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Revised EU audiovisual directive changes playing field for third-country media service providers

16/04/2021

The main regulatory instrument for broadcasting and video-on-demand services (VOD services) at the EU level is the recently revised Audiovisual Media Services Directive (AVMSD).

The AVMSD relies on the "country of origin" principle where media service providers are, as a general rule, only subject to the law and jurisdiction of the EU member state where they are established. Media service providers from third counties such as the UK, cannot operate according to the rules governing freedom of reception and retransmission as laid down in the AVMSD.

Therefore, EU member states are entitled, based on national laws and, where applicable, the European Convention on Transfrontier Television, to restrict reception and retransmission of audiovisual media services originating from third countries. Alternatively, media service providers from third countries can establish themselves in a EU country and still benefit from the country of origin principle.

The Netherlands has not ratified the European Convention on Transfrontier Television (ECTT).  This means that media service providers must apply for a licence when they want to broadcast or offer VOD services in the Netherlands. When a state ratifies the ECTT, it must allow the freedom of reception for services from other ECTT countries. VOD services are not covered by the ECTT, and must be dealt with on a bilateral basis with the individual country concerned.

Licence

A provider who wants to broadcast or offer VOD services in the Netherlands must apply for a licence from the Dutch Media Authority (Commissariaat voor de Media or CvdM). When applying for a licence, the CvdM will take a flexible approach towards application of the AVMSD and granting a licence. A Dutch licence can be held by a Dutch entity, but also by a foreign entity established in the Netherlands, provided that the entity is listed in the Dutch trade registry.

In order for a foreign or Dutch entity to acquire a Dutch licence, the head office and the editorial decision-makers should be based in the Netherlands. Therefore, is it important to understand how the CvdM interprets the AVMSD concepts "head office" and "editorial decisions".

Head office

The CvdM does not contain specific criteria to assess whether the head office is based in or editorial decision-making is conducted from the Netherlands. This will be determined on a case-by-case basis. Editorial decision-making in the Netherlands alone is insufficient to establish that the head office is located in the Netherlands. Other factors are also important in the assessment, such as the country where management is conducted from and the business decisions taken. The CvdM does not look at the absolute numbers of workers established in the Netherlands. Rather, it is the relative number of senior workers in the Netherlands (compared to those outside the EU) that is important. Therefore, management tasks and business decision-making processes have to be directed to the Netherlands in order to apply successfully for a Dutch license.

Editorial decisions

To determine whether the Netherlands is the country where the editorial decisions are taken, the CvdM assesses whether the senior officers responsible for programming (e.g. final editor, channel manager) are located in the Netherlands. The CvdM understands that these persons will occasionally travel to other company offices, but emphasises that, in principle, it will not suffice if these persons only visit the Netherlands occasionally (e.g. monthly or biweekly) to discuss and decide on programming. This means that in principle senior officers in charge of the editorial decisions must be located in the Netherlands, regardless of their obligations to travel to other offices.

Low threshold

The EU promotes European works on TV and VOD through the quota provisions of the AVMSD (Articles 13, 16 and 17 AVMSD). These provisions envisage:

  • A majority proportion of broadcasting time for European works.
  • A 10% broadcasting time wedge or, at the discretion of the member state, at least 10% of the state’s programming budget dedicated to independent European producers.
  • A 30% share of European works in VOD catalogues, with an emphasis on the prominence of those works.

Article 13 also provides for exemptions for companies with a low turnover or a small audience from this obligation. According to the Commission, those providers with an audience share of less than 1% in the member state concerned are exempt from this obligation.

The CvdM can provide an exemption if an obligation or requirement is unfeasible or unjustified by reason of the nature or theme of the audiovisual media services. The CvdM does not fully explain this exemption. However, according to the CvdM, an exemption regarding a low turnover or small audience applies exclusively for those member states in which the audience share is below the threshold of 1%. The CvdM is currently working on a policy regulating European and other quotas, including the exemption policy. This new policy will then apply to niche channels as well. (The definition of a niche channel will also be addressed in the policy).

Conclusion

BREXIT and the revised AVMSD has drastically changed the playing field for media service providers in the EU, especially for media service providers from third countries. Uncertainty exists surrounding the interpretation of some AVMSD rules. The European Commission has published a guidance on this but questions remain, especially at the national level. It is hoped that a number of issues affecting the Netherlands will soon be clarified when the CvdM publishes its policy rules. We will keep you informed on any further developments.

For more information on programming and broadcasting in the Netherlands, contact your CMS client partner or local CMS experts.

Authors

Portrait of Dolf Segaar
Dolf Segaar
Partner
Amsterdam