Eric Rhoads' Blog
Analyst: Likelihood Of Royalties Bill Fading
November 24, 2009: Though he's not ruling out a surprise, Concept Capital analyst Paul Gallant writes in a report that he thinks the "odds are dropping for Congress to pass radio royalty legislation." He's reduced the chances of legislation passing in the next year from 60 percent to 40 percent.
Gallant cites the "effective job" broadcasters have done of building opposition to royalties legislation, citing the 27 senators and 253 members of the House who have signed on to the anti-royalties resolution known as the Local Radio Freedom Act.
Gallant writes, "Broadcasters also have gotten traction with arguments that a new fee could have damaging consequences for a large number a radio stations -- particularly in a difficult advertising environment -- and that a
disproportionate share of endangered stations are minority-owned. Such arguments resonate, especially in a Democratic Congress that already views current minority ownership levels as inadequate."
Gallant also notes that members of Congress are "typically more sensitive to broadcasters' policy agenda" as elections near, and points to the leadership of new NAB President/CEO Gordon Smith, who joined the organization officially late last month. Though he notes that Smith is restricted from lobbying directly for another year, Gallant writes, "We view his stature, bipartisan reputation, and skill set as a new and positive factor for broadcasters in the radio royalty battle."
Gallant cautions that there may be "some kind of breakthrough or legislative maneuver" that will allow the Performance Royalties Act to move forward, noting that Senate Judiciary Chairman Patrick Leahy (D-VT) and House Judiciary Chairman John Conyers (D-MI) "remain very committed to moving a bill." But, he writes, "Our sense is the momentum has shifted away from passage" in this Congress.
Gallant believes that a royalty would amount to 3 to 8 percent of local radio revenues.
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