Letter and memorandum from the Satellite
and Cable Broadcasters' Group
The Satellite and Cable Broadcasters' group
(SCBG) would like to take the opportunity to send you a short
submission on the revision of the Television Without Frontiers
Directive. For your information this paper has also been sent
to DCMS, DTI, Ofcom and the Select Committee for Culture, Media
and Sport in order to inform all the key UK decision-makers about
our views.
SCBG's main concern in the revision process
is maintaining the fundamentally important Country of Origin principle
that is the cornerstone of European broadcasting and has allowed
many of our members to deliver a plurality of services across
Europe.
Although the European Commission and the UK
Government have lent their support to this important principle,
we see that there are many threats to it as several Member States
are seeking to change the rules of jurisdiction, which would in
practice lead to Ofcom having to apply broadcasting regulation
of other EU member States, which would lead to enormous complications
for our members, but also for the regulator.
We therefore urge the UK Government to take
an even stronger stance in the fight for this principle and not
only focus on the issue of scope, but also proactively work with
other supportive Member States to maintain status quo or suggest
a workable solution.
On commercial communications, we believe that
product placement must be allowed and we do not believe that excluding
particular genres from it is going to be very effective.
For the news companies in our membership we
strongly emphasise the need to abolish the 35-minute rule proposed
by the Commission, but also fight the suggested 30-minute rule
that would change the current advertising practice of rolling
news that has worked very well and would result in significant
reductions in investment and revenues of these channels.
These points are elaborated in detail in the
attached paper and we would welcome the opportunity to discuss
them further with you.
The SCBG is the trade association for independent
satellite and cable programme providers. Its members are responsible
for over 100 channels in the UK and in addition broadcast many
more services from the UK to continental Europe and beyond. Many
member companies are pan-European broadcasters, producing and
commissioning content for different national markets.
SCBG channels provide consumers with programmes
and services across a wide range of genres and audiences, including
entertainment, factual, educational, history, music, nature, art
and science. They make and show programmes for children and young
people, and for ethnic minorities in their own languages. Together
they have a combined audience share approaching 20 per cent of
all UK television viewing.
Satellite and cable broadcasters operate in
an extremely competitive and volatile environment, without privileged
access to scarce Government-controlled spectrum or to the must-carry
status afforded to terrestrial networks. They are therefore unable
to attract mass advertising revenues, and do not benefit from
public funding.
Satellite and cable broadcasting has been the
fastest growing sector in the UK television industry, now employing
over 6,000 people in the UK with revenues of nearly £5 billion.
NB This submission represents the views
of all SCBG members with the exception of Kanal 5 who, while agreeing
with a substantial part of the document, have made their alternative
views known to the UK Government directly.
INTRODUCTION
The Satellite and Cable Broadcaster's Group
(SCBG) welcomes this opportunity to submit our views on the revision
of the Television Without Frontiers Directive. We hope that this
revision will lead to a regulatory framework that is fit for the
future digital market. Current legislation is already cumbersome
and inefficient in the analogue world, and needs to be reduced,
not increased, in a new digital environment where consumers and
viewers have increased choice and power over their media consumption.
Self- and co-regulatory measures have proven to be successful
in achieving deregulation and we hope that they will play an important
role in the future of European media regulation.
One of our main concerns in the revision process
is maintaining the fundamentally important Country of Origin principle
that is the corner stone of European broadcasting and has allowed
cross-border services to flourish. We are disappointed that the
UK Government to this date has preferred to focus on the issue
of the future scope of the regulation, rather than supporting
this principle, which is so vital for many broadcasters under
its regime.
COUNTRY OF
ORIGIN
1. Impact on the UK satellite and cable sector
The Government has already made clear its view
that the proposed new Audio-Visual Media Services Directive would
have adverse impact on present and potential non-linear services,
including non-linear services operated by UK television channels.
However, it has not recognised sufficiently the effect of the
proposed directive on those UK companies that already operate
pan-European television businesses.
The Satellite and Cable Broadcasters Group represents
the principal UK television companies operating such businesses.
Its members offer television channels in many EU States, usually
in the language of those states and often including programmes
produced in the country of reception. All these companies are
established in the UK, and are regulated in the UK by Ofcom, under
the Television Without Frontiers Directive (89/552/EC;
97/36/EC).
SCBG member companies already provide television
and other audio-visual services in more than 100 million homes
across Europe, and broadcast in more than 20 European languages.
Further new channel launches are in progress or planned.
The UK's business success in this field has
been enabled entirely by the provisions of the TVWF Directive,
and in particular by its application of the fundamental Country
of Origin principle. UK is the acknowledged leader in pan-European
satellite and cable services, with a number of major UK companies
providing high-quality broadcasting throughout the EU. Inward
investment, employment and revenues in this sector have grown
steadily in the last decade, and will continue to do so provided
the basic principles of the present Directive are maintained—ensuring
that regulation remains based on the country of origin, not on
the country of reception.
