Proposal for a EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE amending Council Directive 89/552/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
Date: 1995-05-31
Institutions: European Commission
Subjects: administrative cooperation, approximation of laws, audiovisual communications policy, broadcasting, television

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

Brussels,  31 05.1995 
COM(95)  86  final 

95/0074  (COD) 

REPORT  ON  APPLICATION  OF  DIRECTIVE  89/552/EEC 

and 

Proposal  for  a 
EUROPEAN  PARLIAMENT  AND  COUNCIL  DIRECTIVE 

amending  Council  Directive  89/552/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 

(presented  by  the  Commission) 

PART A 

Contents 

Introduction 
1. 
2. 
3. 
4. 
5. 

Institutional  and political  background 
The  Directive and the Green Paper  on the programme industry 
The consultation process 
The  Directive and the Information  Society 
Completing the preparations for  amendment 

PARTB 

Report  on the application of Directive 89/552/EEC 

1. 

2. 

Subject  of the report 
Provisions of the  1989 Directive 
- law applicable to television broadcasts 
- promoting the production and distribution of European works 
- televised broadcasts of cinematographic works 
- television advertising and sponsorship 
- protection of minors 
- right of reply 

Economic considerations 
-  expansion in services 
- growth in the advertising market 
- generally positive outcome  for  European works 

Application of the Directive 

3. 
3.1  General problems 
3.1.1  Applicable law 

Establishment as the decisive criterion 

3.1.2  A fundamental  ambiguity 

Specific  problems 

3.2 
3.2.1  Article 2(2) - Freedom of reception 
3.2.2  Chapter  III - Promoting the distribution and production of television 

programmes 
-  Monitoring Articles 4 and 5 
-  European works 
-  Cinematographic  works 

3.2.3  Chapter  IV - Television advertising and sponsorship 

- identification  of sponsor's name or logo 
-  advertising spots broadcast in a given one-hour period 
- programmed duration of audiovisual works for  the purpose of 

advertising breaks 

-  status and calculation of the maximum permissible volume of 

'telepromotion' 

5 
6 
7 
7 
8 

10 
11 
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11 
11 
12 
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13 
13 
14 

15 
15 
15 
16 
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19 

.19 
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21 
21 
21 
22 
22 

22 

22 

-  home  shopping 

3.2.4  Chapter  V - Protection  of minors 
3.2.5  Chapter  VI  -  Right  of reply 

PARTC 

Explanatory  memorandum  and  examination  of  the  provisions  amended 

Proposal  for  a  European  Parliament  and  Council  Directive  amending 
Directive  89/552/EEC 

1. 

2. 

2.1 

2.2 

Nature  and thrust  of the proposed  revision 

The  provisions  amended 

Chapter  I -  Definitions 
Article  1(b)  and  (e) 

Chapter  II  - General  provisions 
Article  2 

2.2.1  Establishment  as the  criterion laid  down under  the  Directive 

Background 

determining jurisdiction 
I. 
II.  Wording 
Context 
III. 
Purpose  and practical  considerations 
IV. 
2.2.2  Clarification  of the  "estabhshment" criterion  as applied  to 

audiovisual  services 

2.2.3  Article  2a 
2.2.4  Article  3 

Promoting  the  distribution  and production  of  programmes 

2.3 
2.3.1  Promotion  of  European  works 

Article  4 
Article  5 

2.3.2  Detailed  examination  of  the proposed  amendments 

a)  Special  rules  for  channels  specializing  in  drama  and  documentaries 
b)  The gradual  approach  for  new  channels 

2.3.3  Article  6 
2.3.4  Article  7 
2.3.5  Article  8 

Chapter  IV  - Television  advertising,  sponsorship  and  home  shopping 

2.4 
2.4.1  Article  11 
2.4.2  Articles  12 to  16 
2.4.3  Article  17 
2.4.4  Article  18 
2.4.5  Article  18a 

22 
23 
23 

25 

26 

26 
26 

27 
27 

27 
27 
28 
28 
29 

. 30 
31 
33 

33 
33 
35 
35 
36 
. . ..  36 
37 
38 
38 
39 

40 
40 
40 
40 
41 
41 

2.4.6  Article  18b 
2.4.7  Article  19 
2.4.8  Article  20 
2.4.9  Article  21 

Chapter  V -  Protection  of minors  and  public  morality  43 

2.5 
2.5.1  Article122 
2.5.2  Article  22a  and b  .  . 

Chapter  VI  -  Final  provisions 

2.6 
2.6.1  Article  25 
2.6.2  Article  26 

3. 
3.1 
3.2 
3.3 

International  aspects 
The  European  Convention  on Transfrontier  Television 
Europe Agreements 
Towards  a world broadcasting  convention 

42 
42 
42 
42 

42 
43 
43 

43 
43 
43 

43 
43 
. 45 
45 

4. 

