Changes to the Audiovisual Media Services Directive approved by the European Parliament – what does it mean for the media market?

by Dentons
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On October 2, 2018, the European Parliament approved the amendments to the Audiovisual Media Services Directive 2010/13/EU (AVMS Directive) and the Council’s approval is expected imminently. Twenty days after its publication in the Official Journal of the European Union, it shall enter into force, and the Member States will need to transpose it into their national legislation within 21 months, probably in mid 2020.

Overall Direction of Amendments

The AVMS Directive is the centerpiece of EU legislation regulating the audiovisual media market. The main reason behind the adoption of its predecessor, Directive 89/552/EEC, in 1989 was to enable cross-border satellite broadcasting. It introduced minimum requirements for broadcasters were and established the principle of the country of origin. Subsequent amendments have shown that the EU legislator is keen to regulate all audiovisual services that might compete with traditional broadcasting. For this reason, in 2007, the AVMS Directive was extended to include on-demand services. Once the current amendments enter into force, the AVMS Directive will also cover video-sharing platforms. While there are obviously many more changes, this is the most significant, as is indicative of the future course of amendments.

Services Covered by the AVMS Directive

The introduction of video-sharing platforms aside, the material scope of the AVMS Directive will generally remain unamended. The AVMS Directive still makes use of the definition of “audiovisual media service(s)”, which may take the form of linear or non-linear services.

The amendment introduces minor changes to the definition of ‘audiovisual media service’ in order to stress that a catalog of programs embedded in a different service may also qualify as an audiovisual media service. This detailed stipulation comes partly as a result of the judgment handed down by the Court of Justice of the European Union (CJEU) in case C‑347/14 on October 21, 2015. The Court explained that a catalog posted on a newspaper publisher’s website may also be subject to the AVMS Directive, provided it fulfills the criteria referred to in the definition.

Interestingly, the requirement that programs must be comparable in form and content to that of television broadcasting (TV like) has been removed from the definition of “program”. To date, it has been possible to argue that any service including a program comparable to television broadcasting may be treated as audiovisual media services.

These two changes will undoubtedly extend the scope of the AVMS Directive into new services, including webpages featuring video catalogs or many professional channels in social media. That said, considering the terms of judgment C‑132/17 of February 21, 2018, in which the CJEU ruled that the AVMS Directive would not cover a channel featuring promotional audiovisual content, not all of them will qualify.

Cross-border perspective

In cross-border terms, the AVMS Directive does not introduce any fundamental changes. It maintains the country of origin principle, which means that media service providers will be subject to the jurisdiction of a single Member State. The determination of jurisdiction will continue be based on the same criteria, in particular on the location of the service provider's head office and the place where editorial decisions are made. If they are located in different Member States or outside of the EU, further criteria will be taken into account. Such criteria include the location of a significant part of the service provider's workforce.

The AVMS Directive clarifies two essential issues. Firstly, it defines what an “editorial decision” is, describing it as “a decision which is taken on a regular basis for the purpose of exercising editorial responsibility and linked to the day-to-day operation of the audiovisual media service”. Secondly, “significant part of the workforce” refers to “staff involved in program-related services”. These two elements may be decisive in dubious cases concerning jurisdiction. The AVMS Directive provides for a procedure whereby Member States will be able to determine which jurisdiction a media service provider falls under.

The AVMS Directive still specifies when Member States may derogate from the country of origin principle and temporarily restrict retransmission of a service. It also outlines a procedure for cooperation between Member States in the event of relocation of a service provider in order to circumvent more detailed or stricter rules. However, the AVMS Directive introduces certain procedural changes to limit this type of measure by Member States to the bare minimum.

