing opportunities.

Broadcasters, however, cannot make informed choices with respect to the use of a given piece of music, and we specific costs associated with performing that piece of music in their locally-produced programs, unless they can quickly and efficiently obtain the information necessary to render an informed judgement specifically, which licensing organization, if any, licenses the particular title at issue. Presently, that information is not readily available. If, as we believe, per program licensing and direct licensing by local broadcasters, as well as other music users, is a goal which ought to be encouraged, the licensing system must require the comprehensive identification of titles in each licensing organization's repertoire.