Not cleared from scrutiny; further information requested
Proposal for a Directive amending Directive 2010/13/EU concerning the provision of audiovisual media services in view of changing market realities
Articles 53(1) and 62 TFEU; QMV; Ordinary Legislative Procedure
Digital, Culture, Media and Sport
(37812), 9479/16 + ADDs 1–4, COM(16) 287
6.1As part of its Digital Single Market Strategy, the European Commission initiated the revision of the Audiovisual Media Services Directive (AVMSD) (EU) 2010/13, the principal regulatory framework governing EU-wide coordination of national legislation of audiovisual media, on 25 May 2016.
6.2On 26 April 2018 the European Parliament, Council and Commission reached a preliminary political agreement on draft Directive (EU) 9479/16. A revision process was concluded in a subsequent interinstitutional trilogue meeting on 6 June 2018, at which the final compromise text, which is now available online, was agreed.
6.3On 2 May 2018 the Minister of State for Digital and the Creative Industries (Margot James) wrote to the Committee to provide an update on the outcome of negotiations and an indication of next steps. The Minister acknowledges that the final text crossed two of the UK’s red lines in the negotiations, namely:
6.4However, the UK’s domestic position in terms of regulating online platforms has evolved considerably during the course of the negotiations, and the Minister notes that, on this issue, “the final text [on video-sharing platforms] aligns with the UK’s Digital Charter proposals”. The Minister also notes that other UK concerns, “especially around the issues of regulatory clarity, have been addressed”. Finally, it should be noted that, although the optional levy is an unwelcome addition to the EU regime, and is not in line with the Country of Origin principle which characterises the broadcasting regime, the core of the existing Country of Origin approach to broadcasting, whereby broadcasters operating in one EU member state are free to broadcast directly to every other EU member state, has been protected. This core negotiating objective has therefore been met.
6.5The Minister states that the final text is expected to be accepted at the Education, Youth, Culture and Sport (ECYS) Council meeting in November 2018. The two year implementation period provided for in the text thus means that, in the event of a negotiated exit from the EU, the UK will be required to implement the Directive before the end of the implementation period provided for in the draft Withdrawal Agreement, assuming that the negotiators reach agreement on a Withdrawal Agreement.
6.6In its report of 13 November 2017 the Committee also asked the Government to provide further information about a number of EU-exit related issues. Asked what proportion of UK audio visual exports and domestic economic activity associated with the audiovisual sector international channels based in the UK represent, the (then) Minister (Matt Hancock) acknowledged in his response the reliance of international channels on access to the EU market:
“A survey published by the Commercial Broadcasters Association (COBA) shows that over eight out of ten multi-territory commercial broadcasters surveyed stated that London was their European or global headquarters. DCMS economic estimates suggest that the EU is the most significant market for the UK’s AV sector, with the total UK exports of audiovisual services to this market accounting for 40.9% of total UK audiovisual services exports in 2015 (£3 billion).“
6.7The (then) Minister did not, however, meaningfully answer the Committee’s questions as to whether the provisions on advertising in the Council of Europe’s European Convention on Trans-Frontier Television (CTT) effectively granted its signatories an opt-out from the Country-of-Origin principle. That Article 16 of the CTT does so has subsequently been confirmed by industry representatives. Nor did the Minister provide a meaningful answer to the Committee’s question as to whether UK-based broadcasters targeting the EU market would, under the current EU regime, be able to shift a relatively modest proportion of their operations to the EU market in order to retain current EU access, or whether a more significant restructuring would be necessary.
6.8On 12 July 2017, the Government White Paper “The Future Relationship Between the United Kingdom and the European Union” stated that the UK would not seek to remain a part of the EU’s Digital Single Market and that it recognised that, in consequence, the intra-EU country of origin principle for broadcasters, whereby a company licenced by a national regulator in one Member State can broadcast into any other Member State, “will no longer apply.” The White Paper also stated that the UK’s position as a party to the CTT will not be affected by the UK’s withdrawal from the EU, and that “the UK is seeking the best possible arrangements for this sector”.
