The arbitration process governing SESAC's performance license rates has determined that for the 2023-2026 license period, a total fee of 0.2824% of revenue will be set — or a 10.4% increase from the previous year's rate of 0.2557% of revenue period, according to a press release from the Radio Music Licensing Commission (RLMC).
The price represents what SESAC, a performing rights organization (PRO), can charge stations in exchange for playing works from their repertoire over terrestrial radio.
Each side characterized the final rate setting differently, with RLMC claiming victory because the arbitration panel rejected SESAC's efforts to more than double the rate and also significantly expand the license revenue base. However, SESAC says the arbitration decision reflects the failure of the RLMC in its bid to lower the rate.
The rate decision is retroactive to January 1, 2023, meaning stations paying the SESAC interim license fee at 2022 rates will receive “a modest readjustment.” The arbitration process governing SESAC's rates arose as a result of a 2015 RMLC antitrust settlement with SESAC that established a rate arbitration process for the next 20 years.
The RMLC announcement alleges that SESAC attempted to justify its efforts to raise rates and expand its licensing revenue base by relying on prices set for other music licensors.
Meanwhile, SESAC's statement on the decision says RMLC failed in its attempt to tie SESAC's rates to those of BMI and ASCAP, the two US PROs, which operate under consent decrees that mandate a rate test in the Southern District of New York when negotiations fail.
“While no increase is warranted, the arbitration award reported here is a significant victory for radio stations represented by RMLC given SESAC's demands and comes at a difficult financial time for the industry,” said the RMLC president Ed Atsinger in a statement. “The RMLC intends to continue to defend and protect the interests of its members at a time when all properly functioning organizations are seeking to aggressively increase their fees.”
On another aspect of the rate setting, the RLMC said that “the long-form license terms are still being worked out, but it is expected that non-music stations will continue to pay the same 77.5% discount” from the above headline music stations . Mathematically, this means the RMLC expects the non-music fee to be set at 0.06354% of revenue, or a 10.5% increase from the previous rate of 0.0575%. Bulletin board estimates.
“The arbitration decision reflects another failure by RMLC to impose regulated rates on SESAC since SESAC and RMLC completed their settlement in 2015,” said SESAC President and CEO Scott Jungmichel. “The panel awarded SESAC an increase of more than 10% while rejecting RMLC's efforts to lower the rate, turn back the clock, and bring SESAC into line with the regulated rates paid by ASCAP and BMI. In addition, the revenue base subject to the fee is significantly greater than the revenue that the station groups had attempted to pay for under the 2017 award.”
