Documents considered by the Committee on 1 March 2017 Contents

5Digital Single Market: Audiovisual Media Services Directive

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; further information requested; drawn to the attention of the Culture, Media and Sport Committee, Business, Energy and Industrial Strategy Committee and Exiting the EU Committee.

Document details

Proposal for a Directive amending Directive 2010/13/EU concerning the provision of audiovisual media services in view of changing market realities

Legal base

Articles 53(1) and 62 TFEU; QMV; Ordinary Legislative Procedure

Department

Culture, Media and Sport

Document Number

(37812), 9479/16 + ADDs 1–4, COM(16) 287

Summary and Committee’s conclusions

5.1As part of its Digital Single Market Strategy, the European Commission proposes to revise the regulatory framework which governs the operation of the Single Market for broadcasting to ensure that it reflects recent technological developments, such as the growth of on-demand services such as Netflix and video-sharing platforms such as YouTube. In its Explanatory Memorandum of 13 June 2016 the Government indicated that it was broadly supportive of the proposal, but would oppose some elements of it.

5.2The UK’s imminent exit from the EU raises particularly stark issues in the broadcasting sector. The EU has succeeded in creating a highly integrated Single Market in broadcasting. The Audiovisual Media Services Directive (AVMSD) ensures that any broadcaster that is established in an EU Member State and conforms to the rules of that state’s national regulator can freely broadcast content to the other 27 Member States.

5.3This framework, combined with the UK’s strengths in the creative sector and its attractive business ecosystem, has led to the UK becoming the destination of choice for international broadcasters seeking to access the EU market: the Creative Industries Federation reports that “of all 2,200 of the broadcasting licences granted to channels across the European Union, more than half (1,100) are granted by Ofcom in the UK, and half of these (650) are for ‘nondomestic channels’ that are broadcast from the UK to other countries”.26

5.4In contrast to the level of integration within the EU broadcasting market, broadcasting is one of the least liberalised sectors in global trade, at the level of both World Trade Organisation (WTO) commitments and also in Free Trade Agreements (FTAs). This is because most countries insist that the particular nature and importance of culture means that it should not be treated like other commodities (“l’exception culturelle”).27 The Council of Europe Convention on Transfrontier Television, which predates the AVMSD, is likely to be the alternative route to market for UK-based broadcasters, but suffers from significant limitations.

5.5The Minister of State for Digital and Culture (Matthew Hancock) responds to some of the Committee’s questions about the relationship between the AVMSD and the UK’s future relationship with the EU, as summarised below. He states that Council Working Group meetings are ongoing but does not provide any detail of the evolving negotiations on the grounds that the meetings are not public and considered confidential. The Government’s overall position remains unchanged—it is supportive of the proposed Directive, but objects to some aspects and is neutral on others. More detail is provided in the summary of the Minister’s letter at the end of this note.

5.6We thank the Minister for his letter, particularly the overview it provides of the potential interplay between the Audio Visual Media Services Directive and the UK’s future relationship with the EU.

5.7On Brexit, we note that:

5.8The Committee requests further clarification on a number of points, based on the Government’s consultation with sectoral stakeholders, and given the limitations of the Convention on Transfrontier Television (CTT) which the Minister describes:

5.9We also request clarification of the following points:

5.10Regarding the proposed revision of the AVMSD, the Minister states that negotiations are ongoing, with the aim being to achieve a General Approach by the Education, Youth, Culture and Sport council meeting on 22 May. He anticipates that he will be able to update the Committee on progress and potential timeframes in late March.

5.11We request that the Minister respond to our questions by 27 March 2017. We also request that the Minister provide the Committee with a clear account of progress in negotiations and the Government’s position on all major aspects of the proposal, including any contentious developments in negotiations, before final agreement is reached in Working Groups, in order to avoid the Committee subsequently being asked to clear from scrutiny a document on which political agreement has already been reached.

5.12We draw this report to the attention of the Culture, Media and Sport Committee, the Business, Energy and Industrial Strategy Committee, and the Exiting the European Union Committee.

Full details of the documents

Proposal for a Directive amending Directive 2010/13/EU on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services in view of changing market realities: (37812), 9479/16 + ADDs 1–4, COM(16) 287.

