Entercom CEO David Field is a member of the NAB Radio Board and voted for the controversial term sheet for a potential deal with the record industry on the Performance Rights Act (PRA). Not surprisingly, he was asked about the potential cost of PRA by a Wall Street analyst during his quarterly conference call.
“I support the NAB’s position on this. Look, nobody’s happy to add an additional spending line item to their P&L [profit and loss statement], but when you soberly, without emotion look at the overall situation and the negotiation as it’s played out, I think that it is a wise decision to move forward with an agreement along the line that has been articulated to eliminate what I believe is a very small risk, but some risk, of a royalty being imposed. To end the confrontation and in addition achieve a number of important strategic goals, such as getting FM radios on cell phones – that warrants what I believe is a manageable expense which, at a rate of 1% or less of music revenues, would be approximately $3 million or less to our company,” Field told the Wall Streeters.
RBR-TVBR observation: This is a tough call. As Field notes, the risk is small – and we would add that it got even smaller last Tuesday – but it remains a risk. The devil is in the details and right now musicFirst/RIAA is acting pretty strangely about minutia, so it remains to be seen whether any deal can be struck. Neither side is really united on what the terms should be – note the high level of opposition within the radio industry to the term sheet – so this is really like trying to herd cats.