DECLARATION OF CAROLINE N. ESSER IN SUPPORT OF THE ...

Microsoft Word - 112032562_9.docx1 Esser Decl. in Support of NAB’s Opp’n to Mot. to
Compel & Designation of Materials as “Restricted” Dkt. No. 19-CRB-0005-WR (2021-25)
PUBLIC VERSION
LIBRARY OF CONGRESS Washington, D.C.
In the Matter of:
Determination of Rates and Terms for Digital Performance of Sound Recordings and Making of Ephemeral Copies to Facilitate those Performances (Web V)
Docket No. 19-CRB-0005-WR (2021-2025)
DECLARATION OF CAROLINE N. ESSER IN SUPPORT OF THE NATIONAL ASSOCIATION OF BROADCASTERS’ OPPOSITION TO SOUNDEXCHANGE’S
MOTION TO COMPEL DISCOVERY AND DESIGNATION OF CERTAIN MATERIALS AS “RESTRICTED”
I, Caroline N. Esser, declare as follows:
1. I am a member in good standing of the State Bar of California. I am an associate
at Latham & Watkins LLP and counsel for the National Association of Broadcasters (“NAB”) in
this proceeding. I submit this Declaration in support of NAB’s Opposition to SoundExchange’s
Motion to Compel Discovery and NAB’s designation of certain portions of the Opposition and
supporting materials as “Restricted.” I have personal knowledge of the facts set forth in this
Declaration and, if called to testify as a witness, I could and would testify competently thereto.
A. Meet And Confer Efforts
2. Beginning on October 22, 2019, and continuing through the present, NAB has been
in conversation with SoundExchange—through email, letters, and telephone conferences—about
NAB’s responses and objections to SoundExchange’s discovery requests. The parties were able
to reach agreement on many but not all of the issues. Below I summarize portions of this meet
Electronically Filed Docket: 19-CRB-0005-WR (2021-2025)
Filing Date: 12/09/2019 03:44:27 PM EST
2 Esser Decl. in Support of NAB’s Opp’n to Mot. to
PUBLIC VERSION
and confer process that are relevant to SoundExchange’s present Motion and NAB’s Opposition
to the same.
3. On November 1, 2019, I participated in a meet-and-confer call with counsel for
SoundExchange. During that call, NAB made clear that, consistent with SoundExchange’s own
position that it would search for documents from entities that are participants or provided a witness
in this proceeding, NAB would collect documents from NAB and the station groups that provided
witness testimony in NAB’s written direct case—i.e., iHeartMedia, Inc. (“iHeart”), Midwest
Communications, Inc. (“Midwest”), and Mel Wheeler, Inc. (“Wheeler”).
4. In email correspondence on November 4, 2019, SoundExchange took the position
that NAB should also collect and produce documents from Beasley, Cumulus, Salem, and
Cromwell in response to RFPs 5, 49, 51, 54, 57, & 58. SoundExchange claimed that these requests
are directly related to paragraph 40 of Dr. Leonard’s written direct testimony. Attached hereto as
Exhibit 1 is a true and correct copy of this correspondence from SoundExchange’s counsel to
counsel for NAB.
5. On November 20, 2019, in the spirit of compromise, NAB informed
SoundExchange that, though it did not agree that any of these requests are directly related to
paragraph 40 of Dr. Leonard’s written direct testimony, NAB was willing to work with Beasley,
Cumulus, Salem, and Cromwell to collect and produce documents responsive to RFPs 57 and 58.
SoundExchange responded that the “parties are at an impasse” with respect to RFP 49 (and other
RFPs), but did not provide a more detailed explanation. SoundExchange also ignored NAB’s
subsequent email seeking clarity on which RFPs SoundExchange was considering addressing in a
motion to compel. Attached hereto as Exhibits 2 and 3 are true and correct copies of this
PUBLIC VERSION
correspondence between counsel for NAB and counsel for SoundExchange from November 1,
2019 through December 4, 2019.
6. On November 6, 2019, I participated in another meet-and-confer call with counsel
for SoundExchange. During that call, NAB explained to SoundExchange that RFP 64 and the
Unnumbered RFP are incoherent because they seek documents regarding the major record
companies’ market power in “the market for simulcasting or radio” and “the market for custom
radio services,” but the majors do not offer simulcasts, terrestrial radio stations, or custom radio
services and therefore do not compete at all (let alone have market power) in the alleged markets.
NAB told SoundExchange that the requests were unanswerable as written and asked
SoundExchange to revise the requests. SoundExchange, however, claimed it was obvious that it
sought documents regarding the majors’ market power in some “upstream market,” apparently
referring to a different market or markets in which the owners of copyrights in sound recordings
license certain rights to downstream players who then perform them for listeners. SoundExchange
insisted that NAB understood what SoundExchange was actually seeking and refused to revise
these requests. Because SoundExchange refused to revise them, counsel for NAB wrote to counsel
for SoundExchange on November 13, 2019 to confirm that NAB would be standing on its
objections to RFP 64 and the Unnumbered RFP. See Ex. 2.
B. Designation Of Material As “Restricted”
7. I also submit this Declaration in support of NAB’s designation of certain portions
of its Opposition and Exhibits 1, 2, and 3 in support of this Declaration as “Restricted.”
8. On June 24, 2019, the Copyright Royalty Board (“CRB”) entered a protective order
that limits the disclosure of “confidential information” to outside counsel of record and their staff,
personnel supplied by any independent contractor with whom such attorneys work, and any outside
PUBLIC VERSION
independent consultant or expert who is assisting a participant to this proceeding (“Protective
Order”). See Dkt. No. 4012. The participants agreed that in this proceeding, “confidential
information” protectable under the Protective Order (hereinafter referred to as “Restricted
materials”) “shall consist of commercial or financial information disclosed by any means
(including, but not limited to, through documents, testimony, or argument), by a Participant
(Producing Participant) to another Participant or other Participants, that the Producing Participant
has reasonably determined in good faith would, if disclosed, either (1) result in a competitive
disadvantage to the Producing Participant, (2) provide a competitive advantage to another
Participant or entity, or (3) interfere with the ability of the Producing Participant to obtain like
information from other Participants or entities in the future.” Id. § III. Prior to the production of
Restricted materials, participants must (1) mark these materials “with a conspicuous label of
‘RESTRICTED – Subject to Protective Order in Docket No. 19-CRB-0005-WR (2021-25)’”; (2)
mark these materials “with highlights or brackets”; and (3) “deliver with all Restricted materials
an affidavit or declaration signed under penalty of perjury listing a description of all materials
marked with the ‘Restricted’ stamp and the basis for the designation.” Id. § IV.A.
9. I have reviewed NAB’s Opposition and the exhibits in support of this Declaration.
I have determined to the best of my knowledge, information, and belief that portions of NAB’s
Opposition and Exhibits 1, 2, and 3 contain non-public Restricted material protected under the
Protective Order. Portions of these documents are protected under the Protective Order because
they contain commercial or financial information that is not publicly available and that, if
disclosed, would competitively disadvantage participants in this proceeding, provide a competitive
advantage to another participant or entity, and interfere with the ability of participants to obtain
like information from other participants or entities in the future. Restricted material is redacted in
the public copies ofNAB's filing and highlighted in gray and bracketed in the restricted copies of
NAB's filing.
10. I declare in good faith, and to the best of my knowledge, that all information
designated as restricted meets the definition of "confidential information" as set forth in the
Protective Order.
I declare under penalty of perjury that the foregoing is true and correct, and that I executed
this Declaration ·on December 9, 2019 in San Francisco, California.
5
~ c;___ Caroline N. Esser
Esser Deel. in Support of NA B's Opp'n to Mot. to Compel & Designation of Materials as "Restricted"
Dkt. No. 19-CRB-0005-WR (2021-25) PUBLIC VERSION
EXHIBIT 1 PUBLIC VERSION
Dkt. No. 19-CRB-0005-WR (2021-25)
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From: Warren, Previn To: Lovejoy, Brittany (SF); Damle, Sy (DC); Esser, Caroline (SF); Hanson, Kris (SF); Jovais, Alicia (SF) Cc: Cherry, Andrew B.; Trepp, Alex S. Subject: RE: Web V Date: Monday, November 4, 2019 7:59:50 PM
Counsel: As we discussed on our call last week, and as anticipated by the correspondence below, SoundExchange believes that NAB should collect documents in response to specific requests for production from the following station groups: Commonwealth, Beasley, Cumulus, Salem, and Cromwell. We have identified the requests we think apply to each of those station groups below. Please note that this correspondence is separate from our forthcoming discovery letter, which will lay out SoundExchange’s position on NAB’s responses and objections in advance of our Wednesday meet and confer. Commonwealth NAB should collect and produce from Commonwealth to the same extent it is collecting and producing from Midwest and Wheeler. NAB elected to offer testimony from Mr. Newberry, which discusses Commonwealth in numerous places. See Newberry WDT ¶¶ 18, 26. It is our understanding from NAB’s website that Mr. Newberry remains the CEO of Newberry. (See https://www.nabfoundation.org/documents/board/stevenNewberry.asp.) Beasley, Cumulus, Salem, and Cromwell NAB should collect and produce documents from these broadcasters in response to Request Nos. 5, 49, 51, 54, 57, & 58. These requests are directly related to Dr. Leonard’s written direct testimony. In his testimony, Dr. Leonard argues that “simulcast differs economically from custom radio” in part because simulcast focuses on non-music content. In paragraph 40, Dr. Leonard states that “[m]y interviews with broadcasters confirmed the importance of non-music content to their radio programming.” Dr. Leonard specifically discusses his interviews with Beasley, Cumulus, Salem, Midwest, and Cromwell, and draws conclusions based on those interviews.
