Opinion on the proposal for a European Parliament and Council Directive amending Council Directive 89/522/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities ()

(95/C 301/11)

On 13 September 1995 the Council decided to consult the Economic and Social Committee, under Article 100a of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing the Committee's work on the subject, adopted its Opinion on 12 July 1995. The Rapporteur was Mr Ramaekers.

At its 328th Plenary Session (meeting of 13 September 1995), the Economic and Social Committee adopted the following Opinion by a majority vote with 12 votes against and 4 abstentions.

1. Introduction

1.1. The Committee welcomes the presentation by the Commission of a draft Directive amending Directive 89/522/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, commonly known as the 'television without frontiers Directive'.

1.2. The Committee supports the Commission's concern to improve the rules in this area, reflecting the need which it feels to help create a clear and stable regulatory framework in preparation for the advent of the Information Society.

More specifically, the Committee would highlight the declaration in the draft Directive's preamble of the importance which the Commission attaches to a regulatory framework applying to the content of audiovisual services, whatever their mode of transmission.

1.3. The Committee would also highlight the need expressed in the preamble to step up measures to promote European works in order to further the development of the audiovisual sector, as endorsed by the Green Paper on 'Strategy options to strengthen the European programme industry in the context of the audiovisual policy of the European Union'.

1.4. The Committee stresses the need to promote European culture of a high quality.

The aim must be to produce works which the public wants to see. It is necessary, however, to maintain a balance between entertainment and culture and to remember that the three basic missions of the media are: education, information and culture. Nor would the Committee wish the creative and innovative potential of the new media to be overlooked.

1.5. The Committee stresses the need to take account of economic and cultural realities and hence to introduce a progressive system for achieving the targets for the proportion of European works. The Committee also wonders whether financial aid might not be possible through a fund, which could form part of the European Investment Fund, or tax concessions when a work is completed.

In this connection the Committee notes that major European production companies consider that the European multimedia industry could become one of the main providers of jobs over the next millennium if measures were taken to eliminate the structural weaknesses which are undermining its competitiveness.

1.6. The Committee welcomes the Commission's intention of laying down a number of minimum standards regulating the form and content of broadcasts provided by new services such as teleshopping.

1.7. The Committee welcomes the Commission's stated intention of clarifying the rules for the protection of the physical, mental and moral development of minors.

2. General comments

2.1. In its Additional Opinion on the Proposal for a Council Directive on the coordination of certain provisions laid down by law, regulation or administrative action in the Member States concerning the pursuit of broadcasting activities (), the Committee regretted that 'the future Directive will cover only television broadcasting, to the exclusion of sound broadcasting'. The Committee is aware of the need to introduce a regulatory framework for the audiovisual sector as rapidly as possible in the light of new technologies and the Information Society; it regrets, however, that similar specific rules have not been laid down for radio.

2.2. In its Opinion on broadcasting (), the Committee stressed 'the need to encourage the promotion of European television programmes ... it feels that European cultural diversity with its manifold characteristics is part of Europe's rich heritage. In the worldwide development of audiovisual media Europe has an exceptional variety of programmes to offer'.

2.3. The Committee would point out that its previous Opinions influenced the content of the Council Directive of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities. Without wishing to list in full its contributions, the Committee welcomes the inclusion in the Directive, in response to its recommendation, of a right of reply (Chapter VI, Article 23).

2.4. The Committee welcomes the Commission's concern to make clear that the establishment criterion is the principal criterion determining the jurisdiction of a particular Member State, without prejudice to the principle of freedom of movement.

3. Specific comments

Article 1

3.1. The Committee welcomes the retention of the definitions of 'surreptitious advertising' and 'sponsorship' and the addition of a definition of 'teleshopping'. A definition of what the Commission means by teleshopping 'programme' and 'spot', and the rules to apply in each case, would however be useful. A definition should also be provided of the terms 'channel' and 'television broadcasting organization' which could lead to confusion in the draft Directive, in particular in Article 4(2) and (5). In this connection the Committee has reservations about the definition proposed for 'special-interest channel'. As currently proposed, excluding the time for teleshopping (3 hours per day) and advertising (15% per day), there are many general-interest channels which could claim the status of 'special-interest channel' with the concomitant differences in production or broadcasting quotas. The Committee also has reservations about the concept of programmes in the context of 'organizations broadcasting a range of special-interest channels'. Is it the whole range or one of its parts which constitutes a programme or a channel?