Text  of the proposal  for  a Directive  amending  Directive  89/552/EEC46 

. ..  46 

REPORT ON APPLICATION AND EXPLANATORY  MEMORANDUM 

PART A: INTRODUCTION 

1 

Institutional and political  background 

frontiers"  Directive,  89/552/EEC,1  was  adopted  on 
The  "Television  without 
3 October  1989  after  several  years  of  debate  within  the  Community  institutions.2 The 
intensity  of the discussions reflected  the place which television already  occupied  in our 
societies, at the heart of the major economic, industrial, cultural, social and technological 
challenges facing  us. 

The Community  institutions' interest has by no means diminished  since the adoption of 
the  Directive.  Several  examples  serve  to  illustrate  this  point:  the  Conclusions  of  the 
Strasbourg European Council in December 1989 and the Communication on Audiovisual 
Policy adopted  in February  19903 in the wake of the Paris Audiovisual Conference, the 
adoption of the MEDIA Programme,4 the Green Paper on concentration and pluralism in 
the media adopted  by the Commission in December  1992,5 the  adoption of the Action 
Plan for  advanced television services in  1993,6 and the attention devoted to audiovisual 
matters in the GATT negotiations concluded on  15 December 1993. 

1994  has  seen  a  new  burst  of  interest  in  and  analysis  of  trends  in  a  sector  whose 
distinguishing features include its capacity for rapid development, particularly in response 
to technological change. 

The Commission published  its first report on the application  of Articles 4 and  5 of the 
Directive  in March this year, as part of its regular  monitoring  function,7  and then went 
on to launch a much more ambitious study of the future of the programme industry, with 
the publication  of  a Green  Paper  entitled  "Strategy  options to  strengthen  the European 
programme industry in the context of the audiovisual policy of the European Union".8 The 
Green  Paper  itself  drew  on  numerous  contributions  from  professionals  in  the  field 
supplied during the preliminary  consultations, and on the Report by the Think-Tank set 

OJ No  L  298,  17.10.1989,  hereinafter  "the  Directive". 
The  Commission  had  presented  its proposal  on  30  April  1986 (COM(86)146  final,  published  in  the 
Bulletin  of  the  EC,  Supplement  5/86. 
COM(90)78  final. 
Council  Decision  of  21  December  1990  concerning  the  implementation  of  an  action  programme  to 
promote  the development  of the European  audiovisual  industry  (MEDIA)  (1991 to  1995) -  OJ No L 
380. 
Pluralism  and media concentration  in the internal market  - An assessment  of the need for  Community 
action  -  COM(92)480. 
Council Decision of 22 July  1993 on an action plan for the introduction of advanced television  services 
in  Europe  -  93/424/EEC  - OJ No  L  196 p. 48. 
Communication  from  the Commission  to the Council  and the European  Parliament  on the  application 
of  Articles  4  and  5  of  Directive  89/552/EEC  Television  without  frontiers  -  COM(94)57  final  -
03.03.94. 
COM(94)96  final. 

up  by  the  Commission  and  comprising  six  well-known  figures  in  the  field.9  The  Green 
Paper  was discussed extensively  by the relevant ministers from  the Member  States at the 
informal  Council meeting in Athens on 20 and 21 April  1994. The conclusions which the 
Presidency  drew  from  these discussions broadly  confirm  the relevance  of the analysis in 
the  Green  Paper  and  underline  the  need  for  the  continued  evolution  of  Community 
regulations, taking  as a starting  point  the  achievements  of  the  Directive. 

The European  Parliament has also continued  to show a strong  interest in the  audiovisual 
industry  throughout  1994, notably  by  adopting  the  Barzanti10  and  Hoppenstedt11  reports 
in  May.  Looking  more  specifically  at  the  legislation  in  general  and  the  Directive  in 
particular,  Parliament  sought  to  reiterate  the  importance  which  it  attributes  to  the 
Directive  by  attaching  to  the  proposal  for  a  directive  on  the  use  of  standards  for  the 
transmission of television  signals12 an amendment13 in the form  of  a recital  emphasizing 
the need to reaffirm  the role that the "Television without frontiers"  Directive  should play 
in  boosting  Europe's  audiovisual  capacity. 

