Audiovisual Media Services Directive Implementation deadline arrives | What’s the state of play and what does this mean for your business?

Written on 17 Sep 2020

Many of the EU Member States are set to miss the 19 September 2020 the deadline for implementing the new Audiovisual Media Services Directive into local law – leaving affected businesses in an uncertain position

The Audiovisual Media Services Directive (AVMSD) brings significant changes for linear broadcasters and on-demand service providers – and a brand new regime for video-sharing platform services (VSPS). Member States were supposed to have implemented the Directive into local law by 19 September, but while the UK (perhaps ironically) is nearly there, other Member States are yet to table their draft laws. So, what should you do if your business is impacted by the new rules?
In this article we'll provide you with a brief refresher on what this change in law might mean for your business. Our international broadcast law experts then take a look at the state of play in:

• UK 
Germany
Italy
France
The Netherlands
Spain

Finally, we'll suggest next steps for your business.

Refresher

What are the changes under the new AVMSD?

Refresher

What are the changes under the new AVMSD?

What does the directive do?

The amended AVMSD not only ushers in changes to the rules governing linear broadcasters and on-demand services of all shapes and sizes, but also sets out a brand new regulatory framework for video-sharing platform services (VSPS) in dealing with video content uploaded by users.

The country-of-origin principle is retained, meaning that only one country can have jurisdiction over a service, allowing for a single point of regulation across the EU. As is currently the case, a service will only be regulated in any Member State, if it falls under the jurisdiction of that country. However, there are separate tests of jurisdiction for: (i) broadcasters and on-demand services; and (ii) VSPS. A far broader test applied to VSPSs, which in practice ensures that many US-based platforms will be subject to regulation by an EU member state. The position in relation to the UK is more complicated as a result of Brexit – which we will discuss in a separate Insight.

The broad aim of the new directive is to apply rules, standards and protections more equally across all audiovisual services: traditional TV; on-demand and streaming services; and user-generated digital video platforms.

Timing

The deadline for Member States to fully implement the amendments to the Audiovisual Media Services Directive (AVMSD) into local law is 19 September 2020. Many Member States are yet to provide comprehensive proposals, despite the fact that the European Commission has now published its highly anticipated but much-delayed on:

(i) “Essential Functionality” for VSPSs;

(ii) the calculation of the share of European works in the catalogues of on-demand providers; and

(iii) the definition of low audience and low turnover in the context of services that are exempt from complying with the quota and financial contribution requirements.

What are the main changes?

Video-sharing platforms

The most significant shift in scope is the regulation of VSPSs. The regime is lighter-touch than that for linear and on-demand, reflecting the lack of editorial control by the platform operator. The rules focus on the tools and other measures needed to create a safe environment and limit exposure to harmful or illegal content, rather than any obligation to ensure content is fully compliant before it appears on the platform.

Content quotas and financial contributions

On-demand services will need to reserve at least 30% of their catalogues for European productions and need to ensure the prominence of those works. European Commission guidance proposes that the percentage of European content in a catalogue should be calculated by title, which means a single film (including each film in the same franchise) or a season of a TV series. There is also some discretion to apply different weighting for TV episodes with high production values or durations more akin to feature films.

As well as the potential for national regulators to impose financial contributions on services established in their own country, the new AVMSD recognises that some territories may choose to impose levies and other investment requirements on services (both linear and on-demand) which originate in other Member States but target audiences in their territory. This is essentially a codification of established case law, but if a large number of countries now choose to implement this type of obligation it will make life difficult for pan-EU services, particularly those which tailor catalogues to national audiences.

There are exceptions from both quotas and financial contributions for low turnover and low audience services. Guidance suggests the exemptions should be understood respectively in reference to percentage audience share, and the existing concept of ‘microenterprises’.

Advertising limits

For linear channels, the hourly limit on ad spots in a single broadcast hour (currently 20%) have been liberalised. We will need to see if industry actually chooses to change its selling model.

🇬🇧UK

Status of implementing legislation:

The UK seems to be the best prepared of all Member States covered in this Insight, but even the UK will miss the implementation deadline. The UK notified its draft implementing Regulations to the European Commission in June 2020. These are subject to change, but are expected to be brought into force in Autumn 2020.  

The UK had indicated that it would implement the AVMSD as close to possible "as is" and this looks to be the case. The UK Regulations would require VSPS providers to:

  • notify the regulator (Ofcom);
  • pay a fee to Ofcom;
  • comply with specific information requirements, including identifying the service as a VSPS under UK jurisdiction; and
  • comply with the rules on harmful content and advertising, which provide some useful clarity on the UK's interpretation of the AVMSD (e.g. that parental controls are only required for R18 / adult material).

The UK Regulations also provide Ofcom with enforcement powers, including the right to impose financial penalties and to suspend the service, which are broadly in line with the ODPS regime.