Article 2

3.1.1. The Commission argues, persuasively, that the criteria to establish the national jurisdiction which applies to a broadcasting organization need to be unambiguous and enforceable. The Committee agrees with the Commission proposal that, where practicable, in the first instance, the country of establishment should be used. This condition is to be further refined, to determine jurisdiction, by identifying the location of the main economic activities of the broadcaster.

3.1.2. Where this is impossible, usually because the organization is established outside the European Union, the secondary criteria suggested include (1) the place where programming policy is made or (2) the place where the programme is produced. The Committee suggests that, in the secondary criteria, there should be added a reference to the place where day-to-day editorial decisions are made.

3.1.3. Despite this outline of 'editorial' criteria, the proposed amended wording of Article 2 links the question of jurisdiction to the location in which the broadcaster is established or, failing that, is either allocated a frequency by the Member State, or uses satellite capacity granted by a Member State, or (if neither of these applies) uses a satellite up-link in that Member State. The Committee is concerned that this wording, relying on technical specifications, does not reflect the arguments adduced by the Commission () and summarized above in point 3.1.1. The Committee notes that the editorial criteria are set out in a recital to the Directive but not in the Article. The Commission is invited to reconsider the proposed amendment to broaden its scope and resolve any possible ambiguity between the technical and editorial criteria.

Article 2a

3.2. The Committee has doubts about whether such a measure will be effective and reiterates the comments made in its aforementioned Opinion on broadcasting () in which it expressed concern that the Directive did not tackle the problem of advertising emanating from one Member State and directed specifically at another Member State. However, while the Committee considers that the restrictions and suspensions provided for in the Directive are necessary to deal with infringements, it emphasizes the need for caution in their use, so as not to undermine the principle of the freedom to provide services. The Committee thinks that consideration should be given to setting up a European regulatory body which would help the Commission to exercise its powers, in the field of economic and financial monitoring for instance. It would be necessary to establish the scope of this body's responsibilities in general.

Article 3

3.3. The Committee notes that the Member States are free to lay down stricter rules than those provided for in the Directive, particularly with regard to language policy, safeguarding pluralism in the information industry and the media, and taking into account television's public-interest role as a provider of information, education, culture and entertainment.

3.4. The Committee stresses that this is not an exhaustive list and other matters might be subject to tighter rules.

3.5. The Committee fears that such provisions could lead to imbalance between the Member States or even within individual Member States.

3.6. Under these circumstances the Committee thinks that it might be necessary to consider applying different sanctions according to whether the broadcaster operates on a national or an international scale. As different sanctions could then be applied as a result of infringements of similar rules, the Committee stresses the need to set up a European regulatory body as referred to above to harmonize the application of any sanctions system. In its Opinion of 22 September 1993 () on the Commission Green Paper on pluralism and media concentration in the internal market and in its Opinion on the summary of the ensuing consultation process (Communication from the Commission to the Council and the European Parliament: Follow-up to the consultation process relating to the Green Paper on pluralism and media concentration in the internal market - An assessment of the need for Community action), the Committee stressed the need to adopt rules on national and international media groups which occupy monopoly-type dominance of broad sectors in certain Member States; EC Directives could not concentrate exclusively on the removal of barriers to market access. On the contrary, Community legislation had to set precise limits to media-specific concentration.

Chapter III - Quotas

3.7. On the matter of quotas, the Committee would refer to its previous Opinions on the pursuit of broadcasting activities. The Committee signalled its approval in principle of the draft Directive insofar as its purpose was to encourage the production of Community works in order to increase employment opportunities and promote European creativity; however, the Committee had doubts about the possibilities of achieving the declared aims and about the planned monitoring system. It stressed that the introduction of a quota system should take account of the Member States' specific circumstances and ensure that the system remained flexible and adaptable.

3.8. The Committee notes the deletion of the phrase 'where practicable' with regard to the application of the quotas, which makes the arrangements strictly mandatory, and the 10-year time limit.

3.9. The Committee has reservations about Article 3(2). It could not accept the abolition of Article 4 after 10 years without further assessment.

The Committee wonders whether the quota system is effective in supporting the broadcasting of European works. For this reason it reiterates its standpoint and considers that an assessment of this measure since its entry into force should clarify whether it has achieved its objective or not. Retention of the quota system is justified only if it can be demonstrated that it is now working effectively. Hence it cannot be allowed to expire arbitrarily; on the contrary, the system should be subject to continuous assessment, enabling the measures to be adjusted in line with the actual situation on the market for the consumption, distribution and production of audiovisual programmes.

3.10. The Committee notes the changes made to Directive 89/552/EEC and wonders whether the new measures are appropriate.

In particular it notes the freedom allowed to special-interest channels, programming at least 80% drama or cinematographic works, to choose between the options of complying with the broadcasting quotas or allocating 25% of their programming budget to European works.