2 

The  Directive  and the  Green  Paper  on the  programme  industry 

In  its chapter  on  "The rules of the game", the  Green  Paper  considers  ways  in which  the 
Community  regulatory  framework  might  contribute  more  effectively  to  promoting  the 
programme  industry.  Such  an  exercise  becomes  important  when  viewed  in  the  light  of 
Article  128(4)  of  the  Treaty,  which  requires  the  Union  to  take  cultural  aspects  into 
account  in  its  action  under  other  provisions  of  the  Treaty,  which  therefore  includes  the 
Directive.  For  although  the  Directive  includes  measures  aimed  at  promoting  the 
production  and  distribution  of  television  programmes,  and  although  attention  has  often 
focused  on this  aspect, we  should not  lose sight of the  fact  that  its original  purpose  was 
to  contribute  to  the  completion  of  the  internal  market  for  services,  the  Commission's 
White Paper on completing the internal market, published in  1986,14 having identified  the 
establishment  of  a  common  market  in broadcasting  as being  important  and  urgent. 

The  Directive  coordinates  Member  States'  provisions  in  a  number  of  areas  where 
differences  between them were such as to form  a legal  obstacle to the free  movement  of 
television broadcasts. The adoption of the Directive and the introduction of common rules 
in the areas where they were required now means that, provided a broadcaster  established 
in  a Member  State  complies with the  law  applicable  in that  state, its broadcasts may  be 
received  and  retransmitted  freely  throughout  the  Union.  The  areas  coordinated  for  this 
purpose  go  well  beyond  mere  programme  promotion  to  include  matters  such  as 
jurisdiction, television advertising and sponsorship, the protection of minors and the right 
of  reply.  The  report  on  application  which  forms  Part  B  of  this  document  therefore 

9 

10 

Report  by  the  Think-Tank  on the  audiovisual  policy  in the  European  Union. 
Report  on  problems  in  the  audiovisual  sector  since  the  "Television  without  frontiers"  Directive: 
Commission  Communication  on the application of Articles 4 and 5 of Directive 89/552/EEC  - PE 208 
575. 
Report  on  the  Communication  from  the  Commission  on  the  evaluation  of  the  MEDIA  Programme 
COM(93)462  final  -  PE  209 002. 
COM(93)556  final.  OJ No  C  341,  18.12.93,  p.  18. 
PE  180 706,  adopted  on  20.4.1994. 
COM(85)310. 

examines  the implementation of the Directive  in relation to all  the objectives  laid down 
and the legal means employed, not just in relation to the aspect of promoting programmes 
which  forms  the  subject of  the Green Paper on the programme  industry. 

3 

The consultation process 

There have been extensive consultations with all of the parties concerned on the aspects 
of  the  Directive  concerned  with  the  promotion  of  programmes  on  the  basis  of  the 
questions  raised  by  the  Green  Paper.  At  the  same  time  the  Commission  has  also 
conducted  periodic  consultations  with those  concerned  on  matters relating  to  the  other 
areas  coordinated.  It  has  invited  the  Member  States  meeting  in  the  ad hoc  group15  to 
submit written contributions on any practical  difficulties  in implementing  the Directive. 

Finally,  with  the  European  Audiovisual  Conference  which  took  place  from  30  June to 
2  July  1994, the general process of consulting the professionals in the field was extended 
to  all  the  areas  coordinated  by  the  Directive.  One  of  the  four  working  groups  at  the 
Conference  dealt  with  the  "Rules  of  the  Game".  This  group,  which  contained 
representatives of all the professional  organizations  involved,  examined the Directive in 
depth, considering the relevance of its provisions in the light of the developments in the 
sector.  Its overall  verdict  was positive, but it  identified  a number of  provisions in need 
of  updating or  clarification. 

The outcome of this consultation procedure, coupled with the Commission's own analysis 
of  trends (notably  in its Green Paper), which there is no need to re-examine  here, have 
prompted  it to propose the  partial revision  of  the  Directive  which  forms  part C of this 
document. The Commission had already announced its intention of producing a proposal 
for  a  revision  in  its  Action  Plan  on  "Europe's  Way  to  the  Information  Society"16  in 
July  1994. 

4 

The Directive  and the Information  Society 

The  first  chapter  of  the Action  Plan deals with the regulatory  and statutory  framework 
of  the  Information  Society;  paragraph  10  deals  with  the  audiovisual  industry  and,  in 
particular,  the  content  of  audiovisual  services. The  aim  is to  ensure the free movement 
of  such  services  within  the  Union,  responding  to  the  opportunities  for  growth  in  this 
sector opened up by new technologies  and taking account  of  the  specific  nature, and in 
particular the cultural and sociological impact, of audiovisual programmes, whatever their 
mode  of transmission.17 

