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March 10, 2015
Dennis Wharton
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Testimony of Mike Dowdle at Senate Judiciary Committee hearing on music licensing

WASHINGTON, D.C. -- Bonneville International Vice President Of Business Affairs And General Counsel Mike Dowdle testified this morning at a Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights hearing on antitrust decrees governing performance rights organizations ASCAP and BMI.

Below is a transcript of his testimony as prepared for delivery.

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Good morning, Chairman Lee, Ranking Member Klobuchar, and members of the Subcommittee. My name is Mike Dowdle and I am the Vice President of Business Affairs and General Counsel at Bonneville International Corporation, which owns television and radio stations in Salt Lake City, Los Angeles, Seattle and Phoenix. I am pleased to testify today on behalf of the National Association of Broadcasters and its thousands of free, local television and radio stations throughout the nation.

My testimony will focus on the continued necessity of the ASCAP and BMI consent decrees. Absent these consent decrees, no fair competitive market could exist for the licensing of musical works. This would harm not only broadcast audiences, whose access to our programming would be jeopardized; but customers of the countless businesses that publicly perform music every day, including restaurants, bars, retailers, and sporting venues in your local communities.

To illustrate the issue, let me provide an example. KSL-TV, Bonneville's NBC affiliate in Salt Lake City, has music interwoven throughout its programming. These musical performances take place in the background of its movies and television shows, in live sporting events and local news, during transitions between programs, and even within commercials.

For its locally-produced content, KSL-TV has editorial discretion over which specific songs it airs. So in the event that it could not obtain the rights to a certain song, KSL could likely take steps to ensure that song is not performed. But for a significant portion of its content namely network and syndicated programming, live events, and commercials it has no editorial control. If KSL lacked the right to publicly perform a song, it runs the risk of significant penalties under Federal Copyright Law.

Our radio stations that air syndicated programming, commercials and live events run the same risks. They simply must have the public performance rights to the full catalog of musical works in order to operate lawfully.

Even the right to a single musical work gives the copyright owner significant market power. The risk of anticompetitive abuse is compounded when these rights are aggregated, which is exactly what the Performing Rights Organizations - or PROs - do. ASCAP and BMI control more than 90 percent of the public performance rights to musical works in the United States, aggregate those rights into blanket licenses, and then fix a single price for all music within that license, irrespective of which songs are actually used. In any other industry this would constitute per se violations of the antitrust laws. But the consent decrees entered into between DOJ and both organizations more than 80 years ago serve as antitrust lifelines that allow ASCAP and BMI to continue to operate in spite of their anticompetitive nature.

Absent the protections and framework afforded by the consent decrees, ASCAP and BMI would have unfettered ability to extract above market prices and terms for the rights in those works from broadcasters and most other music licensees. Let me be clear, broadcasters would cease operations without the ability to clear these rights, and the consent decrees are critical to that end.

Before I conclude, I want to touch on two specific points that are central to today's hearing. First, in an attempt to circumvent the consent decrees, large music publishers have sought to selectively withdraw from ASCAP and BMI, to directly negotiate with certain digital services. Two federal courts interpreted the consent decrees to prohibit such partial withdrawals, and now the PROs are asking both DOJ and Congress to amend them. Such a modification for partial withdrawals cannot be permitted.

The fact is, any music publisher with sufficient size and scale to consider direct negotiations for selected rights, such as digital rights, would have essentially the same market power as the PROs, and raise the same antitrust concerns. Relaxing the consent decrees in this way would enable publishers to engage in the same behavior that prompted the consent decrees in the first place, and that has been condemned by the Courts since.

Second, this Subcommittee need look no further than the recent antitrust actions brought against the third major PRO, SESAC, to glimpse the anticompetitive licensing practices undertaken by an unregulated collective. These practices, which resulted in a $58 million settlement between SESAC and the television industry just a month ago, are detailed in my written testimony and provide real world examples of the antitrust abuses that would be unavoidable outside this consent decree framework.

In conclusion, this Subcommittee has long recognized the important role that the antitrust laws play in ensuring free and competitive markets for the benefit of consumers. The ASCAP and BMI consent decrees remain vital to television and radio broadcaster's ability to fairly, efficiently, and transparently license musical works to the benefit of their audiences and your constituents.

Thank you for inviting me to testify today. I look forward to answering any questions.

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