Buffalo Broadcasting v. AM. SOC. OF COMPOSERS, ETC.

• Decision Date: 19 August 1982
• Docket Number: No. 78 Civ. 5670.,78 Civ. 5670.
• Citation: 546 F. Supp. 274
• Parties: BUFFALO BROADCASTING COMPANY, INC., Kid Broadcasting Corporation, KWTX Broadcasting Company, Inc., Metromedia, Inc. and Storer Broadcasting Company, On Behalf Of Themselves and All Persons or Entities Who Own Local Television Stations which Obtain Music Performance Rights Pursuant to Music License Agreements With American Society of Composers, Authors and Publishers and/or Broadcast Music, Inc., Plaintiffs, v. AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, Stanley Adams, as President of American Society of Composers, Authors and Publishers, Cy Coleman, Hal David, Famous Music Corp., MCA, Inc., Morton Gould, Shapiro, Bernstein & Co., Inc., On Behalf of Themselves And All Other Members of American Society of Composers, Authors and Publishers, Broadcast Music, Inc., Al Gallico Music Corp., Paul Anka, Jerry Bock, Sheldon Harnick, Hollis Music, Inc., and Unart Music Corp., On Behalf of Themselves And All Other Affiliates of Broadcast Music, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

546 F. Supp. 274

BUFFALO BROADCASTING COMPANY, INC., Kid Broadcasting Corporation, KWTX Broadcasting Company, Inc., Metromedia, Inc. and Storer Broadcasting Company, On Behalf Of Themselves and All Persons or Entities Who Own Local Television Stations which Obtain Music Performance Rights Pursuant to Music License Agreements With American Society of Composers, Authors and Publishers and/or Broadcast Music, Inc., Plaintiffs, v. AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, Stanley Adams, as President of American Society of Composers, Authors and Publishers, Cy Coleman, Hal David, Famous Music Corp., MCA, Inc., Morton Gould, Shapiro, Bernstein & Co., Inc., On Behalf of Themselves And All Other Members of American Society of Composers, Authors and Publishers, Broadcast Music, Inc., Al Gallico Music Corp., Paul Anka, Jerry Bock, Sheldon Harnick, Hollis Music, Inc., and Unart Music Corp., On Behalf of Themselves And All Other Affiliates of Broadcast Music, Inc., Defendants.

No. 78 Civ. 5670.

United States District Court, S. D. New York.

August 19, 1982.

COPYRIGHT MATERIAL OMITTED

Weil, Gotshal & Manges, New York City, for plaintiffs; Ira M. Millstein, James W. Quinn, R. Bruce Rich, Kenneth Steinthal, Roger B. Kaplan, Joseph Allerhand, Yvette Miller, New York City, of counsel.

Hughes, Hubbard & Reed, New York City, for defendant Broadcast Music, Inc.; Robert J. Sisk, Norman C. Kleinberg, Michael E. Salzman, Naomi F. Sheiner, Jacqueline D. Gilbert, William H. Voth, New York City, of counsel.

Skadden, Arps, Slate, Meagher & Flom, New York City, for defendants Sheldon Harnick, Al Gallico Music Corp., Hollis Music, Inc. and Unart Music Corp., et al.; Barry H. Garfinkel, Timothy A. Nelsen, New York City, of counsel.

Paul, Weiss, Rifkind, Wharton & Garrison, and Bernard Korman, New York City, for defendants ASCAP, et al.; Jay Topkins, Allan Blumstein, Fred D. Heather, Andrew J. Peck, Alan L. Fischl, Richard H. Reimer, New York City, of counsel.

OPINION

GAGLIARDI, District Judge.

The public performance of virtually every musical composition copyrighted in the United States is licensed by either the American Society of Composers, Authors and Publishers ("ASCAP") or Broadcast Music, Inc. ("BMI"). Each organization, representing thousands of individual copyright holders and music publishing companies, operates primarily through a blanket license, which provides the licensee with immediate, indemnified access to any and all songs in the organization's repertory in exchange for an annual fee ordinarily based upon a fixed percentage of the user's revenues. Recently, the Columbia Broadcasting System, Inc. ("CBS") raised an ultimately unsuccessful challenge under the antitrust laws to the blanket licensing system of ASCAP and BMI as it applied to television networks.¹ In this action, plaintiffs challenge the legality under the antitrust laws of the practices of defendants ASCAP and BMI in licensing music performing rights to local television stations,² and ask the court to enjoin the blanket licensing of performing rights to local television stations in order to permit the evolution of a performing rights licensing system characterized by competition between and among composers.

