NAB reports (Jan-Dec 1941)

Comparison with the form of contract tendered by ASCAP in June 1940 is also necessary. This can most easily be made by taking stations in the groupings which were set up by the tendered June 1940 contract. This comparison is as follows: (a) Stations with an annual revenue of $50,000 or less get the same terms as were tendered in the June 1940 contract for the first four years of the proposal, without reduction. For the remaining four years and seven months of the proposal, the fee to the station is increased from 3% to ( b ) Stations with an annual revenue of between $50,000 and $1 50,000 have a reduction in commercial fees of from 4'/f’ to 3'"/ for the first four years of the proposal and from to for the next four years and seven months of the proposal. These stations were, under the June 1940 contract, offered a sustaining fee ecjual to 75''/ of the sustaining fee formerly paid by the station. The annual sustaining fees, under the current proposal, are twelve times the station’s highest hour rate with a maximum of 1J4 times the station’s 1940 sustaining fees, a potential increa.se of 100/ in sustaining fees. Stations in this class will benefit or lose by the current proposal depending on the ratio of gross business to card rate and previous sustaining fees. (c) Stations with a revenue of over $150,000 per annum obtain a reduction from the June 1940 contract of 2/ in commercial fees for the first four years of the contract and 1)// in commercial fees for the remaining four years and .seven months of the contract. Their sus¬ taining fees are subject to a potential 50% increase. Stations in this category would appear to benefit from the new iiroposal in so far as local and national spot business is concerned. (d) Networks, under the current proposal, will pay less than they would have paid under the June 1940 con¬ tract lint would still pay a very substantial increase, as a class, over actual 1940 payments. Deductions under the new proposal decrease sharply from a maximum of 15'% to a minimum of 1% in jiroportion to volume of business done. The effect upon stations of increased payment by the networks would depend on the extent to which the cost to the network is passed along to stations. Stations which are on more than one network or which expect to receive programs from more than one network have special problems which they will undoubtedly consider in this connection. The proposals relate to three forms of contracts ( 1 ) a blanket single station license, (2) a per program single station licen.se and (3) a network blanket licen.se. No per program network license is submitted, apparently because Mutual stockholders have voted to take a blanket network license but stations have the privilege of accepting either the per jirogram nr blanket licenses which are tendered. 'The per program |)roposal which is sulimitted camtains a provision which permits ASC.\P to compel a broadcaster to shift from a per program to a blanket basis in the event that the return to ASCAP during any year is less than 2'/, of the station’s entire revenue. The broadcaster may shift from the per program to the blanket basis if his payments to ASCAP during any year are in excess of 5/;) of the station’s entire revenue. It will be noted that the network blanket contract provides that if network sustaining jirograms are broadcast by an affiliate which does not have a local blanket license, as distinguished from a per program license or no license at all, there must be paid, with respect to such sustaining programs, a sus¬ taining fee of 1/} of the card rate applicable at the time that the sustaining program is broadcast, with a maximum monthly payment of one-half of the station’s highest one hour card rate, but not exceeding three-fourths of the 1940 monthly sustaining fee; or the highest one hour rate, not exceeding IjA times the monthly 1940 sustaining fees, less actual sustaining fees paid by the station under its individual per program contract. These sustaining fees are in addition to commercial fees deducted by the network. The consent decree signed by ASCAP provides that ASC.'M’ may not demand any percentage which is based ui)on a percentage of revenue of programs which do not include .ASCAP music. In our opinion, therefore, the proposed per program contract, with its minimum of 2% of the broadcaster's entire receipts, does not comply with the terms of .ASCAP’s consent decree. .Attention is directed to the N.AB Special Bulletin of June 27, 1940 which was reprinted in Vol 8, No. 26, June 28, 1940, N.AB Repokts. This Bulletin pointed out that the form of contract then submitted by ASC.AP was unsatisfactory. In the absence of a final contract incorporating all of the terms of the current proposal, it is impossible to judge how many of the defects of the June 1940 contract will remain, although some defects appear to have been eliminated. The full effect of the clause limiting the right of ASC.AP to restrict compositions, for instance, can¬ not accurately be assessed until the language of the pro¬ vision is e.xamined, and there does not appear in the pro¬ posal anything with respect to the rates to be charged by .ASC.AP on optional clearance at the source on electrical transcriptions. It will also be noted that under the log¬ ging provisions of the per program contract it would appear that any number which cannot be identified by full title, author’s name, copyright proprietor’s name, and if the number is performed from a recording, an identifica¬ tion of the record, is presumed to be an .ASC.AP number, and that any ijrogram which contains a number which cannot be so fully identified will pay the full ASC.AP per program rate. Some of the.se matters may be covered in the supi)lementary document which is on file in the 410 — May 9, 1941