Commission fights on in battle to create a single digital market

The European Commission is feeling the pressure as negotiations on the so-called satellite and cable directive enter their final phase. It is reported to be angry at the manner in which its plans to create a single digital market have been watered down by the European Parliament and Council.

The satellite and cable regulation, or ‘SatCab’, part of a package of copyright reforms tied to the EU’s ambitious Digital Single Market strategy, has faced intense scrutiny ever since it was proposed by the Commission in late 2016.

One of its central objectives involves an extension of the ‘country of origin’ (COO) principle from satellite and cable TV broadcasts to online content. This principle allows the clearing of copyrighted content in one EU country – the country of origin – for transmissions in others. It underpins the traditional model of licensing rights on an exclusive territorial basis, allowing content to be sold and marketed according to different audiences and price structures.

Under the proposed extension of COO, EU broadcasters would be able to buy rights to content for pan-European transmission on their online catch-up and simulcast, live broadcast, services as long as they have cleared the rights in the country they broadcast in.

 

The proposals threaten to overturn the very principles of territoriality and contractual freedom

 

The Commission has argued that this is only applicable to broadcasters’ online ancillary services and necessary to give EU consumers greater cross-border access to online content: key to creating a digital single market.

For industry, however, the proposals threaten to overturn the very principles of territoriality and contractual freedom which underpin current audiovisual content licensing. They would effectively create a one-stop EU shop allowing rights to be acquired in one EU Member State and made available to the other 27 for free.

 

Sales strategies

Last March, broadcasters, media groups and rights owners lined up in the European Parliament to condemn the SatCab proposals. They argued that COO by its nature is severely undermined if transferrable across the EU, that return on investment would be eliminated and that new rights sales strategies may develop where rights holders no longer sell to certain territories. Crucially, the proposals ignored the fact that exclusivity is the single most important concept in the sale of audiovisual rights without which the creation of quality European content – whether cultural, film or sports – would not exist.

In December, the European Parliament and Council broadly sided with the industry in coming to their final negotiating positions.

The Parliament limited any extension of COO only to digital news broadcasts, defying the EU’s Digital Single Market Commissioner Andrus Ansip who had personally written to MEPs ahead of the vote urging them not to adopt the watered-down proposals. At the result he tweeted:

“This feels like we’re still in the 20th century

The same week the Council also failed to approve an ambitious mandate, albeit approving a slightly larger extension of COO to broadcasters’ own productions and some commissioned works.

Trilogues on the SatCab regulation are now expected to begin. These intense, behind-closed-door meetings between negotiators from the three EU institutions will determine the content and scope of the final text.

The Commission is reported to be incandescent at the scope with which its proposals have been watered down. The failure to approve an ambitious extension of COO to online content has been translated into an act of sabotage in its efforts to overhaul EU copyright rules and make them fit for the digital age. It is expected to push back strongly during trilogues and has threatened to pull the file completely.

For industry, however, the hope is that the Parliament and Council positions are maintained and the territorial licensing model for EU media rights remains intact.

The first trilogue meeting is expected to begin in early February. Once adopted, the new SatCab rules will apply six months from their publication.