Radio channels await crucial Madras High Court final order in 60 days on royalty payments
Moneylife Digital Team 07 April 2011

Since the Supreme Court has vacated the stay on 2% royalty payments to music companies, major FM broadcasters—and the music industry—are hoping for the best, before the rollout of Phase III of radio spectrum auctions

While FM broadcasters appear jubilant about the Supreme Court lifting the stay on the Copyright Board's music royalty order and ordered the Madras High Court to dispose of the matter in 60 days, the music industry hopes for a favourable decision.

On Tuesday, the Supreme Court vacated the stay on the Copyright Board's order that radio channels would have to pay 2% royalty, and directed the Madras High Court- where the suit had originally been registered-to conclude the suit within the next two months. The Board had fixed the new royalty structure to standardise rates across the board, which was challenged by some music industry labels.

The order has been deemed a relief by the radio channels, who think a speedy settlement of the matter will help them. In a press statement, the Association of Radio Operators of India (AROI) said, "The rates aimed to correct a long standing demand of radio operators in India who were paying royalty at rates that were almost 10 times the prevalent rates in other countries on the subject. The earlier rates were effectively making the private radio industry in India financially unviable and analysts had begun to script obituaries for the industry on the whole. We are satisfied with the court directive and hope that the industry will now move on to the next stage-Phase III- and the Government will expedite announcement of the auctions."

With Phase III of radio spectrum auction being on the cards, the radio industry no doubt wants the problem sorted out. Hence, they are very enthusiastic about the outcome. So are the music industry representatives, who feel that without adequate royalty support, the industry is going to suffer.

"We haven't lost the battle", said Indian Music Industry's secretary Savio
D'Souza, "there are 60 days to the judgement. Of course we hope that the court will understand our point of view." The industry, as Mr D'Souza said, is already losing a lot of money due to piracy and bad business. While they have to buy music from the filmmakers and artists at huge costs, the radio royalties-which form a significant part of their revenue-will decrease with the new regime. Earlier, a broadcaster had to pay a certain amount of money per hour to the industry labels.

However, otherwise, both sides are happy that the matter will be resolved soon.  A representative of Reliance Broadcast Network Limited said, "We are not commenting on the ongoing case, but definitely we are happy that the stay has been lifted and the issue is going to be resolved." said Apurv Nagpal, MD, Saregama India Limited.

"We're delighted that the court has mandated that the matter be closed within two months. We have no issues with the stay being vacated for this period as two months do not matter in the long run."

Phase III, some experts argue, is crucial both for the industry and the broadcasters because with some 800 new radio stations in new locations, it will give a boost to both the music industry and the FM space, which has seen a boom in recent years. The Madras High Court's decision will be crucial in determining the future relationship between the music industry and the broadcasters.

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