Beasley and Cumulus indicated that [ ]. Cumulus also indicated that a music station with little music
content but popular on-air talent will generate more streams than a station with more music. Salem and Midwest stated that non-music programming including local DJ personalities can be a radio station’s competitive differentiator. Cromwell stated that community involvement is a key differentiator for its stations relative to alternatives. They aim to “be important where we are.” Another example given by Cromwell is that there are three country music stations in Nashville that play essentially the same music but they still have nonoverlapping audiences—the reason is because their different non-music content attracts different listeners to each station.
Id. ¶ 40. NAB should collect and produce from these broadcasters in response to the
7 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
From: Warren, Previn Sent: Friday, November 01, 2019 5:59 PM To: '[email protected]' <[email protected]>; [email protected]; [email protected]; [email protected] Cc: Cherry, Andrew B. <[email protected]>; Trepp, Alex S. <[email protected]> Subject: RE: Web V Caroline, et al: Thanks for the chat. To memorialize the key part of our conversation: NAB agreed that it would search for, collect, and produce responsive documents from NAB, iHeart, Wheeler, and Midwest (subject to NAB’s other objections and reservations, which we have yet to discuss). SoundExchange agreed that it would search for, collect, and produce responsive
documents from the record company participants and witnesses as articulated in its responses and objections – again subject to SoundExchange’s other objections and reservations, which we have not yet discussed. SoundExchange explained that it reserves the right to seek documents in response to certain of SoundExchange’s requests from Commonwealth, Entercom, Beasley, Cumulus, Salem, and Cromwell. SoundExchange will be articulating its position with respect to these entities (and the relevant document requests) in a future correspondence. Thanks, Previn
From: [email protected] [mailto:[email protected]] Sent: Wednesday, October 30, 2019 2:29 PM To: [email protected]; Warren, Previn <[email protected]>; [email protected]; [email protected] Cc: Cherry, Andrew B. <[email protected]>; Trepp, Alex S. <[email protected]> Subject: RE: Web V External Email – Exercise Caution All: Would a call tomorrow at 1:30 pm PT/4:30 pm ET work for all? If not, let us know and we’ll go back to the drawing board. Britt Britt N. Lovejoy LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000 San Francisco, CA 94111-6538 Direct Dial: +1.415.646.8329 Fax: +1.415.395.8095 Email: [email protected] https://www.lw.com
From: Damle, Sy (DC) <[email protected]> Sent: Wednesday, October 30, 2019 6:50 AM To: Warren, Previn <[email protected]>; Lovejoy, Brittany (SF) <[email protected]>; Esser, Caroline (SF) <[email protected]>; Hanson, Kris (SF) <[email protected]> Cc: Cherry, Andrew B. <[email protected]>; Trepp, Alex S. <[email protected]> Subject: RE: Web V Previn -
Best, Sy
Sy,
We’d like to set up a call to discuss an issue that runs throughout NAB’s responses and objections to SoundExchange’s requests for production. NAB has objected to our instructions 27, and definitions 9, 15, and 34. Those objections create ambiguity around which entities you will be collecting and producing documents from in response to a number of our requests. NAB’s objections appear to exclude a number of witnesses who have submitted testimony, such as Gille and Wheeler, as well as numerous entities relevant to NAB’s case such as Entercom, Cumulus, and Beasley. NAB’s objections also appear to indicate that you will not be collecting or producing from iHeart in response to numerous of our requests.
Given that this is a threshold issue affecting many of SoundExchange’s specific requests, and given the compressed time for discovery in this proceeding, we would like to resolve this (or take it to the Judges) this week. After we’ve done so, we will also need to take up NAB’s objections to a number of our specific requests. (We can save that for a subsequent call.)
Please let me know a good time to catch up; I look forward to it and hope you have been well.
Thanks, Previn
Previn Warren
Jenner & Block LLP 1099 New York Avenue, N.W. Suite 900, Washington, DC 20001-4412 | jenner.com +1 202 637 6361 | TEL +1 202 661 4961 | FAX Pronouns: He / Him
[email protected] Download V-Card | View Biography
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From: Esser, Caroline (SF) To: Warren, Previn Cc: Jovais, Alicia (SF); Lovejoy, Brittany (SF); Damle, Sy (DC); Wetzel, Joe (SF); Hanson, Kris (SF); Trepp, Alex S.; Rao, Devi M.; Cherry, Andrew B.; Dukanovic, Ivana (SF) Subject: RE: Web V - Follow-Up Date: Wednesday, December 4, 2019 5:45:57 PM
Previn: We are writing to follow-up on RFP 82. We have conferred with iHeart and can confirm that we will be collecting and producing non-privileged, responsive “Minutes from all meetings of the iHeart Board of Directors and committees thereof concerning competition between digital music services,” to the extent they exist. We hope you all had a nice Thanksgiving. Best, Caroline
Caroline N. Esser
LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000 San Francisco, CA 94111-6538 Direct Dial: +1.415.395.8063 Fax: +1.415.395.8095 Email: [email protected] https://www.lw.com
From: Esser, Caroline (SF) Sent: Tuesday, November 26, 2019 8:31 PM To: 'Warren, Previn' <[email protected]> Cc: Jovais, Alicia (SF) <[email protected]>; Lovejoy, Brittany (SF) <[email protected]>; Damle, Sy (DC) <[email protected]>; Wetzel, Joe (SF) <[email protected]>; Hanson, Kris (SF) <[email protected]>; Trepp, Alex S. <[email protected]>; Rao, Devi M. <[email protected]>; Cherry, Andrew B. <[email protected]>; Dukanovic, Ivana (SF) <[email protected]> Subject: RE: Web V - Follow-Up
Previn: You should have received a document production earlier today. This production, along with the documents you have already received, will conclude nearly all of our document productions related to NAB’s written direct statement. As you are aware, however, we are still working on collecting and producing documents from Beasley, Cumulus, Salem and Cromwell in response to RFPs 57 and 58. We are also still discussing RFP 82 (as limited by SoundExchange during the parties’ meet and confer correspondence) with iHeart.
While NAB substantially completed its production today, your team informed us yesterday that you do not expect to complete SoundExchange’s production until after December 3. Nor have you informed us whether your production of documents other than those subject to the parties’ agreement on negotiation documents is now complete (or will be by tomorrow per Alex’s email indicating there will be an additional production). Please provide an update similar to the one you requested of us—i.e., whether and to what extent SoundExchange’s productions are complete (or will be by tomorrow). To the extent your productions will not be complete, please provide a general description of the documents that remain to be produced. NAB reserves the right to assess the sufficiency of SoundExchange’s productions once those are completed, and if necessary file a motion to compel the additional production of documents. Best, Caroline
Caroline N. Esser
LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000 San Francisco, CA 94111-6538 Direct Dial: +1.415.395.8063 Fax: +1.415.395.8095 Email: [email protected] https://www.lw.com
From: Warren, Previn <[email protected]> Sent: Tuesday, November 26, 2019 7:50 AM To: Esser, Caroline (SF) <[email protected]> Cc: Jovais, Alicia (SF) <[email protected]>; Lovejoy, Brittany (SF) <[email protected]>; Damle, Sy (DC) <[email protected]>; Wetzel, Joe (SF) <[email protected]>; Hanson, Kris (SF) <[email protected]>; Trepp, Alex S. <[email protected]>; Rao, Devi M.
Counsel,
In light of your email below, it appears that NAB will not be providing its amended response to RFP 82 within the statutory discovery period. Accordingly, SoundExchange reserves its right to dispute the sufficiency of NAB’s amended response and, as appropriate, bring the issue to the Judges’ attention after the close of the statutory discovery period. See Order Denying, Without Prejudice, SoundExchange’s Motion to Compel the Services’ Production of Certain Documents, Docket No. 16-CRB-0001 SR/PSSR (2018-2022), at 2-3 (Sept. 13, 2016).
