A lawsuit against one of the music industry’s major copyright enforcement firms is striking a sour note with potential suitors, The Post has learned.
As The Post reported exclusively last month, the owners of SESAC — one of the three groups that represents music publishers and songwriters — were seeking about $500 million for the Nashville-based company and had hired Goldman Sachs to shop it.
Hanging over the sale, however, is an antitrust suit against SESAC brought by more than 1,000 television broadcasters that challenges the firm’s price-setting power.
The complaint, filed in Manhattan federal court in November 2009, claims SESAC is engaging in anti-competitive practices.
Broadcasters, which license songs for jingles and theme songs among other uses, claim that SESAC is forcing them to pay a blanket annual fee for all of its music and making it difficult for them to negotiate with individual artists for song rights.
Broadcasters also claim that SESAC charges higher rates than its peers.
SESAC competes with rival performance-rights groups BMI and ASCAP but is the only for-profit one of the bunch.
In its defense, SESAC, whose owners include boutique media investment bank Allen & Co. and hedge fund Och-Ziff Capital Managment, argues it lacks monopoly power and is much smaller than either ASCAP or BMI.
SESAC has tried and failed to get the suit dismissed, and last summer settlement discussions collapsed.
One prospective buyer described the suit as troubling, saying it could upend SESAC’s business model if the firm lost.
“Part of SESAC’s sales pitch is that they have a lot more flexibility on pricing” than competitors, the source said, adding that he was likely not going to make an offer.
The sales book for SESAC may not mention the suit, although management has addressed the issue in meetings with potential suitors, said one source.
SESAC declined to comment.