Full opinion text
OPINION AND ORDER WILLIAM C. CONNER, District Judge. These applications, progeny of the consummation of an historic shotgun union, are made to this Court in its enduring capacity as the so-called “rate-court” under Section IX of the Amended Consent Judgement (“Consent Decree”) entered in United States v. ASCAP, 1950-51 Trade Cases (CCH) ¶ 62,595 (S.D.N.Y.1950). The Consent Decree, originally entered in 1941 and subsequently amended in 1950, settled the United States’ antitrust suit against the American Society of Composers, Authors and Publishers (“ASCAP”). Today, the terms of the Consent Decree continue to regulate the manner in which ASCAP licenses its music inventory. This Court’s jurisdiction, an artifact of the Consent Decree, Section XVII, is retained to oversee the ongoing implementation of these provisions. As amended, the Consent Decree requires ASCAP to offer to users of music a “blanket license,” permitting the non-exclusive right to perform, in unlimited fashion, any music contained in the ASCAP repertory. Section IX(A) of the Consent Decree provides that ASCAP and the users of its music are to attempt, in the first instance, to negotiate a license fee; failing to reach agreement after 60 days, the prospective licensee may then apply to this Court “for the determination of a reasonable fee.” Applicants in the instant proceeding are two television networks owned, respectively, by Capital Cities/ABC, Inc. (“ABC”), and CBS Inc. (“CBS”). Both seek a judicial determination of the reasonable fee to be paid to ASCAP for blanket licenses that authorize the performance of ASCAP music in the programming transmitted by each network. ABC seeks determination of a fee for the period January 1,1986 to December 31,1993; CBS seeks determination of a fee for the period January 1,1991 to December 31,1993. BACKGROUND ASCAP is an unincorporated membership association that licenses public performing rights to the copyrighted musical compositions of its members. ASCAP’s members include over 50,000 music composers, lyric writers, and publishers who own the copyrights to a vast number of musical compositions, and who have granted ASCAP a nonexclusive right to license the performing rights to these compositions. SF ¶ l. The society serves both as the licensing agent and as the collector and distributor of royalties for licensed performances. ASCAP v. Showtime/The Movie Channel, Inc., 912 F.2d 563, 573 (2d Cir.1990). ASCAP also endeavors to monitor the public performances of its members’ music to assure that such performances are licensed. See Broadcast Music, Inc. v. CBS, 441 U.S. 1, 20-23, 99 S.Ct. 1551, 1562-64, 60 L.Ed.2d 1 (1979); Tr. at 673-80. ASCAP’s repertory contains over three million compositions. The performing rights for these compositions are licensed by ASCAP to a wide variety of users, including television and radio networks and stations, cable program services, restaurants, clubs, bars, and other establishments that publicly perform music. SF ¶2. Because ASCAP represents a pooling by members of their copyrights which, among other advantages, enhances their commercial posture in negotiating with music users, the society became subject to an antitrust suit filed by the United States Department of Justice. The suit was settled in 1941 when the parties entered into a Consent Decree that imposed certain limitations on ASCAP. See, United States v. ASCAP, 1940-43 Trade Cases (CCH) ¶ 56,104 (S.D.N.Y.1941). In broad terms, the Consent Decree, as amended in 1950, permits ASCAP to obtain from its members only a non-exclusive agency to issue performance licenses. The members retain the right to negotiate directly the performance licenses for their own compositions, or to assign that role to another entity, and ASCAP is prohibited from interfering with a member’s prerogative to pursue these alternatives. The Decree addresses the manner in which ASCAP is to issue performance licenses and requires, inter alia, that ASCAP “use its best efforts to avoid any discrimination among the respective fees .fixed for the various types of licenses which would deprive the licensees or prospective licensees of a genuine choice from among such various types of licenses.” Consent Decree, Sec. VIII. As previously noted, the Consent Decree, Section VI, requires ASCAP to offer a blanket license covering all of the compositions in its repertory. A substantially similar blanket license is offered by Broadcast Music, Inc. (“BMI”), the other major music performing rights licensing organization. Showtime, 912 F.2d at 565. BMI’s repertory also contains a vast number of musical compositions, though fewer than the number in the ASCAP repertory-. SF ¶ 7. The background and nature of the blanket license has been discussed in several opinions considering antitrust-challenges to its validity. See Broadcast Music, Inc. v. CBS, 441 U.S. 1, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979); Buffalo Broadcasting Co. v. ASCAP, 744 F.2d 917 (2d Cir.1984), cert. denied, 469 U.S. 1211, 105 S.Ct. 1181, 84 L.Ed.2d 329 (1985); Columbia Broadcasting System, Inc. v. ASCAP, 620 F.2d 930 (2d Cir.1980), cert. denied, 450 U.S. 970, 101 S.Ct. 1491, 67 L.Ed.2d 621 (1981). Applicant ABC operates the ABC Television Network, which transmits programs, commercial, promotional and public service announcements (collectively “broadcast material”) broadcast by more than 200 affiliated local stations, including eight stations that are owned and operated by ABC. SF ¶ 3. Applicant CBS operates the CBS Television Network, which transmits broadcast material aired by more than 200 affiliated local stations, including ten that are owned and operated by CBS. SF ¶4. Similar broadcast material is aired by the NBC Television-Network operated by the National Broadcasting Company (“NBC”), with over 200 affiliated stations, including seven that are owned and operated by NBC. SF ¶ 6. ABC and CBS acquire, produce and distribute broadcast material to affiliated stations who then broadcast such programs to the viewers within their area. SF ¶ 8. Typically, a majority of the programs transmitted by networks to affiliates are supplied to the networks by independent producers; the balance are produced by the networks themselves. SF ¶ 10. While programs may be sourced from a multitude of producers or packagers, each network customarily deals with only a limited number of such suppliers. SF ¶ 11. Under the network-affiliate relationship, the networks generate revenues primarily through the sale of commercial announcements that are aired by affiliates in conjunction with the programs furnished by the networks. SF ¶ 9. While the uses of music in broadcast material aired by the networks vary, they may generally be classified as either feature, theme, or background music. Feature music is the principal focus of audience attention, such as. a song sung on a variety show. Theme music is played at the start or conclusion of a program and serves to enhance the identification of the program. Music in a program that is neither feature nor theme is generally considered background music. SF ¶ 13. The music contained in programs supplied to the networks by independent producers is typically selected for those programs by the producers. SF ¶ 14. The producers obtain from, the copyright owners of the music selected the right to record the music on the soundtrack of the program’s film or videotape in synchronization with the action. Acquisition of