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METHODOLOGY FOR PERFORMING RIGHTS ORGANIZATION LICENSE FEE ALLOCATION

(by market and among stations within each market)

BACKGROUND

  • There are approximately 1,800 local television stations (including satellites) in the U.S. and 210 Nielsen DMAs. The TVMLC currently represents about 1,200 full-powered commercial local TV stations.

  • This methodology is used to allocate industry-wide fees negotiated between the U.S. performing rights organizations (PROs) and the TVMLC to individual stations. Stations that take a blanket license pay the allocated amount. The allocation also serves as the starting point for determining fees for stations that take a per-program or other alternative license.

  • The data used in allocating industry-wide fees is provided by Nielsen.

  • At a high level, the allocation is done in two steps:

    • First, industry-wide fees are divided among the DMAs based on the estimated number of television households in each DMA (adjusted to account for the fact that not all local stations in each market are represented by the TVMLC and to place more weight on the larger DMAs).

    • Second, within each DMA, the DMA-level license fee is allocated to individual TVMLC-represented stations based on television household viewership estimates (adjusted to account for the fact that certain networks separately license the music performances in their network programming).

PROCESS

STEP 1 – QUANTIFY THE BLANKET LICENSE FEE AT THE DMA LEVEL

  • Each Nielsen DMA is assigned a share of the industry-wide blanket license fee based on that market’s percentage of adjusted television households, calculated as follows:

    • The number of television households in each market is averaged over the previous three years.

    • The estimated 3-year DMA-level television household estimates are ranked from highest to lowest.

    • A viewership-based adjustment is made to account for the fact that certain stations in each market are not represented by the TVMLC.

  • The resulting DMA-level television household estimates are then adjusted using the following weights, placing more emphasis on larger DMAs:

    • DMA Markets Ranked 1-10: multiplied by 1.21

    • DMA Markets Ranked 11-25: multiplied by 1.05

    • DMA Markets Ranked 26-50: multiplied by 0.92

    • DMA Markets Ranked 51-75: multiplied by 0.85

    • DMA Markets Ranked 76-100: multiplied by 0.85

    • DMA Markets Ranked 101-125: multiplied by 0.80

    • DMA Markets Ranked 126+: multiplied by 0.75

  • Each DMA is then assigned a percentage by dividing its fully adjusted television household estimate by the fully adjusted television household estimates of all DMAs. The resulting percentage is multiplied by the industry-wide blanket fee to determine each DMA’s share of the total blanket fee.

STEP 2 – ALLOCATE THE DMA-LEVEL FEE TO STATIONS IN THE DMA

  • Each station’s share of the DMA-level license fee is calculated as follows:

    • If a station is affiliated with ABC, CBS, NBC, Univision, or Telefutura (UniMas)—networks that secure licenses directly from the PROs for the music performances in their network programming—the station’s television households are calculated by:

      • Multiplying the station’s average quarter-hour households by 420 (the number of quarter hours between 9 a.m. and midnight in one week).

      • Subtracting the station’s average quarter-hour prime-time television households (calculated as the station’s average prime-time quarter-hour households multiplied by 88, the number of prime-time quarter hours in one week).

    • If a station is not affiliated with one of these networks, the television household estimate is calculated by multiplying the station’s average quarter-hour viewing households by 420.

  • A station’s percentage share of the DMA-level blanket fee is calculated by dividing its estimated television viewing households by the total estimated television viewing households for all TVMLC-represented stations in that DMA. The resulting percentage is multiplied by the associated DMA-level blanket license fee to determine the station’s blanket license fee.

  • There is a minimum annual fee for all stations, which varies by PRO. If one or more stations in a DMA pay the minimum fee, an adjustment is made to ensure the total DMA blanket license fee remains as calculated in Step 1.

ADJUSTMENTS FOR ADMINISTRATIVE COSTS (ASCAP ONLY)

  • Your station may be entitled to a credit.

  • For each contract period, TVMLC determines:

    • The total contributions requested from all stations.

    • The percentage of the total for each station.

    • The corresponding amount requested from each station.

  • At the end of the contribution period, TVMLC calculates an adjustment by:

    • Multiplying the station’s contribution amount by the total percentage of contributions received from all stations to calculate an adjusted contribution amount.

    • Calculating the difference between the actual amount contributed by each station and the adjusted contribution amount.

  • All stations that pay their full contribution amount (or more than their adjusted contribution amount) will receive a credit against their ASCAP fees. Any station that does not pay its full contribution amount (or pays less than its adjusted contribution amount) will pay additional ASCAP fees.

ADDITIONAL DETAILS

  • ASCAP, BMI, and SESAC provide TVMLC with their list of licensed stations annually. TVMLC reviews the list and identifies discrepancies from previous years.

  • There are differences in how the PROs list licensed stations:

    • BMI’s list includes all full-power commercial stations, including satellite stations.

    • ASCAP only includes satellite stations if they are a full mirror of another station.

  • TVMLC coordinates with stations and PROs to ensure data accuracy.

  • TVMLC consultants apply the allocation formula as described above.

DISCLAIMER

This summary is a reference tool designed to explain the basic concepts and methodology used to allocate industry-wide blanket license fees. It is not a substitute for the actual license agreements, which contain additional and more extensive terms and conditions.