There  is  no  need  here  to  reiterate  the  importance  of  a content  strategy  to  promote the 
development of the Information Society. Suffice  it to say that this paragraph of the Action 
Plan lays down  a principle  that emerged  clearly  from  the  consultation process, namely 
that measures relating to the  content  of  audiovisual  services  must take  account  of their 

15 

16 

17 

Group of representatives of the Member States set up by the Commission as part of the implementation 
of  the  Directive  (representatives  of  the  EFTA  states  also  take  part  in  the  group's  work  in  the 
framework  of the European Economic Area, as does the Secretariat General of the Council of Europe). 
COM(94)347  final,  19.07.1994. 
COM(94)347  final,  page 8,  point  1.10. 

cultural and sociological  impact regardless of their mode of transmission. The object  of 
such  services  is  to  deliver  images  and  sound  to  consumers;  the  way  in  which  these 
images reach their audience  is of  less importance than their content. 

The Directive helps to establish a legal environment conducive to the development of the 
Information  Society  by  making  broadcasting  services  eligible  for  the  benefits  of  the 
internal market, enabling them to move freely as long as they comply with certain ground 
rules. 

At  its joint  meeting  on  Industry  and  Telecommunications  on  28  September  1994,  the 
Council  congratulated  the  Commission  on  the  speed  with  which  it  had  presented  its 
Action  Plan.  In the  conclusions  adopted  at  this  meeting  the  Council  identified  several 
questions as being of particular urgency, including  "improvement of the competitiveness 
of the European audiovisual and information industry in the world market, including the 
necessary  development  of  a  European  programme  industry  taking  due  account  of  the 
cultural specificities and impacts on the society of these programmes".18 It is in this spirit 
that the Commission is proposing a partial revision of the "Television without frontiers" 
Directive.  The  Commission has  also  started work  on the  legislative  framework  for the 
information  society:  it  will  shortly  be  presenting  Green  Papers  on  copyright  in  the 
information  society,  the  legal  protection  of  encrypted  transmissions  and  commercial 
communication  in the  internal  market  and a communication  on  a mechanism  to  secure 
transparency  about national  regulations  and their consistency  with  the principles  of the 
internal  market,  and  it  has  begun  consultations  on  a possible  Community  initiative  on 
media ownership. A  Green Paper on the development of new broadcasting  services will 
look at questions of encouragement for new broadcasting services, promotion of cultural 
identities  and  language  diversity  and the  implications  for  the  protection  of  the  general 
interest. 

5 

Completing the preparations for amendment 

Political circles once again demonstrated their interest at the end of  1994 when the Heads 
of State and Government meeting at the Essen European Council invited the Commission 
to present its proposals in time for their next meeting, due to take place in Cannes in June 
1995. 

This  momentum  has been  kept  up  in the  first  few  months  of  1995.  The  directive  was 
discussed  by  the  ministers  responsible  for  audiovisual  matters  at  an  informal  Council 
meeting  in  Bordeaux  on  13 February.  In its  conclusions,  the  Presidency  notes  that the 
Ministers felt that the planned amendments to the Directive must be based on experience, 
the European programme industry must be promoted, a greater measure of pluralism and 
diversity  of  operators had to be introduced and technological  change  in the  information 
field  and the  emergence  of new  services had to borne in mind.  To this end, they  asked 
the Commission to submit a proposal for an amendment... in order, amongst other things, 
to  provide  operators  with  clear  and  well  defined  rules  on  Governments'  responsibility 
towards broadcasters, the development of the European programme industry, respect for 
pluralism  and protection  for the public  in relation to new  services.  They  recommended 

18  Conclusions of the Council 9561/94 (Presse  197), 28 September  1994. 

that the proposals be sent to the Council in time for it to start preliminary discussions on 
3 April. 

Furthermore,  when  Parliament  adopted  its  resolution  on  the  Commission's  work 
programme  for  199519  on  15 March, it called  on the  Commission to adopt  its proposal 
for  an amendment  to the Directive  as soon as possible  "maintaining  and improving the 
measures  on  the  application  of  the  distribution  quotas  for  European  audiovisual 
production."  : 

It is against this background that the Commission, taking account of the ongoing activities 
of  the  various  institutions  in  this  field,  entered  a  new  round  of  discussions  with  the 
industry  and,  on  22  March, presented  a proposal  for  an  amendment  to  the  "Television 
without  frontiers" Directive. 

The present Directive  is  not, however,  about to expire.  It will  remain in force  until the 
adoption of a new text, and the Commission, acting in accordance with Article  155 of the 
EC Treaty,  will  continue  to  monitor  compliance  with  it  and  do  all  that  is  necessary to 
secure  its proper application. 

19 

PE  188.641. 