this so-called “synch” right does not carry with it the separate right to perform the music. SF ¶ 14. By longstanding practice, the right' to perform music is licensed to the networks by ASCAP and BMI. SF ¶ 14. During trial, applicants presented considerable testimony concerning the current licensing regime under which, in order to broadcast the programs acquired from producers, the networks must acquire music performing rights for music which is already fully integrated into the programs. Tr. at 373-75, 660-70. The frequently mentioned alternatives to acquiring a music performing-license from ASCAP and BMI are “source” or “direct” licensing. Source licensing entails the program producer procuring performing rights to the music used in the program from the copyright proprietors, and conveying those rights to the network in conjunction with the performing rights to all other components of the. program. Direct licensing entails the network obtaining music performing rights directly from individual copyright proprietors. As noted, however, the networks typically have not secured source or direct licenses, but rather customarily obtained from ASCAP and BMI blanket licenses permitting television performance of all the music in the repertories of these societies. SF ¶ 14; see, Buffalo Broadcasting, 744 F.2d at 920-22. Since 1949, the networks have entered into various blanket license agreements with AS-CAP. SF ¶ 20. Of particular relevance to this proceeding are the four most recent agreements reached between ASCAP and the networks. In June, 1981, CBS entered an agreement (“1981 CBS Agreement”), which retroactively finalized license fees for the 1970-1980 period, and prospectively established fees for the 1981-1985 period. JX 21. The agreement called for total payments to ASCAP of $51.0 million, $6.2 million of which was allocated to the 1970-1980 period, and the balance, $44.8 million, used to establish final fees for the 1981-85 period. The 1981-1985 fees were not apportioned evenly, but rather began at $8.0 million in 1981 and escalated to $9.8 million in 1985. In November, 1985, ABC concluded an agreement with ASCAP, (“1985 ABC Agreement”) retroactively finalizing fees for the 1977-1985 period. JX 12. For the period 1977-1980, ABC fees were finalized at $18.84 million, allocated over the entire period rather than on a per-year basis. For the period 1981-1985, ABC’s final fees totaled $44.8 million, the same amount as paid by CBS for that period. But where the CBS payment schedule called for escalating fees, ABC allocated a fee of $8.96 million to each year. JX 12. In December, 1985, CBS negotiated an agreement (“1985 CBS Agreement”), which prospectively established fees for the 1986-1990 period. JX 22. The fees began at $9.8 million in 1986, and escalated to $11.3 million in 1990. In April, 1992, NBC consummated an agreement with ASCAP (“1992 NBC Agreement”), retroactively finalizing fees for the period 1976-1991, and prospectively finalizing fees for the period 1992-1993. JX 32. The agreement called for an additional payment by NBC of $17.5 million to finalize fees for the period 1976-1990. For 1991, NBC’s fees to ASCAP were finalized at $11.3 million. For 1992, NBC agreed to pay an amount equal to 0.44 percent of NBC’s average gross network revenue for the years 1991 and 1993. For 1993, NBC agreed to pay an amount equal to 0.44 percent of the gross network revenues earned in 1993. JX 32. Applicant CBS remains “open” with regard to final fees for the period 1991-1993. During this period, CBS has paid interim fees to ASCAP in the amount of $9.8 million per year for the years 1991 and 1992. SF ¶ 21. Applicant ABC remains open with regard to final fees for the period Í986 — 1993. During this period, ABC has also paid interim fees to ASCAP in the amount of $9.8 million per year for the years 1986-1992. SF ¶21. Both applicants seek to finalize fees for the years they respectively remain open. DISCUSSION As noted, the Consent Decree establishes a procedure by which the fees payable for an ASCAP license are to be determined. Upon receipt of a written application for a license, Section IX requires ASCAP to “advise the applicant in writing of the fee which it deems reasonable for the license requested.” If the parties are unable to agree upon a reasonable fee within 60 days, the applicant may apply to the Court for the determination of a reasonable fee. In such a proceeding, the burden of proof falls upon ASCAP to establish the reasonableness of its fee proposal. Consent Decree, Section IX. The Consent Decree does not provide further direction as to how the Court should arrive at a license fee, nor does it specify any criteria by which to gauge what constitutes a reasonable royalty. In ASCAP v. Showtime, 912 F.2d at 569, the Second Circuit indicated that the task of assessing such a fee necessitates an appraisal of “fair market value” — an appraisal based essentially on an estimation of “the price that a willing buyer and a willing seller would agree • to in an arms-length transaction.” And in the lower court opinion in Showtime, affirmed on appeal, Magistrate Judge Dolinger noted that a proper analysis should seek to “define a rate or range of rates that approximates the rates that would be set in a competitive market.” See ASCAP v. Showtime, 912 F.2d at 576 (opinion of trial court). Yet the very need for such an approximation reveals the problematic nature of the analysis envisioned and the enigmatic task' thrust upon a court that must undertake this evaluation. For underlying such an analysis is the recognition that the market for blanket licenses does not typify the model of a competitive market, in the sense that it is not characterized by multiple sellers, each possessing negligible market power. Rather, ASCAP and BMI are in the position of being the sellers of a unique product to their licensees, and the providers of a unique service to their constituent members. See BMI v. CBS, 441 U.S. at 20, 99 S.Ct. at 1562. Inasmuch as applicants in this proceeding, and others similarly situated in like proceedings, may prefer to depict the product offered- by ASCAP as the composite of individual musical compositions, the blanket license is “truly greater than the sum of its parts.” BMI v. CBS, 441 U.S. at 21, 99 S.Ct. at 1563. Beyond the performing rights to the music actually used, the license offers the flexibility of immediate and unlimited access to a vast repertory of compositions, without the cost and delay of consummating individual agreements, and without the concern of exposure to liability for copyright infringement. With regard to ASCAP members, the blanket license achieves efficiencies in the monitoring and enforcement of individual copyrights; its absence would significantly raise the cost of licensing, and undoubtedly alter the supply and cost of using the desired compositions. The efficiencies obtained from an aggregate license explain the genesis of this atypical market: “a bulk license of some type is a necessary consequence of the integration necessary to achieve these efficiencies, and a necessary consequence of an aggregate license is that its price must be established.” BMI v. CBS, 441 U.S. at 21, 99 S.Ct. at 1563. In short, the market for blanket licenses appears to be one whose natural consequence is the lack of broad-based competition. To postulate what prices would prevail were such a market “competitive” is perplexing in theory, impractical in practice, and