PBS and NPR in arbitration

Television Digest with Consumer Electronics, March 2, 1998

Public broadcasters want to pay "reasonable" copyright rates, Bruce Rich of N.Y.C. law firm Well, Gotshal & Manges told 3-judge panel in opening comments. For 20 years, parties have agreed on 5-year blanket agreements involving fee increase comparable with cost of living, he said. Current proposal is just above 1993-1997 total of $18.875 million. Now, he said, ASCAP has asked for 170% increase, BMI 778%: "ASCAP and BMI shot for the moon."

Rich also urged judges to consider frequency of music use and program expenditures. Frequency of copyright music in PBS programming is "flat to slightly declining," Rich said, while min. per hour of music on PBS showed only "slight" increase. He said total NPR and PBS programming expenses have been fairly steady, to $838 million in 1996 from $801 million in 1992. Slight 4.5% increase, Rich said, is how public broadcasters calculated $19.8 million fee.

ASCAP attorney Philip Schaeffer of N.Y.C. law firm White & Case said his client prefers fee linked to public broadcasting revenues. He outlined many efforts of PBS and NPR, and their members, to boost revenues, making them differ little from commercial counterparts. Not only do PBS and NPR aggressively pursue underwriting and audience, he said, "I have no doubt that NPR stations play more ASCAP music than their commercial counterparts." based on station revenues, he said, 5-year request of $4.481 million from PBS would be only 0.3% of station revenue, and $3.58 million from NPR would be just 1.24% of station revenue. As to relying on past agreements, Schaeffer pointed to ASCAP licensing accord with NPR and PBS, which in each signing contained clause stating that settlement rates "will have no precedential value" in future negotiations.

"We are entitled to a big raise," BMI attorney Norman Kleinberg of N.Y.C. firm Hughes, Hubbard & Reed told panel. BMI license agreements with PBS and NPR don't contain ASCAP's "precedential value" language, he admitted. However, he said, BMI never would have entered into "voluntary agreement" on fees if it thought rates would be "locked in for life." Use of BMI music by public broadcasters has increased 83% since last agreement, he said, establishing "floor" for negotiations. Kleinberg compared public broadcasters with commercial counterparts in revenue, program expenditures, audience size. Keeping variables constant, he said, PBS should pay $5.5 million for 1998-2002, NPR $1.395 million. Kleinberg said percentage of BMI music used in public broadcasting has increased at expense of ASCAP, and BMI should receive at least 38% of total payments.

Testimony will continue until late May in Washington and in N.Y.C., and judges must render decision by July 28.