PART B: REPORT ON THE APPLICATION OF DIRECTIVE 89/552/EEC 

1 

Subject  of the report 

Article 26 requires the Commission to submit to the Community institutions a report on 
the  application  of  the  Directive, accompanied  if  necessary  by  proposals  to  adapt  it to 
developments in the field of television broadcasting, within five  years from  the date of 
adoption. 

' 

In this report the Commission has concentrated on identifying  the problems encountered 
by Member States in applying the Directive, taking  into account  its general  objectives. 
The explanatory  memorandum  accompanying  the  initial  proposal  made clear  that  the 
chief  aim  of  the  Directive  was to create  a common  legal  framework  conducive  to the 
development  of  a  European  market  in  broadcasting  and  related  activities,  such  as 
television advertising and the production of audiovisual programmes, while respecting and 
encouraging the diversity and specificity of the audiovisual systems of the Member States. 
The Commission wishes to stress the importance of the combined economic and cultural 
component of this objective, which reflects the unique nature and special identity of this 
sector of activity. This was translated more specifically into a joint political determination 
to coordinate national legislation in certain areas in order to: 

the  Union's  economic  position  and  hence  ensuring 

encourage the provision and movement of audiovisual services within the Union, 
infrastructure  capable  of 
develop  a  modern  European  communications 
strengthening 
its 
competitiveness in the world market, 
promote  the  development  of  the  market  for  television  advertising  and  for 
audiovisual programmes in an economic and geographic  context that extends to 
the Community's borders, 
increase the production and distribution of European works in order to encourage 
national  cultural  industries  and  the  expression  of  the  cultural  identity  of  each 
Member State, 
offer  new outlets for the creativity of the professions and workers in the cultural 
field, 
encourage the development of broadcasting as a strategic sector of the Community 
telecommunications  industry. 

- 

The Commission has taken careful  note of the comments made by Member States at its 
request about the practical difficulties  they have experienced  in applying the Directive. 
Regular exchanges took place over the period September  1993-June 1994 in the context 
of  meetings  organized  by  the  Commission  with  national  experts  representing  the 
Member States within the ad-hoc group.20 

20  Cf.  Part A,  point  1.3  above. 

10 

Provisions of the  1989 Directive 

The Directive establishes the legal frame of reference for the free movement of television 
broadcasting  services  in  the  Union.  To  this  end  it  provides  for  the  Community 
coordination of national legislation in the following  areas: 

law applicable to television broadcasts 

The system established by the Directive, which introduces the rule of a single applicable 
law, hinges on a fundamental  and twofold  principle: 

each  broadcaster  shall  be  subject  to  the  legislation  of  a  single  Member  State, 
which is responsible for ensuring compliance (Article 2.1); 
Member  States  shall  ensure  freedom  of  reception  and  retransmission  on  their 
territory  of  broadcasts  under  the  jurisdiction  of  another  Member  State 
(Article 2.2). The provisional suspension of retransmissions is allowed only in the 
event of repeated infringement  of Article 22 (see below). This will give rise to a 
special consultation procedure involving the Commission, the transmitting  State 
and the receiving State. 

promoting the production and distribution of European works 

These measures are intended to encourage the European programme industry to adapt to 
the new audiovisual area created and require broadcasters to: 

reserve a majority proportion of their transmission time, excluding time appointed 
to  news,  sports  events,  games,  advertising  and  teletext  services,  for  European 
works (Article 4), 
reserve  10%  of  transmission  time,  or  alternatively  10%  of  the  programming 
budget, for European works created by independent producers, with an adequate 
proportion of recent works (Article 5). 

A definition  of the concept of European works is given in Article 6. 

These  rules  do  not  apply  to  local  television  broadcasts  which  do  not  form,part  of  a 
national network (Article 9). 

Televised broadcasts of cinematographic works 

The  Directive  introduces  a  mechanism  to  establish  a  system  of  media  time-scales: a 
cinematographic work may not be broadcast on television until two years after it was first 
shown  in  cinemas  (or  one  year  in the  case of  a  co-production  with  a  broadcaster). A 
different  deadline may be agreed with the rights holders (Article 7). 

11 

Television  advertising and sponsorship 

In the area of advertising  the coordinated rules deal with: 

the  general  provisions  to  ensure  that  advertising  is  recognizable  as  such 
(Article  10); 
arrangements  for  advertising breaks (Articles  11 and  18); 
rules  on  ethical  matters  and  the  protection  of  minors  (Articles  12  and  16); 
advertising for tobacco products (Article  13), medicinal products (Article  14) and 
alcohol  (Article  15). 

As  regards  sponsorship, the aim of the Directive  is to ensure on the  one  hand that it is 
recognizable  and  on  the  other  to  prevent  any  influence  being  exerted  on  programme 
content  (Article  17). 

