US v. AMERICAN SOC. OF COMPOSERS, AUTHORS & PUB.
| Decision Date | 08 August 1991 |
| Docket Number | Civ. No. 13-95 (WCC). |
| Citation | 782 F. Supp. 778 |
| Parties | UNITED STATES of America, Plaintiff, v. AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, Defendants. In The Matter of the Application of TURNER BROADCASTING SYSTEM, INC., Applicant, For The Determination of Reasonable License Fees. In the Matter of the Applications of USA NETWORK, Lifetime Television, the Discovery Channel, the CBN Family Channel, Black Entertainment Television, Inc., Arts & Entertainment Cable Network, the Disney Channel, Home Box Office, Inc., Showtime Networks Inc., MTV Networks, Inc., Opryland USA, Inc., Playboy Video Entertainment Group, Inc., American Movie Classics Company, Sportschannel Prism Associates, Bravo Company and Country Music Television, Inc., Applicants, For Licenses for their Cable Program Services. |
| Court | U.S. District Court — Southern District of New York |
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Bruce D. Sokler, Mintz, Levin, Cohn, Ferris, Glovky and Popeo, P.C., Washington, D.C., David Dunn, Davis, Markel & Edwards, New York City, for applicant Turner.
Jay Topkis, Allan Blumstein, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for ASCAP.
R. Bruce Rich, Evie C. Goldstein, Weil, Gotshal & Manges, New York City, for USA Network, Showtime, the Movie Channel, MTV, Lifetime TV, Discovery, CBN, Playboy and Black Entertainment.
Robert D. Joffe, Cravath, Swaine & Moore, New York City, for HBO.
Alan J. Hartnick, R. Charles Wright, Colton, Hartnick, Yamin & Sheresky, New York City, for Arts and Entertainment Cable Network.
Henry Ratner, Woodbury, N.Y.
Peter Shukat, Shukat & Hafer, New York City.
Allen H. Arrow, Arrow, Edelstein & Larid, P.C., New York City.
This proceeding is an outgrowth of certain provisions of a Consent Decree (the "Decree") originally entered into in 1941 by the United States Department of Justice and the American Society of Composers, Authors and Publishers ("ASCAP"). The Decree, as amended in 1950, regulates the manner in which ASCAP licenses for public performance the copyrighted music of its members.
The applicants in this proceeding all function as so-called cable program suppliers. In brief, they each assemble a package of programming, which they typically transmit to numerous cable system operators. The system operators, which are licensed locally to operate in specified geographic areas, in turn transmit the programming over cable to the televisions of residents within their locale who pay subscription fees to be hooked up to the cable and receive the programming.
At present, the parties have presented to the court for decision two questions that require interpretation of portions of the Decree. The first is whether the Decree requires ASCAP to issue a public performance license to the cable program suppliers that covers not only the transmission of the suppliers' programming to the local cable system operators, but also the transmission of the programming by the system operators to the viewers.1 The second is whether the Decree requires ASCAP to issue to the cable program suppliers, on demand, a so-called per-program license as an alternative to its more commonly used blanket license. For the reasons that follow, I conclude that the Decree requires ASCAP to make both of these licenses available to cable program suppliers.
The current proceeding was initiated by the Turner Broadcasting System, Inc. ("TBS") on January 13, 1989. Although styled as an application for the setting of fees under Article IX(A) of the Decree, the petition principally sought a more preliminary form of relief — an order that ASCAP make available to TBS a performance license that covered the transmission of all of its programming "through to the viewer." Such a license — which ASCAP concedes it is required to issue to the traditional "over the air" networks — is commonly referred to as "licensing at the source," presumably because the license is issued to the entity that is the source of the programming. The applicants assert that the relief they seek is necessary because ASCAP announced in 1988, for the first time, that it would no longer agree to licensing at the source for the cable program suppliers — including TBS's three cable programming services, Cable News Network, Headline News, and Turner Network Television — and would instead provide only a license that was limited to the program suppliers' transmission of their programming to local system operators; the license would therefore not cover the transmission of the programs by the system operators to the viewing public. In effect, ASCAP was asserting a right to demand licenses from both the program supplier and the system operator for the performance of ASCAP music as part of the programming on cable television channels.
