Банкеръ Weekly

Briefs

MADONNA LEAVES BULGARIA DUE TO LACK OF MONEY

Clouds above the radio and TV stations are getting thicker. As of February all private radio stations and musical TV channels in the country will have to pay if they want to broadcast foreign music. The Bulgarian representatives of the world's five top musical companies have agreed to cancel the barter deals with the private local electronic media, the organisation for collective management of the copyrights of recordings' producers (PROFON) announced. Until last year it allowed electronic media to pay for the broadcast music by ads time in which PROFON's members promoted their catalogues. In end-2002 recordings' producers began talking about changing the terms, and in the very beginning of 2003 this became a fact.PROFON has decided to offer a 40% discount from its tariff rates for the media which sign contracts in February.Under the Act on Copyrights and Related Rights, the organisation of producers and performers can collecively defend the interests of its members. Anyone that broadcasts music with commercial purposes is obliged to sign a contract with PROFON. Its members include BMG through its licensee Avenue Productions, Universal Music through Virginia Records, Warner Music through Orpheus, Sony Music through Vitosha Entertainment, and ЕMI through Ka Music. The total number of performers, whose recordings are produced by PROFON's so-called major members, is about 2,500,000 - practically all famous and not so well-known foreign singers and bands (from Madonna, Eminem and U2 and the like, to the hundreds of thousands less well-known rap and rock groups and DJs).PROFON's Executive Director Mariyana Lazarova refused to specify the organisation's tariff rates, saying that the exact amount for each radio or TV station depends on the number of songs that have been broadcast. She assured that the prices would depend on that if the media has national or regional coverage. The regional ones will pay less than the national. According to a manager of a Sofia-based station, the most recent version of PROFON's tariff rate requires about 2% of the stations' annual proceeds from ads. We had initially set January 1, 2003 as the date for cancelling the barter deals, but later on we decided to change it to February 1, Kamen Spassov, President of Ka Music and licensee of EMI, said. Music companies are of the opinion that our relations with the electronic media would be most precise if both parties pay their bills - we pay for ordered and broadcast ads, and they pay for the music copyrights. Barter deals are an outdated form by which we cheat each other. I'm sick and tired of hearing the ads for Ka Music's albums at 01.00 hrs. or 02.00 hrs. after midnight.PROFON's members have not yet decided if they'll apply to court for canceling the broadcasting of music if a media is not willing to close a contract with the organisation. According to Ms Lazarova, some of the radio stations are currently broadcasting music without any contract at all. She said in front of the BANKER weekly that the Sofia regional radio Vitosha is the most famous violator of the copyrights legislation. For a year and a half Vitosha has been trying to agree with PROFON acceptable terms, the radio's press attache Roumyana Radoulova commented. Regretfully, we have so far stumbled over the exceptionally high claims of the licensees. Until several months ago they demanded 4% of the radio's annual proceeds from ads, and they additionally set a minimum threshold of BGN18,000 a year. These terms are unaffordable for us. I think that only two or three stations with a national coverage could afford that. For the others such an agreement would result in a bankruptcy. It is already clear that the rules shall be soon changed and the relations between producers and commercial operators will be placed on a different plane. The change will certainly shake the electronic media, especially those with more limited financial resources. PROFON's requirement to get the payment for the musical copyrights in cash will most probably give an impetus to the process of radio stations' mergers, which has already begun. Their number is currently strikingly great as compared to the advertising volumes on which the radio market relies. Recently, Konstantin Markov, Chairman of the biggest professional association of radio operators in Bulgaria, ABBRO, announced that proceeds from ads for 2002 would be almost BGN10MN, and a third of this amount would go to the three most powerful radio stations - the Bulgarian National Radio (BNR), Darik, and FM Plus.PROFON's long-time problems with the Bulgarian National Television (BNT) are not a secret. Two of the national media's managerial teams failed to reach an agreement with the musical companies. As the BANKER weekly has already written, the negotiations between PROFON's managers and those of the state-run TV, came to a halt in March 2002 when the licensees submitted their official offer, demanding from BNT about BGN1MN for 2002. The Director Kiril Gotsev, on his part, offered to pay BGN200,000, but the proposal was rejected. As a result, Channel 1 and the satellite TV Bulgaria have been broadcasting only Bulgarian music in their own programmes (external productions such as Jubox and Krechetalo succeeded to negotiate with PROFON broadcasting of foreign music), taking advantage of the fact that some Bulgarian producers' companies left the organisation last year.BNR's Director General Polya Stancheva was the only one who managed to come off clear of the difficult situation. As the BANKER weekly already wrote, in end-December 2002 she managed to close a deal with PROFON at quite a reasonable price (about BGN80,000 for the year 2003). The amount seems completely affordable on the background of the BGN34MN state subsidy, allocated to the BNR in the beginning of this year, and the circumstance that against that money the national radio gets the catalogues of the five musical companies not only for its Horizon programme, but also for Hristo Botev, for the satellite Bulgaria, and for its regional centres. Moreover, PROFON gave up its financial claims to the state-run radio for the music it had broadcast in the past years. For comparison - PROFON claims from the Bulgarian National Television BGN150,000 for the year 2001.

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