KCOH Up For Sale, But Staying Put
One of the more interesting bits of music-related legislation to come up recently is the bill known as the Performance Rights Act. Drafted as House Resolution 848, sponsored by House Judiciary Committee chairman Rep. John Conyers (D-MI) and co-sponsored by a host of legislators including Houston Democrat Sheila Jackson Lee, H.R. 848 would require broadcasters to pay a fee to performers for using their material. On May 13, the House Judiciary Committee approved H.R. 848 21-9; it now faces a hearing before the full body, although no date has been scheduled yet. Through some arcane loophole, broadcasters' existing agreements with bodies such as ASCAP, BMI and SESAC - the licensing organizations who tabulate, collect and disperse royalties - only covers songwriters and publishers, meaning if an artist didn't write a song, he or she won't see any "mailbox money" no matter how many times it gets played on the radio. According to some literature from Jackson Lee's office, the law governing such practices has not been amended in 100 years, and the only other countries that treat their artists thusly are Iran, North Korea and China. This all sounds equitable enough, but many radio stations - especially smaller ones, ones not owned by giant media conglomerates and often targeted to minority, rural or religious audiences - are worried any further governmental incursion into their balance sheets could be catastrophic. (The committee approved Jackson Lee's amendment that would lessen the amount such stations would pay, and allow for a longer period before their bill came due.)
To see how one such Houston station - Third Ward-based KCOH (1430 AM), a beacon to the local African-American community for well over 40 years - is taking the news, Rocks Off rung up principal stockholder and General Manager Mike Petrizzo Wednesday morning. Rocks Off: Are you familiar with this bill? Mike Petrizzo: Very much so, yes. RO: If this goes through, what sort of effect do you think it would have on KCOH? MP: I don't think it'll be passed.
MP: For one thing, it'll be detrimental to radio stations that play music. It's gonna cost 'em money. We already pay money to ASCAP and BMI every month.RO: My understanding is that that money goes to the songwriters and publishers, not the performers.
MP: Let me say this: If that bill passes, as it's being presented to Congress, 50 percent of the proceeds these stations would pay would go overseas. That's one thing they don't talk about, but it's true. NAB talks about it, the National Association of Broadcasters. If that bill passes, 50 percent of the proceeds will not stay here.RO: Is that because the labels are headquartered overseas now?
MP: In some cases that's true, yes. The companies that are overseas would get 50 percent of whatever we pay on a performance fee. But I don't think we're passing it. That's one of the reasons it won't pass. Anyway, look at the economy today - it's a hardship for radio stations. Just to give you an example, the fee would be based on your income, not on the records you play, how many you play, what type of records you play. If your income is up to $1,125,000, you would be assessed a rate of $5,000 for the year. If it's over $1,125,000, you would pay more than $5,000, but that has not been determined yet. In essence, that's it.RO: Where would KCOH fall under that?
MP: Naturally, I'd vote against it - I'd tell my legislators in Washington, D.C. to vote against it because naturally it would hurt us. It would cost us so much money. We pay enough money now to ASCAP and BMI, and I'm sure the money goes to the right place. Who did not get the money, did you say?RO: It's for the songwriters and publishers, not the people that actually perform the songs.
MP: The artists are not getting any money, you say? RO: That's what the people who drafted this bill are saying. MP: I'm not sure about that. I don't see why they wouldn't get paid - they're the ones who make the records go. They're the ones who make it possible for the radio stations to play them. The most important thing of all is it would be a deterrent to radio stations. Especially with the economy today, we cannot afford another tax of that nature. It came up many years ago and was defeated; I think it'll be defeated again. RO: If it did pass, how much of an impact would it have on your station? MP: I just gave you the rates. The radio station would have to pay at least $5,000 a year if that bill passes, according to the income that I just explained to you. That was given to me by the NAB, and they gave me some spots to run. A lot of stations here in Houston are putting out editorials on the air, asking their congresspeople to oppose the bill. About two or three stations that I know of, and I'm sure there are more than that. RO: Which others? MP: I don't know. I know they're Houston stations, either FM or AM or both. One of my employees heard it on their stations. And I know that for a fact anyway - believe me, those stations that play music and are under contract with ASCAP, BMI and SESAC, they pay money already. RO: Would something like this put KCOH in danger of shutting down? MP: Of course not. I hate to say this, but that's a ridiculous thing to say. You don't think a $5,000 fee would shut us down? That's impossible. That may happen to small stations around the country, but not a station like KCOH in a major market like Houston. RO: Would you stop playing music? MP: That's impossible. That's our bread and butter. We play music and we have talk-style programs. Our talk programs are very consistent, and [the DJs] love to be able to talk to the audience on the air, so we need that very much too. We have a variety format at KCOH - it's music/talk, really. But there's no way we're going to close down because of that fee. That's impossible. RO: How is the station structured exactly? Is it commercial, noncommercial... MP: It's a commercial station. It's for-profit. Definitely. RO: So what you're telling me is you wouldn't like to see this thing go through, but the station could survive if it did? MP: In our case, that's true. Definitely true. There's no way that we're going to close down [laughs]. This station's worth a tremendous amount of money. We don't need another deterrent of that nature, though. It's not necessary. RO: Is KCOH for sale? MP: I'm in the process of selling the station. RO: What's your reason for wanting to sell the station? MP: I'm looking to retire. I've been here 43 years. And my partner here at the radio station, he's the operations manager, he wants to retire also. He's been here 43 years also. We're looking to retire. That's the only reason we want to sell. RO: Just out of curiosity, what's the market like to sell a radio station these days? MP: I'm in the process of selling it. I have a buyer already. But it depends on the funding. It's taken a long time, many months, for the buyer and the lawyers to get together and agree on a contract. But we finally got together, and the contract is before the FCC right now in D.C. My attorneys say that probably by June 30 we'll have an answer from the FCC. RO: Are you selling it to an individual or a corporation? MP: It's a group. That's all I can tell you. RO: Does this group own any other radio stations? MP: No. They don't own any other stations. This would be their first. RO: Are they based in Houston? MP: Yes. RO: So it's up to the FCC now? MP: Of course. They have to approve the contract. And then, most important of all, the buyers have to come up with the funding on that date.
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