Broadcasting (Jan - June 1941)

CBS Offers Counter Proposal to ASCAP it h Basic 2% Plan Also Covers M&O Group; Affiliates Are Not Bound ■I '"A COUNTER proposal for a contract to permit the return of ■ASCAP music to the CBS network and to the eight individual stations operated by CBS was mailed last Friday by the network to ASCAP. Terms, briefly, call for CBS to pay ASCAP •2% of the network net receipts (defined as income from gross ■,time sales less time discounts and advertising agency com^missions actually allowed), after deduction of the cost of (permanent network lines and with deductions for expenses 'to be calculated as follows : 15% on the first $15,000,000 of ijifinet receipts; 25% on the next ,!.' $5,000,000; 35% on the next i.i $5,000,000; 45% on all over ;,|.:$25,000,000. If during the term of the contract CBS should operate less than eight stations down to a minimum of three, an additional sum of $500,000 per year shall be added to the network expense deductions. If CBS M&O stations are fewer than rthree, CBS and ASCAP shall renegotiate the contract. For the local station blanket li^ cense, CBS proposes 2% on net .receipts (defined as gross time sales less discounts and agency commisjsions) from local and spot sales as averaged for the years 1936 to 1939 inclusive, and 1%% on the excess of net receipts over this average. Programs cleared and paid for at the source shall be 'excluded, as network programs are excluded, when figuring net re■'ceipts. J Sustaining Fees Scale I CBS proposes that station sus^taining fees shall be $12 a year for stations with net receipts of less 'than $50,000 per year; eight times ^the highest half -hour card rate for 'stations with net receipts of between $50,000 and $150,000 per ■year; and 12 times the highest halfhour rate for stations with annual net incomes of more than $150,000. ' On a per-program basis, the CBS 'proposal calls for payment of 1 6.66% of net receipts on commercial 'programs using substantial ASCAP ■music and 1.2% for commercial programs using ASCAP music incidentally for themes, bridges, etc. Sustaining fees under this perprogram system would be 1% of net revenue which would have been received if program had been sold, but not to exceed IV2 times the station's 1940 sustaining fee. Both blanket and per-program percentage rates as proposed, CBS says, shall apply only so long as the stations income from local broadcasting is more than $100,000 per year. If the income of any station falls below $100,000, reductions are to be made as follows: 7l^% for net receipts between 580,000 and $100,000. 16% for net receipts between ^60,000 and $80,000. 29% for net receipts between 140,000 and $60,000. 39% for net receipts between $25,000 and $40,000. 46% for net receipts between $15,000 and $25,000. 50% for net receipts under $15,000. Expires in 1949 Contract is to expire Dec. 31, 1949, subject to a five-year renewal at option of licensees, at rates and terms to be fixed by arbitration. Since the Department of Justice consent decree and this proposal call for complete clearance at the source on network programs, CBS states : "It is obvious that this entire burden cannot be borne by CBS without assistance from stations. Accordingly, it is a condition that substantially all of the CBS affiliated stations shall agree to reimburse CBS that portion of the 2% payment on network net receipts made to ASCAP by CBS which is equal to 2% of network payments to stations. The balance of this 2% to ASCAP will be borne by CBS." Proposal calls for ASCAP to agree that CBS need not pay on network revenue from sale of time on stations in States with laws prohibiting ASCAP operations. ASCAP has already agreed to this provision, CBS reports. Licenses for FM, television, shortwave and experimental stations owned by regular licensees shall be available at a nominal fee, the proposal states, and all claims of ASCAP and its members against licensees shall be released. IRNA Committee Approves Copies of the proposed contract were mailed to CBS affiliates also, with letters explaining that CBS did not make a counter proposal to ASCAP sooner because of the Supreme Court decision regarding ASCAP operations in Florida and Nebraska, which the proposed contract covers, and because ASCAP had repeatedly said it could offer no better terms than those given MBS. CBS has discovered that this last does not prevent ASCAP from considering terms offered to it, however. Contract proposed by CBS covers only the network and its M&O stations, the letter points out, and no affiliate is bound by it to make a deal with ASCAP, although under the terms of the consent decree, ASCAP is bound to offer the same terms to other networks and stations. Letter also states that the