Financial contribution towards production of European works

In a significant new departure from the country of origin principle, Member States to which a service is addressed are now allowed to impose the obligation to make financial contributions towards the production of European works. This is a novel solution, which was originally intended to apply only to on-demand service providers, but was eventually extended to cover all audiovisual media service providers. For example, if a Polish-language program containing advertisements addressed to a Polish viewer operates on the basis of a license obtained in another Member State, its provider may be required to pay fees in Poland. The obligation to pay fees in Poland already exists under the Cinematography Act, but applies only to program broadcasters and platform operators established in Poland. It is worth adding that the requirement laid down in the AVMS Directive does not apply to non-EU service providers, nor does it apply to video platform providers, regardless of where their headquarters are.

Video-sharing platforms

The AVMS Directive also regulates for the first time the operation of video-sharing platforms, which are defined as services or a dissociable part of a service whose principal purpose or function is to offer user-generated programs or videos, for which the video-sharing platform provider bears no editorial responsibility. Video sharing platforms will also be obliged to apply appropriate measures to protect minors from harmful content and protect all audiences against incitements to hatred or violence.

The application of advertisement–related requirements is one more important change. Each video sharing platform provider is obligated to comply with the requirements set out in the AVMS Directive with regard to its own advertising content, and to take appropriate measures to ensure that users comply with these requirements. Moreover, the AVMS Directive lists ten tools that video sharing platform providers should use to meet these requirements, including clauses inserted in the terms and conditions of service, age verification, parental control and enabling users to declare commercial content in the video clips they post. Member States may adopt more stringent requirements for video sharing platform providers.

It is questionable whether the requirements set out in the AVMS Directive are indeed a significant burden, especially as, for the most part, video sharing platform providers already apply adequate measures as set out in the AVMS Directive. Undoubtedly, the most important change will be that, from now on, video sharing platform providers will be subject to the media regulator and will probably have to be registered. Moreover, the video sharing platform provider will be subject to the AVMS Directive even if it is located outside the EU, if another entity from the provider's corporate group is located within the EU.

Promoting European works

The AVMS Directive sets out stricter requirements regarding the promotion of European works in on-demand audiovisual services. Providers of such services will need to guarantee that at least 30% of the catalogs on their platforms consist of European content, which should be additionally featured in an appropriate manner. The preamble to the AVMS Directive explains how such a distinction can be achieved, e.g. by setting up a separate catalog for European works that will be accessible from the homepage, using European works in advertising campaigns or by featuring European works in banners or similar tools. While the requirements imposed on on-demand service providers are still less stringent than for traditional broadcasters, there is a clear trend towards convergence.

Changes in advertising messages

The AVMS Directive gives broadcasters greater flexibility and enables them to decide on the timing of advertising. It stipulates that the share of TV commercials and teleshopping spots between 6am and 6pm and between 6pm and midnight may not exceed 20% of the total broadcasting time in this time slot. Such flexibility will certainly benefit the broadcasters. At the same time, the direction indicated in the AVMS Directive shows that any national legislation going in the opposite direction would be contrary to the general trend prevailing in the EU.
As regards other advertising content, the AVMS Directive explicitly prohibits the use of product placement in consumer programs.

ERGA

The new regulations will improve cooperation between Member States' audiovisual authorities by strengthening the European Regulatory Group for Audiovisual Media Services (ERGA) and defining its role in the AVMS Directive. The ERGA will be given more tasks, namely to advise and assist the Commission in the coherent implementation of the Directive in all Member States. It is worth mentioning that ERGA was set up by a decision of the European Commission back in 2014.

Conclusions

The amendments to the AVMS Directive are certainly significant as they relate in particular to the scope of the services covered by the AVMS Directive and they change the obligations of the providers - with very light approach for video-sharing platforms, semi-strict (but higher) regulatory obligations for VOD providers and still strict (but slightly more relaxed) rules for the traditional broadcasters. It is important also that the timing of amendments is critical as they are adopted shortly ahead of Brexit (expected in March 2019). If ‘no deal’ will be made between the UK and the EU, the new rules for AVMS Directive will not apply to broadcasters and VOD providers operating based on UK laws.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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