Timing:

The UK Regulations are expected to be brought into force in autumn 2020.

What else do I need to know?

  • Cross-border financial contributions: the UK government views the new provisions regarding financial contributions (aka the "Netflix tax") as aimed at Member States which already operate national film funds. There is no such scheme in the UK and the government does not propose to implement one.
  • Quotas: The government has indicated it was waiting for the EU's guidance on quotas, so we expect Ofcom to follow the approach to calculating European Works suggested by the Commission.
  • Call to Evidence for VSPS: Ofcom has launched a consultation on VSPS regulation (which closes on Thursday 24 September 2020) to inform its guidance for VSPs on the list of measures set out in the new statutory framework, which it hopes to issue by Summer 2021. In recognition of the fact that it is at the same time implementing the legislation which comes into force immediately but consulting on the guidance, leaving a lack of clarity for affected businesses, Ofcom has said that it will "work with VSPs as they meet their new obligations to ensure that consumers are protected" and "[does] not generally expect to take formal enforcement action during this period" unless there is serious or illegal harm. This is also caveated with: "the new requirements apply from the date they come into force so providers who are likely to be providing a VSP as defined in the AVMSD need to start preparing for this by ensuring they understand the new requirements and take steps to ensure their service is compliant", so in summary UK based VSPSs should start to prepare for compliance but unless there is any harm caused Ofcom is unlikely to take enforcement actions prior to Summer 2021.

 

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🇩🇪Germany

Status of implementing legislation:

AVMSD implementation in Germany is spread across different pieces of legislation. The key regulations are the new Interstate Media Treaty (IMT) (further information available here) as well as the amended Youth Protection Treaty (YPT). Further drafts for implementation acts include the revised Telemedia Act (TMA), the revised Network Enforcement Act (NetzDG) as well as the revised Youth Protection Act (YPA).

There are also minor changes to the Deutsche Welle Act (DWA), the legislation on the German foreign broadcasting service, as well as German legislation on tobacco products (TabakerzG). The latter is affected because of the AVMSD’s rules on advertising of tobacco products.

Timing:

In principle, all of the legislation listed above should come into force at the end of September 2020, or else in autumn 2020.

However, the status of the various drafts differs and there is likely to be a delay in the German implementation of the AVMSD:

  • The IMT was intended to come into force on 19 September 2020. The ratification process may be delayed but will most likely be completed by the end of 2020. The same applies to the amended YPT.
  • The new TMA, together with the amendments to the DWG and the TabakerzG, has been passed by parliament and will be signed into law shortly (this is only a formal process).
  • The new NetzDG is still within the legislative process and is expected to be passed in autumn 2020.
  • The new YPA has been notified to the European Commission and not yet been submitted to parliamentary debate. The draft may yet change substantially, and there is no estimated date for its entry into force.

What else do I need to know?

  • Further categories for platforms: The IMT introduces a new catalogue of regulations that cover Media Intermediaries, Media Platforms and User Interfaces that are intended for the use in the German market (the so-called “marketplace principle”). This will apply in addition to the AVMSD’s regulations of VSPS. Therefore, a service can be a VSPS in a different Member State and also a new service under the IMT. The Commission has suggested that this part of the IMT may be a violation of the country of origin principle. Nonetheless, the German federal states are likely to ratify the IMT. The regulators will likely publish guidelines and bylaws concerning those categories in late 2020 at the earliest.
  • Youth protection: New youth protection rules contained in the YPT and draft YPA will oblige VSPS and other for-profit user-generated content platforms to take adequate measures to protect minors from unsuitable content. The scope of those measures is not entirely clear. The rules expressly apply to providers outside of Germany, subject to the EU country-of-origin principle. However, German regulators have been flexing their muscles and have started to enforce youth protection rules against providers in other EU Member States under the various exceptions to the country-of-origin principle.
  • Financial contribution: The Film Funding Act already contained – prior to AVMSD – an obligation to contribute to the German national film funding institution if movies are shown that have been screened in a cinema in Germany or the movie's country of origin.
  • Bylaws and guidelines: The German regulatory authorities have not yet published any official bylaws or guidelines – on either the implementation of the AVMSD or on the platform categories of the IMT. At the moment, the authorities are in a consultation with the relevant stakeholders and guidelines are expected to be published by late autumn 2020.

 

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🇮🇹Italy

Status of implementing legislation:

Italy is at a very preliminary stage of implementing the revised AVMSD, so the deadline of 19 September 2020 will be missed.

The Parliament is still discussing the draft of the European Delegation bill, which is one of the main legislative tools implementing 33 different EU Directives in Italy (including the AVMSD). This bill does not immediately implement the Directives but instead merely delegates responsibility to the government to draft the legislative decrees.

Timing:

We do not expect the AVMSD to be implemented in Italy before the end of the year.

Once the European Delegation bill is approved, the government will issue an implementing legislative decree within three months.