This measure meets the call for flexibility in the application of the quota measures; but it could lead to a distortion of competition on the Information Society's audiovisual market, in that general-interest channels would have to adhere to stricter criteria than special-interest channels or broadcasters providing a range of special-interest channels.

3.11. The Committee deplores this difference in treatment and would like to see the measures harmonized. It would perhaps be advisable to allow general-interest channels the possibility of complying with the quota rule by combining the two approaches, i.e. both programmes broadcast and financial investment in production.

This flexibility must not, however, allow general-interest channel operators to infringe the spirit of the Directive or circumvent its purpose. The European regulatory body proposed in point 3.2 should be given specific responsibility in this area.

3.12. Rather than provide for separate systems which are complicated to assess, why not propose the mandatory payment of a fixed amount into a support fund for audiovisual production and give channels which so wish the option of complying with a broadcasting quota system rather than paying into this fund?

This proposal would help to clarify the situation by laying down a clear-cut obligation. In this way special-interest channels, such as Eurosport, could be covered by the rules; under the system currently proposed specific cases of this type cannot be covered.

3.13. In this event the two options would have to be progressive: a broadcasting quota which becomes more exacting over time or financial participation in the fund which also increases over time.

The advantages of this proposed progressive system would be that its effectiveness could be assessed before each new stage began and it would allow for the gradual impact of the Media II programme. In this connection the Committee would reiterate the questions raised in its Opinion on audiovisual policy: Stimulating dynamic growth in the European programme industry (Media II 1996-2000) ().

3.14. The Committee also calls to mind the alternative proposals of major European production companies, namely reinforcement of copyright, tax concessions and in particular financial aid through a fund, possibly forming part of the European Investment Fund.

3.15. The Committee would highlight the changing face of the audiovisual landscape, particularly in the context of the Information Society.

Here it would stress that the idea of content will be crucial in defining the new services to be supplied down the 'information highways' or by satellite.

With the liberalization of the whole telecommunications sector planned for 1 January 1998 and the emergence of new services, the Committee considers that retaining the quota system for an arbitrary period of 10 years could raise many problems.

In this connection it would point out that new services, such as video on demand, are not covered by the Directive and still require consideration in a Green Paper.

3.16. The Committee thinks that the entire quota problem should be the subject of a more general review of audiovisual services in the Information Society, including the question of media concentration. With this in mind it considers that any other measures capable of supporting the production or broadcasting of audiovisual material representative of European culture and of creating jobs in this sector should be covered by the regulatory framework proposed in the Commission action plan: Towards an Information Society in Europe.

3.17. Similarly, with a view to creating and safeguarding jobs, it should be stated that works resulting from co-production agreements with third countries would be European not only if the Community co-producers supply a majority share of the cost and the production is not controlled by one or more producers established outside the Member States, but also if a substantial and majority share of the production involves workers established in the Member States.

3.18. The Committee would focus on a series of basic problems concerning the quotas which make them difficult to apply in the form laid down in the draft Directive.

3.19. The definition of 'special-interest channel' will not always make it possible to determine precisely which channels come under this category.

3.20. The proposed quota arrangements for 'special-interest channels' are particularly advantageous compared with general-interest channels.

In fact the allocation of 25% of the programming budget only takes account of the acquisition of broadcasting rights.

As it would seem extremely difficult to determine the programming budget precisely, it would perhaps be more effective to refer to turnover.

3.21. The Committee notes a contradiction between the retention of studio productions in the concept of a European work and the objective of the proposed measures, which is to promote and support mainly the cinematographic side of the audiovisual industry, 'stock programmes' rather than 'flow programmes'.

3.22. Is there not also the risk that application of the draft Directive as proposed by the Commission could force the broadcasting organizations of small Member States to gravitate towards flow rather than stock programmes?

Article 7

3.23. The Committee notes the time limits proposed for radio and television broadcasting of cinematographic works after their first showing in cinemas. The Committee welcomes the primacy accorded to contractual law, but wonders whether the proposed time limits do not run counter to the distribution policy encouraged by the Commission. The limit of six months for pay-per-view services could lead to direct competition between pay television services and cinemas, since a film's life is far from over after six months. This system could mean that cinemas have to obtain a return on films very rapidly.

3.24. This system could intensify the current trend to show the same film simultaneously in an increasing number of cinemas; some multiplexes already show the same film simultaneously in several auditoriums. Such a policy obliges the distribution sector to look for a quick profit on films. The pressure of time limits could reinforce a two-speed system in film distribution, making it increasingly difficult for low and medium budget films to gain a showing.