Protection of  minors (Article  22) 

The Directive  contains a general  rule concerning programme  content: 

a general  ban on programmes likely  to be seriously  harmful  to minors;  and 
restrictions  in  the  form  of  selected  time  of  broadcast  or  technical  means  on 
programmes  likely  to be harmful  to minors. 

The Directive also contains a general ban on programmes containing incitement to hatred 
on grounds of  race, sex, religion or nationality. 

Right of reply  (Article  23) 

This Article provides for legal redress for any person whose legitimate interests have been 
damaged  by  an  allegation  in  a  television  broadcast,  by  appropriate  rules  of  civil, 
administrative  or criminal  law. 

In addition to these areas that are coordinated, the Directive contains a number of general 
provisions: 

Member  States are free to: 

adopt stricter rules for broadcasters under their jurisdiction (Article  3), 
adopt stricter or more detailed rules on the proportions of European works where 
justified  on grounds of  language policy  (Article  8), 
adopt  other  rules  on  advertising  breaks  for  broadcasts  intended  solely  for  the 
national  territory that cannot be received  elsewhere  (Article  20). 

Member  States must: 

ensure compliance  with the Directive  (Article 3), 
ensure that  appropriate measures are taken to penalize  television broadcasts that 
do not comply  with the rules on advertising and sponsorship (Article  21). 

12 

The deadline  for Member States to comply  with the Directive  was 3 October  1991, two 
years after adoption. Although most of the Member States did meet this deadline, national 
implementing measures continued to be notified  until July  1994. Acting under its powers 
to monitor the application of Community law, the Commission launched the infringement 
proceedings  that  proved  necessary  after  examination  of  the  measures.  Two  cases  were 
referred to the European Court of Justice because the national legislation failed to comply 
with the Directive. 

This Directive was followed by another, adopted in  1993, on copyright and rights related 
to  copyright  applicable  to  satellite  broadcasting  and  cable  retransmission,21  to  be 
transposed into  national  legislation by  1 January  1995.  Together  the  two  Directives are 
intended to create a regulatory environment conducive to the growth of the broadcasting 
industry. 

2 

Economic  considerations 

The approximation of national legislation in the areas cited above has at any rate created 
a  framework  conducive  to  the  free  movement  of  television  services  between  the 
Member  States  of  the  Union.  The  commitment  of  the  Community  institutions  to 
coordination has enabled the national broadcasting systems, hitherto organized essentially 
along national  lines for regulatory purposes, to respond to the constant pattern of change 
in the world  audiovisual  environment  typified,  over the  last ten years by  the  explosion 
of  communication  technologies. 

The establishment  of  a common legal framework* however  limited,  has encouraged the 
industry to organize  itself in such a way as to benefit from a market that is much larger 
geographically  and economically.  There is plenty of evidence  to  support this analysis: 

Expansion in services 

The number of national and cross-border television channels in the European Union has 
grown steadily in recent years, from 77 in  1988 to 85 in  1989, 92 in  1990 and 1991, 111 
in  1992 and  129  in  1993.22 Much of the increase is due to the  appearance  of a growing 
number of satellite channels, many of them catering for special  interests, and all of them 
financed  either by  advertising or subscription. 

Growth in the advertising market 

The increase in the number of national and cross-border television channels has led to a 
very  large  increase  in  advertising  investment  in  television.  Income  from  television 
advertising  increased by  50% between  1989 and 1992.23 

21 

22 

23 

Council  Directive 93/83/EEC  on the coordination  of certain  rules  concerning  copyright  and rights 
related to copyright applicable to satellite broadcasting and cable retransmission (OJ L 248, 6.10.93). 
In its initial  1986 proposal the Commission had included provisions on copyright and related rights, 
but the Council preferred  to deal with them  in a separate Directive. 
Source: Marché mondial du cinéma et de l'audiovisuel, Etude IDATE (Institut de l'audiovisuel et des 
télécommunications  en Europe), December  1993, vol. 2, p. 39. 
European  Advertising & Media Forecast - March 1994. 

13 

The Commission also found that the television advertising expenditure of the  100 leading 
pan-European  brands  rose  by  21% between  1990  and  1991  and  by  28%  between  1991 
and  1992.24 

Generally  positive  outcome  for  European  works 

In  line  with  the  monitoring  system  established  by  Article  4(3)  of  the  Directive,  the 
the  subject  of  a  separate  Commission 
application  of  Articles  4  and  5  formed 
communication  sent to the Council and Parliament in March  1994.25 The results recorded 
on the  basis of  the  statistics supplied by  the  Member  States  show that  the  vast  majority 
of broadcasters complied with the proportions laid down in Articles 4 and 5 for  European 
works  and  independent  productions  in  the period  1991-92. Even  where  the  proportions 
were  not  actually  achieved,  the  Commission noted  an overall  upward  trend. 

