Summary

Linear TV and radio services are increasingly being consumed via the internet. Technical developments allowing the on-demand consumption of audio and audio-visual content on different user devices have also changed viewer habits resulting in linear TV content that can also be viewed at times chosen by the users themselves via catch-up or instant restart services.

The EU is in the process of working out how the 1993 EU Cable and Satellite Directive ought to be adapted to the modern digital world. While the EU’s proposals will not abolish territorial licensing of TV and radio content in favour of a single pan-European license, the EU will re-consider how the country-of-origin principle and the mandatory collective rights management of the cable-retransmission rights established by the existing EU legal regime can be expanded to new TV and radio retransmission technologies such as IPTV and WebTV.

This new regulation will affect creators and producers of audio-visual content intended for distribution via linear services and channels, traditional TV and radio networks, as well as all distributors of TV and radio programmes and channels (including cable, satellite, IPTV and OTT network and services operators) with operations in the European Union.

Background

The European Commission launched its Digital Single Market (“DSM”) strategy in May 2015. The DSM strategy is broken down into three “pillars” and 16 “Key Actions”. The review and possible expansion of the scope of the 1993 Cable and Satellite Directive (Directive 93/83/EEC, “SatCab Directive”) is part of Key Action 7, an action point under the pillar “Better Access to Digital Goods and Services”.

After the Commission had conducted a public consultation with the relevant stakeholders in 2015, it presented a proposal for a new regulation on online transmissions and retransmissions (the “SatCab Regulation”) as part of a legislative package for the modernisation of the EU copyright rules. Since then, the European legislative institutions (the Commission, the European Parliament and the Council) have been discussing how the SatCab Regulation should change and modernise the EU regime established by the 1993 Cable and Satellite Directive.

At the heart of the debate is the issue of how the country-of-origin principle and the mandatory collective rights management of the cable-retransmission rights established by the SatCab Directive can be expanded to linear and non-linear online services ancillary to traditional TV and radio broadcasts and to TV and radio retransmission networks and technologies evolved over the last years such as IPTV and WebTV. The three EU institutions are preparing for a trialogue to find a compromise for their different positions on the SatCab Regulation. We expect that a final proposal will be adopted in the second half of 2018. As a regulation, the SatCab Regulation would directly apply in all EU Member States from its effective date and does not require implementation into the national laws of individual EU member states.

Current Scope of 1993 Satellite and Cable Directive

The SatCab Directive applies a “country-of-origin” principle to cross-border satellite transmissions, which means that a satellite transmission is deemed to occur only in the EU country where the satellite transmission is carried out (i.e., where the programme signals are fed into an uninterrupted transmission chain leading to the satellite and down to earth). As a result, to broadcast a programme via satellite in all EU countries, the satellite broadcaster must acquire only a license for the EU country where the satellite broadcast is carried out from the rights holders in the programme content.

In addition, the SatCab Directive also establishes a “mandatory collective rights management approach” which means that the right to cross-border cable retransmission of broadcasted TV and radio programmes is to be exercised mandatorily by the applicable collective rights management society and cannot be exercised by the individual rights holders (except for the rights held by the broadcasters in their broadcast). The remuneration claims of the authors, performing artists and other rights owners for the retransmission of their works can neither be assigned in advance to any third party nor be waived. This regime provides cable network operators with a one-stop-shop where they can acquire all necessary retransmission rights instead of negotiating with numerous rights holders, and it provides the creators of programme content an additional revenue stream from the retransmission of their content.

Expansion of scope to other methods of broadcasting and retransmission of TV and radio programmes?

The digital transformation of how content is transmitted and consumed by users raises the question of whether and to what extent these two principles - i.e., country-of-origin and mandatory collective rights management - should be expanded to other equivalent technical methods of linear content transmission such as the cross-border online broadcasting via OTT or the cross-border online retransmission of broadcasted programmes via OTT or managed networks (such as closed IPTV and satellite networks) across Europe. This transformation also includes ancillary services provided by the broadcasters and network operators allowing users a non-linear viewing of the broadcasted programme, such as catch up, instant restart and timeshift (live pause) services that are closely connected to the linear broadcast or retransmission of a programme.