Also, can you please advise whether and to what extent NAB’s productions are complete (or will be completed today)? To the extent your productions will not be complete today, please provide a general description of the documents that remain to be produced. SoundExchange reserves the right to assess the sufficiency of NAB’s productions once those are completed, and if necessary file a motion to compel the additional production of documents. Again, SoundExchange is permitted to file such a motion even after the close of the statutory discovery period. Id.
Best, Previn
From: [email protected] [mailto:[email protected]] Sent: Monday, November 25, 2019 4:49 PM To: Warren, Previn <[email protected]> Cc: [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; Trepp, Alex S. <[email protected]>; Rao, Devi M. <[email protected]>; Cherry, Andrew B. <[email protected]>; [email protected] Subject: RE: Web V - Follow-Up
External Email – Exercise Caution Hi Previn, Due to the holiday schedules at iHeart, we need until early next week to get back to you about RFP 82. Best, Caroline
From: Warren, Previn <[email protected]> Sent: Monday, November 25, 2019 1:41 PM To: Esser, Caroline (SF) <[email protected]> Cc: Jovais, Alicia (SF) <[email protected]>; Lovejoy, Brittany (SF) <[email protected]>; Damle, Sy (DC) <[email protected]>; Wetzel, Joe (SF) <[email protected]>; Hanson, Kris (SF) <[email protected]>; Trepp, Alex S. <[email protected]>; Rao, Devi M. <[email protected]>; Cherry, Andrew B. <[email protected]>; Dukanovic, Ivana (SF) <[email protected]> Subject: RE: Web V - Follow-Up
Caroline,
Thanks, Previn
From: [email protected] [mailto:[email protected]] Sent: Thursday, November 21, 2019 7:19 PM To: Warren, Previn <[email protected]> Cc: [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; Trepp, Alex S. <[email protected]>; Rao, Devi M. <[email protected]>; Cherry, Andrew B. <[email protected]>; [email protected] Subject: RE: Web V - Follow-Up
External Email – Exercise Caution Previn: We are writing to respond to your email regarding RFP 28. As we made clear in our October 30 letter, during the meet and confer calls on October 22 and November 8, and in our email correspondence on November 13, unlike SoundExchange, NAB did not put negotiation tactics at issue in its written direct case and, as a result, will not be producing non-valuation negotiation documents. In the few circumstances where negotiations were explicitly referenced in NAB’s written direct case, NAB has already produced the relevant documents. See, e.g., Williams ¶ 22 ( ); NAB Ex. 77 ( ). The circumstances are similar to those in Web IV, where the CRB made clear that using an agreement as a benchmark does not make documents concerning negotiation tactics
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On Nov 20, 2019, at 7:09 PM, "[email protected]" <[email protected]> wrote:
External Email – Exercise Caution Previn: We are writing to follow-up on certain of NAB’s responses to SoundExchange’s RFPs.
• RFP 28: We will respond to your separate November 15 email on this RFP regarding negotiation documents.
• RFP 3 & 4: The parties have reached a separate agreement with respect to production of experts’ past testimony from prior proceedings.
• RFP 9: Documents sufficient to show Average Revenue Per User (“ARPU”) data, on an annual basis, for all Service Types.
o SoundExchange: The requested documents are directly related to the written direct testimony of Dr. Leonard. In that testimony, Dr. Leonard makes the claim that it is difficult to “convince advertisers to pay for” ads on simulcasting, because of the “small simulcast audience size.” Leonard WDT ¶ 53. However, Dr. Leonard does not attach to this report data sufficient to evaluate the relative revenues earned by simulcasting versus other forms of webcasting. ARPU data is necessary to test Dr. Leonard’s proposition that simulcasting is less profitable than other forms of internet webcasting, and from there to test his argument that simulcasting should receive a different royalty rate than other forms of webcasting. Leonard WDT ¶ 59. Given Dr. Leonard’s view that “economic differences among licensees can result in different negotiated royalty rates,” Leonard WDT ¶ 55, SoundExchange should be permitted to receive data directly related to those “economic differences.” Notably, such data would also be directly related to various propositions in the written direct testimony of Leonard Wheeler, who states that increased royalties for simulcasting would “far outweigh the potential revenue that we could generate from that streaming listenership.” Wheeler WDT ¶ 28.
o NAB Response: Neither Dr. Leonard nor Mr. Wheeler rely on ARPU data in their written direct testimony. As we explained during our meet and confer call, the average revenue per user is related to SoundExchange’s written direct case, not NAB’s. For example, as you point out, Dr. Leonard notes that it is difficult to convince advertisers to pay for simulcast ads because of the audience size. He says nothing about the average revenue per simulcast user. See Leonard ¶ 53. Further, in support of his claim, Dr. Leonard provided Appendix D to his WDT, which shows the simulcast listening hours as a percent of over the air listening hours. This is sufficient data to test Dr. Leonard’s testimony in paragraph 53. Mr. Wheeler’s testimony about the potential revenue Wheeler could generate from increased simulcast listenership is based on his personal experience and industry expertise, not ARPU data. See Wheeler ¶ 28. For these reasons, as well as those articulated during our meet and confer, NAB will not reconsider its position.
• RFP 12: Documents sufficient to show your market share in the following markets: (i) noninteractive ad-supported streaming services, (ii) noninteractive subscription services, (iii) terrestrial radio services, (iv) interactive ad-supported streaming services, and (v) interactive subscription services, (vi) overall music consumption, and (vii) streaming services consumption.
o SoundExchange: On our call, you asked SoundExchange to identify metrics for calculating market share in accordance with this request. SoundExchange identifies the following metrics: (a) total number of listeners, (b) total number of listening hours, (c) total number of plays or performances, (d) revenue, and/or (e) any other metric by which a station group measures its own market share. Documents sufficient to show market share are directly related to Dr. Leonard’s benchmarking analysis. In that analysis, Dr. Leonard concludes that iHeart’s direct licenses with indies are “representative” of the market for simulcast performances, given the “coverage percentage” for “simulcast, custom radio, and webcasting performances, respectively.” Leonard WDT ¶ 72. SoundExchange is entitled to documents bearing on the accuracy of Dr. Leonard’s conclusion about the “representatives” of these licenses, including documents that permit alternative calculations of the market share covered by these licenses. More generally speaking, Dr. Leonard appears to acknowledge that the relative weight that should be afforded a benchmark is based in part on the market share of the entities covered by that benchmark. See Leonard WDT ¶ 77 n.100 (“Spotify is the largest interactive music streaming company in terms of number of users and has the largest ad supported interactive service. Of its overall users, about 54% are on the ad-supported service.”); ¶ 83 (“These PRO deals are industry-wide agreements that cover approximately 90% of musical composition performances and nearly the entire commercial radio industry.”). That is to say, NAB’s own expert concedes the direct relevance of market share statistics.
o NAB Response: NAB objects to SoundExchange’s revised version of this request to the extent it requests “any other metric by which a station group measures its own market share” as vague, ambiguous, overbroad, and unduly burdensome. Further, for the reasons discussed during our meet and confer, NAB does not view documents related to iHeart, Midwest, or Wheeler’s “market share” as directly related to NAB’s written direct statement. Nor does NAB concede that the station groups measure their “market share” in the regular course of business or that the metrics identified by SoundExchange are used by the station groups to measure “market share.” Nonetheless, in the interest of compromise,
>
· SoundExchange is awaiting a response from NAB on RFPs 9, 12, and 75, and on RFP 82 as limited by SoundExchange. SoundExchange is awaiting a response from NAB on whether it will collect and produce documents from Beasley, Cumulus, Salem, and Cromwell in response to RFPs 5, 49, 51, 54, 57, & 58. >
Absent a timely response from NAB, SoundExchange reserves the right to take any or all of the above issues to the Judges.
Best, Previn
Caroline,
The purpose of this email is to discuss NAB’s response to RFP 28. SoundExchange does not agree with your claim that NAB “has not put … at issue” the negotiation of direct licenses between independent labels and broadcasters. Your written direct testimony proves the opposite.
· Dr. Leonard claims that “iHeart’s direct deals with the renewal indies are relevant benchmarks to consider in this proceeding.” He then articulates a theory why that is the case – because the lower rates in these deals are “the result of competition.” But Dr. Leonard defends that assertion using highly conditional language, stating that the indies renewed because “iHeart could and perhaps was steering towards the labels’ recordings.” The negotiation documents – in which iHeart may very well have made promises (or failed to make promises) about steering – are directly relevant to Dr. Leonard’s theory. We are entitled to see them.
· Dr. Leonard also claims that the direct licenses offer indies “other (e.g., promotional) benefits.” Again, we are entitled to probe whether this is true. What representations did iHeart make (or not make) to the indies about such promotional benefits? Were indies led to believe that their licensing agreements would lead to added promotional and marketing support (regardless of whether such benefits materialized as contractual guarantees)? Was there any effort by the broadcasters to quantify the value of such benefits to the labels?
