Report of the Supervisory Board

This activity report of the Supervisory Board covers the fiscal period of 2021.

Introductory information: In 2021, OSA Supervisory Board met at the total of 12 sessions. It has to be said that serious health problems of the Supervisory Board chairman, Luboš Andršt, unfortunately still did not get better in the early months of 2021. It was necessary to elect a new chairman in accordance with Article 7.3.2. of OSA Articles which provides that membership in the Supervisory Board shall terminate with respect to each member of the Supervisory Board who did not (could not) attend the Supervisory Board’s meetings for more than 5 months. Ivan Kurz was elected by secret ballot and replaced the current chairman, Luboš Andršt, from 1 May 2021. Martin Kratochvíl became a new member of the Supervisory Board as a properly elected substitute. Members of the three-member OSA Management Board and vice-chairmen of the Supervisory Board remained unchanged. On 21 December 2021, Luboš Andršt died and, as if that was not enough, Juraj Filas passed away on 31 December 2021.

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 proper audit was carried out by the independent company PKF APOGEO Audit, s.r.o., which did not find any deficiencies in OSA’s accounting for the year 2021, and the information in the annual report of OSA Management Board complies with the financial statements in all respects.

 Economic results: Last year, we managed to collect the second highest revenues in OSA’s history in the amount of CZK 1,313,412,000. Total revenues collected increased by 13.94%, i.e. CZK 160.7 mil. OSA achieved the result despite the ongoing pandemic situation. We managed to achieve the outstanding result thanks to settlement of legal cases and conclusion of settlement agreements with respect to prior periods. On this basis, we collected a lump sum of more than CZK 222 mil. These were agreements with satellite operators, television broadcasters and, last but not least, the Czech Association of Hotels and Restaurants.

Revenues for granted licenses collected only for music authors amounted to CZK 1,104,755,000, which means an increase by CZK 117.5 mil., i.e. 11.90%, year-on-year. In 2021, OSA’s costs were lower by CZK 2.6 mil. year-on-year, the average cost deduction (cost to revenue ratio) thus reaching 11.63%.

Member base: As of 31 December 2021, OSA represented on a contractual basis a total of 10,530 rights holders, 7,373 of whom were living authors, 2,999 heirs and 158 publishers. In the course of the year, OSA agreed to represent 468 new authors and 10 new publishers. As of 31 December 2021, OSA had 593 members, of which 427 composers, 92 lyricists, 28 publishers and 46 heirs. Nineteen members died in the course of 2021. 23 new members have been accepted since 1 January 2022.

Of those who met the conditions for membership, 10 authors (9 popular music authors and 1 lyricist) and 1 heir have filed a membership application this year. This year’s General Assembly of OSA members will decide on those applications.

Supervisory Board activities: Similar to 2020, the entire year 2021 was marked by the Covid-19 pandemic. The situation naturally affected activities of the Supervisory Board which had to deal with issues of support for authors, demonstration of mutual solidarity in relation to organizers of music performances as well as music users on a commercial basis.

The Supervisory Board continuously, and as a matter of priority, addressed topical issues relating to the needs of authors and publishers and its decisions aimed to bring maximum possible positive results. For example, the Supervisory Board approved the rules for payment and settlement of full-year advances for the royalties to be paid out, on the basis of the proposal submitted by the Distribution Committee, discussed issues relating to the waiver of license fees payable by entrepreneurs hit by the crisis – these are only some examples of the Supervisory Board’s efforts to help the Czech musical culture.

The Supervisory Board, in cooperation with the Management Board, took great care in preparing and addressing all topical issues relating to copyright matters.

The Supervisory Board discussed and prepared the requisite supporting documents for the voting at this year’s meeting of the General Assembly. For example, upon the initiative of the Distribution Committee, a proposal was approved to amend the Distribution Rules with respect to the distribution of royalties for the so-called non-personalized stream (it is proposed to logically distribute royalties for streaming services according to the revenues from streaming services distributed on a personalized basis in accordance with the reports of works used); upon the initiative of the Committee for Creativity Affairs, a proposal was approved to change the coefficient for categories 3 and 5 (the reason for the approved proposal is some fluctuation in revenues from public performances of pieces of music in the two aforementioned categories); we could continue but these issues are discussed in other supporting documents for the General Assembly – please refer to the next agenda item.

Since the General Assembly is not held until the end of May, activities of the Supervisory Board logically continue into the next calendar year (let us give a few examples):

It is, for example, the discussion of the amendment to the Copyright Act in the Parliament of the Czech Republic (this means that the position of authors in further negotiations will depend on the degree and quality of implementation within the process of approval of the relevant amendment – we need to be ready).

As concerns OSA’s application (of 26 May 2021) for aid under the scheme COVID – Culture 3.3, where we claimed maximum state compensation in the amount of CZK 10 mil., the application was eventually granted. On 30 December 2021, we were informed by the Ministry of Industry and Trade that the compensation had been granted in full. OSA received the amount on the next day, i.e. on 31 December 2021.

The last state of emergency in 2021 was declared in the Czech Republic (still by the government of Andrej Babiš) for the period from 26 November 2021 to 26 December 2021. Presence of the public in food service facilities, clubs etc. was once again restricted. Rules for holding mass events were tightened. Unfortunately, those facts are highly likely to affect the royalties in 2022. In this context, in the light of the restrictions on music performances in the period from November 2021 to February 2022, OSA Supervisory Board decided to pay out another extraordinary aid. With this aid, we would like to at least partially compensate the shortfall of royalties occurred as a result of the Covid-19 pandemic (the contribution will be paid out on the basis of individual requests).

 Other events which, of course, fall beyond the scope of the 2021 report but for which it is good to be prepared, are linked to possible economic problems caused by the pandemic, the war in Ukraine as well as other problems of our ailing world.

To conclude, I would like to say that OSA Supervisory Board worked in a great, helpful environment and friendly atmosphere throughout 2021. I want to take this opportunity to thank all members of the Supervisory Board and members of the Management Board for professional quality cooperation and helpfulness and for their considerable understanding in the performance of work tasks throughout the year. On behalf of the Supervisory Board, I want to express profound respect and thanks to the deceased members of the Supervisory Board – Luboš Andršt and Juraj Filas. We honor their memory!  I am very grateful to Šárka Jančíková for the perfect organization of all work meetings and for the meticulous administration of the extensive paperwork of the Supervisory Board.

The only path I can see is to avoid harboring any inclinations to division, free ourselves of them and cherish cooperation and mutual assistance.