1.1 Threats to the Country of Origin principle
The Commission's present proposals seek to maintain
the Country of Origin principle. But we are aware of significant
threats, which would undermine its operation in practice:
— A number of Member States are seeking
to change the rules of jurisdiction in a way, which would effectively
bring regulation into the country of reception. The proposals
of this group, as expressed in the 26 June Working Paper for the
"Ministerial round table on problems resulting from relocation
and audience targeting" are designed to weaken Country of
Origin regulations by introducing a comprehensive range of exceptions
including national regulation on "morals, cultural diversity,
media pluralism, social cohesion, advertising and production".
— The Commission's own proposed amendments
to Article 2 (new paragraphs 7, 8, 9 and 10), under which a Member
State may take action against a media service provider established
in another Member State, may unintentionally provide a new route
for complainant countries to evade the Country of Origin principle.
Although intended constructively, in order to codify existing
case law in the new Directive, the inclusion of these paragraphs
has led to further suggested amendments which if accepted would
de-stabilise the CoO principle. The term "abuse and fraudulent
conduct" introduced by the Commission has already proved
open to a variety of definitions in the hands of those who would
prefer to weaken CoO.
— The UK Government's negative stance
in relation to the proposed enlarged scope of the Directive has
been taken in some quarters to mean that it is prepared, in return
for restrictions on scope, to compromise on the Country of Origin
rules.
1.2 Damage to the UK creative economy
If the Country of Origin principle is undermined
in practice by any of these means, the satellite and cable sector
of the UK creative economy will be damaged substantially. By definition,
most cable and satellite channels are in niche markets and face
tough financial conditions. Scope economies provide an underpinning
on our pan-EU and multi-territory channel. Absent a robust CoO
policy countries in many of the receiving countries will be denied
the rich choice and diversity of service that TVWF has enabled.
Companies will not be prepared to run or launch channels if they
are subject to varying regulations dependent on their country
of reception, nor if the regulatory environment is rendered uncertain
by new provisions for complaint by receiving States. The technical
complexity of preparing alternative versions of programming for
countries under the same satellite footprint would deter businesses
from investing in new channels or continuing the operation of
existing ones.
Companies would inevitably reduce operations,
investment and employment in the UK, and ultimately would face
a decision whether to establish themselves elsewhere, outside
the UK and probably outside the European Union.
2. Proposals for UK Government policy
2.1 Retention of present Country of Origin
regulation
In its responses so far, both to the Commission's
proposals and to potential amendments, the Government's entire
emphasis has been on the risks inherent in extending the scope
of the Directive. In our view, this emphasis has been misplaced.
We believe that, while the UK should continue to resist comprehensive
enlargement of scope, it should give equal weight to maintaining
the Country of Origin regulations intact by supporting retention
of the relevant sections of the present TVWF Directive, unaltered
and without addition.
In this respect it is essential to distinguish
between support of the Country of Origin principle and
its future operation in practice. Maintaining the principle
while facilitating increased exceptions to it is not acceptable,
if UK pan-European businesses are to be protected.
2.2 No change to rules of establishment and jurisdiction
Therefore the UK Government should not readily
agree any changes to the rules on establishment or jurisdiction,
nor support any amendments, which give credence to the belief
that national regulation should over-ride EU regulation. Nor should
the Government support new criteria for determining the place
of establishment of an audio-visual media service, regardless
of whether such criteria are based on economic or employment assessments.
These criteria are unlikely to be viable, but none should in any
case be acceptable since they are in practice erosions of the
Country of Origin principle.
2.3 Support for Finnish Presidency positions
While our clear preference is for the status
quo to be maintained, we recommend that the Government should
consider supporting—with some clarification—the positions
and drafting put forward by the Finnish Presidency in relation
to establishment and jurisdiction (Chapter II Article 2 paragraphs
3 to 8).
The Presidency text acknowledges the concerns
of some Member States in relation to trans-frontier media services,
but avoids the extreme remedies put forward by those States seeking
to break the Country of Origin regulations. The Finnish draft
also removes from the Commission's proposals the term "abuse
and fraudulent conduct", whose lack of precise definition
would leave Member States too much room to question all activities
by broadcasters offering services to other Member States.
However, an important clarifying amendment needs
to be made to the Finnish text:
At Chapter II Article 2 paragraph 7, the reference
to a media service provider "which has established itself
in a second Member State in order to avoid the sector-specific
rules which would be applicable if it were established in the
first Member State" needs the addition of the word "only"
before "in order to avoid". Any media service
provider established in the UK and offering services to another
country may in some respects thereby avoid the sector-specific
rules of the receiving country. But that is an inevitable consequence
of the Country of Origin principle, and is not the only or principal
reason why companies have chosen the UK to establish themselves.