· Dr. Leonard further claims that Again – is this true? What representations did the labels make (or not
make)
· Dr. Leonard claims that “[o]ther license agreements between broadcasters and record labels … are not useful comparables.” SoundExchange is not required to accept this representation at face value. To the contrary, we are entitled to see how those negotiations transpired, and to understand what deal terms were proposed and rejected. If, for example, iHeart approached 300 indies for a renewal license, and they all said no, could Dr. Leonard still credibly claim that the 15 renewals still function as a representative benchmark? We are entitled to explore this and related issues, which Dr. Leonard has put at issue by disregarding the non-renewed licenses.
For the foregoing reasons, SoundExchange finds NAB’s self-imposed limitations to RFP 28 to be inadequate. That is particularly the case in light of the compromises that SoundExchange has proposed with respect to the negotiation documents requested by the Services.
In the spirit of compromise, and to ensure parallelism with the concessions that SoundExchange is willing to make per Alex’s email earlier today, SoundExchange will accept the following limited production of documents from NAB in response to RFP 28:
“For the time period January 1, 2012 through the present, all documents related to the negotiation of a Direct License or the renewal of a Direct License—including but not limited to (a) all drafts of licenses, (b) all internal emails, and (c) all emails exchanged with record companies,
REDACTED
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Caroline,
Thank you for your email. Allow me to summarize what I believe is the current state of play of our discussions.
· The parties are at an impasse with respect to RFPs 24, 62, 64, 77, and the Unnumbered Request. The parties are at an impasse as to whether NAB should collect and produce documents from Commonwealth to the same extent it is collecting and producing documents from Midwest. The parties are at an impasse as to whether NAB should collect and produce documents from Entercom and Beasley in response to RFPs 13, 17, 18, 19, 20, 21, 23, 25, 26, 27, 28, 29, 30 (Beasley only), 32, 33, & 66. SoundExchange reserves its rights to take any or all of these issues to the Judges.
· SoundExchange is awaiting a response from NAB on RFPs 9, 12, and 75, and on RFP 82 as limited by SoundExchange. SoundExchange is awaiting a response from NAB on whether it will collect and produce documents from Beasley, Cumulus, Salem, and Cromwell in response to RFPs 5, 49, 51, 54, 57, & 58.
Please advise this morning whether you have any corrections to the above list.
Best, Previn
External Email – Exercise Caution
Thank you for your email.
With respect to RFP 82, NAB is discussing the proposed limitation with iHeart and will circle back shortly.
We stand on our objections to RFP 64 and the Unnumbered Request. As we explained during our call, the requests are legally and economically incoherent, rendering them unanswerable as well as not directly related to NAB’s written direct statement. SoundExchange indicated during the meet and confer call that it would not revise these requests. NAB reserves all rights and objections with respect to any potential revisions to these requests, including with respect to their relatedness, burdensomeness, and/or proportionality to the needs of this proceeding.
With respect to SoundExchange’s November 4 email regarding collecting documents from additional station groups, none of the station groups identified by SoundExchange are participants in this proceeding, nor did they submit testimony as part of NAB’s written direct case. By requesting that NAB collect documents from these station groups, SoundExchange is asking for much more of the NAB than SoundExchange itself is willing to offer in this proceeding. See SX Resps. & Objs. to Licensees’ First Set of RFPs at 5 (objecting to discovery requests “that seek to impose obligations on entities that are not participants in this proceeding and have not provided a witness in this proceeding”). Because the additional station groups are not participants and have not submitted testimony, it is taking time to discuss SoundExchange’s proposal with them. We can, however, provide you with the following updates:
* Commonwealth: NAB will not be collecting and producing documents from Commonwealth as this request is unduly burdensome and not proportional to the needs of the case. While NAB designated Mr. Newberry’s Web IV testimony, in which he offered testimony on behalf of Commonwealth, SoundExchange already had full and fair discovery regarding that testimony in Web IV. There is no valid justification for
reopening discovery on the same set of issues that SoundExchange already probed in the prior proceeding. In addition, Mr. Newberry offered testimony in this proceeding based on his role as the Vice President for Strategic Planning/Industry Affairs at NAB, not his position at Commonwealth. He provides background on the NAB and explains what differentiates local radio from other music services. That is the focus of his testimony, not the particulars of Commonwealth’s radio business. Indeed, he makes only two passing references to his time at Commonwealth. See Newberry ¶¶ 18, 26. Full discovery on Commonwealth based on two sentences in Mr. Newberry’s Web V testimony is clearly not proportional to the needs of the case.
· Beasley, Cumulus, Salem & Cromwell: NAB is in the process of contacting these station groups about SoundExchange’s request that they produce documents related to paragraph 40 of Dr. Leonard’s testimony. As discussed above, because they are not participants in this case nor have they submitted witness testimony, this process is taking some time.
· Entercom & Beasley: NAB strongly disagrees that Dr. Leonard put at issue documents related to Entercom and Beasley. Dr. Leonard mentions the direct licenses with Entercom and Beasley only to explain that “these agreements are not useful comparables for the rates that would result from a hypothetical WBWS simulcast-label license agreement under effective competition” and, as a result, he did not consider them in his benchmark analysis. Leonard ¶ 92. SoundExchange’s requests for document productions from Entercom and Beasley are therefore not directly related to NAB’s written direct statement, overbroad, and not proportional to the needs of the case.
Thank you for providing additional information with respect to RFPs 24, 62, 75, and 77. We respond as follows:
* RFP 24: NAB position: “NAB has already produced all of the direct licenses, which are sufficient to show the list of counterparties ”
SoundExchange response: “RFP 24 also seeks documents sufficient to show counterparties Are the direct licenses are also sufficient to show these counterparties? If not, will NAB be producing any
documents in response to this request?” NAB Response: NAB maintains that the agreements speak for themselves.
* RFP 62: NAB position: “Any responsive, non-privileged SoundExchange audit documents that would be the subject of a reasonably tailored discovery request are equally accessible to SoundExchange. To the extent this Request seeks internal communications regarding SoundExchange audits, it is overbroad and not proportional to the needs of the case.” SoundExchange response: “NAB is obligated to produce internal communications regarding SoundExchange audits, which are directly related to NAB’s efforts to revise the regulations concerning how audits are conducted. See Williams WDT ¶¶ 40-43. For example, NAB requests a reduction in the interest rate applicable to underpayments, arguing that such underpayments “may simply reflect good faith errors.” Id. ¶ 43. SoundExchange is entitled to test that proposition by reviewing internal documents concerning (among other issues) any underpayments uncovered by SoundExchange’s auditors. Please let us know whether you will reconsider your position and produce documents responsive to this RFP, or whether we need to take this issue to the Judges.” NAB Response: NAB will not reconsider its position.
* RFP 75: NAB position: “NAB has already produced all of the direct licenses, which are sufficient to show both the direct licenses that were renewed and not renewed.” SoundExchange response: Can you please clarify whether NAB has produced “all iHeart direct licenses, entered into since January 2012”? That appears to be the case but we find NAB’s response somewhat confusing on this point.” NAB Response: We are confirming with iHeart and will circle back.
* RFP 77: NAB position: “NAB will work with iHeart to collect and produce responsive documents, subject to NAB’s position with respect to non-valuation related negotiation documents and documents concerning unexecuted licenses, as articulated in our October 30 letter.” SoundExchange response: “For the avoidance of doubt, this request seeks documents that the parties have been calling ‘negotiation documents’ in addition to other categories of documents. For example, if iHeart conducted an analysis of whether to offer a label a direct license (and then concluded that it should not) such documents would be encompassed by this request, even though they are not ‘negotiation documents.’ To the extent this request covers ‘negotiation documents,’ SoundExchange maintains the positions articulated in its November 6 letter and maintains that NAB should produce consistent with those positions. We are happy to discuss further once the global discussion over negotiation documents has concluded.” NAB Response: Pursuant to the discovery orders in Web IV, NAB will produce valuation documents related to direct licenses that its expert relies on in his benchmark analysis. NAB will not produce non-valuation related documents or documents related to unexecuted licenses, as NAB (unlike SoundExchange) has not put those matters at issue in its written direct testimony. We explained our position on this issue in detail in our October 30 letter and during the parties’ November 8 meet and confer.
Lastly, NAB will respond separately to SoundExchange’s positions with respect to RFPs 9 and 12.
