New EC dicey for showbiz trade

It’s official: As of Jan. 1, the 12-nation European single market is a reality. But rarely has such a highly touted treaty had so little effect on business planning.

When it comes to showbiz, the world’s newest and richest economic bloc has about as much substance as a Main Street facade on a Hollywood backlot.

And Hollywood is at the center of the debates that continue to stymie European Community film and TV initiatives. Until the U.S. studios and talent guilds settle their differences with Europe over the General Agreement on Tariffs and Trade (GATT), any real direction to the EC media industries will be impossible.

That’s because EC measures governing copyrights, quotas and videotape levies could be shot down if the Motion Picture Export Assn. of America succeeds in convincing GATT that such regulations are a legitimate trade issue. Europeans argue they’re a cultural issue and thus exempt from GATT.

In short, the grand single market that was, among other things, supposed to crystalize showbiz trade across Europe has so far merely muddied the waters.

Paradoxically, American showbiz companies, which have long treated Europe as one market anyway, are the staunchest supporters of the single market, at least in principle. U.S. exex actually understand the EC rules far better than most Euro exex, who have much less experience selling their homegrown product in foreign countries.

For example, Datty Ruth, head of Germany’s largest independent vid distributor, had no comment on Europe’s looming dispute with the MPEAA.

Yankee ingenuity

By contrast, the MPEAA can rattle off long lists of what it calls discriminatory policy in the EC directives. In general, it claims the EC’s efforts to harmonize Europe’s varied media regulations threaten two basic principles:

That copyright owners should exercise exclusive control over the exploitation of their product and that the European subsids of U.S. majors, some of which have been established for 70 years and all of which employ European exex and pay European taxes, should be counted as European companies.

The copyright question is dauntingly complex, but the stickiest pointcenters around the EC principle of “author’s rights.”

That concept, alien to British and American law, provides the writer or director with inalienable underlying rights regardless of contractual agreements. The right gives its holder a veto over secondary exploitation, for example in the video market.

Property co-owners

Under the EC’s proposed regime, says the MPEAA, the author and the producer become, in effect, co-owners of the property. That is not a state of affairs that MPEAA members are prepared to countenance and, if it goes through, it could spell the end of U.S. filmmaking in Europe.

Another aspect of EC copyright law concerns satellite broadcasting and cable retransmission rights. The EC wants satellite rights to be negotiated in the country from which the satellite service originates.

That means a Hollywood studio might sell a package of rights to a satellite movie channel based in Germany. If that channel can be received in neighboring EC countries, it would be up to the parties to negotiate a price for those adjacent rights, which the studio would not be allowed to withhold.

Robbed of control

A similar principle would apply to cable, with the onus put on cable operators to clear rights for simultaneous retransmission.

According to the MPEAA, these new rules undermine the principle of market-by-market exploitation and fly in the face of accepted practice in the industry. Once again, say the Yanks, producers will be robbed of control in the marketplace.

The nationality question is important to the U.S. majors because of the EC’s imposition of quotas and levies that discriminate against non-EC companies.

Quota restrictions were first contained in a 1989 EC directive called “Television Without Frontiers.” The loud American complaints this provoked fell on deaf ears, mostly because the directive called for a 50% limit on imported programs, which was way above the average penetration of foreign shows on European airwaves.

But last year the French dramatically extended the scope of the new directive by applying it specifically to primetime. MPEAA boss Jack Valenti, fearing a precedent that could be followed throughout Europe protested vigorously.

Now the EC is discussing a videotape levy. With so many consumers using VCRs to copy films onto blank tape, it was felt that copyright owners should in some way be compensated.

The MPEAA has no argument in principle with that; the problem is making sure that MPEAA members share fairly in the proceeds, since funds are also to be diverted into local production.

Money for new talent

Already, France has a levy that takes 2.25 francs per hour from each blank tape. The money is collected by umbrella group Copie France for distribution among producers, actors and directors, including MPEAA members and the U.S. talent guilds.

But a quarter of the money raised goes to support new talent. In 1991, revenue from the levy totaled 516 million francs ($ 97 million). This year, it is expected to exceed 600 million francs.

Just before Christmas, French authorities slapped a 2% distributors’ tax on prerecorded tapes, with part of the proceeds again going to support local production.

A similar tape levy in Germany, applied to prerecorded as well as blank tapes , was recently hiked to 2.5%.

Last month, a law introducing a video levy was passed by the Spanish parliament. It is said the Spanish law could be used as a model elsewhere in Europe; levies are being considered in Belgium, Greece, Italy and Denmark.

Recognizing MPEAA company subsids as EC nationals wouldn’t solve the quota problem (few U.S. films or TV shows are shot in Europe), but it would help resolve the potentially more important question of levies.

Chief U.S. trade negotiator Carla Hills said before Christmas, “We will drop opposition to the quotas if you treat us fairly on the levy.”

National status could also ease negotiations over copyright legislation, the MPEAA’s area of greatest concern.

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