6.9The broadcasting sector has not reacted favourably to the position taken in the White Paper. Adam Minns, the Executive Director of COBA (the Commercial Broadcasters’ Organisation) told the Exiting the EU Committee that the White Paper was a “backwards step”:
In the Mansion House speech the PM suggested the UK would seek mutual recognition for broadcasting. That was removed in the White Paper and nothing else replaced it. […] This uncertainty could not have come at a worse time for us. No one can wait until March 2019 before activating contingency plans.
6.10Mr Minns also questioned the Government’s rationale for seeking freedom to diverge from the EU in this area in exchange for increased flexibility, stating that:
“I do not know anyone in the broadcasting sector who is asking for more flexibility and, even if we were, we could get more flexibility without sacrificing mutual recognition or leaving the single market because the UK gold-plates so many rules anyway. It certainly is not going to be mitigation for losing access to 45% of our market, which is what the EU is.”
6.11Mr Minns noted that, although it was technically possible for broadcasters in the UK to qualify to participate in the EU regime when the UK was no longer a Member State if (approximately) 10% of a company’s senior editorial workforce was based in an EU Member State, this was not a straightforward solution because these people need support (“they need their IT people; they need legal; they need compliance; they need technology, et cetera. That is when it starts to snowball”). He also stated that the Council of Europe’s European Convention on Trans-Frontier Television was of limited use to international channels in the UK because it did not provide Country-of-Origin principle on advertising, and did not cover on-demand services, which represent the future of the industry. Mr Minns said that he did not know a single COBA member that would be willing to use it, apart from channels that do not rely on any advertising revenues and do not have any on-demand services—principally “Russian propaganda news channels coming out the UK”.
6.12The Government has provided the Committee with a short summary of the overall effects of the amendments made by draft Directive 9479/16 to the Audiovisual Media Services Directive (EU) 2010/13, which is provided in the Background section of this report. The Minister will write in due course to indicate its voting intention with regards to the final proposal.
6.13We thank the Ministers for their regular updates regarding the progress of the proposed reforms to the Audiovisual Media Services Directive. We note that the introduction of optional local levies for video-on-demand and linear broadcasts is contrary to the UK negotiating position, as is the extension of the definition of video-sharing platforms to include social media and live-streaming services, although the Government’s domestic policy on regulating digital platforms has evolved so considerably during negotiations that this aspect of the text now appears to align with the UK’s Digital Charter. We also note that the Government has succeeded in protecting the core effects of the Country-of-Origin Principle—which allows broadcasters licensed in one EU Member State to broadcast to all other EU Member States—against initial suggestions from some Member States that it should be replaced with a Country-of-Destination approach. In the event of a negotiated exit, UK-based broadcasters will continue to benefit from this mechanism, which has enabled the growing dominance of the UK broadcasting sector within Europe, during the implementation period provided for in the draft Withdrawal Agreement.
6.14In the event of a non-negotiated exit, the cross-border market access provided by the current AVMSD would fall away on March 29 2019, when broadcasting licences issued by Ofcom in the UK would cease to be valid in the EU27. International broadcasters based in the UK would no longer be able to rely on the Country-of-Origin principle to broadcast to the European market. Unilaterally retaining current EU regulatory arrangements in UK law will not provide any cross-border market access, as this aspect of the EU regime is inherently reciprocal.
6.15In this scenario, there are two means by which international channels based in the UK could continue to access the EU market:
6.16We note that the Government’s White Paper “The future relationship between the United Kingdom and the European Union” states that the Government no longer seeks to remain a part of the EU Single Market as a whole or of the Digital Single Market in particular, and in consequence accepts that participation in the EU’s Country-of-Origin regime for broadcasting will not be possible. Without taking a view on the merits of this position, we consider it to be consistent, given that broadcasting is excluded from EU preferential trade agreements due to the ‘cultural exception’, the only notable exception to this being the EEA Agreement which entails participation in the EU Single Market and acceptance of all of the obligations that this entails.