dubious in outcome given the efficiencies obtained due to the aggregating nature of the service rendered. Little can be adduced as to the expected behavior of such a market were it populated by multiple sellers. It is questionable whether such a market could sustain many sellers; whether the market would function efficiently and the price levels at which its supply and demand would converge are even more uncertain. In addition, limited evidence is discernible as to the incremental costs facing ASCAP. Consequently, any rate-setting standard that calls, in the abstract, for a theoretic construct of a competitive market in blanket licensing must confront the reality that there exists minimal evidence as to what that market would look like, much less the prices it would yield. Lacking the instruments with which to construct from start a model to price fairly the rights at issue, it becomes necessary to establish a tangible foundation from which to commence this inquiry.' Thus, as in prior proceedings, the Court finds it appropriate to consider previous agreements voluntarily entered between the parties, or those similarly situated, as the starting point, of its analysis. See Showtime, 912 F.2d at 577 (opinion of trial court) (“we must look to very imperfect surrogates, particularly agreements reached either by these parties or by others for the purchase of comparable rights”). Such an approach offers a workable means by which to advance the analysis in a manner consonant with the stated aims of the Consent Decree. See Showtime, 912 F.2d at 576-77 (opinion of trial court) (deliberating the countervailing considerations relevant to a rate-setting inquiry, beyond policy of encouraging price restraint upon ASCAP). The Decree demands the determination of a “reasonable” fee; as ASCAP remarks, it does not require the Court to create the “platonic ideal” of a competitive market. ASCAP Br. at 4. Rather than speak in terms of competitive market pricing, when such' a term carries vague significance within the context of the blanket license market, we believe it more instructive to view the Court’s role as a moderating influence on ASCAP that selves “to minimize the likelihood that ASCAP’s evident market leverage may be exerted to' obtain unacceptably inflated price levels for its licensees.” Showtime, 912 F.2d at 576 (opinion of trial court) (citing cases). Performing this function does not require the Court to ignore the history of the parties’ preferences as expressed in their prior agreements; on the contrary, prices negotiated voluntarily in an arms-length transaction offer the only palpable point from which to proceed towards an estimation of fair value for later periods. See Showtime, 912 F.2d at 569; see also, United States v. ASCAP; Application of Home Box Office, Slip Op. at 11 (S.D.N.Y. July 11, 1986) (interim fee opinion) (“invocation of a previously negotiated agreement as a guide to interim fees is based ■ on the premise that both parties’ uncoerced acquiescence to the terms of the contract reflects their conclusion that those terms are reasonable under then-current conditions”). Of course, we do not merely endorse as appropriate for today the terms of compromises concluded yesterday. Rather, this inquiry must faithfully address both challenges to the validity of negotiated agreements as reliable benchmarks of reasonable rates at the time entered, as well as changed circumstances that may make prior benchmarks outdated measures of fair value. The very existence of a rate court necessitates the initial inquiry: Though the rate court’s existence does not mean that ASCAP has violated the antitrust law, the court need not conduct itself without regard to the context in which it was created. The opportunity of users of music rights to resort to the rate court whenever they apprehend that ASCAP’s market power may subject them to unreasonably high fees would have little meaning if that court were obliged to set a “reasonable” fee solely of even primarily on the basis of the fees ASCAP had successfully obtained from other users. Showtime, 912 F.2d at 570. Where prior agreements form the starting point of a rate-setting inquiry, the Court will consider the distinctive conditions impacting those agreements, and evaluate claims that the agreements were the product of a disparity in bargaining leverage. With regard to changed circumstances, the Court must account for alterations in the economic conditions confronting the parties, as well as appraise variations in .the nature and value of the rights at issue. With these general principles in mind, we examine the divergent proposals submitted by the parties as measures of reasonable blanket license fees. Since ASCAP bears the burden of establishing the reasonableness of its approach, its proposal will be evaluated first. A. ASCAP’s Fee Proposal ASCAP seeks to discharge its burden by relying primarily on the terms of an agreement recently entered into between ASCAP and NBC. The 1992 NBC agreement retroactively finalized fees for the period 1976-1991, and prospectively finalized fees for the period 1992-1993. ASCAP’s fee proposal suggests for ABC and CBS terms identical to as those agreed to by NBC for the particular period for which each applicant seeks to finalize its fees. Thus ASCAP proposes for ABC the same terms agreed to by NBC for the years 1986 to 1993, and for CBS the terms agreed to by NBC for the years 1991 to 1998. The fees assented to by NBC for these years are as follows: 1986 [redacted] 1987 [redacted] 1988 [redacted] 1989 [redacted] 1990 [redacted] 1991 $11,300,000 1992 0.44% of 1991/1993 average gross revenue 1993 0.44% of gross revenue SF ¶21. According to applicants’ projections, ASCAP’s percentage-of-revenue proposal for 1992 and 1993 would yield the following fees: ABC CBS 1992 [redacted] [redacted] 1993 [redacted] [redacted] AX 127, 152. ASCAP’s proposal also seeks from the applicants interest on the amounts by which the recommended fees exceed previous interim fee payments; interest is to be computed from April 30,1992, the date of the NBC agreement. Tr. at 37; ASCAP Br. at 6-7. The principal argument advanced by AS-CAP in support of its proposal rests on the theory that there is no better measure of a reasonable fee than the price recently agreed to voluntarily, in an arms-length transaction, by a network situated similarly to the two applicants. Indeed, the Consent Decree itself adjures ASCAP to treat users evenhandedly; Section IV(C) enjoins discrimination in license fees between licensees similarly situated. In broad terms, ABC and CBS do appear to be situated similarly to NBC. All three networks are approximately the same size, operate in the same manner, earn roughly equivalent revenues, and use ASCAP music in a similar fashion and in approximately the same amounts. Tr. at 79-80; DX Q. Additionally, ASCAP’s proposal professes to respect the experience of applicants’ own history; the fees resulting from the present proposal are “in line,” ASCAP maintains, with fees generated by prior agreements entered into by ABC and CBS. ASCAP Br. at 7-9; Tr. at 50-51 (testimony of ASCAP chief economist Dr. Peter Boyle that ASCAP’s proposal is “status-quo type deal”). With regard to CBS, the proposed 1991 fee of $11.3 million is the same as the fee paid by CBS in 1990; adjusted for inflation, the fee would be lower than the prices CBS had previously agreed to for each of the last ten years. Tr. at 55-56; DX N. Using applicants’ projections, ASCAP’s percentage-of-revenue proposal for 1992 and 1993 yields, in absolute dollar terms, fees equal to or lower than the amounts paid by CBS in 1989 and 1990. AX 127, 152; SF ¶ 21. As a percentage of gross revenue, the 0.44% rate sought for 1992 and 1993 is lower than the average rate reflected in the fixed fees paid by CBS during the years 1981 to 1990 (an average of [redacted] of gross network revenue). DX D. With regard to ABC, while the proposed fees are higher in absolute dollar terms than the final fees ABC has paid in prior years, adjusted for inflation, the average of the fees proposed for the years 1986 through 1991 is lower than the average of the fees paid by ABC during the years 1981 through 1985. See DX M. As a percentage of gross revenue, the 0.44% rate for 1992 and 1993 is close to the average rate yielded by the fixed fees paid by ABC during 1981 to 1985 (an average of [redacted] of network revenue). DX 000; see Tr. at 51-60. 