Broadcasting Telecasting (Jan-Mar 1962)

which BMI's broadcaster-owners would dispose of their BMI stock — or to whom — was not made clear in the public court session. Nor did there seem to be any uniform understanding of these issues afterward. Herman Finkelstein, ASCAP attorney, said the proposal's reference to divestiture of broadcaster "ownership or control" meant that broadcasters should be allowed neither ownership nor control. All-Industry sources, contended that the plan ruled out only one or the other, ownership or control, and suggested that one solution might be to have BMI operated by a court-appointed trustee. This, they said, would enable BMI's present owners numbering more than 500 broadcasters, to retain their stock interests which incidentally pay no dividends— but give them no voice in the firm's affairs. Some broadcasters wondered, however, just how efficient such a dichotomy of ownership and manage Herman Finkelstein ment could be expected to be. Mr. Finkelstein felt that the trusteeship idea, although advanced by AllIndustry counsel, had been rejected. He said the plan, as he understood it, contemplated "two ASCAPs," with the reconstituted BMI operating as a writerpublisher firm like the society. Hopes for Continued BMI ■ The ASCAP attorney minimized the possibility that BMI should substantially go out of business if the plan were adopted. He said he hoped BMI would continue to operate side by side with ASCAP — but without its broadcasting ownership. He said he thought that so long as BMI has funds to distribute, it will have writer and publisher members to distribute them to. Broadcasting sources were considerably more skeptical. They thought it possible that if the plan goes through, some of BMI's members might seize the opportunity to start their own licensing agencies and that many others might feel that the circumstances of the reorganization — its sanction by the court — would make transfer of their allegiance to ASCAP desirable. Broadcasting sources also questioned the fairness of the plan's divestiture of BMI from broadcasting without a similar divorcement between ASCAP and the motion picture industry, whose voice in ASCAP is roughly equivalent to that of broadcasters in BMI. The import of the plan's ban on "discrimination" against the use of ASCAP music was expanded in exchanges between Judge Ryan and All-Industry counsel. The judge agreed that the injunction would be directed against BMI, but said: Binding ■ "I expect that the broadcasters would recognize this as being a binding obligation, and perhaps they might subject themselves to private suits if they use their licensing author Carl Haverlin ity to discriminate against any group of composers. I expect that they are duly advised of their legal obligation in this respect, but they would not be subject to any anti-trust decree." Judge Ryan also said he didn't know of any way to bind broadcasters in the proposed general injunction against BMI, "except, perhaps, if we do find a breach of this we can issue an injunction against (BMI), or cite them for contempt, and ASCAP could file a complaint with the FCC." At another point Judge Ryan said that "no television or radio station shall give preferential treatment and preferential performance to any composition which would result in discriminatory action as to ASCAP's members. In other words, in the language of the industry, there shall be no undue plugging of compositions originating outside of ASCAP but that ASCAP shall re ceive a fair deal on . . . plugging or even presentation which doesn't reach the point of plugging." Counsel for the All-Industry Committee is the New York law firm of Donovan, Leisure, Newton & Irvine. Payments Substantial ■ Television stations' payments to ASCAP last year totaled approximately $10.3 million, and television networks added another $8 million. Radio contributed an estimated $10 million, bringing broadcasting's payments to about $28 million or $29 million out of ASCAP's 1961 total of $33.1 million. By comparison, BMI's income for the fiscal year ended last July 31 amounted to $12.7 million, also mostly from broadcasters. If the settlement plan goes through and BMI is hurt as badly as many broadcasters think it will be, then broadcasters themselves will have accomplished what ASCAP has been trying without success to do for the better part of 20 years. For ASCAP has been Hamilton Shea attacking BMI in any handy forum since after BMI was founded in 1940. Once — in 1951 — it took an approach similar to the tack embodied in the current proposal. In a tv music-rate proceeding in that year ASCAP asked the court to amend its consent decree so that it would not have to issue per-program licenses to any BMI-licensed broadcaster so long as BMI was owned by broadcasters. The committee representing tv stations opposed the motion and ASCAP withdrew it. Many Complaints ■ ASCAP has repeatedly complained to the Justice Dept., ever since the early 1940's, about broadcasting ownership of BMI. After investigation, the Justice Dept. has always refused to act. In 1948 ASCAP sought — in vain — to have BMI made a party to a consent decree issued against ASCAP. One of the most spectacular attacks BROADCASTING, March 12, 1962 29