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Brexit and the Media and Entertainment sector

Posted on 7 December 2020

As the UK's entertainment and media sector continues to adapt to deal with the aftermath of the global COVID-19 crisis and the safest way to manage production of film, television and digital content, the end of the Brexit transition period presents an additional significant challenge, with the risk of the UK and EU failing to reach a trade agreement.

Broadcasting to Europe and VOD services

Under the Audio-visual Media Services Directive (AVMSD), a broadcaster based in the EU needs only to obtain a licence and comply with regulatory standards in one EU member state. That broadcaster can then offer its services in other EU member states without any additional requirements. This is known as the "country of origin principle" and is explained in more detail in the European Commission's Brexit Notice to industry stakeholders.

At the end of the transition period, a UK-licensed broadcaster that wants to broadcast in the EU will, in the absence of a trade deal, no longer benefit from the country of origin principle under AVMSD. UK broadcasters will therefore need to ensure that they are regulated in a Member State to avoid facing barriers to reception and transmission. Whilst UK broadcasters may rely on the country-of-origin principle established by the Council of Europe’s Convention on Transfrontier Television (ECTT), this does not provide a complete solution, not least because certain countries such as Ireland, the Netherlands, Belgium, Sweden and Denmark have not ratified it. It also does not extend to broadcasters’ VOD services.

Broadcasters established in EU Member States who wish to have their services carried on UK platforms to UK audiences will need to take different steps depending on whether they are linear TV service providers or VOD service providers. For the former, the UK Government has implemented Brexit-related legislation to address the loss of the country of origin principle. Subject to certain exceptions, services that appear on regulated UK Electronic Programme Guides will require a UK licence and will be subject to UK regulations. Concerning VOD, from 1 January 2021, service providers will be subject to Ofcom regulation where both the head office is in the UK (i.e. it is 'established' in the UK) and editorial decisions are made in the UK.

In terms of practical guidance, the Department for Digital, Culture, Media & Sport (DCMS) has published guidance for media services providers in relation to broadcasting and VOD services. The DCMS Guidance suggests that broadcasters check their current licence to see if it will continue to be accepted in the EU countries where the service is available and seek independent local advice about VOD services.

Video Sharing Platforms

A Video Sharing Platform (VSP) is distinct from a VOD service provider and will be regulated in its own right under the UK AVMS Regulations. A VSP does not have editorial responsibility over the content as it doesn't select it, even though it organises it (this could be by automatic means or algorithms in particular by displaying, tagging and sequencing). A VSP will be subject to the AVMS Regulations in the UK, or the relevant rules in an EU Member State, simply if it is "established" there.

As we reported, the AVMSD was revised in 2018, with Member States required to implement the revised Directive by 19 September 2020 (though many Member States missed this deadline).The UK Government implemented the Audiovisual Media Services Regulations 2020 (UK AVMS Regulations) on 30 September, which came into force on 1 November 2020. Ofcom is currently consulting on proposed guidance to help providers assess whether they need to notify it that they are operating a VSP. Ofcom is appointed as the regulator in respect of enforcement and monitoring of the UK AVMSD Regulations but this is seen as an interim regime pending the introduction of the Online Harms framework. You can read more about this here.

European works

Crucially, UK films and TV programs will still count towards European quotas – which dictate that 30% of content on broadcasters' and VOD platforms such as Netflix must be European – even after the end of the transition period. Therefore, the sale of British-made content by producers and distributors will be able to continue unaffected after the transition period.

As the UK is a party to the ECTT, it is included within the ‘European Works’ content quota.

Creative Europe funding

In the absence of a deal, UK companies will no longer be able to apply for Creative Europe funding from 1 January 2021 and will have to seek alternative funding channels.

Portability of content

At the end of the transition period, consumers in the UK will no longer benefit from their digital content subscriptions when travelling to the EU under the EU Portability Regulation, and vice versa for EU consumers travelling in the UK. In practice, service providers may continue to elect to make content available but this will ultimately depend on their licensing arrangements with content providers as they will not be able to rely on the principle that the use only take place in the subscriber's home country. Examples of digital content subscriptions impacted include VOD platforms (e.g. Netflix, Amazon Prime), online TV services, music streaming services (e.g. Spotify) or game online marketplaces (e.g. Steam).

Advertising

While the self-regulatory system as a whole should emerge from either scenario intact, consideration should be given to those elements of the Committee of Advertising Practice (CAP) Code which have their roots in EU laws.For example, the rules dealing with misleading advertising are underpinned by the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) which were introduced to implement the European Unfair Commercial Practices Directive 2005.

In practice, there is likely to be little change at least initially as the CPRs are already part of the UK’s body of legislation which will continue in force after Brexit. However, there is potential in the long term for Brexit to cause a divergence between UK and EU law on this issue. This could create a scenario where a marketing claim could be considered misleading or unlawful in the EU, but not in the UK, or vice versa.

All current rules in the UK will continue in force for as long as the ASA determines they should remain part of the CAP Code (see guidance from the ASA here).

Consumer Rights

In January 2020, the Enforcement and Modernisation Directive (Omnibus Directive) came into force. The Omnibus Directive amends four key pieces of consumer protection legislation: (1) the Unfair Commercial Practices Directive; (2) the Consumer Rights Directive; (2) the Unfair Contract Terms Directive; and (4) the Price Indications Directive. Its aim is to strengthen consumer rights through enhanced enforcement measures with GDPR-style penalties and increased transparency requirements online, particularly for personalised pricing and search result rankings.

Member States must implement the Omnibus Directive by 28 November 2021. The UK will not therefore be required to implement the Omnibus Directive, although it has indicated previously that similar legislation will be introduced separately, with proposed fines capped at 10% of the firm’s worldwide turnover (see BEIS Consumer Green Paper "Modernising Consumer Markets"). These proposals are still under review and the Government has said that it is considering responses to the Green Paper with a view to further policy development.

Anyone selling or providing entertainment and media services or products to consumers in the EU and UK will need to be abreast of these developments including changes to contracts for the supply of digital content and digital services, as discussed here. For example, under the Digital Content Directive, consumers in the EU will be provided with greater protection against defective content when buying or downloading digital content such as music, apps, games, or using cloud services and social media platforms such as Instagram and Facebook. The rules will also apply to those consumers who provide their data in exchange for the content or services, meaning that no money has to exchange hands for the rules to apply.

Copyright

Member States have until 7 June 2021 to implement the controversial Digital Copyright Directive into their national laws. Again, whilst the UK does not have any plans to implement the Directive, it will be interesting to see what approach it takes in relation to the use of copyright-protected content by users uploading that material to sites such as YouTube, Twitter and Facebook. Interestingly, in a recently launched Parliamentary enquiry into music streaming, one issue slated for consideration is how to protect against piracy and whether to implement a version of the Digital Copyright Directive.

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