European Union: European Law Makers Strike A Deal On Key Changes To The EU Audiovisual Media Services Directive

Last Updated: 15 May 2018
Article by Tim Johnson

The European Parliament, European Council and the European Commission have reached preliminary political agreement on the main elements of the proposed changes to the Audiovisual Media Services Directive (AVMS Directive). The amendments agreed are intended to reflect digital progress and recognise that people now watch videos in different ways than before. They are also meant to pave the way for a fairer regulatory environment for the entire audiovisual sector as they extend European rules beyond traditional broadcasters to include video-on-demand and video-sharing platforms, such as Netflix, YouTube and Facebook, as well as to the live streaming on demand video-sharing platforms. In addition, these revisions also include improved child protection measures and efforts to tackle hate speech, encourage innovative services and promote European films. These proposals are likely to be welcomed by traditional broadcasters as they will regard their video-on-demand competitors as now being on the same playing field in terms of the regulatory environment

Whilst full details of the amendments agreed have yet to be published, the key elements include:

  • An extension of European audiovisual rules to video-sharing platforms. The revised AVSM Directive will be extended to apply to user-generated videos shared on platforms when providing audiovisual content is an essential functionality of the service.
  • The promotion of European works in on-demand catalogues. The amendments include a requirement that at least 30% of content in the programmes of TV channels and video-on-demand platforms be European. This quota follows the European Council recommendation in May last year but is 10% higher than the European Commission's original proposal two years ago. Video on demand and subscription video on demand platforms will also be asked to contribute to the development of European audiovisual production, either through a direct investment in content or a contribution to national funds, with the level of contribution in each country (ie Member States where they are established or where their target audience is located) being proportional to their on-demand revenues in that country.
  • A strengthened "Country of Origin" Principle with more clarity on which Member State's rules apply in each case, and the same procedures applying to both TV broadcasters and on-demand service providers.
  • Better protection of children against harmful content on TV and video-on-demand services. With the legislation being extended to video-sharing platforms, including YouTube and even Facebook, the new rules envisage obligations on video-sharing platforms to put in place appropriate measures to protect minors. The revisions would also impose strict rules on advertising or product placement in children's TV programmes or content available on video-on-demand platforms. Member states would also be able to decide individually whether they want to exclude sponsorship from children's programmes.
  • Stronger rules against hate speech and public provocation to commit terrorist offences, gratuitous violence and pornography. These new rules will also apply to video-sharing platforms which would also become responsible for reacting quickly when content is reported or flagged by users as harmful.
  • More flexibility in television advertising. The existing limit of allocating no more than 20% of broadcasting time to adverts will only apply between 6am and 6pm, thereby allow broadcasters more flexibility on when to show ads throughout the rest of the day.
  • Measures to ensure the integrity of broadcast signals, with an obligation on service providers not to add a window with content to the screen during the transmission of a programme on smart TVs without first having the agreement of the broadcaster.
  • The reinforcement of existing measures to ensure the Independence of audiovisual regulators.

The final details of the changes are expected to be agreed in June, with confirmation by Council and European Parliament plenary vote likely to take place in September. It is only at this stage that the new rules will then have to be transposed into national law.

Although the proposed changes to the AVMS Directive are beginning to crystallise, it is still not clear how these changes will apply to the UK once it leaves the European Union.

Earlier this year, the European Commission published a notice on the legal and practical consequences of Brexit in relation to audiovisual media services in which it made it clear that, subject to any transitional arrangement, as of the withdrawal date, the EU rules in the field of audiovisual media services will no longer apply to the UK. Whilst some may see this as an opportunity for the UK, freed from the minimum requirements laid out in the AVMS Directive, to reimage how the sector is regulated, many in the industry (including OFCOM and the Commercial Broadcasters Association) are concerned that the disadvantages of being outside of the European regime will far outweigh the benefits, thereby undermining growth and threatening revenue and jobs.

One key benefit of the AVMS Directive is that works originating in the UK form part of the European works quota. The AVMS Directive requires European broadcasters to reserve a majority of their airtime for European works and for European on-demand services actively to promote European works. This obligation has in practice meant that works that qualify as European can command a premium in economic terms. After Brexit, will UK-originated works continue to be classified as European? As currently drafted, the AVMS Directive provides that not only do works originating from Member States fall within the definition of a "European work" but also (subject to some conditions) those works originating from European non-Member States which are parties to the European Convention on Transfrontier Television. The amendments recently agreed include no proposed changes to this definition. Provided, therefore, that this remains the case and the UK remains a signatory of the Convention, works originating in the UK would still continue to be classified as "European work" under the AVMS Directive after Brexit.

The "country of origin" principle is another key benefit of the AVMS Directive. This principle provides that a service regulated in any Member State may then be transmitted for reception freely in other Member States without further regulation. Post Brexit, media services received into or retransmitted from the UK will no longer benefit from this principle. What, therefore, is the UK Government planning to do? Will it seek to bring back control of the regulation of content broadcast into UK, or will it seek to remain part of the EU system of regulation? What will be the position should it choose the former option or fail to secure the latter? Will the prospect of having to comply with separate UK legislation deter EU broadcasters from transmitting into the UK? It is rumoured that a number of international broadcasters based in London are already planning to licence their services in other European countries. In addition, will UK broadcasters not only have to comply with UK legislation post Brexit but also (in order to benefit from EU wide broadcasting rights) legislation in one of the EU Member States in which they operate, which may be entitled to impose additional restrictions on the reception and retransmission of audiovisual media services originating from the UK? Outside the EU, the European Convention on Transfrontier Television would only act as a partial substitute for the market access conferred by the AVMS Directive. The Convention is founded on broadly the same country of origin principle as that set out in the AVMS Directive but excludes seven Member States (including Ireland and the Netherlands). In addition, it lacks an effective enforcement mechanism and does not cover online streaming. Furthermore, its current status is unclear. Following adoption of the AVMS Directive, the Council of Europe had originally proposed to amend the Convention to bring it in line with the AVMS Directive and extend its scope to cover on-demand services. After intervention from the European Commission, however, which asserted that it enjoyed exclusive competence in relation to the issues covered by the Convention, revision of the Convention was dropped and there is no longer a Convention Standing Committee.

With so much at stake, it is hardly surprising that the cross-party Digital, Culture, Media and Sport Committee Report on the impact of Brexit issued earlier this year strongly urged the UK Government to secure as early as possible a country of origin deal with the EU prior to Brexit. Many in the industry, however, fear that maintaining country of origin rules through a separate agreement is far from assured since there is currently no precedent for a third country gaining single market-equivalent access for broadcasters and, according to the European Scrutiny Committee, audio visual media services are generally excluded from EU free-trade agreements due to cultural sensitivities. And so, while broadcasters will keep one eye on the progress of the changes to the AVMS Directive, they will be just as interested in the position of the UK after it leaves the EU.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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