Everton FC’s pre-season victory

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Originaly published in the Entertainment Law Review.

Although not quite as lucrative as its pre-season US tour, Everton FC’s recent successful appearance before media regulator Ofcom helps it to retain a few more pounds which might be available for the transfer kitty.

The club appealed the decision, by the regulator of on-demand programmes services (“ATVOD”), that the “Everton TV” section of its official website amounted to an “on-demand programme service” and as such should have been notified to ATVOD and a fee paid. Ofcom agreed with Everton FC’s appeal; another loss away from home for the regulator1.

ATVOD

ATVOD was created in early 2010, when Ofcom delegated to it responsibility for the regulation of on-demand programme services (“ODPS”), which are usually distributed via the Internet.2

Before this point, or rather before the inception of the Audiovisual Media Services Directive3 and the subsequent changes to the United Kingdom’s corresponding regulatory framework, media regulation had been largely restricted to traditional, linear, broadcasting services.

ATVOD was charged with overseeing a new tier of media regulation, one key aim of which was to provide a “level playing field” between linear and non-linear/on demand services. The Directive sets out that:

“it is necessary, in order to avoid distortions of competition, improve legal certainty, help complete the internal market and facilitate the emergence of a single information area, that at least a basic tier of coordinated rules apply to all audiovisual media services, both television broadcasting and [ODPSs].” 4

Ever since its creation, ATVOD has faced an issue familiar to many a watchdog: a significant portion of the people and services that it considers should be subject to its regime, take the opposite view. In various instances ATVOD’s initial view of exactly what is and is not an ODPS has been overturned, each time prompting it to reassess its approach.

To be fair, the issues here are not straightforward and ATVOD’s parent regulator and, effectively, appellate body, Ofcom is perhaps glad that it delegated to ATVOD the functions that it did.

There are various conditions that need to be met in order for a service to fall within the concept of an ODPS5:

• its principal purpose must be the provision of programmes the form and content of which are comparable to the form and content of programmes normally included in television programme services;

• access to the service must be on-demand;

• a person must have editorial responsibility for the service;

• it must be made available by that person for use by members of the public; and

• that person must fall within the jurisdiction of the United Kingdom for the purposes of the Directive.

Each of these conditions has been considered by ATVOD and, on appeal, Ofcom in the context of various services and there now exists a significant body of decisions which, although often complex, provide operators with a useful framework.

Everton TV

The latest example of somebody seeking, successfully, to avoid ATVOD’s jurisdiction related to the “Everton TV” section of Everton FC’s website. The focus here was whether the “principal purpose” of the club’s service was “the provision of programmes the form and content of which are comparable to the form and content of programmes normally included in television programme services”.*Ent. L.R. 261

Back in 2011 Everton FC, being a good citizen, notified ATVOD that it considered that the “Everton TV” online service amounted to an ODPS. At that point in time the “Everton TV” service was subscription-based, not accessible to general users of the club website.

In making the notification the club effectively accepted that, as with any other ODPS: (a) the service must comply with restrictions on harmful content and commercial references (sponsorship, product placement and the like); and (b) a fee is payable. Although not always the case, this fee requirement is the one which leads to a large number of the disputes in this area. Whereas the licence fee payable by a traditional broadcaster amounts to a very small percentage of the overall costs of operating a channel, the same is less likely to apply to, for example, Internet-based content distributors. The obligation to pay a fee to ATVOD really can eat into the bottom line, hence the challenges.

Unsurprisingly ATVOD didn’t dispute the notification (it doesn’t do this), and readily accepted the club’s fees.

However, Everton FC subsequently made changes to the service. Unlike various other clubs with similar internet-based “TV” offerings, Everton decided to make the majority of the content available without subscription or payment. I won’t make the obvious joke that this may have resulted from revenues being less than the then ATVOD fee. It also integrated Everton TV’s URL into its website and then requested that ATVOD determine whether the Everton TV section still constituted an ODPS.

ATVOD determined that not only was “Everton TV” still a distinct service, which was not fully integrated into the remainder of the site (which they accepted was not an ODPS), but the form and content of the programming included in the section were comparable to the form and content of programmes normally included in television programme services (in other words, it was “TV-like”). Further, the provision of those programmes remained the principal purpose of the service. Therefore, ATVOD concluded that despite the changes, the “Everton TV” section of the club’s website remained an ODPS.

Everton FC appealed to Ofcom, arguing that the Everton TV section of its website is not a separate service, but rather part of a single overall website and that the principal purpose of its website was not the provision of TV-like programmes.

