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Royalty battle brews in Europe

Non-profit Agicoa kept out of central, eastern Europe

GENEVA Television producers are losing millions of dollars in royalties because the world’s largest rights collecting agency is being kept out of central and eastern Europe.

Geneva-based Agicoa is a not-for-profit org that collects royalties due to independent producers for the retransmission of terrestrial TV signals on cablers in 36 European countries.

It says disputes in the Czech Republic, Hungary, Slovenia and Bulgaria — where local collecting agencies operate — are costing rights holders up to $10 million annually.

Agicoa, which operates under the Berne and European conventions on intellectual property rights and within the framework of the 1993 European Union cable and satellite directive, says although competition is enshrined in EU law, the four countries are attempting to assert monopoly rights for national collecting agencies.

Agicoa, which last year collected and redistributed nearly $165 million to more than 2,700 of its 7,200 members, says this is both illegal and costly.

With more than 854,000 audiovisual works on its books and a steadily dropping percentage charged for collection (in 2009 it will be 7.82%), inept collection and poor redistribution of royalties is not a small matter.

“Take the Czech Republic, where we estimate the cable retransmission market is worth annually around e1 million ($1.4 million) in royalties,” says Helmut Koszuszeck, Agicoa legal director. “In 2002, Czech agency Intergram collected e24,000 ($34,000) and this year just over double that.”

Agicoa’s Luxembourg-based Agicoa Europe has the right, as an EU company, to work in any member state. But it has been refused a license to operate by the Czech Ministry of Culture and has lodged an appeal.

The case is likely to go before a Czech administrative court and eventually the European Court of Justice but it could be three years before any judgment is made.

Intergram managing director Martin Maran denies it’s in conflict with Agicoa, saying that Agicoa pulled out of negotiations for joint representation of Czech and international producers.

“We are still saving reserves for Agicoa’s producers in our accounts in the agreed amount,” Maran says, calling Agicoa’s expectations of remuneration from cable retransmission in the Czech Republic “unrealistic.”

A similar dispute in Hungary — where Agicoa is in discussions with collection agency, Filmjus, and its related company, Prodjus — has not gone unnoticed by the European Commission in Brussels.

Three years ago it initiated EU treaty infringement actions against both countries.

But malpractice continues to spread, Agicoa says.

In Slovenia, where Agicoa has been working for 10 years, collecting $1.8 million for producers in 2008, Agicoa alleges that government intellectual property agency, Sipo, said only local collection agency Aipa can be licensed.

Sipo denies this, saying it has received three requests for licenses, including one from Agicoa. A decision may be subject to review later this year when the EU Cable and Satellite directive becomes operative in Slovenia, according to Sipo’s head of legal affairs Mojca Pecar.

“It is up to national legislation whether a collecting society needs authorization from anybody. It has not yet been decided whether Agicoa should leave the market or whether there is no authority for them to enter the market,” Pecar says.

She adds Agicoa is still working in Slovenia through an arrangement with a local company.

“We are still doing business in Slovenia but are under threat of being forced out,” Koszuszeck says. “When you look at the environment in which this has happened it can only be interpreted as a political situation, protecting a local organization.”

In Bulgaria a general licensing agreement has allowed Agicoa to collect royalties since the late 1990s.

That is now under threat following a decision by the Bulgarian competition authority alleging that it is in breach of local anti-monopoly laws. Agicoa appealed all the way to the Bulgarian supreme court, which upheld the decision.

“Calling the general licensing agreement a monopoly is a joke if you keep in mind that it only affects the retransmission of foreign shows, which represent less than 1% of the cable retransmission market in Bulgaria,” Koszuszeck says.

The licensing agreement had been collecting around $700,000 a year, although there was potential for increasing that to as much as $3.9 million, he adds.

Bulgaria’s intellectual property market now risks slipping back into its pre-EU days when piracy of licensed programming was rife, Koszuszeck says.

Agicoa continues to battle for its clients. But Duggan warns that local agencies’ poor record on collection and attempts to keep Agicoa out of the market pose a serious risk to a key revenue stream for TV producers at a critical time for the industry.

“Copyright needs to be paid for,” he says, “because that is an essential part of the business model for production.”

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