Royalties

Music royalty companies face EU antitrust ruling

European Union broadcasters may win the right to lower payments to groups that collect license fees for composers under a European Union draft ruling, three people with knowledge of the decision said.

Regulators will rule within weeks that royalty-collecting societies, which are national monopolies, must lift restrictions on some Europe-wide licensing, forcing them to compete with each other, three people familiar with the draft decision said. The probe was prompted by a 2000 complaint by Bertelsmann AG's RTL Group unit.

“Everyone would be better served if royalty collection were better managed,” said Gert Potvlieghe, an analyst in Brussels at Petercam with a “buy” rating on RTL. “For analysts, the most frustrating thing is to get a grip on what broadcasters are paying and how they're paying.”

Broadcasters may benefit if large collecting societies, such as France's Sacem, are forced to cut royalty charges to compete with smaller agencies that have lower costs. RTL Group's French television channels, which spend about 100 million euros ($156 million) a year on licensing, may have “more flexibility on their cost side,” Matthieu Mouly, an analyst at Natixis Securities in Paris with a “reduce” rating on RTL.

The European Commission, the EU's antitrust regulator in Brussels, will rule that the societies' restrictions break EU antitrust rules and must be removed within 90 days, said the people, who can't be identified because the decision isn't public. The draft decision doesn't include a fine, the people said.

(Published by Bloomberg - june 25, 2008)