1. Prior Benchmarks Applicants vigorously contest the validity of reliance on the prior agreements between the networks and ASCAP. With respect to replicating the 1992 NBC agreement on the assumption that it is probative of reasonable fees for ABC and CBS, applicants maintain that they are not situated in a position similar to that of NBC at the time that network negotiated its contract. Testimony from the NBC executive who directed the negotiations culminating in the 1992 agreement profiles the circumstances unique to NBC that formed the basis for this agreement. Tr. at 249-87 (testimony of Richard Cotton, NBC Executive Vice-President and General Counsel). Prior to 1992, NBC remained open with respect to finalizing its ASCAP fees for a prolonged period dating from the last quarter of 1976. Tr. at 250. NBC’s interim payments to ASCAP for the 1976-1990 period totalled approximately $15 million less than the amounts paid as final fees by CBS. Tr. at 126, 257; App.Br. at 23. In its fee discussions with NBC, ASCAP appears to have asserted that the network should make-up the $15 million shortfall as well as pay interest for the substantial period it had use of this money. Tr. 126-28, 255-57, 266-68; DX A. While NBC repeatedly resisted the notion of paying interest attributable to the 1976-1990 period, the network apparently viewed ASCAP’s interest claim seriously. Tr. 255-60, 266-68. The trial record reveals assessments of NBC’s interest exposure, ranging from NBC’s appraisal of $25 to $45 million, to ASCAP’s estimate of $15 to $17 million. Tr. at 257, 128. The parties appear to have agreed, in their fee discussions, to settle the 1976-1990 open period in conjunction with the determination of fees for the period 1991 to 1993. Tr. at 260-62, 265-68, AX 4. The 1992 NBC agreement ostensibly represents the compromise struck to settle the “whole ball of wax;” the means by which to set fees on a forward basis through 1993, as well as to arrive at a final disposition for the previous period, including a resolution of the interest issue. Tr. at 266-278. NBC asserts that it viewed the deal as an explicit exchange: ASCAP bartering its claim to a payment designated as interest in return for both premium fees during the 1991 to 1993 period and ASCAP’s preferred percentage of revenue format for 1992 and 1993. Tr. 271-79, 282-83. Based on this testimony, applicants urge that the agreement entered into by NBC was induced by concerns particular to NBC and cannot be considered as the benchmark of reasonable fees for ABC and CBS.App.Br. at 22-27. ASCAP disputes NBC’s characterization of the 1992 agreement. Initially, ASCAP notes that it was far from a foregone conclusion that NBC would match the fees CBS had paid for the 1976 to 1990 period, much less pay a sizable sum of interest on the shortfall. ASCAP’s interest claim rested largely on the award of interest in Showtime, Slip Op. at 3, (October 13, 1989); generally, prior agreements between the parties did not provide for interest payments. ASCAP Br. at 15. ASCAP also argues that the fees prescribed by the NBC agreement “are consistent with” the fees that CBS accepted in its most recent agreement, undermining the contention that the NBC deal was distinctive due to NBC’s peculiar position and thus inappropriate for ABC and CBS. Finally, AS-CAP suggests that the claim that NBC would agree to pay a premium in fees to ASCAP during any period between 1986 to 1993 imputes a significant degree of imprudence on the network’s part with regard to its fee obligations to BMI; NBC’s contracts with BMI required the network to pay final fees equalling 85% of NBC’s final fees to ASCAP for the period 1986 to 1990, and 100% of the final fees NBC paid to ASCAP for the years 1991 and 1992. Tr. 287-301; ASCAP Br. at 16-18; JX 94-97. Consequently, it would be reckless for NBC to agree to pay substantial excesses to ASCAP for the 1986 to 1992 period, when the premiums reflected in those fees would have to be duplicated in large part in the fees paid to BMI. Despite the explications offered by AS-CAP, we think applicants have raised sufficient questions as to the similarity in circumstance between themselves and NBC to cast doubts on the validity of replicating the terms of the NBC agreement for ABC and CBS. Even if it remained uncertain that NBC would ultimately have to match CBS’s payments to ASCAP for the 1976 — 1990 period, as well as pay interest on the shortfall, it is readily apparent that ASCAP pressed its interest claims and that NBC took these claims seriously. The magnitude of the interest calculations arrived at by NBC, the network’s awareness of the Showtime decision and the interest levels assessed in that case, the repeated references in fee discussions to ASCAP’s interest claims and NBC’s view that an unfavorable resolution of the question was a “dealbreaker,” all support the conclusion that NBC’s interest exposure influenced the terms to which it acquiesced. The fact that the fees dictated by the NBC agreement are roughly “consistent with” the amounts under the 1985 CBS agreement does not address squarely the claim that in 1992, NBC deemed a lower fee to be reasonable and may have struck a more favorable bargain if unencumbered by its peculiar circumstances. With regard to the reference to NBC’s BMI obligations, we agree that the magnitude of the premium that applicants, in their post-trial briefs, claim is reflected in the NBC fees does not indicate an entirely sound or balanced approach by NBC towards its total cost for purchasing music performance licenses: it seems imprudent to pay premiums of $3 to $4 million a year to ASCAP to offset an interest exposure that ASCAP itself estimated to be in the range of $15 to $17 million, and for which ASCAP had indicated it would accept a $9 million payment in settlement, if those premiums were to be duplicated, dollar for dollar, in the fees paid to BMI for 1991 and 1992. See App.Br. at 24-27, ASCAP Rep.Br. at 5-6; Tr. at 128, 255-56, 267. However, the fact that music users are apt to make exaggerated estimates of the amounts paid in excess to ASCAP does not invalidate entirely the claim that there was some degree of premium reflected in the fees agreed to by NBC to compensate ASCAP for interest due over the considerable period that NBC had failed to finalize its fees. If the premiums are appraised at a lower order of magnitude, the NBC agreement appears more sound with respect to the additional royalties due BMI. Indeed, if we take