Brokers battle performance tax


Richard Kozacko, writing to Nancy Pelosi (D-CA) on behalf of the National Association of Media Brokers, said that the proposed performance royalty put forth by John Conyers (D-MI) could have a devastating effect on radio as a whole, and will be especially hard on minorities and new entrants.

Kozacko said that the bill leaves wide open the potential for the Copyright Board to set up new rules three years down the road that would “virtually eliminate the profit potential from the radio industry.” NAMB based this remark on the actions of the CB regarding other industries.

The bottom line is that it injects an element of uncertainty into the proceeding that virtually guarantees that investors will steer clear of putting any money into the radio industry, which in turn will make it almost impossible for new entrants to enter the business.

Kozacko/NAMB also endorsed the Minority Media and Telecomminications Council prediction that even the reduced rates being offered small and minority stations would not be enough to forestall about a third of them going into bankruptcy as a result of the performance tax.

Kozacko pointed out that the bill discourages growth by ratcheting up the royalty costs as a station’s income grows, essentially penalizing it for success. The presence of this lever is yet another element of the bill which will scare off investors. This is especially true when there are an increasing number of audio platforms competing for the same cash sources.

At the very least, Kozacko urged tabling the matter until key studies from the GAO are completed.

RBR/TVBR observation: Thanks brokers, for bringing up these key points about how this misbegotten bill could take a dire access to capital problem and make it several multiples worse than it is already. There are plenty of other reasons to send this bill down in flames – let’s hope 220 reps, and how ever many more they can sign up – are prepared to do just that.