United States: Antitrust Claims Against SESAC Copyright Licenses Permitted To Proceed

Last Updated: March 24 2014
Article by David A. Kluft

Performing rights organizations (PROs) are entities that issue licenses to, and collect royalties from, television stations and other parties who wish to perform or broadcast copyrighted musical compositions. There are three PROs in the United States, the largest of which are ASCAP and BMI. The other PRO, the Society of European Stage Authors and Composers (SESAC) has until recently been the Jan Brady of the bunch – born in the middle and often overlooked. Founded in 1930 to represent European composers, it later concentrated on the Christian music genre.

Because ASCAP and BMI are bigger, they are also better known, not only by licensees and composers, but also by antitrust regulators. Since the 1940's, BMI and ASCAP have been the target of numerous private antitrust lawsuits and government actions, and both have entered into consent decrees with the Department of Justice that place controls and restrictions on their licensing activities. SESAC, on the other hand, has largely flown under the antitrust radar.

However, in the early 1990's, SESAC began expanding its catalogue, which now includes more than 20,000 affiliated composers, including Bob Dylan and Neil Diamond, and other lucrative properties such as the music embedded in reruns of Seinfeld. In 2008, SESAC allegedly attempted to parlay this increased market share into more favorable licensing terms with television stations. The Meredith Corporation and other television companies filed suit in 2009, alleging that these new terms violated the Sherman Act. On March 3, 2014, Judge Paul Engelmayer of the Southern District of New York, in Meredith Corp. v. SESAC LLC, denied SESAC's motion for summary judgment and allowed most of these claims to move forward to trial.

SESAC's Television Licensing Terms

Almost every television program contains music, but the right to broadcast a program does not ordinarily include the right to broadcast the music embedded in it, which must be separately secured. As a practical matter, this puts television stations in a tough spot. They can't control which music is used in the programs they air (except for locally produced shows), and it would be darned impractical to try and license the music rights directly from every composer for each individual piece of music in every program. So, the stations have little choice but to take licenses from all three PROs.

The purported problem with this arrangement, from the perspective of licensees, is that PROs could take advantage of the situation and force television stations to accept expensive "blanket" licenses, in other words, an all-or-nothing deal that includes a PRO's entire catalogue, even if the licensee only ends up using a few songs. The BMI and ASCAP consent decrees address this concern by requiring the option of a "per-program" license (PPL), under which a station only pays for the music it uses. SESAC (even though unencumbered by the consent decrees) offers both blanket licenses and PPLs. However, the television station plaintiffs argued that what SESAC was offering nevertheless was unlawful in the following ways:

  • Although SESAC offered a PPL, the television stations claim that SESAC manipulated its terms, including by jacking up the administrative costs, so that it would always cost more than a blanket license and in effect elimiate the only economically viable alternative to the blanket license.
  • SESAC allegedly increased its blanket license fee 10% over the prior license period, despite a decline in demand for SESAC music. By contrast, under the BMI and ASCAP consent decrees, disputed licensing rates must be deemed "reasonable" by a third party Rate Court.
  • Most notably, SESAC allegedly entered into "supplemental affiliation agreements" with a few of its most popular composers. Under these agreements, the composers purportedly received more compensation up front from SESAC, and in return the composers agreed not to deal directly with the television stations (or at least to pay very steep fines if they did).

The Court's Antitrust Analysis

Section 1 of the Sherman Act outlaws "[e]very contract, combination . . . or conspiracy in restraint of trade or commerce." Judge Engelmayer wrote that, in order to make out a case under Section 1, a plaintiff must show both concerted action to accomplish an unlawful objective and an unreasonable restraint of trade. Under the "rule of reason" analysis applicable to most situations, a court determines whether an accused action is an unreasonable restraint of trade by considering, among other things, the definition of the relevant market, the defendant's market power and the pro-competitive effects of the challenged activity.

The court held that a jury could find that SESAC's activities satisfied the elements of a Section 1 violation. First, a jury could find concerted action among SESAC-affiliated composers, i.e., thatthey knew their rights would be bundled into a blanket license. Also, a jury could find that the small percentage of composers who agreed to "supplemental affiliation agreements" did so appreciating that they were unlawfully "choking off" any competition to SESAC's blanket license.

As to whether this activity was an "unreasonable restraint" on trade, the court engaged in a "rule of reason" analysis. The Court first explained that the relevant market was not the entire PRO industry (SESAC, ASCAP and BMI). Each PRO has entirely different catalogues, so a television station cannot substitute one license for another, but always had to deal with all three. Therefore, the relevant market in this case was SESAC's catalogue only. The Court held that, with that market definition in mind, a jury could find that the anticompetitive effects of the SESAC license terms (allegedly unrealistic pricing, restrictive supplemental affiliation agreements, etc.) outweighed any procompetitive benefits (which in this case would include giving stations the ability to acquire rights to many works at once and potentially lowering administrative costs).

The Court also refused to dismiss the television stations' claim under Section 2 of the Sherman Act, which alleged that SESAC was attempting to "maintain and fortify" a monopoly by eliminating all realistic competition. After issuing its order, the court temporarily stayed all pretrial deadlines to give the parties a "time out" to explore settlement. They have until April 11, 2014 to report to the court.

To view Foley Hoag's Trademark and Copyright Law Blog please click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
14 Dec 2017, Seminar, Boston, United States

The trustees of The Foley Hoag Foundation invite you to the upcoming Speaker Series event with David Friedman, Senior Vice President, Legal & Government Affairs of the Boston Red Sox.

15 Dec 2017, Seminar, Boston, United States

The New England Electricity Restructuring Roundtable has been meeting bimonthly since 1995 to discuss current topics related to important changes in the electric power industry in Massachusetts and throughout New England.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.