Netflix, YouTube face curbs in new EU video law, broadcasters get relief

18 May 2016. By Magnus Franklin.

Online video platforms such as Netflix would face European content quotas and child-protection measures under audiovisual legislation drawn up in Brussels.

But television broadcasters would find their regulatory burden lightened in an effort to level the playing field between the two forms of content distribution, according to the draft European Commission proposals seen by MLex.

Processed food and drink makers can also expect more wide-ranging curbs on advertising for salty, fatty and sugary products under the new rules, which the commission is set to adopt next week.

The new legislation would update the EU’s 2010 Audiovisual Media Services Directive as part of a drive to build a borderless market for digital goods and services. The current rules limit television advertising, seek to protect minors and promote European content.

EU digital-market chief Andrus Ansip lifted a lid on the revamp at the Cannes film festival over the weekend, telling French journalists that the proposals would require streaming services such as Netflix to reserve 20 percent of their catalogs for European-made content. Similar requirements are already in place for broadcasters.

But the draft legislation obtained by MLex reveals the full extent of the changes, which also include a significant loosening of today’s advertising constraints on broadcasters.

On-demand video providers — which include pay-TV companies, cable operators and satellite broadcasters offering on-demand content — would have to set aside 20 percent of their cataloged offerings for European films and television programming.

The draft law would also allow national governments to require on-demand services to contribute to “film funds” to finance European content, reflecting systems in countries including France of levying taxes on movies and TV channels to support domestic movie production. This contribution could hit operators targeting audiences in a given country as well as operators established there.

On-demand operators would also be required to ensure that minors aren’t exposed to inappropriate content. For traditional television broadcasters, this has meant not airing adult content until after a “watershed” time each evening and warning viewers before screening a show containing violence, foul language or nudity. This rule would now extend to on-demand providers.

A version of this rule would also apply to “video-sharing platforms” such as YouTube and Facebook. These operators would have to install more robust systems for protecting minors and blocking videos that incite hatred. But they wouldn’t be expected to monitor all of the content uploaded on their systems, the draft says.

At the same time, the updated law reinforces the “country of origin” principle that now allows broadcasters to air content across the EU but subjects them only to the rules laid down in their home state.

Traditional TV broadcasters would meanwhile have their regulatory load lightened. Under the current audiovisual directive, broadcasters can carry a maximum of 20 percent of advertising an hour. Under the new rules, the 20 percent limit would be counted per day, during the core viewing hours of 7:00 a.m. to 11:00 p.m.

Broadcasters would also be allowed to interrupt news programs and made-for-TV films more often for advertising breaks. They could use those breaks to feature “isolated spots” for a single promotion, rather than a series of ads.

Advertisers could see their profit margins dented under the new rules. Companies selling foods and drinks high in fat, salt, sugar and alcohol would face EU-wide “codes of conduct” to replace the current patchwork of national rules, which allows these advertisers to shop around the bloc for the most relaxed rules.

The proposals also seek to strengthen the regulatory system by introducing a statutory requirement that media watchdogs must be independent. They would also give an EU umbrella group of these regulators a more formalized role.

The draft update is set to be published on May 25. The legal form of the law remains a “directive,” meaning the bloc’s 28 states will be able to adapt the rules to their national circumstances.