Unless it can be shown that avoidance is the only or principal
factor in the choice of establishment, the provisions of paragraph
7 should not apply.
2.4 Scope extension gives CoO wider UK importance
Since some extension of the scope of the Directive
beyond linear services now seems likely, it is important to recognise
that Country of Origin regulations will embrace many more UK businesses
other than those presently affected. All new media companies,
including major UK companies, may find their operations embraced
wholly or partially within the enlarged scope of the new directive.
They and the Government should therefore be concerned strongly
to ensure that, in that event, they are not restricted in their
activities nor deterred from investing by changes to Country of
Origin regulation.
2.5 Avoidance of pejorative language
It would also be helpful if the Government were
to abandon its use of such pejorative terms as "targeting"
or "jurisdiction shopping" in its descriptions of channels
and services created in the UK for reception in other Member States.
Such channels and services are providing EU consumers with choices
they are free to make, and represent the working of common market
principles in their purest form. No official UK document or representation
should, even unwittingly, characterise these present or potential
services as hostile acts against the culture or economy of another
Member State.
COMMERCIAL COMMUNICATION
3. Product placement
Product placement is becoming increasingly important
to the economies of media service providers and independent producers.
The Commission's proposals to liberalise it, and the many amendments
put forward to date, restrict unnecessarily the categories of
programme in which product placement may be allowed.
We support its exclusion from news programmes
and from other programmes reporting on matters of current social,
political or economic interest. However, we see no reason to exclude
it from fiction programmes or from the "factual entertainment"
programmes, which many UK broadcasters provide for European audiences.
The proposed exclusion of "documentary" programmes is
too broad a category, and should be deleted or qualified.
The UK Government should support the relaxation
of EU rules in order to allow product placement in all
programmes where (a) it is not surreptitious, (b) it does not
affect, or might be assumed by consumers to affect, editorial
integrity—for example in news and current affairs programmes—and
(c) it does not receive undue prominence. Ideally, national regulatory
authorities should be given freedom to liberalise product placement
within this basic tier of regulation.
We believe that the restrictions on product
placement should not extend to prizes given out in programmes
and should only extend to programmes commissioned or produced
by a media service provider.
We think it unlikely that Ofcom would wish to
apply restrictions to product placement that go beyond those contained
in any new Directive. To do so would be entirely impractical,
since pan-European broadcasters and programme-makers would have
to produce re-versioned programmes for the UK, thus denying them
the economic benefits of product placement. In practice, product
placement would go elsewhere into media not faced by these unequal
restrictions.
When it comes to identification of product placement
the rules should in our view mirror those currently applied on
sponsorship, which have worked very effectively in the UK under
Ofcom's control.
4. The 35-minute rule
There is no support for the proposed new 35-minute
rule on advertising breaks in news programming, or indeed any
amendment to shorten it to 30 minutes. We therefore recommend
that the UK Government should reject any such amendments.
Nevertheless, the exclusions that presently
apply in practice should be maintained, notably in respect of
specialised news and current affairs channels.
Any change to the present model would result
in a significant reduction in investment and revenues and present
business models would no longer be viable. The news genre channels
have been at the forefront of the pan-European broadcasting initiative
and their investment and skill has contributed significantly to
the creation of the "Television Without Frontiers" society.
This would be jeopardised by any further restriction on advertising.
Also in relation to the proposed "35"
or "30" minute rule, if it is to remain, then "films
made for television" should be deleted. We believe that the
policy objective should be to encourage investment in such programming
by media service providers and not discourage it.
Although the proposals by the Commission to
liberalise the advertising rules are welcome, we would recommend
that isolated spots be allowed in all programmes (subject to specific
rules for certain programme genre such as news or children's programmes
if this is deemed necessary). Advertising will remain a fundamental
economic driver for the television industry but as is now becoming
increasingly apparent, television attractiveness to advertisers
is reducing due to the coalescing of a range of hitherto disparate
factors (such as the growing importance of the internet for key
advertising demographics such as 18-35 year olds).
CONCLUSIONS
The Satellite and Cable Broadcasters group represents
UK stakeholders whose businesses have been built on the foundations
of the present TVWF directive, and who have an intimate commercial
interest in the outcome of the proposed revisions. We therefore
hope that the UK Government will give its strong support to our
views in relation to Country of Origin, and also:
— Commit to self-regulation and co-regulation.
— Support inter-state issues to be
settled by enhanced contact between regulators.
— Argue for maximum liberalisation
and equality in advertising rules, including admission of product
placement in all programme categories other than news, current
affairs and children's programmes.
— Support the removal of the newly
proposed "35 minute rule" on advertising breaks in news
programming.
— Resist new regulatory burdens that
would deter investment in new technologies.
September 2006
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