The  Commission  would  sum up the results as  follows: 

broadcasts  of European works (statistics were supplied for  all  channels referred 
to  in  the  national  reports.  The  overall  average  complying  with  the  required 
proportion  was  66.6%): 

Portugal, Ireland, Denmark, the Netherlands: all channels broadcast at  least a 
majority  proportion  of  European  works, if not  more; 

United  Kingdom,  France:  all  channels  broadcast  over  the  air  transmitted  over 
50%  of  European  works; 

Italy,  Spain,  Belgium,  Greece,  Germany,  Luxembourg,  France  (one  cable 
channel),  United  Kingdom  (certain  satellite  channels):  certain  channels  did  not 
broadcast  the  requisite proportion  of  European  works. 

In  most  cases  general  interest  channels  broadcast  over  the  air  achieve  proportions  well 
over  the  requisite  51%  and  rarely  fall  below 40%. 

independent productions  (statistics were not supplied for  all  channels referred to 
in  the  national  reports;  the  overall  average  complying  with  the  required 
proportion  was  68.4%): 

France (the only country to have opted for "proportion of programming budget"), 
Germany,  Denmark,  the  Netherlands:  all  channels  complied  with  the  10% 
figure; 

Spain, Ireland, Portugal:  statistics were supplied  for  all  channels. One of these 
(a  Portuguese  channel)  complied  with  the  10%  rule,  the  others  achieved 
proportions  between  5 and  9%; 

24 

25 

AFEP  - 6  September  1994. 
COM(94)57  final,  3.3.94. 

14 

Luxembourg,  Belgium,  United  Kingdom,  Greece,  Italy:  statistics  were  not 
supplied  for  all  channels.  Where  data  were  provided  the  majority  of  channels 
achieved  proportions  of  over  10%. 

Recent  works  (statistics  were  not  supplied for  all  channels  referred  to  in  the 
national  reports): 

Italy,  Portugal,  Germany,  Denmark,  Greece,  France,  Ireland:  no  statistics; 

Spain,  the  Netherlands:  statistics  supplied  for  all  channels  (proportions  of 
between  1 and  3% in  Spain  and  between  9 and  29% in  the  Netherlands); 

United  Kingdom,  Luxembourg: statistics supplied  for  the  majority  of  channels 
(proportions  of  between  1 and  15% in Luxembourg  and  between  1 and  100% in 
the  United  Kingdom); 

Belgium: statistics supplied for two channels (67.7% for  one, 3.4% for the other). 

The  Commission  considers  the  results  generally  encouraging,  although  the  variety  of 
criteria  used  by  the  Member  States  and  the  differences  in  presentation  of  the  national 
reports  highlight  a  series  of  methodological,  technical  and  legal  problems  which  have 
the  Commission's  job  of  monitoring  the  application  of  the  system 
complicated 
(see point  3.2.2  below). 

3 

Application  of  the  Directive 

3.1 

General  problems 

3.1.1  Applicable  law 

The  operation  of  the  system of  free  movement  set up  by  the  Directive  has  encountered 
one  legal  difficulty:  the  problem  of  identifying  the  place  with  which  certain  television 
channels  have  a  legal  tie.  So  far  though  there  have  been  few  actual  cases  in  which  this 
difficulty  has  arisen,  but  the  Commission  believes  that  the  increase  in  the  number  of 
satellite  television  services  will  make  this  problem  more  and  more  acute.  The  problem 
is  to  identify  the  criterion  which  determines  that  a  broadcaster  is  legally  under  the 
jurisdiction of a particular Member State. Article 2.1 provides two possible linking  factors 
between  a  broadcaster  and  a particular  national  legal  system: 

the  broadcaster  is under  the jurisdiction  of  that  Member  State; or 
the broadcaster  is not  under  the jurisdiction  of  any  Member  State  but. makes  use 
of  a  frequency,  a  satellite  capacity  or  a  satellite  up-link  situated  in  that 
Member  State. 