Mr. Cotton’s testimony at face value, it would appeal' that NBC was “so focused on avoiding the payment of any interest fee in the ASCAP arrangement,” that the network did not consider the consequences as to BMI. Tr. at 292.. Even if we were to discount Mr. Cotton’s testimony as ASCAP would prefer, it is simply inconceivable that the 1992 NBC agreement would not reflect the duration of the open period and the interest claims accumulated therefrom. To accept this position would compel us to ignore the reality of NBC’s open period dating to 1976, ASCAP’s repeated demands for interest and NBC’s steady resistance, the network’s insistence that a resolution of these questions be part of any agreement reached between the parties, ASCAP’s ability to obtain its preferred percentage-of-revenue format, which was a substantial departure from prior practice, and NBC’s success in avoiding a lump sum payment to ASCAP designated as interest — all facts with which ASCAP does not take issue, and all facts that strongly suggest a compromise. Even if the agreement may not have been as explicit a “horse trade” as applicants claim, the record reveals that it was at least implicitly influenced, if not entirely induced by the unique conditions confronting NBC. Consequently, we do not find ourselves obliged to prescribe fees for applicants on the basis of what ASCAP was able to obtain from another user when the facts indicate a high order of probability that the fees obtained were through circumstances particular to that party. See Showtime, 912 F.2d at 570. We thus agree with applicants that ASCAP has failed to meet its burden of demonstrating that the 1992 NBC agreement is probative of reasonable fees for ABC and CBS. Applicants also take issue with the validity of relying on any of the other three prior agreements between ASCAP and the networks as benchmarks of reasonable royalties. With regard to the 1981 CBS agreement, applicants contend that the loss of CBS’s antitrust suit in 1981 eliminated a meaningful constraint on ASCAP’s market power; the subsequent agreement reáehed between CBS and ASCAP reflects the performance society’s unbridled ability to price the blanket license at levels reflecting the limited alternatives available to CBS. App. Br. at 32-34, Tr. at 706-07, 710-13 (testimony of applicants’ expert economist, Professor George Benston). Nothing else, applicants contend,.can account for the precipitous increase in fees between 1980 and 1981. Applicants’ theory is untenable. First, the CBS 1981 agreement finalized fees retroactively for the 1970 to 1980 period, as well as prospectively for the 1981 to 1985. period. That the same agreement established the fees for both periods quickly undermines the hypothesis that the pendency of the antitrust litigation was the reason for the difference in fee levels between 1980 and 1981. Second, CBS cannot adequately explain why it did not seek rate-court adjudication of its 1981 to 1985 fees, if it truly believed the “precipitous increase”- reflected, in large part, a premium over the reasonable sums due. Third, the fact that the 1985 ABC agreement established the same total amount as that paid by CBS for the 1981 to 1985 period, while simultaneously setting lower fees than CBS’s payments for 1977 to 1980, supports the contention that the 1981 to 1985 fees were deemed reasonable. Finally, ASCAP offers an assortment of factors — the growth enjoyed by the networks in the 1970’s, the surge in inflation during the period at issue, and the dynamics of ASCAP-network relations in the 1970’s — that offer more viable explanations for the increase in ASCAP fees during the early 1980’s than the one posited by applicants. With respect to the 1985 ABC agreement that finalized fees for the 1977 to 1985 period, applicants appear to advance the same argument as that raised against the 1981 CBS agreement. App.Br. at 43^15. Applicants seem to suggest that the failure of the CBS antitrust suit, which resulted in CBS agreeing to inflated fees for the 1980 to 1985 period, also saw ABC inevitably faced in 1985 with no viable alternative than to agree to the rates acquiesced in by CBS in. 1981. As noted above, we find little merit in this theory. In fact, ABC’s position is even less tenable than that of CBS: ABC’s fees were established retroactively — thus the network had the perspective of CBS’s experience as well as the benefit of hindsight. In their post-trial brief, applicants also allude to their difficulties in obtaining viable per-program licenses from ASCAP, despite a persistent five-year effort beginning in 1981. App.Br. at 44^15. The networks appear to imply that the lack of viable per-program alternatives may have influenced ABC to accept reluctantly the terms ASCAP offered for blanket licenses in 1985. The record provides sparse support for this proposition. Moreover, the rate-court alternative remained ever-present; applicants do not- explain why ABC failed to pursue its objective ' further through adjudication, if the network had in fact favored per-program licenses. See Consent Decree, Sec. VIII (enjoining ASCAP from discriminating among fees for various types of licenses so as to deprive users of genuine choice); see also, United States v. ASCAP, 586 F.Supp. 727, 729 (S.D.N.Y.1984) (“mandatory per-program option remains an integral part of the injunctive relief provided for by the decree, necessary to provide users with a viable alternative to the blanket license”). In any event, there is meager evidence in the record that ABC’s frustration in accessing the per-program route induced it to enter the 1985 agreement. Because applicants did not vigorously press this claim, we do not discuss it at greater length. Applicants make two claims with respect to the unsuitability of the 1985 CBS agreement as a benchmark of reasonable royalties. First, applicants claim that the agreement was the outcome of an overly optimistic outlook on the network’s part.as to its future prospects. Based on “rosy” projections contained in a series of reports entitled The Road to 1990, prepared under the direction of David Poltrack, CBS Senior Vice President of Planning and Research, the network submits that it anticipated robust economic health into the 1990’s; the fees CBS agreed to pay ASCAP reflect that mistaken optimism. App.Br. at 40-43. The record contains few if any facts that support this claim. There is scant evidence that CBS relied on the Poltrack forecasts in arriving at a fee for ASCAP. While the testimony of CBS’s able negotiator George Vradenburg suggests that the forecasts were the source of “general corporate optimism,” there is no indication that these reports influenced, much less, formed the basis for the fees negotiated with ASCAP. Tr. 425-26, 435-37. Absent from the record is any credible connection between the Poltraek predictions and the claim that CBS was amenable to increased outlays in its programming costs. Nor do The Road to 1990 reports appear to be in the nature of a financial planning guide to which CBS may have referred in assessing the expenses it was willing to incur. The forecasts are silent with regard to the changing cost structure confronting the networks and thus, by themselves, are an inappropriate basis for financial decision-making of any sort. Tr. at 348-50. Moreover, the reports do not aspire to a careful appraisal of CBS’s individual economic prospects, but rather speak broadly in terms of cumulative network growth, three-network