Astral, Canadian Radio Stations Win Royalty Ruling by Joe Schneider
Source : Bloomberg
November 12, 2008
Nov. 12 (Bloomberg) -- Astral Media Inc., Rogers Communications Inc. and other owners of Canadian radio stations stand to win millions of dollars as a result of a court ruling letting them reduce royalty payments to composers and musicians.
Astral and the other broadcasters won summary judgment Oct. 24 from Judge Russel Zinn in Ottawa granting their request to exclude production costs of radio commercials from the amounts on which royalties must be paid, reversing a 10-year-old practice of basing the royalties on advertising revenue.
The Society of Composers, Authors and Music Publishers of Canada and other groups representing artists are urging the Copyright Board of Canada to boost royalties to make up for the losses stemming from the decision or to rule that the royalty calculation doesn't allow the deduction, Paul Spurgeon, SOCAN's general counsel, said in a telephone interview.
"It could amount to millions of dollars," Spurgeon said. "The Copyright Board of Canada has never, ever, looked at this issue."
The group, which includes the Neighbouring Rights Collective of Canada, hasn't determined exactly how much, Spurgeon said. SOCAN hasn't decided whether to appeal Zinn's ruling to the Federal Court of Appeals, he said.
Largest Broadcaster
Montreal-based Astral is Canada's biggest radio broadcaster, with 82 stations in eight provinces, according to its Web site. Its vice president of corporate communications, Alain Bergeron, didn't respond to a request for comment.
Jan Innes, a spokeswoman at Toronto-based Rogers, didn't immediately respond to a request for comment, nor did Tracy Ewing, a spokeswoman at Toronto-based Corus Entertainment Inc.
Astral fell 17 Canadian cents to C$26.03 at 4:10 p.m. in trading on the Toronto Stock Exchange. The stock has dropped 44 percent this year. Rogers, down 26 percent this year, declined 40 cents to C$33.30.
The broadcasters said they have overpaid the artists since 2005. They continued to pay pending the court ruling, because under Canada's copyright law they could have been penalized up to 10 times the amount owed if they had unilaterally reduced the payments and lost in court, Zinn said in his ruling.
Advertisers buy radio spots, either by producing them, contracting the work out to advertising agencies or letting the radio stations produce them. Until 2005, the radio stations calculated their royalty payments based on the money they received from the sale of the ads, according to court documents.
In February 2006, the companies began negotiating with the artists' groups, attempting to exclude the production costs from the calculations. They failed to reach an agreement. The broadcasters sued in 2007, asking the federal judge to rule that such deductions were allowed. The broadcasters sought no monetary damages.
The deductions "unfairly reduce the fair market value of the air time," Spurgeon said. "That's not fair for the composers and publishers."
The case is Between Astral Media Radio Inc. and Society of Composers, Authors and Music Publishers of Canada, T-1439-07, Federal Court of Canada (Ottawa).
© Bloomberg
Astral and the other broadcasters won summary judgment Oct. 24 from Judge Russel Zinn in Ottawa granting their request to exclude production costs of radio commercials from the amounts on which royalties must be paid, reversing a 10-year-old practice of basing the royalties on advertising revenue.
The Society of Composers, Authors and Music Publishers of Canada and other groups representing artists are urging the Copyright Board of Canada to boost royalties to make up for the losses stemming from the decision or to rule that the royalty calculation doesn't allow the deduction, Paul Spurgeon, SOCAN's general counsel, said in a telephone interview.
"It could amount to millions of dollars," Spurgeon said. "The Copyright Board of Canada has never, ever, looked at this issue."
The group, which includes the Neighbouring Rights Collective of Canada, hasn't determined exactly how much, Spurgeon said. SOCAN hasn't decided whether to appeal Zinn's ruling to the Federal Court of Appeals, he said.
Largest Broadcaster
Montreal-based Astral is Canada's biggest radio broadcaster, with 82 stations in eight provinces, according to its Web site. Its vice president of corporate communications, Alain Bergeron, didn't respond to a request for comment.
Jan Innes, a spokeswoman at Toronto-based Rogers, didn't immediately respond to a request for comment, nor did Tracy Ewing, a spokeswoman at Toronto-based Corus Entertainment Inc.
Astral fell 17 Canadian cents to C$26.03 at 4:10 p.m. in trading on the Toronto Stock Exchange. The stock has dropped 44 percent this year. Rogers, down 26 percent this year, declined 40 cents to C$33.30.
The broadcasters said they have overpaid the artists since 2005. They continued to pay pending the court ruling, because under Canada's copyright law they could have been penalized up to 10 times the amount owed if they had unilaterally reduced the payments and lost in court, Zinn said in his ruling.
Advertisers buy radio spots, either by producing them, contracting the work out to advertising agencies or letting the radio stations produce them. Until 2005, the radio stations calculated their royalty payments based on the money they received from the sale of the ads, according to court documents.
In February 2006, the companies began negotiating with the artists' groups, attempting to exclude the production costs from the calculations. They failed to reach an agreement. The broadcasters sued in 2007, asking the federal judge to rule that such deductions were allowed. The broadcasters sought no monetary damages.
The deductions "unfairly reduce the fair market value of the air time," Spurgeon said. "That's not fair for the composers and publishers."
The case is Between Astral Media Radio Inc. and Society of Composers, Authors and Music Publishers of Canada, T-1439-07, Federal Court of Canada (Ottawa).
© Bloomberg