Background

The Audiovisual Media Services Directive

5.13The Audiovisual Media Services Directive (2010/13/EU) (AVMSD) governs EU-wide coordination of national legislation on all audiovisual media, both traditional TV broadcasts and on-demand services.

5.14The Directive governs the EU-wide coordination of national legislation on all audiovisual media, including both traditional (referred to as ‘linear’) broadcasts and on-demand (‘non-linear’) services. The Directive establishes minimum regulatory standards that Member States and national regulators must implement, which aim to preserve cultural diversity, protect children and consumers, safeguard media pluralism, combat racial and religious hatred, and guarantee the independence of national regulators.

5.15The Directive is generally agreed to have created a very deep Single Market in broadcasting. This is because it applies a Country of Origin (or mutual recognition) approach to broadcasting, meaning that a broadcaster only has to obtain a licence and observe regulatory standards in any one Member State in order to be able to offer its services in the others without being subject to additional requirements. This removes the obligation for broadcasters to meet multiple regulatory regimes when trading across borders.

5.16The Directive requires broadcasters to promote the production of, and access to, ‘European works’, both for linear and on-demand services. The Directive defines ‘European works’ as audiovisual works that either originate in EU Member States or in states party to the European Convention on Transfrontier Television. Works that are co-produced between the EU and third countries are also included.

5.17For linear (television) services, the Directive requires Member States to ensure that broadcasters, “where practicable”, reserve a majority proportion of their transmission time for European works, excluding the time allotted to content such as news, sports events and advertising. Broadcasters should reserve at least 10% of their transmission time, or alternately allocate at least 10% of their programming budget, for European works created by independent producers. Member States are given flexibility as to how they choose to promote European works, and there is wide variation.

5.18The UK has benefited significantly from the Single Market in broadcasting created by the AVMSD, and has become the hub for international broadcasting in the EU. Currently, over half of the 1,100 broadcasting licenses granted by Ofcom are for non-domestic markets. This is a much higher volume of international broadcasting than occurs in any other EU Member State. The decision to leave the EU is therefore likely to have very significant ramifications for international broadcasters, and potentially some other parts of the sector as well, although the Council of Europe’s European Convention on Transfrontier Television will provide a fallback for elements of the market access conferred by the AVMSD.

The proposed reforms

5.19As part of the EU’s Digital Single Market Strategy, the European Commission committed to modernise the AVMSD in order to reflect changes in the broadcasting landscape, such as the increasing volume of content that is viewed online.

5.20The Commission proposes to:

5.21It is also proposed to extend the scope of the Directive to include video-sharing platforms, such as YouTube. Specific requirements are proposed for such platforms concerning protection of minors from harmful content and the protection of all citizens from incitement to hatred. Measures to implement these requirements could include:

5.22Video-sharing platforms will also be encouraged to develop national codes of conduct.

Previous correspondence with the Minister

5.23In his Explanatory Memorandum of 15 June, the (then) Minister of State for Culture and the Digital Economy, Mr Edward Vaizey, expressed the Government’s support for the free movement of audiovisual media services throughout the EU, and said that the Government would seek to limit the scope of any derogations from the country of origin principle, lest they endanger the single market for audiovisual services. The Minister added that the Government was still considering the detail of the proposal and would submit an update on its position to Parliament in due course.

5.24In a subsequent letter to the Committee, the Minister for Digital and Culture, Mr Matthew Hancock, provided further information about the Government’s emerging position. He wrote that:

5.25In response, the Committee asked for further information on a number of points, including:

The Minister’s letter of 16 February 2017

5.26The Minister of State for Digital and Culture (Matthew Hancock) writes in response to the Committee’s report on 23 November 2016.

5.27The Minister prefaces his remarks about the implications of the UK’s decision to leave the EU by observing that “our negotiating position on this Directive will remain flexible.”

5.28Noting that a number of the Committee’s questions concern the relationship between Brexit, the AVMSD and any future relationship with the EU, the Minister then cites paragraph 8.35 of the Government’s recent white paper on the United Kindom’s exit from and new partnership with the European Union:

“Content that is carried over electronic communication networks is regulated in the EU by the Audiovisual Media Services Directive. This underpins the operation of the internal market for broadcasting by ensuring the freedom to provide broadcasting services throughout the EU. The UK is currently the EU’s biggest broadcasting hub, hosting a large number of international broadcasting companies. In the course of the negotiations, we will focus on ensuring the ability to trade as freely as possible with the EU and supporting the continued growth of the UK’s broadcasting sector.”