Ofcom’s decision

 

Principal purpose

Ofcom agreed with ATVOD that it is not correct to assume that a website automatically equates to a single service, with a single “principal purpose”. Although this may be the case in respect of certain websites, others could comprise various services, each potentially with a different “principal purpose”. At this stage ATVOD is happy, multiple services equal larger fees.Ofcom considered that although ATVOD had correctly considered the club’s entire website to assess whether the “Everton TV” section amounted to a distinct service, ATVOD had reached the wrong conclusion.

Because of the inter-connectedness of the club’s entire website and the integrated nature of the “Everton TV” section, on balance Ofcom viewed that section as simply an ancillary part of the overall website. As the principal purpose of the overall website was an “online fanzine/information service” this was not an ODPS.

“TV-Like”

I think that Ofcom stuck the knife into ATVOD a little here, concluding that even if the principal purpose of the service (whether the entire club website or even the “Everton TV” section) could have been said to be the provision of programming, then the programming still was not sufficiently “TV-like” to meet the comparability part of the statutory definition.

The majority of the material assessed was under five minutes in duration, with only 4 per cent being over 10 minutes. Ofcom’s conclusion was that although certain of the content was “TV-like”, the vast majority would have been “more likely to form parts of sports report or highlights programming rather than being programmes in themselves”.

Ofcom compared the programming with that found on the MUTV, LFCTV and other linear services and concluded that there were “significant differences”, which in turn led to an overall conclusion that the Everton material would not have competed for the same audience as linear television broadcasts.

So, Ofcom concluded that neither the “Everton TV” section, nor the entire club website as a whole satisfied the requirements to be an ODPS.

Lessons?

This decision is interesting, and will no doubt have led to a significant amount of head-scratching within ATVOD.

In terms of the identifying the service itself, and whether that this was the “Everton TV” section or the entire site, Ofcom appears to have laid some clear markers as to how to ensure the integration of a “sub-service” within an overall website. In brief, those operating a service, whose principal purpose is not the provision of “TV-like” material, but on which there is some on-demand audio-visual content should consider:

• look and feel—the touchstone here seems to be common branding, layout and styling, creating a link and connection between any “TV section” and the broader service; and

• sharing—the propagation of audio-visual content throughout the broader service, including links from various sections to it, rather than simply having all audio-visual content contained in a single area.*Ent. L.R. 262

These markers are not however new—they really repeat the approach taken previously by Ofcom in instances such as The Sun online decision6 where again the “TV section” of the site was found not to be a separate standalone service.

The more interesting part of this decision, and more difficult for ATVOD to accept, is probably the question of whether the content in question, even that within simply the “Everton TV” section of the service, is “TV-like”.

Based upon Ofcom’s decision, even if the content was behind a subscription paywall, and was on a standalone service (i.e. quite distinct from the main Everton website), it still wouldn’t have fallen within ATVOD’s remit.

Ofcom referred to a research report that it commissioned in 2012 which considered in detail what the public views as “TV-like” and therefore what competes for the same audience as TV broadcasts. Everton’s service, the short duration of the content, and the fact that it wasn’t heavily produced (for example lack of credits) wasn’t seen as meeting this benchmark in this context.

That must be quite hard for ATVOD to swallow. In other instances, notably in the world of online on-demand adult content, Ofcom has confirmed that short pieces of content, with no credits or the like, are competing for the same audiences as linear adult television services.

So, context is key and, as Ofcom recognised, the line between services which should be regulated and those which should not is not always a bright one. In an ideal world, this is exactly the sort of question which should be put to an audience panel each time to decide—effectively, a jury system. But with ATVOD’s relatively limited resources this isn’t going to happen. I wonder whether, partly in fear of another overturning on appeal, ATVOD will now take a less aggressive approach in targeting services which are operating on the borderline.

Ent. L.R. 2013, 24(7), 260-262

1. See http://stakeholders.ofcom.org.uk/binaries/enforcement/vod-services/Everton-TV.pdf [Accessed August 12, 2013].

2. Ofcom designates ATVOD as the “appropriate regulatory authority” to carry out certain functions under Pt 4A of the Communications Act; under a designation published on September 14, 2012 (“The Designation” see annex 1 and at http://www.atvod.co.uk/uploads/files/amended-designation140912.pdf [Accessed August 12, 2013]).

3. Directive 2007/65 amending Council Directive 89/552 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities [2007] OJ L332/27.

4. Recital 11 of the Audiovisual Media Services Directive 2007 (the “Directive”).

5. Communications Act 2003 s.368A.

6. The Sun decision: http://stakeholders.ofcom.org.uk/binaries/enforcement/vod-services/sunvideo.pdf [Accessed 21 August 2013]