RBR-TVBR analysis: PRA appears to be in limbo


There’s still lots of consternation in the radio industry over the NAB Radio Board’s proposed “term sheet” and the possibility of a deal being cut with musicFirst and RIAA to have radio stations pay performance royalties to record labels and artists. But the reality is that the momentum the issue once had has pretty much come to a halt inside the Beltway.

Soon-to-be-former Speaker Nancy Pelosi (D-CA) hasn’t laid out her agenda for the upcoming lame-duck session of Congress, but there’s no indication that passing the Performance Rights Act (PRA) as approved by the House Judiciary Committee is high on her list of things to do. NAB is dead set against PRA as it stands, with fees to be set by the dreaded Copyright Royalty Board, and has plenty of allies in both the House and Senate against that bill as written. The risk is that someone – say outgoing Judiciary Committee Chairman John Conyers (D-MI) – might try to get PRA attached to some must-pass legislation, but NAB is supposed to be on watch so its allies can keep that end-run from taking place.

We had wondered how the whole idea of starting with a 0.25% fee if the combined efforts of NAB and musicFirst were not able to get a radio chips in cell phones mandate written into the compromise legislation came about. It seems that it developed with the NAB as a way to move forward with a possible deal for the lame-duck session. musicFirst was shocked when it came out in the NAB “term sheet” and condemned it as a deal breaker rather than an attempt at compromise.

In addition to rejecting the idea of anything less than 1%, musicFirst has also objected to the amount of the reduction in streaming royalties for radio stations. Reducing streaming royalties had been part of the negotiations, but musicFirst seems to think that NAB went overboard in the cuts proposed in the term sheet.

RBR-TVBR checked with both sides on Tuesday and found no expectation of any resumption of negotiations near term. Spokesman Tom Matzzie of musicFirst told us “the term sheet rewrote an agreement from July and undermined the fundamental economics that music and radio jointly presented to Congress. That is the core issue.”

With no likelihood of an agreement for legislation in the lame-duck session, NAB is taking the view that the term sheet put the ball in the record industry court and is waiting for the next volley. Meanwhile, the broadcast trade organization is working to convince dissidents in its own ranks that a deal is worth doing – that getting a negotiated PRA is better than risking some more ominous legislation making it through a future Congress.

In response to Saga Communications CEO Ed Christian’s claim that NAB represents only 4,000 of the nation’s 12,000 or so radio stations, NAB Exec. VP/Communications Dennis Wharton said the actual number is around 6,000 – and that about 40% of the industry is directly represented on the Radio Board which voted for the term sheet.

Rather than simply poll members, as Christian and some others have been demanding, NAB has been focused on explaining the complicated issues and the risks and rewards one-on-one. Wharton insists that while no one wants to pay a new fee, when they really understand what is at stake most radio broadcasters will agree with the path NAB is taking.

Our take? Absent the radio in cell phone mandate we don’t see that musicFirst/RIAA is bringing enough to the table to get excited about. But since they are apparently dead set against anything less than the 1% fee (which would trigger international reciprocity payments to US labels and artists) the phase-in idea beginning at 0.25% might as well be dropped. So, RIAA either has the clout to get the cell phone mandate passed – or it really has nothing to offer.

Right now it looks like PRA is a dead issue for 2010. It will start all over with a new Congress in January – and without John Conyers holding a chairman’s gavel. We wait to see if musicFirst/RIAA really wants to do a deal and comes up with a counterproposal to the term sheet. The status quo is just fine for many broadcasters, so it will have to be a pretty good offer to get the radio industry interested.