I. Proposal of the EU Commission

In its draft of the SatCab Regulation, the Commission proposes:

  • to apply the country-of-origin principle to the transmission by the broadcaster of online services ancillary to the broadcast of a TV or radio programme, i.e. the transmission would be deemed to take place solely in the EU country where the broadcaster has its principal establishment so that the broadcaster would only have to acquire a license for the transmission of such ancillary online services from the right holders for that one country; and
  • to expand the system of mandatory collective rights management to the right to retransmit TV and radio programmes originating in other EU countries over closed networks other than cable, including satellite, digital terrestrial, closed-circuit IP-based (IPTV) and mobile networks, excluding the OTT, by a party other than the broadcaster.[1]

In this proposal, “ancillary online service” is defined as:

  • the online transmission of radio or TV programmes (i) simultaneously with the broadcast of the programme (so called simulcast) or (ii) on an on-demand basis for a limited period of time after the broadcast (e.g., so called catch-up services); or
  • the online transmission of material related to the initial broadcast of such programme.

Recital 8 of the proposed regulation states that these are services “which have a clear and subordinate relationship to the broadcast”, but the draft does not provide for a specific time limit for such o-demand services. The proposed regulation does not apply to stand-alone online video on demand services such as Netflix or Amazon Video - and in respect of these services, a temporary cross-border use by consumers will be facilitated under Regulation (EU) 2017/1128 on cross-border portability of online content services.

The proposal explicitly excludes the retransmission of programs via the open internet (OTT/WebTV). It also requires that the programme must be broadcast for the reception by the public by wire or over the air, including satellite but excluding online transmissions. As a result, a retransmission of a mere WebTV programme would not be considered a retransmission within the meaning of the SatCab Regulation.

II. Amendment Proposals by the European Parliament and the Council of the EU

The Commission’s proposal for the SatCab Regulation was referred to the European Parliament (“EP”) and the Council of the EU. Both institutions proposed significant modifications to the draft proposal (see the EP proposal of November 27, 2017 and the Revised Presidency compromise proposal of November 15, 2017).

a. Country-of-Origin Principle

As regards the ancillary online service, the revised Counsel and EP proposals are more restrictive. The EP proposes that the country-of-origin principle should not be expanded to online services ancillary to the broadcast of all TV and radio programmes but only to the broadcast of news and current affairs programmes. The Council’s proposal requires that the country-of-origin principle shall apply only to programmes either related to news and current affairs or fully financed and controlled by the broadcaster, excluding any sports events. The latter proposal would exclude any programme content co-produced with or licensed to the broadcaster by third parties. To avoid forum shopping by broadcasters, the EP clarifies that the country-of-origin principle is not to apply to online services that are preliminary targeted to an audience in Member States other than the Member State in which the broadcaster has its principal place of establishment.

b. Collective Management of Retransmission Rights

The EP emphasises that the scope of cable retransmission regime must be expanded in a technology-neutral manner to services equivalent to cable retransmission and proposes that all “cable-like or IPTV-like” cross-border retransmission services that are provided “within managed environments” are to be considered re-transmissions to which the rights are subject to mandatory collective rights management. The EP defines such services as services “with secured and restricted access, where a retransmission operator provides an end to end encrypted retransmission service to its contractually authorised users”. Likewise, the Council proposes that a retransmission over an internet access service[2] “to a controlled circle of users” should be included in the definition of “retransmission” under the SatCab Regulation. In our understanding, both proposals would expand the collective rights management mechanism to subscription-based retransmission services over the OTT as long as identification and authentication of their users is ensured (e.g., where a user registration and verification for access is required) and the content is protected by DRM/encryption against unauthorised use. In this respect, the EP and the Council proposals are more expansive than the Commission’s proposal.

c. Direct Injection

As a consequence of judgments by courts of Member States and the European Court of Justice (ECJ), as well as lobbying by the rights holders, the EP has proposed as new provision (Art.4a) for the SatCab Regulation addressing the obligations of broadcasters and independent network operators for distribution of TV and radio programme based on direct injection of the programme signals. The proposal defines direct injection as a process by which the broadcasters transmit their programme signals for reception by the public to third-party distributors “point to point via a private line – by wire or over the air, including by satellite – in such a way that the programme signals cannot be received by the general public during such transmission; the distributors then offer these programmes to the public simultaneously, in an unaltered and unabridged form, for viewing or listening on cable networks, …IP-based and mobile networks or similar networks.”