share, and collective network performance. It appears that in the face of gloomy forecasts for network decline, The Road to 1990 reports were offered as assuring estimates of the promising performance of network television in an environment sporting new competitive challenges — -testaments to the enduring viability of the network “dinosaurs” in the evolving climate envisioned ahead. See Tr. at 308, 350-53, 436. The Poltraek predictions thus seem to be more in the nature of reports prepared for public relations or for designing marketing and sales strategies, than as reliable guides for financial planning, or as the basis of decisions respecting the costs of production or operation. Tr. at 308. In any event, the record is barren of facts that can persuade the Court that a sophisticated and seasoned market participant such as CBS was moved to generosity in the music licensing fees it was willing to pay by pie-in-the-sky forecasts of the nature contained in The Road to 1990. . ■ Second, applicants also claim that the 1985 CBS agreement was the reluctant result of the network’s failure to achieve alternative source and direct licensing for music performing rights. George Vradenburg, CBS’s former general counsel, testified to a four-year effort by the network to obtain agreements with composers, publishers and program packagers to convey their music performing rights to CBS, in the event CBS chose at some future date not to operate under a blanket license. Tr. 403-06. The testimony suggests that despite fairly “serious and intense” efforts, CBS’s venture proved fruitless: while the network was able to obtain cooperation from the composers it hired for programs produced in-house, it was able to obtain agreement from only a handful of program packagers. Tr. 416-24. . Even if CBS had been successful in overcoming the reluctance of many to grant- the options it' sought, the network estimated the total cost would have exceeded the cost of a blanket license due to two factors: first, the incentive for individual suppliers to hold-out and charge premium prices for music rights knowing the network was obliged to obtain all licenses at the source; second, the “inflated royalties” ASCAP furnishes to members whose works have been performed on networks. The result of these failures, argue applicants, was that CBS had no alternative but to . agree to the terms ASCAP demanded for a blanket license. The evidence submitted provides an inadequate basis to find that the 1985 agreement saw a frustrated CBS resigned to paying an unreasonable price for a blanket license after the failure of exhaustive efforts to secure alternative forms of licensing. Evidence regarding the source and direct licensing initiatives pursued by CBS remains insufficient for the Court to assess the intensity or purposefulness of the efforts undertaken. Nor are we able to determine the posture under which these initiatives arose; whether they were exploratory — in the nature of attempts to obtain leverage against ASCAP or to procure a competitive yardstick for the blanket license — or whether they were serious efforts to establish a system of alternative licensing capable of prompt and practical implementation. In any event, the difficulties CBS faced in opening the source and direct licensing routes — including any hurdles erected by hold-outs and by AS CAP’s distribution methods — are relevant here only insofar as they affect the prices CBS agreed to pay in the 1985 agreement. On this score, the record is conspicuously silent. There was no testimony indicating either the prices CBS suggested as reasonable, or the premiums it believed it paid due to its failure to secure source and direct licenses. While CBS declares that it saw no alternative but to come to terms with ASCAP on blanket license fees, there is nothing in the record to indicate the amount of excess fees, if any, that ASCAP was able to extract as a result On the contrary, the record suggests that fees agreed upon were acceptable to CBS: [T]he absence of a competitive measure of the value of the ASCAP/BMI licensed rights is a real, business issue; as a practical matter, however, if a license is available to CBS at current rates in years after 1984, there probably won’t be an “issue” which will require people to focus on trying to find alternatives to current practices. AX 27 (Vradenburg memorandum describing discussion with ASCAP general counsel Bernard Korman in December 1984 regarding CBS’s source licensing efforts). The prices agreed upon were in fact consistent with then-current rates: the 1986 fee was identical to that of 1985, while subsequent years showed moderate increases in line with those of the prior period ($1.5 million- over five years). Related to the claims concerning CBS’s experiences at seeking source and direct licensing, applicants also attempt to characterize each of the prior agreements between the parties as products of the substantial market power that the blanket license affords AS-CAP. Given the nature of music use in network television, a licensing system combining direct and source licenses could function efficiently, argue applicants, were it not for the restraints imposed by the blanket license regime. Most network programming is pre-recorded, and most of the music contained therein is composed specifically for the program pursuant to composer-for-hire agreements. SF ¶ 10. . Tr. 373-74, 584-84. In these transactions, the producers select composers and negotiate the prices for the services performed, as well as the fees for the licensing of synchronization rights; music performing rights, however, are reserved for licensing by the composer’s chosen music performing rights society. Applicants maintain that absent the blanket licensing system, there would be no reason why the producer could not also acquire from the composer music performing rights on the networks’ behalf. The “all-or-nothing” aspect of the blanket license, however, makes it prohibitively costly for parties to pursue this course; in order to benefit from accessing licenses at the source, the network would have to be prepared to forgo the blanket license entirely. Thus, before crossing such a rubicon, the network would have to succeed in obtaining performing rights to all the music in its programs, a daunting task both in theory and practice. The issues raised by these claims sound strikingly similar to issues deliberated at great length in the antitrust cases brought against the performing rights societies. See, e.g., CBS v. ASCAP, 400 F.Supp. 737 (S.D.N.Y.1975), rev’d, 562 F.2d 130 (2d Cir.1977), rev’d, BMI v. CBS, 441 U.S. 1, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979), on remand, 620 F.2d 930 (2d Cir.1980), cert. denied, 450 U.S. 970, 101 S.Ct. 1491, 67 L.Ed.2d 621 (1981); Buffalo Broadcasting Co. v. ASCAP, 546 F.Supp. 274 (S.D.N.Y.1982), rev’d, 744 F.2d 917 (2d Cir.1984), cert. denied, 469 U.S. 1211, 105 S.Ct. 1181, 84 L.Ed.2d 329 (1985). The final result of those cases was a rejection of the claim that the blanket license prevents music users from licensing performing rights through alternative means so as to function as a restraint of trade. Applicants urge that the context in which their theories are raised in this proceeding distinguishes the conclusions reached in those cases. The focus of the antitrust cases was on whether the blanket license operates an unlawful restraint of trade; the inquiry centered on plaintiffs sustaining their