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SESAC owner might bid for the Harry Fox Agency

By | Published on Tuesday 27 May 2014

Harry Fox Agency

The private equity firm that took control of American performing rights society SESAC last year, Rizvi Traverse, is reported to be bidding to buy the main US mechanical rights organisation the Harry Fox Agency, in a deal that could result in a combined performing and mechanical rights body in the American music publishing sector for the first time.

When music publishers license their songs to third parties, the licence defines the exact ways in which a customer is allowed to make use of the music being licensed, and a common distinction is made between the making of ‘mechanical copies’ of songs and the performing of them in public.

In the collective licensing space, where the music publishers provide blanket licences to certain groups of licensees through their collecting societies, separate collecting organisations have usually been set up for ‘mechanical’ licensing and ‘public performance’ licensing, because traditionally different groups of people wanted such licences (record labels usually wanting to make mechanical copies of songs, whereas broadcasters and concert promoters need permission for songs to be performed in public).

This has created challenges in the streaming content space, where often both licences are required, because streaming services make copies of songs while simultaneously performing them in public. In some countries – including the UK – mechanical and public performance societies have allied in recent years and offer joint licences in such scenarios.

In the US, though, where there are three separate performing right societies, each representing different rights owners, there has been no such alliance, meaning online services have not been able to get one-stop blanket licences from the publishing sector (some streaming services have actually licensed the mechanical side directly with the publishers, while covering performing rights via the societies). All of which would make SESAC and HFA coming into common ownership very interesting, even though SESAC is by far the smallest of the performing right societies in the US.

But a merger would enable the combined organisation to provide joint licences for the SESAC catalogue. Plus some wonder if there might not be more opportunities for a combined SESAC/HFA if and when the US publishers withdraw their digital rights from the bigger performing right societies BMI and ASCAP. Because while those publishers would then seek to do direct deals with digital services, they may still need an agency to oversee royalty collections, and SESAC – as a more commercial entity than the other two performing right societies – might go after that work.

According to Billboard, the current owner of HFA, which is the US publishing sector’s trade body the National Music Publishers Association, has been considering a sale for a few months now, and is planning on hiring the services of an investment bank to consider possible options. Though the mechanical licensing side of music publishing is generally in decline, because it’s so closely linked to the record industry’s fortunes, so it’s possible only a buyer with a strategic interest, like Rizvi Traverse, would be interested.