Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Music licensing organization settles television stations’ monopoly claims for $58.5M, (Oct 16, 2014)

By Linda O’Brien, J.D., LL.M.

Performance rights organization, SESAC, LLC, has agreed to pay $58.5 million to several local television stations to settle allegations that the organization conspired to monopolize its repertory of copyrighted music, according to the plaintiffs’ motion for preliminary approval of the settlement filed in the federal district court in New York City (Meredith Corporation v. SESAC, LLC, Case No. 09 Civ. 9177.).

SESAC LLC is one of the three largest performing rights organizations (PROs) that issue blanket licenses to the rights to perform the copyrighted music of its members or affiliates. Local television stations—Meredith Corporation, The E.W. Scripps Company, Scripps Media, Inc., Hoak Media, LLC, Hoak Media of Nebraska LLC, and Hoak Media of Dakota, LLC—filed a class action suit against SESAC, alleging that SESAC’s licensing practices unlawfully restrain trade and that SESAC has conspired to monopolize the market for the performance rights to musical works within its repertory in violation of Sections 1 and 2 of the Sherman Act. In March 2014, the court denied SESACs’ motion for summary judgment.

According to the memorandum in support of the plaintiffs’ motion, SESAC will pay $58.5 million into a settlement fund that will be used to reimburse local stations for the claimed inflated license fees paid since 2008 and to reimburse the Television Music License Committee (TMLC) for legal fees and costs in funding the suit on behalf of the industry. SESAC has also agreed to a set of conduct restrictions in its dealings with any local station in the settlement class.

In their memorandum, the plaintiffs state that the proposed settlement exceeds the standards for preliminary approval. The settlement was the result of robust, arms-length negotiations that included active participation by representatives of the class representatives and the involvement of mediators. Moreover, the proposed settlement was fair, reasonable, and adequate in light of (1) the complexity, expense, and likely duration of the litigation, (2) the parties engaged in extensive fact and expert discovery, (3) the risks of maintaining the action through trial, (4) the ability of the defendant to withstand greater judgment, and (5) the range of reasonableness of the settlement fund to a possible recovery.

Additionally, the proposed settlement meets the requirements of Federal Rule of Civil Procedure 23(a) and (b). The settlement class is numerous, comprising of more than 1,200 local stations; questions such as the determination of the relevant product market are common to all class members; the claims of the class representatives are typical of the class; and the named plaintiffs will fairly and adequately protect the interests of the class. Furthermore, questions of law or fact common to the class predominate over any questions affecting individual members and class treatment is superior to other methods for the fair and efficient adjudication of the controversy.

Pursuant to Federal Rule of Civil Procedure 23, the plaintiffs move for (1) leave to file an Second Amended complaint, (2) certification of the settlement class, (3) preliminary approval of the settlement, (4) notice to be given to the settlement class, and (5) the setting of dates for settlement class members to submit objections or opt out of the proposed settlement.

Attorneys: Steven A. Reiss, R. Bruce Rich, Benjamin E. Marks, Eric S. Hochstadt, and Carrie Mahan Anderson (Weil, Gotshal & Manages LLP) for Meredith Corporation, The E.W. Scripps Company, Scripps Media, Inc., Hoak Media, LLC, Hoak Media of Nebraska, LLC, and Hoak Media of Dakota, LLC.

Companies: Meredith Corporation; The E.W. Scripps Company; Scripps Media, Inc.; Hoak Media, LLC; Hoak Media of Nebraska, LLC; Hoak Media of Dakota, LLC; SESAC, LLC

News: Antitrust NewYorkNews