The amended Audiovisual Media Services Directive is adopted by the European Council, but what does this mean for the UK if there is a "no deal" Brexit?

Following preliminary agreement by the European Parliament, the European Council and the European Commission on the main elements of the proposed changes to the Audiovisual Media Services Directive (AVMS Directive) on 6 June 2018, the European Council adopted the revised AVMS Directive on 6 November 2018. This is now the final step in the legislative process.

The amendments agreed are intended to reflect digital progress and recognise that people now watch videos in different ways than before. They are also meant to pave the way for a fairer regulatory environment for the entire audiovisual sector as they extend European rules beyond traditional broadcasters to include video-on-demand and video-sharing platforms, such as Netflix, YouTube and Facebook, as well as to the live streaming on demand video-sharing platforms. In addition, these revisions also include improved child protection measures and efforts to tackle hate speech, encourage innovative services and promote European films. The revised AVMS Directive is likely to be welcomed by traditional broadcasters as they will regard their video-on-demand competitors as now being on the same playing field in terms of the regulatory environment.

The key elements of the revised AVMS Directive include:

• An extension of European audiovisual rules to video-sharing platforms. The revised AVSM Directive will be extended to apply to user-generated videos shared on platforms when providing audiovisual content is an essential functionality of the service.
• The promotion of European works in on-demand catalogues. The amendments include a requirement that at least 30% of content in the programmes of TV channels and video-on-demand platforms be European. This quota follows the European Council recommendation in May last year but is 10% higher than the European Commission's original proposal two years ago. Video on demand and subscription video on demand platforms will also be asked to contribute to the development of European audiovisual production, either through a direct investment in content or a contribution to national funds, with the level of contribution in each country (ie Member States where they are established or where their target audience is located) being proportional to their on-demand revenues in that country.
• A strengthened "Country of Origin" Principle with more clarity on which Member State's rules apply in each case, and the same procedures applying to both TV broadcasters and on-demand service providers.
• Better protection of children against harmful content on TV and video-on-demand services. With the legislation being extended to video-sharing platforms, including YouTube and even Facebook, the new rules envisage obligations on video-sharing platforms to put in place appropriate measures to protect minors. The revisions would also impose strict rules on advertising or product placement in children’s TV programmes or content available on video-on-demand platforms. Member states would also be able to decide individually whether they want to exclude sponsorship from children’s programmes.
• Stronger rules against hate speech and public provocation to commit terrorist offences, gratuitous violence and pornography. These new rules will also apply to video-sharing platforms which would also become responsible for reacting quickly when content is reported or flagged by users as harmful.
• More flexibility in television advertising. The existing limit of allocating no more than 20% of broadcasting time to adverts will only apply between 6am and 6pm, thereby allowing broadcasters more flexibility on when to show ads throughout the rest of the day.
• Measures to ensure the integrity of broadcast signals, with an obligation on service providers not to add a window with content to the screen during the transmission of a programme on smart TVs without first having the agreement of the broadcaster.
• The reinforcement of existing measures to ensure the Independence of audiovisual regulators.

Although we now have certainty as to the AVMS Directive, the country still awaits the final outcome of the government's proposed Brexit deal.

Earlier in September, the UK government published guidance on the legal status for providers of audiovisual media services if there is no Brexit deal.

One key benefit of the AVMS Directive is that works originating in the UK form part of the European works quota. The AVMS Directive requires European broadcasters to reserve a majority of their airtime for European works and for European on-demand services actively to promote European works. This obligation has in practice meant that works that qualify as European can command a premium in economic terms. After Brexit, will UK-originated works continue to be classified as European? As currently drafted, the AVMS Directive provides that not only do works originating from Member States fall within the definition of a "European work" but also (subject to some conditions) those works originating from European non-Member States which are parties to the European Convention on Transfrontier Television. The revised AVMS Directive does not include any changes to this definition. Provided, therefore, that the UK remains a signatory of the ECTT, works originating in the UK would still continue to be classified as "European work" under the AVMS Directive after Brexit.

The "country of origin" principle is another key benefit of the AVMS Directive, which provides that a service regulated in any Member State may then be transmitted for reception freely in other Member States without further regulation.  The guidance is clear – if there is no deal, the AVMS Directive and the country of origin principle will no longer apply to audiovisual services provided under UK jurisdiction that are broadcast into the EU, as the UK would be classified as a third country. It further highlights that Recital 54 AVMS Directive explains that EU countries shall be free to take the measures they each deem appropriate in relation to audiovisual media services that originate from third countries (of course these measures must be compliant with Union law and the international obligations of the Union).

What can the UK rely on if there is no Brexit deal? Well, the Council of Europe Convention on Transfrontier Television (ECTT) may become more important. The UK, along with 20 other EU countries, is a signatory to the ECTT. The ECTT came into force in 1993 and is founded on broadly the same country of origin principle as that set out in the AVMS Directive, but excludes seven EU countries (including Ireland and the Netherlands). We are awaiting final details in relation to those seven EU countries that have not signed and ratified the ECTT.

However, it is important to note that the ECTT has its limits. It lacks an effective enforcement mechanism and does not cover video on demand services and online streaming. So, providers of these services will need to comply with the requirements of the AVMS Directive. Furthermore, the ECTT stipulates that signatories to the ECTT must observe only the AVMS Directive rules inside the single market.

The guidance explains (and as is also noted in the White Paper on the future relationship with the EU) that in any event, following Brexit, the UK is committed to ensuring continued licence-free reception for channels TG4, RTE1 and RTE2 to reflect the commitments made in the Good Friday agreement.

Whilst some may see this as an opportunity for the UK, freed from the minimum requirements laid out in the AVMS Directive, to reimage how the sector is regulated, many in the industry (including OFCOM and the Commercial Broadcasters Association) are concerned that the disadvantages of being outside of the European regime will far outweigh the benefits, thereby undermining growth and threatening revenue and jobs.

With so much at stake, it is hardly surprising that the cross-party Digital, Culture, Media and Sport Committee Report on the impact of Brexit issued earlier this year strongly urged the UK Government to secure as early as possible a country of origin deal with the EU prior to Brexit. Many in the industry, however, fear that maintaining country of origin rules through a separate agreement is far from assured since there is currently no precedent for a third country gaining single market-equivalent access for broadcasters and, according to the European Scrutiny Committee, audio visual media services are generally excluded from EU free-trade agreements due to cultural sensitivities.

So with this uncertainty, where does this leave broadcasters and video on demand providers? The published guidance attempts to provide some clarity and advice for providers of audiovisual media services, including addressing licensing arrangements that will need to be put in place following Brexit and once the UK is considered a third country. This guidance can be found here. However, we still do not know what the outcome of the current Brexit deal on the table will be and it is still not clear how this will all work in practice.

What is certain is that the AVMS Directive will come into force on the 20th day following its publication in the Official Journal of the EU. All Member States will then have 21 months to transpose the directive into domestic legislation.