proposal was examined by the IRNA committee for CBS affiliates —I. R. Lounsberry (WGR), Don S. Elias (WWNC), John A. Kennedy (WCHS) — each of whom said he would accept such an ASCAP contract for his station. BMI Makes Ask Ruling ASKING the New York Supreme Court to settle the moot question of control of performance rights to musical compositions, BMI and Edward B. Marks Music Corp. last week commenced suit against ASCAP in a test case that seeks no damages but requests that "the court declare the rights and other legal relations of the plaintiffs and ASCAP" in certain musical numbers. When served with papers in the suit, John G. Paine, general manager of ASCAP, termed the case "an admission by the major networks of their urgent need for the Society's music even in small quantities." Compositions chosen for the test suit are Bluer Than Blue by Lew Pollack and Tot Seymour, You Fit Into the Picture by Bud Green and Jesse Greer, and Mississippi River by J. Rosamond Johnson and Frank Abbott. All these writers except Abbott are members of ASCAP. When the Marks company resigned its ASCAP membership at the close of 1940, it granted all performance rights in the works included in its catalog to BMI. A number of these works are currently being performed by BMI licensees, but BMI says that about 10,000 other compositions in the Marks catalogs, which were written by ASCAP members during the period of their ASCAP membership, have not been performed as ASCAP has asserted certain rights in them. Ownership Rights at Stake Under agreements between ASCAP writers and their publishers, a BMI executive stated, the writers assign all of the performing rights in their works to the publishers. Therefore, Edward B. Marks Music Corp. claims ownership of the compositions named in the suit. ASCAP, according to BMI, "has not hitherto made clear whether it contends that the performing rights under these works are the property of ASCAP's publisher members or its composer members." The suit is intended to secure a court ruling on the ownership of these rights so that the numbers may be available for performance, BMI declares, pointing out that clarification of the issues will be beneficial to writers, publishers and to the public as ASCAP's claims have so far resulted in preventing the performance of these works. ^ * ASCAP Preparing Own Suit In the preparation of the ASCAP damage suit against the NAB, . BMI, NBC, CBS and "others who appear to be involved in the combination against ASCAP" [Broadcasting, June 16], ASCAP has engaged David L. Podell, well-known trial attorney, to assist its ov/a general counsel, Schwartz & Frolich, in the prosecution of the case. Although both officers and attorneys of ASCAP refused to discuss details of the proposed action, it is understood that a number of individual stations, advertisers and advertising agencies may be included among the defendants. Such action, it was explained, would enable ASCAP counsel to go more deeply into the contractual relations of the networks with their affiliate stations and with their advertising clients than might otherwise be admissible. Mr. Podell has been given a leave of absence to handle the ASCAP suit. Although the attendance of NBC and CBS chief executives at the Senate Interstate Commerce Committee hearings on the FCC network monopoly regulations in Washington has served to interr rupt the progress of their negotiations with ASCAP, it was learned that the conversations will be resumed this week regardless of the proposed ASCAP suit. Trammell's Wire Niles Trammell, NBC president, early last week sent ASCAP a telegram expressing surprise at the announcement. Informal conversations between network and ASCAP oiRcials have disclosed a mutual willingness to continue their attempts to come to an agreement for the return of ASCAP music to the networks, he said. Meanwhile, MBS has invited the publisher members of ASCAP to attend a luncheon July 1, at which Fred Weber, MBS general manager, and other network spokesmen will explain the network's methods of operation. It was said that a number of misconceptions about MBS are prevalent among the music men which have prevented the fullest exploitation of their tunes on Mutual programs. A second Mutual luncheon with orchestra leaders as guests, will be held within the following day or two. The luncheons were originally scheduled for this week but were postponed due to the Senate hearings in Washington. ^ BROADCASTING • Broadcast Advertising Fla. Citrus Meeting FLORIDA Citrus Commission will meet in Lakeland June 26 to consider advertising plans for 1941-42, and to decide on retention of Arthur KlUdner Inc., New York, or selection of another agency to handle the account. June 23, 1941 • Page 9