burden of establishing that they lacked realistic alternatives to the blanket license. The focus in the instant case is on whether ASCAP has discharged its burden of establishing that its fees are reasonable; the inquiry raised by applicants’ claims concerns whether the blanket license empowers AS-CAP to extract excessive fees from the networks, so as to undermine reliance on the prior agreements entered between the parties. See Showtime, 912 F.2d at 570 (failure of antitrust plaintiffs to prove an antitrust violation does not mean that Magistrate lacked evidence sufficient to support a finding that ASCAP enjoys more market power than it would in a freely competitive market for music rights). Inasmuch as the Court was not eager to retry, in this limited rate proceeding, issues raised and resolved in pri- or antitrust cases, wé permitted applicants to proceed with their inquiry, confined to the specific purpose of demonstrating the consequences of blanket licensing on the prices the networks ultimately consented to in their agreements with ASCAP. The cornerstone of applicants’ claim is that the “all-or-nothing” aspect of the blanket license makes other licensing alternatives virtually impossible. Yet as the Second Circuit found, and as applicants themsélves seem to recognize, the availability of per-program licenses substantially undermines this claim. See Buffalo Broadcasting v. ASCAP, 744 F.2d at 926-29 (“the availability of the program license enables [the stations] to forgo the blanket license and still obtain music rights for any program for which direct licensing proves infeasible”). While applicants assert that ASCAP has consistently resisted offering per-program licenses, they are unable to explain why the networks did not resort to the Court if ASCAP’s fee demands deprived them of a “genuine choice” among licenses. Indeed the path remained ever-open; in 1984, this Court denied ASCAP’s motion to amend the Consent Decree to permit ASCAP the prerogative to deny per-program licenses to broadcasters that held blanket licenses with BMI. See United States v. ASCAP, 586 F.Supp. 727 (S.D.N.Y.1984). While ABC did pursue per-program license negotiations- with ASCAP that ultimately faltered, none of the networks availed themselves of the rate-court alternative. They should not be heard now to complain that high fee levels precluded resort to per-program licenses: The availability of a judicially enforceable requirement of a ‘reasonable’ fee precludes any claim that the program license rate is too high, especially in the context of television stations regularly represented by a vigorous committee with the demonstrated resources, skill, and willingness to invoke the rate-adjustment process. Buffalo Broadcasting v. ASCAP, 744 F.2d at 927. Consequently, it is difficult for the Court to accept that the nature of the blanket license forecloses access to other licensing options when the vital path bridging these alternatives does not appear to have been vigorously pursued by.any of the interested parties. Cf. id. at 926-33 (characterizing per-program license as bridge to source and direct licensing). ASCAP, of course, submits that the blanket license has always been the license of choice due to the efficiencies it provides. Indeed, this claim finds much support in the language of the antitrust cases ASCAP has survived. See, e.g., Buffalo Broadcasting, 744 F.2d at 934 (Winter, J., concurring) (“the lack of use of alternatives does not signal a restraint on competition but merely reflects the competitive superiority of the blanket license”). Applicants, however, maintain that irrespective of the efficiencies the blanket license may generally afford, within the context of network music use, source licensing can offer an equally efficient alternative. Tr. 668-85 (testimony of Professor George Benston). Accepting applicants’ theory at face value, the prospect that networks may be able to access performing licenses at the source without incurring prohibitive transaction costs could appear as a viable alternative from the networks’ perspective; however, any theory extolling the feasibility of such alternatives must address the efficiencies lost from the perspective of composers and publishers. In the absence of licensing through ASCAP, alternative mechanisms for monitoring music use and enforcing copyrights must be engaged. Applicants’ theory does not appear to account fully for the time and capacity required to fulfill these functions in situations where a license conferring blanket immunity upon a user is no longer available. Indeed, it is not surprising that producers would be reluctant to fly to the undiscovered country of source and direct licensing, when the blanket license has been known over the years to be an efficient manner by which to license music as well as facilitate the protection of copyrights. In short, we remain highly skeptical of the claim that source or direct licensing alternatives would be able to match the overall efficiencies afforded by the blanket license. More pertinent from the perspective of this proceeding, we are unpersuaded that the blanket license has obstructed the networks’ assiduous efforts to develop a system of source or direct licensing and that, as a result, ASCAP has been persistently able to obtain inflated royalties for its license from the networks. The networks’ theory fails to overcome one inescapable fact: the availability of the rate-court in instances where the fees demanded by ASCAP appeared unreasonable. Given the tenacity with which applicants present their case in this proceeding, one would expect that the networks, faced with intransigent demand by ASCAP, would fly to the Court for relief. Applicants blame their previous reluctance on the fact that invocation of the Court’s jurisdiction is risky, costly, and time consuming; the availability of the rate-court mechanism is therefore a feeble constraint, they argue, on ASCAP’s ability to exert its market power and extract excessive fees from the networks. The risks and costs of litigation, however, must be borne by both parties. If anything, these burdens would appeal’ to weigh more onerously on ASCAP: the networks are likely to have the greater wherewithal with which to wage litigation; moreover ASCAP, in each proceeding, must bear the burden of proving that its proposals are reasonable. Consequently, it is difficult to accept that parties in the position of applicants, represented by skillful negotiators and able counsel, would be incapable of wielding the leverage afforded by the rate-court alternative. Nor can we give credence to the claim that the television networks were repeatedly willing to succumb to ASCAP’s demand for substantially inflated fees rather than taking the matter to the Court to determine a reasonable fee. The theories advanced by applicants are similar to those successfully advanced against ASCAP at the lower Court level in the Skoivtime proceeding. See, 912 F.2d 563, 573-98. Indeed, applicants repeatedly remind the Court of the standards enunciated and the findings made in Showtime. In that proceeding, Magistrate Judge Dolinger declined to use ASCAP agreements with two competing cable services, HBO and Disney, as benchmarks of reasonable fees for Showtime. The decision in Skoivtime, however, cannot support applicants disclaimers’ in the present proceeding against the .prior agreements which ABC and CBS themselves entered into with ASCAP. Several facts distinguish this case from Showtime. First, in Showtime, ASCAP sought to set fees for one user based on fees agreed to by another; the Court here has already rejected the NBC agreement as a reliable benchmark of fees for ABC and CBS, and now seeks only to rely on prices to which the two applicants themselves agreed. Second, in Showtime, Judge Dolinger specifically credited the testimony of cable company executives who stated they viewed the rate-court as “ASCAPfriendly,” thus accepting the cable companies’ “aversion” to invoke this alternative. ,912 F.2d at 585. No similar testimony is available to applicants here to justify the absence of attempts to invoke the rate-court’s jurisdiction in the face of unreasonable fee demands. Third, Judge Dplinger noted that per-program licenses were essentially unavailable to cable suppliers due to ASCAP’s position that the Consent. Decree did not require these to be offered to cable stations; applicants cannot claim here that the per-program alternative is similarly denied the networks. 