Committee Holds Hearing on Performance Rights Act

RADIO ONLINE | , , | :am CT

NAB Radio Board Chairman Steve Newberry, who also serves as President/CEO of Kentucky-based Commonwealth Broadcasting, testified today on behalf of NAB in a House Judiciary Committee hearing on legislation that would require royalties to be paid for local radio airplay. Larry Patrick, managing partner of brokerage firm Patrick Communications, and owner of 14 radio stations in Wyoming, also testified during today's hearing.

In his remarks, Newberry said that "At its heart, this bill attempts to create a conflict between artists and radio stations where no conflict exists. In reality, local radio has been supporting the music industry for decades."

He noted that 50% of any royalties would go right in to the pockets of the big four record labels, most of which are not even American companies. "Let me repeat that: the record labels actually walk away with more money under this bill than do the featured artists."

Newberry pointed to the record companies themselves as the real culprit as artists often find themselves in such difficult financial straights because of the "one-sided, unfair contracts they signed with their record label." For example, he said, Toni Braxton received less than 35 cents per album of the $188 million in CDs she sold. "If these artists had fair contracts with their labels that included fair royalty clauses, they would have benefited from the promotional value of free radio airplay that they should have enjoyed."

"Let me put this in the starkest of terms," he continued, "Under H.R. 848, your local radio stations will be forced to cut services or employees, may be forced to move from a music format to a talk format, or may be facing bankruptcy. But the damage resulting from H.R. 848 will run far beyond local radio stations.. As this bill makes a steep mountain even stepper for emerging young artists."

Larry Patrick, managing partner of radio brokerage firm Patrick Communications and owner of Legend Communications, which owns 14 stations in Wyoming, said the current economic downturn is having a significant and devastating effect on local radio. "But as bad as the current local radio landscape is, it will deteriorate even further and more dramatically if H.R. 848 were to be enacted."

Salem Communications, the largest religious radio group, Saga Communications, based in Detroit, Radio One, the largest African-American radio company, and others including Citadel, Cumulus, Entercom, Beasley, Emmis, Fisher and dozens of others have had to lay off employees or reduce company-wide compensation five to 10 percent.

He noted that the radio industry is "tightening its belt" and moving forward into a world of "financial uncertainty that none of us ever have ever experienced." "Having watched the industry for 40 years, I can sit here and tell you that the new fees that will be levied under H.R. 848 will do significant damage to local radio stations across the country," he added.

He continued, "The labels suggest that the provision for small market operators of an annual flat fee of $5000 would not harm the small market operators... To pay this fee, even a $5000 fee, stations could have to eliminate covering high school sports, local origination and would reduce their staffing further. Any additional fees also threaten their ability to provide emergency services that are so critical to the thousands of small towns across the country."

Patrick concluded his testimony by proclaiming, "The recording industry is living in a fantasy world that is divorced from the critical depressed financial position in which almost every radio station finds itself today. I strongly urge you to oppose H.R. 848."