Best,
Caroline
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Caroline N. Esser
LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000 San Francisco, CA 94111-6538 Direct Dial: +1.415.395.8063 Fax: +1.415.395.8095 Email: [email protected]<mailto://[email protected]> https://www.lw.com<https://www.lw.com>
From: Warren, Previn <[email protected]<mailto:[email protected]>> Sent: Tuesday, November 12, 2019 2:15 PM To: Warren, Previn <[email protected]<mailto:[email protected]>>; Esser, Caroline (SF) <[email protected]<mailto:[email protected]>> Cc: Jovais, Alicia (SF) <[email protected]<mailto:[email protected]>>; Lovejoy, Brittany (SF) <[email protected]<mailto:[email protected]>>; Damle, Sy (DC) <[email protected]<mailto:[email protected]>>; Wetzel, Joe (SF) <[email protected]<mailto:[email protected]>>; Hanson, Kris (SF) <[email protected]<mailto:[email protected]>>; Trepp, Alex S. <[email protected]<mailto:[email protected]>>; Rao, Devi M. <[email protected]<mailto:[email protected]>>; Cherry, Andrew B. <[email protected]<mailto:[email protected]>>; Dukanovic, Ivana (SF) <[email protected]<mailto:[email protected]>> Subject: RE: Web V - Follow-Up
Alicia and Caroline,
The purpose of this email is to follow up on the meet and confer between SoundExchange and NAB concerning NAB’s responses and objections to SoundExchange’s request for production.
First, we have not yet received a response from NAB on the following outstanding issues. Please advise when we can expect to hear from you.
· NAB has not responded to SoundExchange’s request from over a week ago (attached hereto) that NAB collect and produce documents from Commonwealth, Beasley, Cumulus, Salem, Entercom, and Cromwell.
· NAB indicated that it would consider and respond to RFP 64 and the “Unnumbered RFP” but has not yet done so.
· SoundExchange has limited RFP 82 in the following manner: “Minutes from all meetings of the iHeart Board of Directors and committees thereof concerning webcasting, on demand services, terrestrial radio, as well as documents concerning competition between digital music services, as well as the profitability or relative profitability of music services. NAB indicated that it would provide a response regarding this limited request but has not yet done so.
Second, SoundExchange responds as follows to the objections and responses articulated by NAB in your email of November 6, 2019.
· RFP 24: NAB position: “NAB has already produced all of the direct licenses, which are sufficient to show the list of counterparties ”
SoundExchange response: RFP 24 also seeks documents sufficient to show counterparties who . Are the direct licenses are also sufficient to show these counterparties? If not, will NAB be producing any
documents in response to this request?
· RFP 62: NAB position: “Any responsive, non-privileged SoundExchange audit documents that would be the subject of a reasonably tailored discovery request are equally accessible to SoundExchange. To the extent this Request seeks internal communications regarding SoundExchange audits, it is overbroad and not proportional to the needs of the case.” SoundExchange response: NAB is obligated to produce internal communications regarding SoundExchange audits, which are directly related to NAB’s efforts to revise the regulations concerning how audits are conducted. See Williams WDT ¶¶ 40-43. For example, NAB requests a reduction in the interest rate applicable to underpayments, arguing that such underpayments “may simply reflect good faith errors.” Id. ¶ 43. SoundExchange is entitled to test that proposition by reviewing internal documents concerning (among other issues) any underpayments uncovered by SoundExchange’s auditors. Please let us know
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From: Warren, Previn [mailto:[email protected]] Sent: Wednesday, November 06, 2019 10:43 PM To: [email protected]<mailto:[email protected]> Cc: [email protected]<mailto:[email protected]>; [email protected]<mailto:[email protected]>; [email protected]<mailto:[email protected]>; [email protected]<mailto:[email protected]>; [email protected]<mailto:[email protected]>; Trepp, Alex S. <[email protected]<mailto:[email protected]>>; Rao, Devi M. <[email protected]<mailto:[email protected]>>; Cherry, Andrew B. <[email protected]<mailto:[email protected]>>; [email protected]<mailto:[email protected]> Subject: Re: Web V - Follow-Up Caroline, Thanks. Fine about the typo and no objection to your first bullet. The other responses in your email, though, were not surfaced on the call and therefore we will need to consider them and get back to you. I am out of the office until next week so we will endeavor to get back to you then. Thanks, Previn Sent from my iPhone On Nov 6, 2019, at 7:08 PM, "[email protected]<mailto:[email protected]>" <[email protected]<mailto:[email protected]>> wrote: External Email – Exercise Caution Hi Previn, Thanks for taking the time to connect on the phone and for your summary of the call. We agree that your summary of our discussion is accurate except with respect to bullet 2. First, there is a small typo in bullet 2, which I corrected in red font below. Second, we are withholding documents on the basis of objections raised for some of the requests listed in bullet 2 (though not on the grounds that they are vague). As it was difficult to attempt to address more than 20 RFPs all in one sweeping statement during our call, below is a detailed explanation of the requests on which we’re standing on our objections. For all the other requests listed in bullet 2, we are working with iHeart, Midwest, and Wheeler to collect responsive documents (to the extent they exist) and/or have already produced responsive documents. · RFPs 3 & 82: Both requests are addressed in your separate bullet points below, and were the subject of separate conversation. · RFP 24: NAB has already produced all of the direct licenses, which are sufficient to show the list of counterparties
· RFP 62: Any responsive, non-privileged SoundExchange audit documents that would be the subject of a reasonably tailored discovery request are equally accessible to SoundExchange. To the extent this Request seeks internal communications regarding SoundExchange audits, it is overbroad and not proportional to the needs of the case. · RFP 75: NAB has already produced all of the direct licenses, which are sufficient to show both the direct licenses that were renewed and not renewed. · RFP 77: NAB will work with iHeart to collect and produce responsive documents, subject to NAB’s position with respect to non-valuation related negotiation documents and documents concerning unexecuted licenses, as articulated in our October 30 letter. · RFP 85: Documents related to iHeart’s bankruptcy or emergence from bankruptcy are not directly related to NAB’s written direct statement. Best, Caroline Caroline N. Esser LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000 San Francisco, CA 94111-6538 Direct Dial: +1.415.395.8063 Fax: +1.415.395.8095 Email: [email protected]<mailto://[email protected]>
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Counsel,
Thank you for the productive meet and confer today. Below are the major points discussed on our call.
· NAB does not yet have a response to SoundExchange’s request that NAB collect and produce documents from Commonwealth, Beasley, Cumulus, Salem, Entercom, and Cromwell.
· NAB is not withholding any documents from production on the basis of the objections that it has raised to the following RFPs: 3, 10, 11, 14, 21, 23-27, 32-34, 43-46, 548-52, 57, 58, 60, 62, 69-75, 77-79, 81, 82, and 85. NAB has not found any documents in NAB’s possession, custody, or control that are responsive to those RFPs. NAB is in the process of working with iHeart, Wheeler, and Midwest on collecting and producing any documents responsive to those RFPs that these station groups might have.
· RFPs 3, 4: The parties will take these requests up in the context of attempting to reach “global” resolutions with the other licensees.
· RFP 64, “Unnumbered RFP”: NAB will discuss and provide a response regarding this request.
· RFP 82: SoundExchange has limited this request in the following manner: “Minutes from all meetings of the iHeart Board of Directors and committees thereof concerning webcasting, on demand services, terrestrial radio, as well as documents concerning competition between digital music services, as well as the profitability or relative profitability of music services. NAB will discuss and provide a response regarding this limited request.
· RFP 9: SoundExchange will discuss and respond to NAB’s “directly related” objection.
· RFP 12: SoundExchange will discuss and respond to NAB’s “directly related” objection and will identify metrics for calculating market share.
· RFP 56: NAB has agreed to produce in response to this request.
· RFP 63: NAB has already produced all documents responsive to this request, both on its behalf and on behalf of iHeart, Midwest, and Wheeler.