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🇫🇷France

Status of implementing legislation:

A major audiovisual reform in France was to be implemented as part of a wide-ranging draft bill on “audiovisual communication and cultural sovereignty in the digital age”. This draft bill included several provisions to transpose the AVMSD.

As a result of the Covid-19 crisis, legislative the calendar has been disrupted and the provisions of this bill will not be adopted as a whole, but rather in several parts. As a result, the deadline of 19th September 2020 will be missed.

In order to speed up the adoption process, a draft bill, containing various provisions adapting to European Union law on economic and financial matters, is currently under discussion in Parliament to authorise the government to take, by mere ordinances, all measures required to transpose the AVMSD.

Timing

Once the draft bill mentioned above is enacted and published (which is likely to be in October 2020), the government will have six months to transpose the AVMSD. France will therefore be late in transposing the AVMSD. However, as the AVMSD is a priority matter for the government, the ordinances should are likely to be enacted without waiting for the end of the above six month period.

What else do I need to know?

As part of the major audiovisual reform in France, two decrees were issued on 5 August 2020:

  • A decree amending the regime for the broadcast of cinematographic works on television services (Decree No 2020-984). As a result, movies can now be broadcast every day of the week. Saturday, however, will be reserved for auteur movies produced / co-produced by the channel at stake.
  • A decree modifying the television advertising regime in order to soften the rules governing ad broadcasting for television channels (Decree No 2020-983). This Decree authorises, in a controlled way, segmented adverts via connected television / television via boxes.

 

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🇳🇱The Netherlands

Status of implementing legislation:

The AVMSD will be implemented in the existing Dutch Media Act (Mediawet). The proposal to amend the Media Act was adopted by the House of Representatives (Tweede Kamer) in June 2019, but has not yet been adopted by the Senate (Eerste Kamer).

As a consequence of Covid-19, the Netherlands will not meet the deadline of 19 September 2020 to implement the AVMSD.

The Dutch government has chosen to implement and/or amend only the minimum required by the AVMSD. In relation to VSPS, providers will be required to notify the regulator (Commissariaat), and to affiliate themselves with the Dutch self-regulatory Advertising Code (Reclame Code) and the NICAM (Kijkwijzer) – and provide a confirmation in each case to the Commissariaat.

Timing:

The exact timing of implementation is yet unclear, but is expected before the end of this year.

What else do I need to know?

The Dutch government published its intention to introduce an investment obligation in the Media Act as a measure to stimulate Dutch films, series and documentaries. The investment obligation requires all services, which are based in the Netherlands or target audiences in the Netherlands to invest a certain percentage of the relevant yearly turnover, as generated in the Netherlands, in the (co-)production of Dutch cultural audio-visual offerings. This may be either by investing themselves or by transferring the investment to a private fund. The obligation is based on the potential under the AVMSD to introduce investment requirements for services which originate in other member states but target audiences in the Netherlands. The obligation may apply to the following services, provided that they meet the turnover threshold of EUR 1 million:

  • cinemas;
  • transactional based VOD-services (users pay for single items);
  • subscription based VOD-services (users get unlimited VOD for a fixed price per month); and
  • broadcast services.

The proposal for the amendment of the Media Act to introduce the obligation is not yet published. As a result, the exact nature and scope of the obligation are not yet clear.

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🇪🇸Spain

Status of implementing legislation:

Implementing legislation has not yet been drafted, so the deadline of 19 September 2020 will be missed.

Timing:

The timing is currently unknown. However, the leading Parliamentary Group in the opposition (the Popular Party) has formally asked the Spanish government (i) whether the government has requested an extension of the applicable implementation term due to the circumstances of the health crisis caused by Covid-19, (ii) when the latest meeting of the working party in charge of drafting the text took place, and (iii) when the government expects to start the hearing procedure. The government should respond these questions by 2 October 2020.

By way of background, the Spanish government launched a public consultation on 21 January 2019 (which closed on 22 February 2019), but no feedback about it was ever published.

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What next?

If your business is under the jurisdiction of a Member State which has not yet implemented the AVMSD, your choices in broad terms are to either comply based on the text of the Directive or wait for further clarity from your Member State. If you choose to comply based on the Directive, you should be aware that that there may be local law variations with which you'll have to comply, which may mean further changes at a later date or even unwinding changes you've made. Waiting for further clarity will avoid this risk, but may leave you with little time to identify and implement the changes once the laws come into force.

Most affected businesses have been conducting full impact assessments against the Directive itself to identify:

  • to what extent they might be regulated; and
  • any gaps between their current practices and the requirements of the new AVMSD.

They have then also been communicating with internal stakeholders and upskilling the business, to make sure there are no surprises. This puts them in a good position to move quickly once their "country-of-origin" implements the AVMSD.

Our international team of broadcast law experts would be happy to discuss your options and help you formulate an approach.