The Commission updates EU Audiovisual rules: what are the challenges and opportunities for businesses?

On 25 May 2016, the European Commission published its proposed amendments to the Audiovisual Media Services Directive 2010 (AVMSD).

In its Explanatory Memorandum, the Commission states that the proposed update “creates a fairer environment for all players, promotes European films, protects children and tackles hate speech better.”

The updated rules contain controversial provisions, helpful clarifications of the existing rules and potential benefits to businesses in this sector by deregulation in certain areas.

Background

The AVMSD was designed as a way to streamline TV and media rules across the EU.

The changes have been made to recognise that the media landscape has shifted dramatically in less than a decade:

• instead of sitting in front of the family TV, millions of Europeans, especially young people, watch content online, on-demand and on different mobile devices;
• there is a generational shift in terms of how people are viewing and consuming content. Children are watching about half as much TV as the average viewer;
• global internet video share in consumer internet traffic is expected to increase from 64% in 2014 to 80% by 2019;
• audiovisual media increasingly target markets across national borders. At the end of 2013, more than 5,000 TV channels had been established in the EU. Of these, almost 2,000 targeted foreign markets (either EU or extra-EU). This share had increased from 28% in 2009 to 38% in 2013. As far as video-on-demand services are concerned, 31% of the video-on-demand services available in a Member State are established in another EU country.

What is the Commission proposing?

The headline points are that:

• video sharing platforms (VSPs), which often fell outside the existing regime, will be specifically regulated for the first time. This creates a three tier broadcast legislation regime in the EU for: (i) linear broadcasts; (ii) on demand programme services (ODPS); and (iii) VSPs;
• VSPs will be under obligations to take appropriate measures to: (i) protect children from harmful content; and (ii) protect citizens from incitements to hatred. The updated rules give some practical examples as to what may constitute appropriate measures, for example, including restrictions in terms and conditions and implementing and operating age verification systems;
• the thorny issue of jurisdiction has been avoided for ODPS (meaning that services established outside the EU still do not fall within the jurisdiction of EU regulators), but the concept has been extended for VSPs to include the location of their subsidiaries and group companies. This seems a deliberate move to ensure that VSPs based in the USA do not slip through the regulatory net this time round, in the same way that ODPS operate from outside the EU;
• perhaps most controversially, the new rules could force ODPS to contribute to EU nations’ cultural budgets (although there are certain exemptions). This could make life very expensive for a company which offers services across the EU’s 28 member countries;
• the new regulation introduces quotas of EU content for ODPS, meaning that each ODPS must have at least 20% share of European content in their catalogues (again, there are certain exemptions to this);
• advertising rules are changing to be more relaxed when it comes to product placement and advertising minutes on linear TV, but stricter in terms of protecting children from advertising messages encouraging the consumption of alcohol and fatty, salty and sugar-filled foods;
• existing concepts such as “TV-like”, which was one of the criteria an on demand service had to meet in order to be regulated, have been changed, meaning it is now possible that more services (including those which had previously relied on the fact that they were not providing “TV-like” content) will fall under the regulators ambit and will have to comply with the rules for ODPS;
• providers of audiovisual media services must empower viewers in making informed decisions about content by providing sufficient information by, for example, using a system of content descriptors. This will potentially necessitate changes to products and back-ends, for example, how content is tagged or described upon ingestion; and
• certain provisions have been harmonized across ODPS and linear TV services, most notably in relation to ensuring that programmes which may be harmful to children are made available in such a way so as to ensure minors do not normally see and hear them. This could have profound implications for the types of content now made available on linear TV, which were previously not permitted.

What now?

• Legislative timetable: The current AVMSD will continue to apply until the revised Directive enters into force. The Commission is calling on the European Parliament and the Council of the EU (representing Member States) to adopt the text as soon as possible. The Commission proposes that Member States have one year to transpose the Directive into their national legislation.
• Video sharing websites should assess if and the extent to which they will fall under the new rules.
• Online audiovisual services which are not ODPS should assess whether they are caught by the revised criteria for ODPS.
• Existing ODPS should assess the extent to which their obligations will change and whether they will be able to benefit from the relaxed advertising rules.
• Existing linear services should determine whether they will be able to benefit from the deregulation of advertising and harmful content.