6.17We ask the Government to provide us with a summary of its voting intention in relation to the proposed Directive in advance of the forthcoming vote in ECYS Council in November, as well as a more detailed account of the overall effects of the amendments to the AVMSD by the proposed Directive. In the meantime, we retain this document under scrutiny.
6.18The revision of the AVMSD, initiated by the European Commission as part of its Digital Single Market Strategy on 25 May 2016, has aimed to bring the Directive in line with the new media landscapes and shifting market realities. The newly introduced and amended regulatory provisions have been designed to level the playing field for all audiovisual media services: traditional linear services, video-on-demand and, for the first time, also video-sharing platforms.
6.19The revised AVMSD focuses on reinforcing the protection of minors and combating hate speech and public provocation to commit terrorist offences in all audiovisual content. The new rules also place an emphasis on promoting production and distribution of European works; strengthening the Country of Origin principle; allowing more flexibility in television advertising; permitting levies for video-on-demand and linear services in the country of operation; and guaranteeing the independence of audiovisual regulators.
6.20Government officials have provided the following informal summary of the effects of the revisions to the existing AVMSD:
6.21The Government is currently assessing the proposals in greater detail and will write more formally in due course.
First Report HC 301–i (2017–19) (25 April 2017), Thirty-third Report 71–xxxi (2016–17), (1 March 2017), Nineteenth Report 71–xvii (2016–17), (23 November 2016), Seventh Report 71–v (2016–17), (6 July 2016)., (13 November 2017); Fortieth Report 71–xxxvii (2016–17),
46 European Commission, Audiovisual media services: breakthrough in EU negotiations for modern and fairer rules ().
47 Council of the European Union, Audiovisual media services: agreement on a directive to protect minors, boost competitiveness and promote European content ().
48 European Parliament, Committee on Culture and Education, Provisional agreement resulting from interinstitutional negotiations ().
49 Letter from the Minister (DCMS) to the Chair of the European Scrutiny Committee ().
50 Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community highlighting the progress made (coloured version) in the negotiation round with the UK of 16–19 March 2018 ().
51 First Report HC 301–i (2017–19) , (13 November 2017).
52 Letter from the Minister (DCMS) to the Chair of the European Scrutiny Committee ().
53 COBA, ().
55 Letter from the Minister (DCMS) to the Chair of the European Scrutiny Committee ().
56 Article 16, .
57 House of Commons Exiting the European Union Committee, Oral evidence: The progress of the UK’s negotiations on EU withdrawal, Q2331 ().
58 HM Government, The future relationship between the United Kingdom and the European Union ().
59 House of Commons Exiting the European Union Committee, Oral evidence: The progress of the UK’s negotiations on EU withdrawal, Q2312 ().
60 House of Commons Exiting the European Union Committee, Oral evidence: The progress of the UK’s negotiations on EU withdrawal, Q2323 ().
61 House of Commons Exiting the European Union Committee, Oral evidence: The progress of the UK’s negotiations on EU withdrawal, Q2330 ().
62 House of Commons Exiting the European Union Committee, Oral evidence: The progress of the UK’s negotiations on EU withdrawal, Q2331 ().
63 House of Commons Exiting the European Union Committee, Oral evidence: The progress of the UK’s negotiations on EU withdrawal, Q2379 (). See also: Bloomberg, “Brexit Limbo Leads London Broadcasters to Size Up Amsterdam Digs” ().
64 The only exceptions to this are very limited, relating to (for example) Korean anime. See House of Lords EU Internal Market Committee, Corrected oral evidence: Brexit: Future Trade between the UK and the EU, Q48 (). For an explanation of the cultural exception, see Wikipedia, .
Published: 11 September 2018