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411 audiovisual sector leaders from 28 Member States urge the EU to „reject and abandon“ a proposal that „undermines the entire audiovisual eco-system in Europe“

2. Mai 2017

Absolute territorial exclusivity is the cornerstone of creativity and investment in European audiovisual works and other protected content – Communication from AV sector representatives across Europe regarding the proposed Regulation on country-of-origin licensing of certain online services by broadcasters.

Dear President Tajani, Dear President Tusk, Dear Prime Minister Muscat, Dear Prime Minister Ratas, Dear Ministers,

As representatives of Europe’s world-leading audiovisual sector, we write to highlight our concerns about the impact of erosion of territorial exclusivity on the creativity and investment in original content, which are the foundation of Europe’s leadership in cultural diversity and digital content services.

The nearly completed Portability Regulation is a significant pillar in the European Commission’s Digital Single Market Strategy. Once this new measure is in place, Europe will have addressed the vast majority of the demand for cross-border access to audiovisual content from its citizens – demand which according to the Commission’s Impact Assessment arises primarily when consumers travel within Europe for business, leisure or education.

The process leading to this development is in sharp contrast with the proposed Regulation on country-of-origin licensing of certain online services by broadcasters[1], where the Commission is persistently moving ahead despite significant concerns raised by organisations and individuals representing screen writers, film authors/directors, film and television producers, publishers on physical media and online, distributors, cinema operators, broadcasters, platforms, sport right owners and media and entertainment trade unions. These concerns are shared by several Member States.

Indeed, last year, more than 100 organisations and individuals across Europe urged President Juncker to preserve the integrity of absolute territorial exclusivity and maintain the indispensable market incentives for the film, TV, and sports sectors to create, finance, produce, market and distribute audiovisual content across Europe. The concerns raised in 2016 remain unaddressed by the European Commission. The proposal referenced above leaves considerable uncertainty with regard to the sustainability of financing the development and production of content, distribution business models and the commercial freedom to license of many European content producers, creators and investors to the detriment of cultural diversity, industry growth and, ultimately, European consumers’ choice.

It is worth recalling that in its Digital Single Market Strategy communication adopted on 6 May 2015, the European Commission expressly committed itself to “respect the value of rights in the audiovisual sector”. We commend the French and Spanish Governments in coming together in their communication of 20 February 2017[2] to uphold the critical value of territorial exclusivity.

The proposed Regulation on country-of-origin licensing of certain online services by broadcasters – based on legacy legislation devised more than two decades ago for a specific technology (satellite) – does not preserve territorial exclusivity with respect to the licensing of audiovisual content. Rather, it will severely erode territorial exclusivity as it would artificially allow certain online TV services such as catch-up TV and simulcasting to become accessible in all Member States on the basis of a single copyright license agreed between a producer and a TV broadcaster in one Member State. The default rule set out in the proposed Regulation amounts to “buy a license for one Member State, get the rest of the EU for free.” This has a negative impact on the value of rights in the various distribution channels and territories.

The Commission’s assertion, despite the shortcomings of its Impact Assessment, that the proposed Regulation will only provide for a default rule which private parties would be free to contract around is unfortunately an empty promise. It is highly questionable whether right holders will have the necessary bargaining power to obtain an opt-out from the application of country-of origin licensing. In addition, there is a fundamental interaction between this proposal and the ongoing DG Competition investigation into absolute territorial exclusivity provisions in contracts for the distribution of audiovisual content, as well as DG Competition’s e-commerce sector enquiry. The Commission itself has recently publicly acknowledged this link in several instances, while denying it in other fora. Our concern is that the proposed Regulation’s assurances of commercial freedom to license content is a hollow assertion, especially when DG Competition appears determined to erode this very commercial freedom to license.

Our sector’s concerns are now exacerbated by amendments from some Members of the European Parliament that would further broaden the scope and deepen the severe harm that the proposed Regulation would cause to the film and audiovisual sector in Europe.

Our industry continues to embrace opportunities provided by new technology and improved connectivity in the digital age to meet consumer demand for choice, quality and diversity. As a result, there are a growing number of online audiovisual services available in Europe delivering high quality content to millions of viewers in a manner that caters for culturally and linguistically distinct local audiences. Put simply, consumers have more access to more content, in more ways and on more devices than ever before and this growth will continue. At the same time, the ability to recoup development, production, marketing and distribution costs are challenged both as a result of changes in consumption patterns and ongoing illegal access and services.

We would like to recall that our collective sectors employ more than 1,000,000 people across the EU, generate more than €97bn a year and offer culturally diverse, high-quality content and entertainment on more than 3,000 VOD services available to European citizens[3].

We strongly advise against measures that further threaten cultural diversity, growth and sustainable jobs for creative talent and skilled workers, as well as future investments in the audiovisual sector in Europe.

At this critical stage of the legislative process, and in light of the requirements of the Better Legislation Guidelines, we therefore respectfully urge the European Parliament and the Council of the European Union to reject and abandon the Commission’s proposed application of country-of-origin licensing which undermines the entire audiovisual eco-system in Europe.
We thank you for your consideration.

Yours sincerely,

AV sector 411 signatory call to action on territoriality

CC: President Juncker, President of the European Commission
CC: Permanent and Deputy Permanent Representatives of the Members States to the EU
CC: Chairs of political groups in the European Parliament
CC: Rapporteurs and shadow rapporteurs in the JURI, IMCO, CULT, and ITRE committees in the European Parliament
CC: Participants to the Competitiveness Council

[1] (COM(2016)594.

[2] Joint Declaration of the French Republic and Kingdom of Spain on: A European Strategy for Culture in the Digital Age and in the context of the reform of Intellectual Property, 20 February 2017 (Malaga).

[3] O&O/Oxera: The impact of cross-border access to audiovisual content on EU consumers (2016).


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