Europe’s Unified Digital Market: Final Judgement Set in Motion

E.U. institutions begin to debate a definitive decision on a key piece of digital regulation as industry concerns persist

BERLIN — They’re into the final straights. After nearly three years of often bitter confrontation between Europe’s industry and the European Commission, the E.U.’s executive arm, regarding the E.C.’s push for a unified digital market in Europe, the final countdown has formerly begun.

Europe’s film and TV industry – and Hollywood’s, which backs its European counterparts – is, moreover, still not certain of final victory.

The cause of contention remains the Commission’s proposal, made in September 2016, to amplify the so-called country of origin principle to online content. This would allow E.U. broadcasters to buy rights to movies and TV shows for pan-Europe transmission on their online catch-up and simulcast services, if these TV networks have cleared the rights in the country they broadcast in.

For the Commission, this would allow citizens in one E.U. country to access more movies and TV shows from another.

Allowing consumers to view films and TV programs on far lower-priced catch-up services from other countries before their theatrical or TV first-runs in their own countries, the proposal has, however, horrified Europe’s industry and Hollywood.

It threatens territory-by-territory licensing, the backbone of the Europe and indeed Hollywood’s business in Europe.

“The European Commission’s original project for Digital Single Market is “hated throughout the industry, every single part of it,” said Constantin’s Martin Moszkowicz.

He added: “It’s one of the few things where everyone is united. Studios, independent’s producers, artists –  nobody understands it.”

On Dec. 12, Europe’s industry – and Hollywood – appeared to have won. The European Parliament voted to reject the European Commission’s country of origin (aka SatCab) proposal, apart from for news and current affairs.

But the industry hardly had time to celebrate. On Dec. 15, the E.U. Council of Ministers, made up of E.U. member state representatives, proposed a compromise text that extended  the council of origin principle to content “fully financed and controlled” by broadcasters.

Yet again, the industry is concerned. In Europe, pre-sales contracts with public broadcasters are often vital for getting a film or TV show made. That puts producers in a weak position when negotiating with these networks.

“The Council’s approach would inadvertently invite public broadcasters to ignore up-front creative and financial investments by producers in developing projects, formats and content,” said Benoit Ginisty, at Brussels-based Intl. Federation of Film Producers Associations (FIAPF).

Instead, he argued, state TV networks would bargain hard for “all-rights-with-the-broadcaster” deals and apply country of-origin licensing.

“This would leave producers unable to recoup the development costs which they seek to offset by exploiting rights retained by themselves.”

On Feb. 20, the E.U.’s Commission, Parliament and Council of Ministers initiated so-called trilogue negotiations to arrive at a final ruling on country of origin. A second round of talks will take place this April.

After the Council of Ministers compromise proposal, the industry is worried that these three-way talks will lead to further compromise.

FIAPF, the worldwide producers’ association umbrella org, and the Hollywood’s Motion Picture Assn. EMEA, were among 21 European industry bodies joined in a Creativity Works! coalition which on Feb. 8 thanked the Council and Parliament for having moved away from “the ill-conceived proposal of the Commission.”

But, the coalition argued, “To restrict country of origin to news and current affairs limits the erosion of territorial exclusivity.”

There’s also concern that the Digital Single Market issue has become a game of whack-a-mole: When the industry pushes back on one front, another initiative pops up.

For Moszkowicz, “I’m hesitant to concede or say that the industry is winning. In the past we always thought we were winning and then DSM came back through another door.”

Nobody doubts that the stakes are huge. For Ginisty, “the trilogue negotiations will decide whether European institutions make the choice to secure a sustainable and dynamic independent audiovisual production sector in Europe with the best conditions for creativity and cultural diversity in European content.”

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