Background

Cable retransmission (as designated by the SatCab Directive) requires two acts of communication to the public:

  • an initial act by which the broadcaster broadcasts its programme by wire or over the air to the public; and
  • a second act by which the cable network operator takes the broadcasted programme signals, feeds them into its cable network and transmits them to its subscribers simultaneously and unaltered.

This concept has been working well for free-to-the-air TV programmes where any user with an antenna or a satellite receiver is able to view the unencrypted broadcasted programmes. The treatment of free TV programmes is different to the treatment applied to the transmission of encrypted pay TV programmes by pay TV platform providers, which can be viewed exclusively by the paying subscribers of the pay TV platform provider who licenses and bundles the broadcasting rights for the pay TV programmes from the respective broadcasters. The pay TV set-up is traditionally not considered cable-retransmission but as only one act of communication to the public (i.e., the initial transmission/broadcast of that programme) so that the pay TV platform providers do not license, and pay for, retransmission rights to the pay TV programmes.[3]

More and more broadcasters have completely ceased the free-to-air broadcast of their programmes to the public and now directly deliver their programme signals via direct injection (as defined above) directly to the cable, satellite or IPTV network operators who distribute the programmes on their own behalf and for their own account (i.e., not as technical service providers of the broadcasters) exclusively to their (paying) subscribers. This means there is only one act of communication to the public, i.e., the transmission to the subscribers of the network operators, and, technically speaking, the programme is not retransmitted.

The delivery of the programme signals via a private point-to-point-line by the broadcaster to a limited number of network operators/distributors is not a broadcast or any other act of communication to the public as the ECJ confirmed in 2015[4]. This ECJ judgment has increased the uncertainty in the on-going dispute between rights holders, broadcasters and network operators as to (i) whether such method of distribution of a programme is an initial broadcast or a retransmission of the programme; and (ii) which party is responsible for licensing and remunerating the rights holders for this distribution of the programme content, i.e., is it the “traditional” broadcaster delivering the programme signal via direct injection or the network operator/distributor transmitting the programme signal to its subscribers?

EP Proposal

The EP follows the joint liability approach favored by the collective rights management societies of authors and composers (GESAC). According to this proposal, broadcasters and distributors should jointly be liable “for the single and indivisible acts of communication to the public and making available to the public, which they carry out together. Such broadcasting organisations and such distributors should therefore obtain an authorisation from the right holders in question for their respective participation in such acts”. This would mean that broadcaster and distributor are jointly responsible for clearing the transmission rights for this distribution directly with the rights owners (except for the music-related rights that are managed by collecting societies also for such transmission/broadcast), and the rights holders could claim the payable licensee fees from both parties.

In revenue terms, this concept may work for most rights holders if the license fees include both revenue streams: the advertising revenues (generated by the broadcaster) and subscription fees (generated by the distributor and shared with the broadcaster). It may complicate the rights acquisition for the distributors unless they manage to oblige the broadcasters to clear, and pay for, all transmission rights, and to indemnify them against infringement and payment claims by the rights holders.

But this solution is less favourable for the broadcasters. They would lose the revenue generated from licensing their retransmission right in their broadcasts, and this questions their legal role as broadcasters.

Other stakeholders such as the collective rights management societies AGICOA and SAA favour a solution maintaining the status quo for the rights holders, under which the current retransmission licensing and remuneration regime is applied to the transmission of the programmes that were delivered by the broadcaster to the distributor by direct injection despite the lack of an initial act of communication of the programme to the public. Each broadcaster and distributor would be required to clear rights with the respective rights holders/collective rights management societies for its own act of exploitation.

Digital Single Market