Alicia, Thanks for the email. I think we misunderstood each other on the phone. The Tuesday/Wednesday schedule we had proposed is supposed to cover RFPs specific to NAB and the NAB entities. We had not intended for that schedule to apply to all other licensees. With that in mind, we will send Latham a NAB-specific list on Tuesday, and plan to meet and confer with Latham about that list on Wednesday. Thanks, Previn Sent from my iPhone On Nov 1, 2019, at 11:40 PM, "[email protected]<mailto:[email protected]>" <[email protected]<mailto:[email protected]>> wrote: Received: from CLEXCHP2.Internal.Jenner.com (10.10.12.41) by CLEXCHP2.Internal.Jenner.com (10.10.12.41) with Microsoft SMTP Server (version=TLS1_2, cipher=TLS_ECDHE_RSA_WITH_AES_128_CBC_SHA256_P256) id 15.1.1466.3 via Mailbox Transport; Fri, 1 Nov 2019 22:40:23 -0500 Received: from CLEXCHP2.Internal.Jenner.com (10.10.12.41) by CLEXCHP2.Internal.Jenner.com (10.10.12.41) with Microsoft SMTP Server (version=TLS1_2, cipher=TLS_ECDHE_RSA_WITH_AES_128_CBC_SHA256_P256) id 15.1.1466.3; Fri, 1 Nov 2019 22:40:22 -0500 Received: from us-smtp-1.mimecast.com (10.10.12.224) by CLEXCHP2.Internal.Jenner.com (10.10.12.41) with Microsoft SMTP Server (version=TLS1_2, cipher=TLS_ECDHE_RSA_WITH_AES_128_CBC_SHA256_P256) id 15.1.1466.3 via Frontend Transport; Fri, 1 Nov 2019 22:40:22 -0500 ARC- Message-Signature: i=1; a=rsa-sha256; c=relaxed/relaxed; d=dkim.mimecast.com; s=201903; t=1572666022; h=from:from:reply- to:subject:subject:date:date:message-id:message-id: to:to:cc:cc:mime-version:mime-version:content-type:content-type: dkim-signature; bh=Hq0WkHxLjfAehSSBdmb+T7mitg4qvmMkizsm5tk5E8s=; b=pQhGO32JUU0imFmDrMKSWFJ95h74eLk6jQ7PQCSpwCHkZ5E2bUqFIcKG23UVHWSkvWJFeO ArWyTfJ4EZkjCGUTUWxtH6fbp3MuiGkLDCNTuLRkRmnVAjno3Gldlq7nRyy0P3bcnjBOB0 B+XVFxtb6leryAGtFwtCEqsV6WzxbxBE4AtpvgvhFSFx1gAHp4vnQqlu7xyxaNDcufOClc Is6nstgSqbr12As4wWFfwHmuYrfne0EjxVh6GNqDKtrRr6aFRgMsvl6QsRTOn0q2Ty75Lz JCzp2rIVD/uIeN4TDHz2suqFYdJG8p74ah9SD6a9+2MIV27Hl99KbHt/NX9kCQ== ARC-Seal: i=1; s=201903; d=dkim.mimecast.com; t=1572666022; a=rsa-sha256; cv=none; b=Z9w9Axx+d7aQ7hJu4mJq/2K7WOnUFRAVg5ZSSIfe93Nvx7z9mrT++QqJEQUU/vVecv/cYl rWO3cJK1C5P0BNa55Gv1ifokUCpNBz/GkWgraIv39v5GjPBbxGe659gN6rVOx47gyDapND saslReNShz/coI1keK7WmHlCOggEz69aRfxdD5g+BM2XXoZZ+jOQWxtltgr7P4Ke06LIIR JfxwpNN6vnfl53B38Gr/2XuzH2bCP1C/oWpS9Rykpmm3JdBSHQ5QzCL0MW9UipyDC0Quyi nc3hi+LeHX4QaPR6h6DwXFGx4rWHkI9TIFlSZg3Dy0BoNkvIDwGfdK+pmBb2VA== ARC-Authentication-Results: i=1; relay.mimecast.com; spf=pass (relay.mimecast.com: domain of [email protected]<mailto:[email protected]> designates http://66.116.117.70<http://66.116.117.70> as permitted sender) [email protected]<mailto:[email protected]> DKIM-Signature: v=1; a=rsa-sha256; c=simple/simple; d=lw.com; [email protected]<mailto:[email protected]>; q=dns/txt; s=dkim100119; t=1572665844; x=1604201844; h=from:to:cc:subject:date:message-id:mime-version; bh=/e/0EawCGD1FD55akFasQZD/T4yO04hk4/FCV+wSfLY=; b=V+J4cvu6ECuH60y29pA69vkMHzg/sU6hfRSx0ZrVzWrMGRxYKZe1lRmv dJauwHTvpAL9Klumv7vNqKpyfC6GNEQy7z8XE1ud6r2yqdxzaR7kVn6KM QwzDMx9N0Ln06weTOYAcW04cxcpA9VLdyzsjJCzNYDp9wgYLjx02pY357 w=; IronPort-SDR: c2W3Z93kXH6NnV0unlDutz0gX/eO0ROHWnjA70Hdjee81mfdNOBvV8hv3F0k6jij1c5vt+KiRK /ImH3hfzMvPokN64LB8xyAZItd3zny6OzpPIBJnJfmwMUtGIk9+8QeH43PjqFWyFTLnJamCZf1 U/wd+mZGK8XXZB+vga/0QJzATgkjkmBnFVRd8eJu72ne0ZNAPTQ31y0AKdAPy85doXIwqM/U/z YrPbLxXk9YPsis09cBdpPTTlOzaL+DvQ+nwKQOE/72IFQms5p04LRp9YtRQvjLbesA3pwwdI/z vNc= X-Disclaimer: 1 Received: from mx1.lw.com (mx1.lw.com [http://66.116.117.70<http://66.116.117.70>]) (Using TLS) by relay.mimecast.com with ESMTP id us-mta-400- PEvmOVFlPuendONy6rNa1A-1; Fri, 01 Nov 2019 23:40:19 -0400 Received: from unknown (HELO LVDEX13NA04.lw.com) ([10.20.218.24]) by mx1.lw.com with ESMTP/TLS/ECDHE-RSA-AES256-SHA384; 01 Nov 2019 20:37:22 -0700 Received: from LVDEX13NA03.lw.com (10.20.218.23) by LVDEX13NA04.lw.com (10.20.218.24) with Microsoft SMTP Server (TLS) id 15.0.1497.2; Fri, 1 Nov 2019 20:40:17 -0700 Received: from LVDEX13NA03.lw.com ([fe80::f060:9056:f6d7:4795]) by LVDEX13NA03.lw.com ([fe80::f060:9056:f6d7:4795%22]) with mapi id 15.00.1497.000; Fri, 1 Nov 2019 20:40:17 -0700 From: To: , CC: , , , , , , , , , , , , , , Subject: Web V - Follow-Up Thread-Topic: Web V - Follow-Up Thread-Index: AdWQ/mftxSO8NKU9TiWvBiofcRREzg== Date: Sat, 2 Nov 2019 03:40:16 +0000 Message-ID: Accept-Language: en-US Content-Language: en-US
LATHAM & WATKINS LLP505 Montgomery Street Suite 2000= San Francisco, CA 94111-6538= Direct Dial: +1.415.395.8170= Fax: +1.415.395.8095 Email: alicia.jovais@l<mailto:alicia.jovais@l>= w.com<3D"mailto:[email protected]"> http://www.lw.com<3D"http://protect-us.mimecast.com/s/IKN_Cxk7<http://www.lw.com%3c3D%22http:/protect- us.mimecast.com/s/IKN_Cxk7>=> _________________________________ This email may contain material that is confidential, privileged and/o= r attorney work product for the sole use of the intended recipient. A= ny review, disclosure, reliance or distribution by others or forwarding wit= hout express permission is strictly prohibited. If you are not the intended recipient, please contact the sender and delet= e all copies including any attachments. Latham & Watkins LLP or any of its affiliates may monitor electron= ic communications sent or received by our networks in order to protect our = business and verify compliance with our policies and relevant legal require= ments. Any personal information contained or referred to within this electronic communication will be processed in a= ccordance with the firm's privacy notices and Global Privacy Standards avai= lable at http://www.lw.com<3D"http://www.lw.com<http://www.lw.com%3c3D%22http:/www.lw.com>>. --_000_cc6e3a2b08a74af499853fdce7cf8183LVDEX13NA03lwcom_-- _________________________________
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Esser, Caroline (SF)
From: Esser, Caroline (SF) Sent: Friday, November 22, 2019 2:30 PM To: 'Warren, Previn' Cc: Jovais, Alicia (SF); Lovejoy, Brittany (SF); Damle, Sy (DC); Wetzel, Joe (SF); Hanson, Kris
(SF); Trepp, Alex S.; Rao, Devi M.; Cherry, Andrew B.; Dukanovic, Ivana (SF) Subject: RE: Web V - Follow-Up
Previn: We are writing to provide SoundExchange with additional background on RFP 9. Without waiving any of NAB’s objections to the production of ARPU data, NAB has confirmed with iHeart that ARPU is not a metric that iHeart uses. As a result, there are no responsive documents in iHeart’s possession, custody, or control. Separately, could you please let us know which RFPs, if any, SoundExchange is considering addressing in a motion to compel? Thanks, Caroline Caroline N. Esser LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000 San Francisco, CA 94111-6538 Direct Dial: +1.415.395.8063 Fax: +1.415.395.8095 Email: [email protected] https://www.lw.com From: Warren, Previn <[email protected]> Sent: Friday, November 22, 2019 5:41 AM To: Esser, Caroline (SF) <[email protected]> Cc: Jovais, Alicia (SF) <[email protected]>; Lovejoy, Brittany (SF) <[email protected]>; Damle, Sy (DC) <[email protected]>; Wetzel, Joe (SF) <[email protected]>; Hanson, Kris (SF) <[email protected]>; Trepp, Alex S. <[email protected]>; Rao, Devi M. <[email protected]>; Cherry, Andrew B. <[email protected]>; Dukanovic, Ivana (SF) <[email protected]> Subject: RE: Web V - Follow-Up Caroline, Thanks. We are at an impasse on RFP 28 and reserve the right to take this issue to the Judges. Best, Previn From: [email protected] [mailto:[email protected]] Sent: Thursday, November 21, 2019 7:19 PM To: Warren, Previn <[email protected]>
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Cc: [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; Trepp, Alex S. <[email protected]>; Rao, Devi M. <[email protected]>; Cherry, Andrew B. <[email protected]>; [email protected] Subject: RE: Web V - Follow-Up External Email – Exercise Caution Previn: We are writing to respond to your email regarding RFP 28. As we made clear in our October 30 letter, during the meet and confer calls on October 22 and November 8, and in our email correspondence on November 13, unlike SoundExchange, NAB did not put negotiation tactics at issue in its written direct case and, as a result, will not be producing non-valuation negotiation documents. In the few circumstances where negotiations were explicitly referenced in NAB’s written direct case, NAB has already produced the relevant documents. See, e.g., Williams ¶ 22
