Dear colleagues,
this activity report of the Supervisory Board covers the fiscal period of 2020.
Introductory information: As at the date of this report, members of our three-member Management Board and the composition of the Supervisory Board remain unchanged since the last-year’s elections. The Supervisory Board notes with regret that for serious health reasons, the chairman of the Supervisory Board Luboš Andršt has been unable to participate in the work of the Supervisory Board since December 2020.
Audit: The Association’s Management Board is responsible for compiling the financial statements. The Supervisory Board is responsible for overseeing the process of financial reporting. A due audit was performed by the independent company APOGEO Audit, s.r.o., which did not find any deficiencies in OSA’s accounting for the year 2020, and the information in the annual report of OSA’s Management Board complies with the financial statements in all respects.
Economic results: Total revenues collected decreased by 16.87% (- CZK 233.920 thousand) year-on-year due to the pandemic situation.
Of which the revenues for granted licenses collected only for music authors decreased by CZK 131,731 thousand, i.e. 11.85%. This fairly good record was, however, strongly supported both by settlements for previous periods – in particular in the segments of television broadcasts and cable retransmission – and by received payments for use in 2019.
In 2020, OSA’s costs were by 8% lower year-on-year and, despite the aforementioned decrease of revenues collected, the calculated average cost deduction (cost to revenue ratio) reached an acceptable level of 13.48%.
The government measures taken in 2020 had terrible effects in particular on public performance of music. The affected fields included both the live music performance licensing which decreased by 52% year-on-year and the entire field of background music (including cinemas and jukeboxes for other domestic collective management organizations) with a year-on-year decrease by 48%.
On the contrary, the internet segment with its year-on-year increase by CZK 29,669 thousand, i.e. a jump by 57% compared to 2019, benefited the most from the coronavirus crisis. Also the television broadcasts segment achieved a large year-on-year increase of revenues collected. But this increase was considerably affected by the retroactively concluded settlements for prior periods.
Member base: As at 31 December 2020, OSA represented on the contractual basis a total of 10,106 right holders, of which 7,071 living authors, 2,887 heirs and 148 publishers. It accepted representation 444 new authors and 4 new publishers in the course of the year. As at 31 December 2020, OSA had 589 members, of which 422 composers, 91 lyricists, 27 publishers and 49 heirs. Since 1 January 2021, 22 new members have been accepted. Twelve members died in 2020.
Of those who fulfilled the conditions for membership, 20 authors (16 popular music authors and 4 lyricists) and 2 heirs have filed an application this year. This year’s general assembly of OSA members will decide on these applications.
Supervisory Board activities: The leitmotif of last year was the support for represented authors who were affected by the coronavirus pandemic. In 2020, we paid out almost CZK 10 million in total, in the form of non-repayable aid, to authors directly affected by the prohibition of live music performances.
At this year’s general assembly, we are not presenting any fundamental changes, except for the point which amends the distribution for television broadcasting. After many long years, we managed to negotiate with broadcasters a synchronization fee as a separate item. For this reason, the synchronization fee will once again become a one-off sum. We propose to cancel the coefficient 5 and move all works currently falling under this coefficient to the coefficient 3 category. Under our proposal, each work broadcasted for the first time on television will have the coefficient 18. This means six times the regular royalty. Hence the coefficient is de facto a one-off synchronization royalty. This is another step towards creating the fairest possible distribution rules.
As we announced last year, the Office for the Protection of Competition (OPC) had imposed a fine on OSA in the case of taking account of the occupancy of hotel and spa rooms in the period from 2008 to 2014. OSA filed an appeal against this decision but it was dismissed by the OPC, the fine became final and OSA had to pay it. But we have very strong arguments and we believe that OSA did not commit the alleged abuse of dominant position and, therefore, we continue to defend ourselves before court. It is a long process but we are convinced, just like the lawyers representing OSA, that we will win the lawsuit.
State of emergency: The end of the report inevitably covers also the year 2021. Just like the rest of the world, we have entered the second year of the coronavirus pandemic. Cancellation of cultural events results in economic losses not only for performers but also for authors. The entire Supervisory Board considered it necessary and self-evident that an extra financial aid should be provided to authors in the pandemic situation as a partial compensation for the rapid drop in royalties from public concerts. Both in the first wave in spring and in the second autumn wave. We were happy that we could afford it thanks to the good management in the past.
Another problem was that our business partners were also considerably and seriously affected by the coronavirus pandemic. Although OSA has to act as a good businessman when collecting royalties, a crisis situation with economic effects, frequently bordering on existential threat, further requires human decency. Therefore, royalties were waived, on request, to those who had to close their stores, hairdressing salons, hotels or restaurants. It has to be mentioned that all decisions of the Supervisory Board were taken in accordance with the Statutes, Distribution Rules and other binding documents in force.
Despite the vaccination ongoing not only in our country but worldwide, it cannot be excluded that we will have to continue to live with the coronavirus and restrictive measures in 2021. The Supervisory Board, in cooperation with OSA’s Management Board, will flexibly react to the situation and it will be certainly able to meet the challenges posed by this emergency situation.
For the Supervisory Board
Jolana Zemanová,
Vice-Chairman of the Supervisory Board
Michael Prostějovský
Vice-Chairman of the Supervisory Board
Approved by the Supervisory Board on 30 March 2021.