I. Factual Background

A. The Parties

The five named plaintiffs in this action own and operate one or more local television stations in the United States and represent the class of all owners of local television stations in the United States who obtain music performing rights pursuant to license agreements with ASCAP and/or BMI. There are approximately 750 local television stations in the United States, owned by the approximately 450 members of the plaintiff class. The plaintiff class was certified by this court under Rule 23(b)(3), Fed. R. Civ. P., in a memorandum decision dated December 5, 1980. Only one owner — WSM, Inc., of WSM-TV, Nashville — has opted out of the class. While 65% of the owners of local television stations own only one station, the plaintiff class also includes corporations such as Metromedia, Inc. ("Metromedia") which owns and operates seven local television stations, including WTTV in Los Angeles and WNEW-TV in New York, and Storer Broadcasting Company which also owns and operates seven local television stations. Since 1949, the vast majority of local television stations has been represented by the All-Industry Television Station Music License Committee (the "All-Industry Committee") in their periodic negotiations with ASCAP and BMI regarding music performing rights licenses.

Defendant ASCAP is an unincorporated membership association of composers, authors and publishers of music formed in 1914 by Victor Herbert and several other composers to license the performance of its members' copyrighted music. At the time of ASCAP's formation, the users of copyrighted music — principally theaters, dance halls and taverns — were so numerous and widespread, and performances so fleeting, that it was impossible for individual composers and publishers to negotiate licenses with each user and to detect unauthorized uses. In addition, users who wished to perform compositions without infringing the copyright had no practical means of obtaining licenses from the copyright owners. ASCAP was formed as a "clearinghouse" for copyright owners and users to solve these problems. BMI v. CBS, 441 U.S. 1, 5, 99 S.Ct. 1551, 1555, 60 L.Ed.2d 1 (1979). Today, ASCAP has approximately 21,000 writer and 8,000 publisher members and licenses the performing rights in more than three million musical compositions to a wide variety of users including radio and television broadcasters, restaurants, nightclubs, concert halls and sports arenas. Defendant BMI is a non-profit corporation organized in 1939 by members of the radio broadcasting industry. BMI has more than 38,000 writer and 22,000 publisher affiliates, and there are approximately one million compositions in its repertory. Membership in ASCAP or affiliation with BMI is available to any composer or music publisher who meets certain minimal requirements. Both organizations' licensing practices also extend to foreign nations. ASCAP licenses on behalf of tens of thousands of members of approximately 40 affiliated foreign performing rights licensing societies who also license for ASCAP members in their countries. Similarly, BMI has reciprocal agreements with 39 foreign licensing societies pursuant to which it licenses music from their repertories in the United States and they license the works from the BMI repertory in their countries. As mentioned above, each organization operates primarily through the blanket license, which provides the licensee with the right to perform all of the compositions in the ASCAP or BMI repertory, as often as desired, upon payment of an agreed-upon fee.

The eleven individual defendants in this action represent two certified classes of defendants consisting of, respectively, all persons from whom ASCAP, and all persons from whom BMI, have obtained the right to license performing rights to third parties. Each ASCAP member and BMI affiliate enters into a standard membership or affiliate agreement by which ASCAP and BMI obtain the non-exclusive right to license the nondramatic performance of the composer's copyrighted work. Pursuant to these agreements, ASCAP and BMI obtain the authority to establish the forms of licenses to be offered, to fix the price and manner of payment, to adopt a royalty distribution system, and to distribute royalties among the members and affiliates. After deducting operating expenses, each organization distributes all revenues to the members and affiliates at rates which reflect, among other factors, the nature and amount of the use of their music. Among the principal functions of both organizations is the monitoring and policing of unauthorized uses of their composers' copyrighted work.

As the Supreme Court commented in the CBS case, "both ASCAP and BMI plainly involve concerted action in a large and active line of commerce, and it is not surprising that, as the District Court found, `neither ASCAP nor BMI is a stranger to antitrust litigation.'" BMI v. CBS, 441 U.S. at 10, 99 S.Ct. at 1557 (quoting CBS v. ASCAP, 400 F.Supp. at 743). As early as 1934 the Department of Justice initiated antitrust litigation against ASCAP.³ Following the filing in 1941 of criminal complaints which sought to enjoin ASCAP's exclusive licensing powers and to alter the blanket licensing format, the Government and ASCAP entered into a consent decree which, as modified in 1950, still largely governs ASCAP's activities.⁴ Under the amended decree, ASCAP may obtain only non-exclusive rights to license its members' works for public performances.⁵ Further, the decree requires ASCAP to offer a "per program" license which differs from the traditional blanket license in that its fee is based on the licensee's revenues only for those programs which actually use the copyrighted music. The decree mandates that ASCAP set its fees for these licenses at rates which offer users a genuine choice between the licenses, prohibits ASCAP from insisting on the blanket license, and establishes a procedure whereby a licensee unable to agree upon a fee with ASCAP may apply to the District Court for the Southern District of New York for determination of a "reasonable fee."⁶ The licensing practices of BMI parallel those of ASCAP and are similarly governed by a consent decree entered into in 1966 between BMI and the Government.

B. Local Television Station Programming

There are approximately 750 local television stations currently in operation; of these, approximately 600 are network-affiliated and the others are independent.⁷ Local television stations, whether network-affiliated or independent, have three principal sources of programming: network programming; syndicated programming; and locally-produced programming. Network programming is not at issue in this action and need not be...