RADIO STATIONS FIGHT SONG-FEE INCREASE Broadcasters to seek a judicial review of regulator's 'renegade' royalty rates Grant Robertson – Globe and Mail Canada's commercial radio stations are fighting a multimillion-dollar decision by the federal copyright regulator to increase the amount broadcasters must pay musicians for the right to play their songs.
At a closed-door meeting in Winnipeg, more than 15 of the country's radio networks agreed to seek a judicial review of a ruling last month that saw royalty payments increase 30 per cent, according to the broadcasters.
While the decision answers a call from musicians for a bigger piece of the profits from radio airplay, several of Canada's largest broadcasters say they've taken a substantial financial hit.
CHUM Ltd. and Corus Entertainment Inc., which have stations across the country, each recorded a $2.6-million impact in their third-quarter results.
Corus said the unexpected additional expense could force layoffs at its stations, although the company did not elaborate.
Glenn O'Farrell, president of the Canadian Association of Broadcasters, said the industry will ask a judge to overturn the decision and send it back to the copyright board to be reworked.
The industry will argue the regulator stepped outside its legal boundaries to make a "renegade" ruling, Mr. O'Farrell said.
"We feel that the copyright board has taken a number of liberties that are not consistent with its role," Mr. O'Farrell said after the meeting, which was held at the broadcast association's annual conference.
Officials with the Society of Composers, Authors and Music Publishers of Canada (SOCAN), which collects royalties on behalf of artists, could not be reached.
However, Paul Spurgeon, general counsel of SOCAN, said in a recent statement that the royalties had gone unchanged for 25 years and "the previous rates undervalued music's contribution to the radio industry."
Under the new system, music stations will pay 3.2 per cent on the first $1.25-million of their annual revenue to SOCAN, along with a slight increase on royalties for another, smaller artists' organization. After the first $1.25-million, the rate jumps to 4.4 per cent of revenue.
Previously, broadcasters paid a 3.2-per-cent flat rate to SOCAN, which had asked the board to set the royalties at 6 per cent of each station's advertising revenue, but was turned down.
The battle could prove to be a messy one between the broadcasters and the copyright board, since the industry also decided yesterday to push the federal government to rewrite the rules dictating how the regulator operates.
Mr. O'Farrell said the regulator was acting as an advocate of the musicians, which is not allowed.
"Its role is not to provide social engineering and social policy, but to be a rate-setting organization," he said, adding the payouts have been climbing steadily over the years as revenue rose.
The ruling is retroactive to 2003 and extends to 2007. Corus chief executive officer John Cassaday told analysts two weeks ago the firm is looking for ways to offset the costs. The increase comes at a time radio networks are under intense competitive pressure from each other.
"What we'll be doing is essentially scrubbing all our costs and looking for ways of offsetting this," he said. "And we'll look at everything that moves and hopefully find a way to do it without impacting jobs." |