In particular the Committee is concerned that it is the release date in any one Member State which is taken as a reference for all Member States. This measure could have two different effects: either that highlighted by the Committee above, or to encourage efficient simultaneous distribution in all the Member States.

The Committee urges the Commission to examine this situation carefully so as to avoid the risks of an unhealthy uniformity in creation and distribution and to ensure that the end-effect is indeed efficient distribution.

3.25. The proposed hierarchy of time limits suggests that most of the new services offered to television viewers will be pay services on a graduated scale. Thus pay-per-view will be more expensive than pay television, with the general-interest and public service channels at the bottom of the scale. The Committee therefore has reservations about the promised development of these new pay services and the implications for the public.

3.26. Consequently the Committee would like to see these services studied from the angle of cost, profitability, demand, investment required, and impact on cinema distribution and on the general-interest and public service channels.

Chapter IV - Television advertising, sponsorship and teleshopping

3.27. The Committee welcomes the clarification of the concept of teleshopping in the rules concerning its relationship to television advertising. In view of the complexity of this matter, the Committee reserves the right to issue an Opinion later when the Green Paper on teleshopping is presented.

3.28. The Committee notes the amendment to the rules on advertising breaks in Article 11(3).

The proposal excludes films made for television from the break rules for feature films.

3.29. Henceforward it will be possible to interrupt TV-films for advertising more frequently than feature films. In the Committee's view this measure should be examined carefully as TV-films may be regarded as complete audiovisual works and equivalent to feature films in terms of length and characteristics.

The introduction of more frequent breaks could ultimately lead to changes in the pace and scenario structure of TV-films. In the past, however, the Committee always considered that the rules on publicity breaks should not be overly strict as this could lead to unfair competition favouring the most powerful advertisers. Hence the Committee's concern that the impact of this measure be assessed before it is implemented.

3.30. The Committee welcomes the retention of the ethical rules on advertising and their extension to teleshopping spots, especially the rules designed to protect minors.

3.31. The Committee regrets that the Commission has not taken into account its earlier recommendations, in particular that the ban on advertising breaks in certain broadcasts, such as religious programmes, should be extended to philosophical and political broadcasts.

3.32. The Committee notes that the Commission does not intend to retain the ban on sponsorship of medicinal products and medical treatment.

The Committee realizes that the aim of this measure is to enable firms whose principal activity is the manufacture or sale of medicinal products to sponsor certain broadcasts. This matter should, however, be looked at very carefully; while sponsorship of the type envisaged is not basically a problem, the viewer must not associate it with a particular medicinal product. In this case the proposed measure would be unacceptable in that it would encourage self-medication.

Article 18

3.33. The Committee notes the addition of the word 'clock' before 'hour' to define the reference period more precisely. It has reservations about this amendment and fears that it might lead to particularly high concentrations of advertising spots at certain times, even exceeding 20% if the former hour period arrangements were applied. In the interests of consumer protection therefore, the Committee thinks that the impact of this measure on programming should be assessed so as to avoid an excessive concentration of advertising at peak viewing times.

Article 18b

3.34. The Committee notes that the time allowed for teleshopping broadcasts in any 24-hour period has been extended from one to three hours.

It notes that this measure is not accompanied by more detailed rules, additional to those laid down by the draft Directive on contracts negotiated at a distance (distance selling).

At the very least, provision should be made for measures concerning the use of brand names.

For consumers the brand name of a product may be essential information, but this is not covered by the Directive on distance selling. The Committee therefore fears that products or services offered in teleshopping broadcasts, without mention of a brand name, may be the subject of advertising spots on the same channel outside teleshopping broadcasts.

3.35. The Committee notes that the only provision relating to teleshopping channels in the proposal stipulates that they are not subject to any 'scheduling restrictions as regards time-limits'. Teleshopping, however, like other broadcasts, is covered by the Directive's more general provisions concerning inter alia ethical standards and the protection of minors.

3.36. The Committee is seriously concerned over the rules applicable to teleshopping channels, all the more so as the Commission predicts that teleshoppping will be the service to expand most rapidly among the general public. Measures have been taken to remedy some of these problems, but it is too early to assess their effectiveness (e.g. the Directives on distance shopping, unfair clauses in consumer contracts and product liability). For this reason the Committee reserves the right to examine this issue at a later date.

3.37. In the Committee's view, however, it is of fundamental importance at least to develop a set of rules governing the relationship between, on the one hand, advertising and exclusive teleshopping services and, on the other, advertising and products or services offered in teleshopping broadcasts. By the same token the relationship between advertising and teleshopping spots must be clarified.

