General Description

• The per program license was developed as an alternative to the blanket license that allows stations to reduce their otherwise applicable blanket license fees to account for music performance rights that stations either license directly from the copyright holder (a direct license), license from the program producer (a source license), or own.
  Stations that are affiliated with ABC, CBS, FOX, and NBC and produce local programming typically have achieved savings by switching from a blanket to a per program license.

• The more a station airs programming that uses only direct or source licensed music, the greater the potential benefits of a per program license.

• Per program fees are a function of a station’s blanket license fee and revenues that are derived from each program.

• BMI and SESAC are referred to below as PROs or performing rights organizations.
  The ASCAP per program license formula and terms are confidential. Stations should refer to their ASCAP per program licenses for information on the formula and terms for that license.

BMI and SESAC Methodology / Calculation of Per Program License Fees

Step 1
Stations pay an incidental and ambient use fee of 15% of the station’s monthly blanket license fee. This fee covers performances of music:

• In commercials;

• That is heard in the background of news and public events programs, so long as the performance is less than 15 seconds in duration;

• That is heard in the background of sporting events.

No cue sheets need to be provided to the PROs for these types of music performances.
The remaining 85% of the monthly blanket license fee is subject to adjustment as set forth in Step 2.

Step 2 – Calculation of the Program Fee
The Program Fee is calculated by:

• Multiplying the remaining 85% of the monthly blanket license fee by a “per program multiplier” (specific multipliers below), which yields the “maximum program fee”—the program fee that would be paid if 100% of the programs contain at least some music (other than incidental and ambient music) licensed through the PRO.

• Reducing the maximum program fee by multiplying it by a fraction:

  • Numerator: Revenue attributable to the “non-network” programs broadcast on the station’s main channel that contain music licensed through the PRO (excluding incidental and ambient uses).

  • Denominator: Station’s total revenues attributable to “non-network” TV programs broadcast on the station’s main channel.

Formulas:

• BMI Program Fee
  175% × [85% of Monthly Blanket License Fee] × (Revenues attributable to Non-Network TV programs using BMI music / Revenues attributable to all Non-Network TV programs)
  Note: This includes the administrative fee paid to BMI.

• SESAC Program Fee
  265% × [85% of Monthly Blanket License Fee] × (Revenues attributable to Non-Network TV programs using SESAC music / Revenues attributable to all Non-Network TV programs)
  Note: SESAC charges a separate administrative fee.

Additional Detail

• Calculation of Revenues (Numerator)
  Revenues attributable to TV programs using music licensed through the PRO generally include 100% of the revenues from such programs (unless the music is covered by a source or direct license).
  Programs with only incidental or ambient uses of the PRO’s music are not included.
  Programs that only contain “split works” (joint ownership with rights via other PROs) are also excluded if the station has properly secured other licenses.
  When music in programs cannot be identified, a portion of the revenue may be included—details vary by program and PRO.

• Calculation of Revenues (Denominator)
  This includes the station’s total revenue from non-network programs broadcast on the main channel. Revenue generally means:

  • Amounts billed for sale of commercial or program time (including political ads)

  • Value of trades and barters received in exchange for commercial or program time
    It includes commercial announcements within or immediately preceding a program (after the prior program ends).

• SESAC Administrative Fee
  SESAC receives $300,000 per year in total administrative fees.
  Each licensed station is allocated a portion of these fees.

DISCLAIMER
This summary is a tool for reference purposes only and is designed to explain the basic concepts and methodology contained in music performance license agreements. It is not meant to substitute for use or interpretation of the actual agreements, which contain additional and more extensive terms and conditions.