; NAB Ex. 77 . The circumstances are similar to those in Web IV, where the CRB made clear that using an agreement as a benchmark does not make documents concerning negotiation tactics or unexecuted licenses discoverable. See Jan. 1, 2015 Web IV Discovery Order 9 at 4. We disagree with SoundExchange’s assertion that Dr. Leonard’s testimony contains “theories about what motivated iHeart and various independent record companies to execute direct licenses” and that this testimony requires NAB to produce its entire negotiation files. See Nov. 6, 2019 SoundExchange Resp. to Negotiation Letter at 4 (citing Leonard ¶ 65). Dr. Leonard uses the indie renewals as benchmarks in part because the fact that both parties voluntarily renewed an agreement indicates as a matter of basic economics that the agreement was one between a willing buyer and willing seller. Dr. Leonard does not opine about the actual negotiation dynamics between iHeart and the indies. Rather he remarks that the indies “could have refused to agree to renew the agreements and received higher per play royalties under the statutory rates,” and the fact that they didn’t “suggest[s] an understanding that iHeart could and perhaps was steering towards the labels’ recordings or that licensing iHeart offers other (e.g. promotional) benefits for the labels.” Leonard ¶ 65 (emphasis added). In other words, Dr. Leonard is doing nothing more than acknowledging a basic principle of contract negotiation—a party generally will not enter into an agreement with higher prices than it could get elsewhere if it is not receiving some other benefit. iHeart has already agreed to produce non-privileged valuation documents from January 1, 2012 to the present related to the negotiation of the executed renewed indie direct licenses that Dr. Leonard relies on in his benchmark analysis, and the deals with those indie labels when first signed, to the extent they exist. In addition, NAB has produced documents, and intends to produce additional documents and communications, regarding iHeart’s steering towards lower-royalty direct deal music. NAB is also producing all of the iHeart direct licenses. Together, these materials are more than sufficient to test Dr. Leonard’s testimony. Any additional production of non-valuation negotiation documents would not be directly related NAB’s written direct case or proportional to the needs of this proceeding, and would impose an undue burden on the NAB. We are still working with iHeart on RFP 82 and will circle back as soon as possible. Best, Caroline Caroline N. Esser LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000 San Francisco, CA 94111-6538 Direct Dial: +1.415.395.8063 Fax: +1.415.395.8095 Email: [email protected] https://www.lw.com
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-----Original Message----- From: Warren, Previn <[email protected]> Sent: Thursday, November 21, 2019 2:57 PM To: Esser, Caroline (SF) <[email protected]> Cc: Jovais, Alicia (SF) <[email protected]>; Lovejoy, Brittany (SF) <[email protected]>; Damle, Sy (DC) <[email protected]>; Wetzel, Joe (SF) <[email protected]>; Hanson, Kris (SF) <[email protected]>; Trepp, Alex S. <[email protected]>; Rao, Devi M. <[email protected]>; Cherry, Andrew B. <[email protected]>; Dukanovic, Ivana (SF) <[email protected]> Subject: Re: Web V - Follow-Up Caroline, Thank you for your email. • The parties are at an impasse with respect to RFP 9. The parties are at an impasse as to whether NAB should collect and produce documents from Beasley, Cumulus, Salem and Cromwell with respect to RFPs 5, 49, 51, and 54. SoundExchange reserves its rights to take any or all of these issues to the Judges. • SoundExchange is awaiting a response from NAB on RFP 28, and RFP 82 as limited by SoundExchange. We need your response on these issues by noon eastern tomorrow given the impending discovery deadline. Absent a response from NAB within that timeframe, SoundExchange reserves the right to take these issues to the Judges. Best, Previn Sent from my iPhone On Nov 20, 2019, at 7:09 PM, "[email protected]" <[email protected]> wrote: External Email – Exercise Caution Previn: We are writing to follow-up on certain of NAB’s responses to SoundExchange’s RFPs. • RFP 28: We will respond to your separate November 15 email on this RFP regarding negotiation documents. • RFP 3 & 4: The parties have reached a separate agreement with respect to production of experts’ past testimony from prior proceedings. • RFP 9: Documents sufficient to show Average Revenue Per User (“ARPU”) data, on an annual basis, for all Service Types.
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o SoundExchange: The requested documents are directly related to the written direct testimony of Dr. Leonard. In that testimony, Dr. Leonard makes the claim that it is difficult to “convince advertisers to pay for” ads on simulcasting, because of the “small simulcast audience size.” Leonard WDT ¶ 53. However, Dr. Leonard does not attach to this report data sufficient to evaluate the relative revenues earned by simulcasting versus other forms of webcasting. ARPU data is necessary to test Dr. Leonard’s proposition that simulcasting is less profitable than other forms of internet webcasting, and from there to test his argument that simulcasting should receive a different royalty rate than other forms of webcasting. Leonard WDT ¶ 59. Given Dr. Leonard’s view that “economic differences among licensees can result in different negotiated royalty rates,” Leonard WDT ¶ 55, SoundExchange should be permitted to receive data directly related to those “economic differences.” Notably, such data would also be directly related to various propositions in the written direct testimony of Leonard Wheeler, who states that increased royalties for simulcasting would “far outweigh the potential revenue that we could generate from that streaming listenership.” Wheeler WDT ¶ 28. o NAB Response: Neither Dr. Leonard nor Mr. Wheeler rely on ARPU data in their written direct testimony. As we explained during our meet and confer call, the average revenue per user is related to SoundExchange’s written direct case, not NAB’s. For example, as you point out, Dr. Leonard notes that it is difficult to convince advertisers to pay for simulcast ads because of the audience size. He says nothing about the average revenue per simulcast user. See Leonard ¶ 53. Further, in support of his claim, Dr. Leonard provided Appendix D to his WDT, which shows the simulcast listening hours as a percent of over the air listening hours. This is sufficient data to test Dr. Leonard’s testimony in paragraph 53. Mr. Wheeler’s testimony about the potential revenue Wheeler could generate from increased simulcast listenership is based on his personal experience and industry expertise, not ARPU data. See Wheeler ¶ 28. For these reasons, as well as those articulated during our meet and confer, NAB will not reconsider its position. • RFP 12: Documents sufficient to show your market share in the following markets: (i) noninteractive ad- supported streaming services, (ii) noninteractive subscription services, (iii) terrestrial radio services, (iv) interactive ad- supported streaming services, and (v) interactive subscription services, (vi) overall music consumption, and (vii) streaming services consumption. o SoundExchange: On our call, you asked SoundExchange to identify metrics for calculating market share in accordance with this request. SoundExchange identifies the following metrics: (a) total number of listeners, (b) total number of listening hours, (c) total number of plays or performances, (d) revenue, and/or (e) any other metric by which a station group measures its own market share. Documents sufficient to show market share are directly related to Dr. Leonard’s benchmarking analysis. In that analysis, Dr. Leonard concludes that iHeart’s direct licenses with indies are “representative” of the market for simulcast performances, given the “coverage percentage” for “simulcast, custom radio, and webcasting performances, respectively.” Leonard WDT ¶ 72. SoundExchange is entitled to documents bearing on the accuracy of Dr. Leonard’s conclusion about the “representatives” of these licenses, including documents that permit alternative calculations of the market share covered by these licenses. More generally speaking, Dr. Leonard appears to acknowledge that the relative weight that should be afforded a benchmark is based in part on the market share of the entities covered by that benchmark. See Leonard WDT ¶ 77 n.100 (“Spotify is the largest interactive music streaming company in terms of number of users and has the largest ad supported interactive service. Of its overall users, about 54% are on the ad-supported service.”); ¶ 83 (“These PRO deals are industry-wide agreements that cover approximately 90% of musical composition performances and nearly the entire commercial radio industry.”). That is to say, NAB’s own expert concedes the direct relevance of market share statistics. o NAB Response: NAB objects to SoundExchange’s revised version of this request to the extent it requests “any other metric by which a station group measures its own market share” as vague, ambiguous, overbroad, and unduly burdensome. Further, for the reasons discussed during our meet and confer, NAB does not view documents related to iHeart, Midwest, or Wheeler’s “market share” as directly related to NAB’s written direct statement. Nor does NAB concede that the station groups measure their “market share” in the regular course of business or that the metrics identified by SoundExchange are used by the station groups to measure “market share.” Nonetheless, in the interest of