3.38. The Committee also wonders whether teleshopping services should be regarded as special-interest channels and to what extent or in what form they should help to maintain and develop the European audiovisual industry?

3.39. In the Committee's opinion the problems with teleshopping mainly concern distance selling and the rules governing it. However, in view of the audiovisual nature of this sales technique and its inclusion in programme schedules, the Committee considers that teleshopping must also observe a number of audiovisual rules.

3.40.

Cross-border television broadcasting

3.40.1. One of the unresolved problems affecting some citizens of the European Union and the providers of television services in border regions is the conflict between the demand by some people in border regions to be able to receive, using terrestrial broadcasting techniques, broadcasts from a neighbouring country and the licensing regulations which protect the commercial interests of a local broadcaster and, as a result, prevent direct cross-border transmissions.

3.40.2. Cable television and satellite channels are changing this debate.

3.40.3. The Committee hopes that, at an early opportunity, the Commission will bring forward proposals which would extend the 'television without frontiers' Directive to facilitate this type of cross-border transmission, possibly with suitable compensatory arrangements between broadcasting organizations.

4. Conclusions

4.1. The Committee welcomes the Commission's concern to submit a draft Directive aimed at harmonizing and coordinating certain legal and administrative provisions in the Member States relating to the pursuit of television broadcasting activities.

4.2. The Committee wonders, however, whether the new quota measures are appropriate.

It would like to see a more flexible and progressive system dovetailing with the gradual impact of the Media II programme. The Committee would, moreover, refer to its Opinion CES 526/95 concerning the questions raised as to the effectiveness of the Media II programme.

The Committee therefore proposes that the Directive leave it up to the broadcasting organizations to choose between meeting either broadcasting or investment quotas, irrespective of whether they be a general- or special-interest channel.

The Committee also proposes that these quotas - of whichever type - be progressive and that intermediary stages be fixed after which the effectiveness of the measures would be assessed before moving on to the next stage. For instance, the objective would have to be met after two or three two-year stages.

4.3. The Committee would highlight the cultural aspect of this issue and would like to see the proposed measures help to upgrade the quality of European audiovisual production.

In this respect the Committee considers that culture and quality will not be achieved purely by quotas; for this reason it puts forward alternatives, although it realizes that quotas may also have a beneficial effect on European production provided that they are progressive.

4.4. Having stressed the need to take account of economic and cultural realities and to introduce a progressive system for achieving the targets for the proportion of European works, the Committee wonders whether consideration might not be given to financial assistance measures through a fund, possibly as part of the European Investment Fund.

In this context, the Committee would refer to the proposals put forward by the European multimedia industries, which could be major providers of jobs in the third millennium.

4.5. The Committee also stresses the importance of preparing a stable and clear regulatory framework in preparation for the Information Society. This comment applies equally to regulation of media concentration.

In this connection the Committee awaits the forthcoming Green Papers on new services and reserves the right to take up the matter again then.

The time is right to consider setting up a European regulatory body, the scope of whose powers in general would have to be established.

4.6. The Committee notes the Commission's concern to tackle the specific issue of teleshopping.

While the Committee regards this matter as falling basically under the heading of distance selling, it also thinks that this sales technique must, by its very nature, respect a number of rules in the audiovisual sector.

Thus the Committee also reserves the right to return at a later date to this specific question in the light of the various sets of rules governing it.

Done at Brussels, 13 September 1995.

The President

of the Economic and Social Committee

Carlos FERRER

() OJ No C 185, 19. 7. 1995, p. 4.

() OJ No C 159, 26. 6. 1989.

() OJ No C 232, 31. 8. 1987.

() Par. 2.2.2 on page 30 of the English text, COM(95) 86.

() OJ No C 232, 31. 8. 1987.

() OJ No C 304, 10. 11. 1993.

() OJ No C 256, 2. 10. 1995.

APPENDIX to the Opinion of the Economic and Social Committee

The following amendment, which received at least one quarter of the votes cast, was defeated in the debate:

Point 1.5, second sentence

Delete: 'The Committee also wonders whether financial aid might not be possible through a fund, which could form part of the European Investment Fund, or tax concessions when a work is completed.'

Reasons

In this paragraph the Section supports the creation of a fund to offer financial assistance for the production of European programmes. There is no proposal, or discussion of such a proposal, in the draft Directive. The need for such a fund is not established in the Opinion and, if the quota system is introduced (either as proposed, or as outlined in a further amendment), it will give its own impetus to European productions. Any proposal for financial aid to the television industry should be the subject of a separate submission.

Result of vote

For: 25, against: 60, abstentions: 6.