That’s the opinion of Concept Capital, a division of SMH Capital Inc. It says there is now only a 40% chance that the Performance Rights Act will proceed any further than it already has. That’s down from 60%. Part of the reason: “Broadcasters are doing an effective job of building opposition to legislation.”
Concept Capital looked at the PRA situation through the prism of Warner Music and Clear Channel. Warner would stand to benefit greatly from its passage, and even though it would have to share half the proceeds with artists, “…the incremental revenue to Warner would be almost pure margin.”
Clear Channel, on the other hand, would watch 3%-8% of its revenue disappear.
Concept wrote, “Broadcasters also have gotten traction with arguments that a new fee could have damaging consequences for a large number a radio stations – particularly in a difficult advertising environment – and that a disproportionate share of endangered stations are minority-owned. Such arguments resonate, especially in a Democratic Congress that already views current minority ownership levels as inadequate.”
Concept also praised the selection of former Oregon Sen. Gordon Smith as the new President/CEO of the NAB. Even though he is restricted from lobbying personally on the Hill until January of 2011, CC said, “…we view his stature, bipartisan reputation, and skill set as a new and positive factor for broadcasters in the radio royalty battle.”
On the other hand, Concept notes that the congressional leaders backing PRA are thoroughly committed to the legislation and it is not ruling out passage. But it believes the closer we get to Election Day, the stronger the hand that broadcasters are holding.
RBR-TVBR observation: This is good news, in a guardedly-optimistic way – but only for 12 months. As we’ve pointed out in the past, this is one of those bills that likely will keep springing back to life. Constant vigilance will be required to make sure it never so much as comes to a floor vote. Broadcasters have had great success pleading their case in the House – so make sure you are on good terms with your own representative going forward.