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compromise, NAB will confirm with iHeart that there are no additional responsive documents beyond those already produced regarding: (a) total number of listeners to simulcast and terrestrial radio, (b) total number of listening hours to simulcast and terrestrial radio, (c) total number of plays or performances on simulcast and terrestrial radio, and (d) revenue from simulcast and terrestrial radio. NAB will also confirm with Midwest and Wheeler that there are no additional responsive documents beyond those already produced regarding: (a) total number of listeners to simulcast and terrestrial radio, (b) total number of listening hours to simulcast and terrestrial radio, and (d) revenue from simulcast and terrestrial radio. Information regarding Midwest and Wheeler’s (c) total plays/performances is equally available to SoundExchange given that this data is included in reports to SoundExchange. Thus, SoundExchange has already obtained (or is about to obtain) a significant amount of information regarding metrics (a)-(d) from NAB related to iHeart, Midwest, and Wheeler in initial disclosures, the back-up data provided for Dr. Leonard’s report during the expert exchange of materials on October 1, and in response to RFPs 7, 10, 58, and 78. • RFP 75: NAB has conferred with iHeart and is working on producing a small number of recently executed direct license agreements that have not yet been produced to SoundExchange. • RFP 82: NAB is still discussing SoundExchange’s proposed limitation to its request for iHeart board meeting minutes with iHeart and will circle back. • Beasley, Cumulus, Salem & Cromwell – RFPs 5, 49, 51, 54, 57, & 58: NAB believes that SoundExchange’s request for production of documents from Beasley, Cumulus, Salem & Cromwell in response to RFPs 5, 49, 51, 54, 57, and 58 is objectionable and reserves its right to oppose the production in its entirety should SoundExchange move to compel. However, without waiving any of its objections to the production of these documents, and without conceding that any of these requests are directly related to paragraph 40 of Dr. Leonard’s written direct testimony, NAB is willing to work with these station groups to collect and produce documents responsive to RFPs 57 and 58. RFPs 57 and 58 request information related to the value of music versus non-music content, the revenues attributable to music- formatted stations, and expenditures on non-music content. These are the only requests that are even arguably related to Dr. Leonard’s testimony about the importance of on-air talent, talk-content, and local DJ personalities. See Leonard ¶ 40. Beasley, Cumulus, Salem, and Cromwell have indicated that they will conduct a reasonable search for documents responsive to RFPs 57 & 58. Due to their vacation schedules, however, we may need additional time after November 26 to produce documents from these broadcasters, who are not participants and did not provide witness testimony in the proceeding. Best, Caroline Caroline N. Esser LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000 San Francisco, CA 94111-6538 Direct Dial: +1.415.395.8063 Fax: +1.415.395.8095 Email: [email protected]<mailto://[email protected]> https://www.lw.com<https://www.lw.com>
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From: Warren, Previn <[email protected]> Sent: Wednesday, November 20, 2019 11:51 AM To: Esser, Caroline (SF) <[email protected]> Cc: Jovais, Alicia (SF) <[email protected]>; Lovejoy, Brittany (SF) <[email protected]>; Damle, Sy (DC) <[email protected]>; Wetzel, Joe (SF) <[email protected]>; Hanson, Kris (SF) <[email protected]>; Trepp, Alex S. <[email protected]>; Rao, Devi M. <[email protected]>; Cherry, Andrew B. <[email protected]>; Dukanovic, Ivana (SF) <[email protected]> Subject: RE: Web V - Follow-Up Caroline, I have not heard back from you in response my below email concerning RFP 28. Please advise as to NAB’s position. Separately, SoundExchange is still awaiting an answer from you on the below items, some of which have been pending now for weeks. We would appreciate a prompt update given the impending discovery deadline. > · SoundExchange is awaiting a response from NAB on RFPs 9, 12, and 75, and on RFP 82 as limited by SoundExchange. SoundExchange is awaiting a response from NAB on whether it will collect and produce documents from Beasley, Cumulus, Salem, and Cromwell in response to RFPs 5, 49, 51, 54, 57, & 58. > Absent a timely response from NAB, SoundExchange reserves the right to take any or all of the above issues to the Judges. Best, Previn From: Warren, Previn Sent: Friday, November 15, 2019 12:59 PM To: '[email protected]' <[email protected]<mailto:[email protected]>> Cc: [email protected]<mailto:[email protected]>; [email protected]<mailto:[email protected]>; [email protected]<mailto:[email protected]>; [email protected]<mailto:[email protected]>; [email protected]<mailto:[email protected]>; Trepp, Alex S. <[email protected]<mailto:[email protected]>>; Rao, Devi M. <[email protected]<mailto:[email protected]>>; Cherry, Andrew B. <[email protected]<mailto:[email protected]>>; [email protected]<mailto:[email protected]> Subject: RE: Web V - Follow-Up Caroline, The purpose of this email is to discuss NAB’s response to RFP 28. SoundExchange does not agree with your claim that NAB “has not put … at issue” the negotiation of direct licenses between independent labels and broadcasters. Your written direct testimony proves the opposite.
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· Dr. Leonard claims that “iHeart’s direct deals with the renewal indies are relevant benchmarks to consider in this proceeding.” He then articulates a theory why that is the case – because the lower rates in these deals are “the result of competition.” But Dr. Leonard defends that assertion using highly conditional language, stating that the indies renewed because “iHeart could and perhaps was steering towards the labels’ recordings.” The negotiation documents – in which iHeart may very well have made promises (or failed to make promises) about steering – are directly relevant to Dr. Leonard’s theory. We are entitled to see them. · Dr. Leonard also claims that the direct licenses offer indies “other (e.g., promotional) benefits.” Again, we are entitled to probe whether this is true. What representations did iHeart make (or not make) to the indies about such promotional benefits? Were indies led to believe that their licensing agreements would lead to added promotional and marketing support (regardless of whether such benefits materialized as contractual guarantees)? Was there any effort by the broadcasters to quantify the value of such benefits to the labels? · Dr. Leonard further claims that
Again – is this true? What representations did the labels make (or not make)
· Dr. Leonard claims that “[o]ther license agreements between broadcasters and record labels … are not useful comparables.” SoundExchange is not required to accept this representation at face value. To the contrary, we are entitled to see how those negotiations transpired, and to understand what deal terms were proposed and rejected. If, for example, iHeart approached 300 indies for a renewal license, and they all said no, could Dr. Leonard still credibly claim that the 15 renewals still function as a representative benchmark? We are entitled to explore this and related issues, which Dr. Leonard has put at issue by disregarding the non-renewed licenses. For the foregoing reasons, SoundExchange finds NAB’s self-imposed limitations to RFP 28 to be inadequate. That is particularly the case in light of the compromises that SoundExchange has proposed with respect to the negotiation documents requested by the Services. In the spirit of compromise, and to ensure parallelism with the concessions that SoundExchange is willing to make per Alex’s email earlier today, SoundExchange will accept the following limited production of documents from NAB in response to RFP 28: “For the time period January 1, 2012 through the present, all documents related to the negotiation of a Direct License or the renewal of a Direct License—including but not limited to (a) all drafts of licenses, (b) all internal emails, and (c) all emails exchanged with record companies, distributors, representatives, or other content owners—regardless of whether or not the Direct License or renewal was executed for the licenses relied on as a benchmark by Dr. Leonard in Section V.A of his written direct testimony, in addition to “valuation-related” documents related to the negotiation or renewal of any unexecuted or nonrenewed license rejected as a comparable by Dr. Leonard in Section V.C of his written direct testimony.” These limitations are consistent with and proportional to SoundExchange’s willingness to produce all documents (valuation and non-valuation) related to the 2017 agreements with Spotify and Apple Music, to produce valuation- related documents for certain historic agreements, and to produce certain documents for presently unexecuted agreements (WMG-Spotify) – notwithstanding our view that such documents are not discoverable. Please let us know if you are willing to accept this compromise, or if the parties are at an impasse on RFP 28. In the event you reject this compromise, please be advised that SoundExchange reserves the right to move to compel the production of all documents requested by RFP 28 as initially served.
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With respect to RFP 82, NAB is discussing the proposed limitation with iHeart and will circle back shortly. We stand on our objections to RFP 64 and the Unnumbered Request. As we explained during our call, the requests are legally and economically incoherent, rendering them unanswerable as well as not directly related to NAB’s written direct statement. SoundExchange indicated during the meet and confer call that it would not revise these requests. NAB reserves all rights and obj

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