912 F.2d at 585. Fourth, Showtime placed substantial weight on the fact that the ASCAP fee rates for HBO and Disney were far higher than the rates BMI was able to obtain from these users. 912 F.2d at 587-88. No such disparity exists between the fees ASCAP and BMI are able to generate' from the networks. Finally, the Showtime opinion itself contrasts the cable suppliers with the television networks and stations in terms of the latter entities’ substantially enhanced capacities to negotiate fairly with ASCAP. 912 F.2d at 584. For all these reasons, the claims successfully presented in Showtime will not sustain applicants’ theories in this proceeding. Thus, our evaluation of the prior agreements between the networks and ASCAP leads to the following conclusions. We agree with applicants insofar as rejecting the 1992 NBC agreement as probative of reasonable fees for ABC and CBS. With regard to each of the other three contracts, we do not believe there exist valid grounds to doubt their reliability as benchmarks of reasonable royalties at the time they were entered into. 2. Changed Circumstances ASCAP contends that the fee levels it proposes are modest in comparison to the general upward trend in network programming costs. The rise in total broadcast expenses, however, does not appear to be due to across-the-board increases in all aspects of network programming cost. Rather, it appears that certain costs — notably license fees for sports and for popular prime-time programming, and salaries for sought-after scriptwriters, producers and actors — have risen, on some occasions dramatically, and have largely accounted for the increase in overall broadcast expense, despite rigorous cost-cutting measures implemented elsewhere by the networks. Tr. at 540-49 (testimony of Jay Gold, CBS Vice President of Finance); 623-33 (testimony of John Wolters, ABC Senior Vice President of Finance). Senior executives at CBS and ABC testified credibly as to the concerted cost containment efforts embraced by both networks; efforts entailing a range of administrative cuts, including reductions in staff, salaries, station compensation and the closing of news bureaus around the world, as well as changes in programming mix to introduce lower cost shows such as news and reality-based broadcasting. Tr. at 540-50, 623-33. Thus the argument that ASCAP’s fees should increase, or at least should not be singled out for reduction, when all other network costs are generally rising, does not find support in the record. Rather, if reference must be made to other programming costs, it seems more precise, though admittedly more difficult, to determine whether music performing rights represent the sort of programming factor that should be deemed to fall within the category of factors subject to the networks’ cost-cutting measures, or whether they represent an element of programming whose value would likely command fees consistent with or above prior levels. In this regard, both parties sought at trial to illustrate the relative value of music to network programming. Applicants presented testimony to the effect that music does not play a substantial role in attracting or retaining viewers, and therefore does not fall within the category of the “make-or-break” elements of programming whose costs have historically escalated. Tr. at 584-90, 599-600 (testimony of producer Robert Berger). Applicants also suggested that the recent rise in news and reality-based programming has seen a marked diminution in the use and significance of music to network broadcasting. ASCAP, for its part, entertained the Court with two plays of one episode from the popular television drama series “Dallas”— once with music as would it normally be aired to a television audience, and once without music, in order to highlight the essential contribution music makes to a dramatic presentation. Despite such inventive efforts, the Court, must admit that it remains incapable of quantifying the value of music to any particular television program. Nor do we believe that the rate-setting function requires us to venture any such assessment. Surveying the fluctuations in the amount of music used by a network over time provides an adequate proxy by which to gauge whether the significance of music to network programming has changed relative to prior years; assuming all other factors remain constant, the direction in which a network’s music use has headed should chart the course for the music licensing fees owed to ASCAP. See, United States v. ASCAP; Application of Turner Broadcasting, Inc., Slip Op. at 18-21, 1989 WL 222654 * 20-25 (S.D.N.Y. October 12, 1989). With reference to the above-mentioned efforts undertaken to trim costs at ABC and CBS, if the networks’ consumption of music has remained fairly constant, or has increased over the years, the networks should, not be heard to complain that their music licensing fees should be reduced in accordance with cuts implemented elsewhere. If, on the other hand, music use has steadily decreased, this would provide support for the position that music performing licenses have been relatively less valuable to network programming in recent years than in the past. In the absence of any other yardstick by which to measure the varying value of music to network programming over time, the necessity of incorporating changes in music use into the calculation of music licensing fees becomes apparent. Because ASCAP’s percentage-of-revenue formula takes no account of changes in music use, it is not an acceptable method of arriving at a reasonable fee. In defense of its proposal, ASCAP strenuously contests the claim that the networks’ use of ASCAP music has declined markedly. Given that the most comprehensive source of data measuring music use on network programming comes from ASCAP, the debate over the direction in which music use has changed is ultimately a debate over the interpretation of ASCAP data. See Tr. at 137-155; 823-42. The dispute centers around the reliability of ASCAP data on music use in the so-called “other” category — a question that will be deliberated in due course. At this stage, it is not so relevant whether music use actually increased, decreased or remained constant for purposes of evaluating the reasonableness of a rate-setting formula from a methodological point of view. What is relevant is the fact that no formula which fails to account for the changes in the level of network music use can