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T-Series faces probe on royalty payments

T-Series faces probe on royalty payments
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First Published: Mon, Oct 31 2011. 10 57 PM IST

Updated: Mon, Oct 31 2011. 10 57 PM IST
New Delhi: The Competition Commission of India (CCI) has asked its director general to investigate whether leading music company Super Cassettes Industries Ltd, which owns the T-Series label, is charging arbitrary royalty rates from radio broadcasters.
If CCI establishes that T-Series is abusing its dominant position in the music industry, it can take several steps—from imposing a cease and desist order to charging a penalty— which may bring relief to a number of radio channels.
“The case is based on a petition filed by law firm Amarchand Mangaldas on behalf of HT Media Ltd. CCI has found prima facie merit in the submission of the informant that radio broadcasters have no option but to accede to the terms dictated by T-Series,” said a senior CCI official who did not want to be named. T-Series has an estimated 80% marketshare in music rights. HT Media publishes Mint and Hindustan Times and operates four FM radio stations under the Fever 104 brand.
CCI has directed the directorate general to submit the report within 60 days, the official said.
Another person close to the case said if T-Series was found to be seeking very high rates for music played on HT Media’s radio stations, the move could be deemed anti-competitive by CCI.
HT Media has based its petition on the Copyright Board having ruled in September last year that, for sound recordings, a music company should charge not more than 2% of net revenue from radio broadcasts as royalty, said the person, who didn’t want to be identified. T-Series is charging Rs 660 per needle hour.
“This works out to be almost four times higher than what is stipulated,” said the person. A needle hour is the music industry’s equivalent of a regular hour.
T-Series was charging arbitrary rates under other heads such as performance royalty, the person said.
“Based on four different court rulings, radio broadcasters feel there should not be royalty on performance as there is no performance happening in playing CDs or DVDs but T-Series is charging Rs 660 per needle hour for that too saying there is performance involved in running them as lyrics and other things are included,” said the person cited earlier.
Neeraj Kalyan, president, T-Series, declined to comment on the case. “We will respond as and when we hear of the CCI order,” he said.
Pallavi S. Shroff, senior partner at Amarchand Mangaldas and counsel for HT Media, also declined to comment.
A senior executive at another radio station said T-Series gets the music rights to 80-90% of new films.
“Given that most radio stations play contemporary Bollywood music, it becomes impossible to ignore T-Series. It’s this monopoly that has prompted the company to charge more than what radio stations pay other music companies,” said this executive. He requested not to be identified as the matter was sensitive.
He said that some radio stations considered boycotting T-Series music but decided against the move. “It doesn’t work in the long run and listeners will complain eventually when they don’t get to hear tracks of new films,” he added.
T-Series’ charges are in with the old Copyright Board Order passed in 2002 since it is not covered under the new Copyright Board Order of 2010 unlike the other music companies, said Prashant Panday, chief executive of 98.3 Radio Mirchi, the radio station owned by Entertainment Network India Ltd, part of the Times Group.
“The legal matter is pending and that’s why temporarily radio stations pay much more to T-Series compared to others,” said Panday.
Panday said such payments should not vary among different music companies.
According to earlier media reports, T-Series had sought an injunction from the Delhi high court exempting it from the 2010 Copyright Board Order.
sangeeta.s@livemint.com
Nikhil Kanekal and Abhilasha Ojha contributed to the story.
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First Published: Mon, Oct 31 2011. 10 57 PM IST