TBS's application was ultimately joined by 16 other entities, all of which also supply programming to system operators for transmission to cable viewers. All of these cable program suppliers reported that they had been stymied in seeking a license from ASCAP that would cover the public performance of ASCAP music in programming distributed by them. In each instance, ASCAP had advised the suppliers that it did not believe itself bound to issue such a license to them, and that it intended to obtain separate licenses from both the cable program suppliers and the cable system operators.
ASCAP has moved for partial summary judgment, urging dismissal of that portion of the cable program suppliers' petitions that seeks an order compelling the issuance to them of a license that would cover programming transmissions by the system operators. ASCAP premises its motion on the contention that Article V(A) of the Decree, which requires ASCAP to issue such a license to "telecasting networks" for programming aired by the stations "affiliated" with such networks, does not cover cable program suppliers and their affiliated cable system operators. The applicants have opposed the motion, and although not formally cross-moving for summary judgment, have urged that the court grant their requested relief on the current motion.
After the briefing and argument of ASCAP's motion, the parties agreed to broaden the scope of this proceeding to encompass another issue of decree interpretation. In the previously filed Showtime/The Movie Channel Article IX(A) proceeding, Showtime raised at trial the question of its entitlement under the Decree to a so-called per-program license from ASCAP. Ultimately, Showtime and ASCAP agreed to the withdrawal of that claim from the Showtime proceeding, and its resurrection in the current proceeding. Accordingly, the parties have agreed to expand the scope of ASCAP's previously filed summary judgment motion to encompass the question of whether cable program suppliers are entitled, under Article VII(B) of the Decree, to a per-program license as an alternative to a blanket license.
In supplemental briefing, the applicants have argued that they are "television broadcasters" within the meaning of Article VII(B) of the Decree, and hence are entitled to such a license. In response, ASCAP has pressed the argument that this term applies only to over-the-air or traditional television stations, and that accordingly it has no obligation to provide a per-program license to the applicants.
With the consent of the parties, the court invited the Department of Justice, as a co-signer of the Decree, to offer its views on both issues. On each issue, the Department — although not fully agreeing with ASCAP's interpretation of the Decree or its legal analysis — has concluded that the Decree does not obligate ASCAP to issue the types of licenses sought by the applicants.
ASCAP is a membership association consisting of approximately 40,000 composers and music publishers. American Society of Composers, Authors and Publishers v. Showtime/The Movie Channel, Inc., 912 F.2d 563, 573 (2d Cir.1990) (). The members own copyrights in more than three million musical compositions, see, e.g., id., and have authorized the Society to grant licenses for the public performance of those compositions.
Because the formation of ASCAP represented a pooling by the members of their copyrights for the purpose of obtaining a commercial advantage in dealing with music users, ASCAP eventually attracted the attention of the Antitrust Division of the United States Department of Justice. In 1941, the Government filed suit in this court, alleging that ASCAP and its officers and members had conspired to restrain trade in violation of the Sherman Act. That suit was quickly settled by a Decree that imposed certain limitations on ASCAP's licensing of the performance rights to its members' musical compositions. See United States v. ASCAP, 1940-43 Trade Cas. (CCH) ¶ 56,104 (S.D.N.Y. March 4, 1941).
In general terms, the 1941 Decree required that ASCAP's members give the Society only a non-exclusive agency to issue performance licenses, thus retaining for the members themselves the right to negotiate directly for such licenses or to assign that role to another person or entity. The Decree also prohibited ASCAP from "discriminating in price or terms between licensees similarly situated." Id., Art. II(2).
The Decree addressed in some detail the manner in which ASCAP was to issue licenses for the performance of music by radio broadcasters. Thus, it prohibited ASCAP from insisting on a license fee for commercial radio programs that was predicated in whole or part on the revenues received by the broadcaster from programs that contained no music licensed by ASCAP. Id., Art. II(3).2 It also required ASCAP to issue to radio broadcasters, on request, a...
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