5.29The Minister provides a full response to the Committee’s question regarding the extent to which the Council of Europe Convention on Transfrontier Television (CTT) would act as an effective substitute for market access, in the absence of one being included in a bilateral trade agreement:

“The Council of Europe Convention on Transfrontier Television (CTT) was first established in 1993 to allow for free transmission across borders within the Council of Europe and in that respect is intended to cover the audiovisual sector. There are, however, a number of limitations in relying on the CTT: the CTT is dated, having been agreed for the market as was in 1993, so services that are distributed in ways other than satellite, such as online, are not within its scope; a number of countries have not signed the Convention so its application does not extend to all Member States; and it does not contain any specific enforcement mechanisms to ensure its effective operation.

“While updating the CTT to align it with AVMSD might address some of these limitations, this may prove problematic in a practical sense. The EU Commission has asserted that it has exclusive competence in relation to the CTT and therefore any update would need to be agreed with the Commission rather than the individual Member States. The Commission has stated that it does intend to become a party to the Convention in future. As a result, Council of Europe level work on transfrontier television has been discontinued and there is no longer a CTT Standing Committee in place. Having said that, we will continue to consider whether and how the CTT might fit with the future audiovisual landscape as part of the Brexit negotiations and more generally.”

5.30The Minister also notes that the Council of Europe Convention on Cinematographic co-production, which the Committee also asked about, “is not designed to deal with market access, rather to encourage co-production and it is fit for purpose in this regard”.

5.31In response to the Committee’s questions about the extent to which audiovisual was typically included in EU FTAs, the Minister states:

“It is correct that audio visual media services are generally excluded from EU free-trade agreements. However, while we will examine precedents from other agreements, we will not seek to replicate an existing model and will pursue the right deal for the UK”.

5.32In answer to the Committee’s question about the extent to which divergence between UK and EU law on the provision of audiovisual services could operate as a barrier to trade, the Minister states that:

“The Great Repeal Bill will end the authority of EU law and allow us to take back control of our own laws. The same rules and laws will apply on the day after Brexit as they did before. It will be for Parliament to decide what laws to keep, amend or repeal. Any decision to diverge will be taken after that point and an assessment of the likely impacts will be made at that time.”

5.33The Minister provides an update on the consultation that the Government has undertaken “regarding how best to accommodate the audio-visual sector outside of the EU:

“Since the referendum result the Secretary of State held roundtables with both Broadcasters and Creative Industries and further roundtables are planned. Meetings with individual companies that might be affected have been held with ministers, special advisors and policy officials and the department is in continued dialogue with the broadcasting and creative industries to ensure that their interests are captured and taken into consideration in formulating our post-brexit policy.”

5.34The Minister also provides an update regarding negotiations of the proposed revisions to the AVMSD, in which he states that the meetings are not public and considered confidential, and that this will limit the information that is shared with the Committee prior to the General Approach being agreed:

“I provided an update on the position of the UK government on the key issues outlined in my letter of 27 October 2016. Our position on these matters remain unchanged. The negotiations are currently ongoing, there are 11 council working groups between January and April, and I would expect to be able to update you on the progress and potential timeframes in late March. It is worth noting that in the first of these Council Working meetings in January it was made explicit that the meetings for this Council working group are not public and considered confidential, and this will therefore limit the information which can be circulated prior to a general approach being agreed. The working group is aiming to achieve a general approach by the Education Youth Culture and Sport council meeting on 22 May.”

Previous Committee Reports

Nineteenth Report 71-v (2016–17), chapter 4 (23 November 2016); Seventh Report 71-v (2016–17), chapter 7 (6 July 2016).


27 The Cultural Exception, or “exception culturelle”, is a political concept introduced by France in General Agreement on Tariffs and Trade (GATT) negotiations in 1993 to treat culture differently from other commercial products. It is often cited as the providing the rationale for excluding cultural services from FTAs.




3 March 2017