The effect  of using different  criteria to determine whether a Member State has jurisdiction 
might  be  an  increase  in  the  number  of  cases  where  a  channel  is  potentially  under  no 
State's jurisdiction (conflicting  renvoi of jurisdiction) or under several  States'jurisdictions 
(conflicting  claim of jurisdiction).  An example of a conflicting  disclaimer  of jurisdiction 

3) 

15 

is  the  case  of  Red  Hot  Television,26  discussed  below,  and  an  example  of  a  conflicting 
claim of jurisdiction is the case of RTL-TVi, included by both Belgium and  Luxembourg 
in  their  national  reports  on the  application  of  Articles  4  and  5.27 

In cases of conflicting  disclaimer of jurisdiction,  such as the Red Hot  Television case, it 
is  difficult  to  take  measures  against  a  channel  which  evades  all  legal  controls,  being 
broadcast  from  the Netherlands  or  Denmark  but  liable  to  be  regarded  as  established  in 
the  United  Kingdom.28 

Cases of conflicting  claims of jurisdiction, on the other hand, are likely to undermine the 
operation  of  the  Directive  by  producing  a  cumulation  of  laws  applicable  to  a  single 
broadcaster  (laws  which  may  contain  mutually  incompatible  provisions). 

Establishment  as the  decisive  criterion 

These  practical  examples  underline  the  need  for  common  criteria  to  determine  which 
national law is to apply in each case. The Commission and the majority  of Member States 
regard  the  broadcaster's  place  of  establishment  as  the  primary  connecting  factor.  This 
option  is  based  as  much  on the  history  of  the  Directive,  its wording  and  its  purpose  as 
on  a  general  trend  in  Community  law  and  the  consistent  case  law  of  the  Court  of 
Justice.29 

26 

27 

28 

29 

Reference  was in fact  made to the European Court of Justice for a preliminary  ruling on two questions 
relating to Red Hot Television;  they concerned the concept  of "retransmission"  and the definition  of 
the nuisance caused by certain programmes rather than the problem of legal link (C-327/93;  see below 
at  points  3.2.1  and  3.2.5).  However  the  case  provides  a  useful  example.  The  channel  began 
broadcasting  in" July  1992  from  a  satellite  up-link  situated  in  the  Netherlands  and,  from  December 
1992,  from  a  satellite  up-link  situated  in  Denmark,  with  certain  elements  of  relevance  to  its 
broadcasting  activities  being  situated  in  the  United  Kingdom.  The  British  authorities  decided  to 
intervene to halt the broadcasts on their territory and the question which then arose was which Member 
State had jurisdiction.  In fact  it came under the jurisdiction  of neither  Denmark,  nor the Netherlands, 
nor  even  the  United  Kingdom  because the  law  in the  first  two  countries  stipulates  that  establishment 
is the legal  link giving jurisdiction,  while British  law  focuses  on  the place where the  satellite  up-link 
occurs. 
See  Communication  of  March  1994, op. cit.  p.  13. 
IP(93)251,  2.4.1993. 
Cf.  Articles  58, 59, 60, 66 of the Treaty;  General  Programme  for the abolition  of restrictions  on the 
freedom  to supply  services  (OJ  32/62,  15.1.1962,  p. 32);  and Factortame  Judgment  (Case C-221/89 
[1991]  ECR  1-3905). 

16 

Historically, the Commission's original proposal clearly took place of establishment as the 
connecting  factor.30  The  revision  of  the  wording  to  refer  to jurisdiction  rather  than  the 
proposed  concept  of  establishment  was  made  to  solve  a  specific  problem  arising  in 
Germany,  where  Allied  Forces  radio  broadcasting  (the  original  proposal  encompassed 
radio  broadcasting)  originated  and  was  established  in  Germany  but  was  not  under 
Germany's jurisdiction.  The wording  actually  adopted  by  the  Council  supports  the  view 
that the original  intention to define  the jurisdiction of the Member  State as depending on 
the place of establishment is maintained since  the first indent of Article 2(1) refers  solely 
to  broadcasters  and  the  second  indent  explicitly  mentions  purely  technical  criteria.  The 
purpose  of  the  Directive  also  supports  this Interpretation,  because  the  ideal  of  a  single 
applicable  law  depends  on  a  clear  connecting  factor,  and  place  of  establishment  is 
obviously  the  best  one, better  at  any  rate than  the  alternatives.  On  a technical  level,  for 
example,  a broadcaster  can  easily  up-link  the  same programme  to  different  viewers  via 
different  satellites  or  up-link  it  from  several  different  Member  States  simultaneously.31 

Although  the  Commission  remains  convinced  that  establishment  is  the  only  factor  that 
will  really  work,  it  is open to  the  idea  of  identifying  criteria that  can  be  used  to  define 
the  concept  of  establishment  more  precisely  in  the  specific  context  of  the  broadcasting 
business, in order  to ensure a high level of  stability and  legal certainty  for  organizations 
operating  in the  Union  and  hence to  foster  the development  of  cross-border  television. 

3.1.2  A  fundamental  ambiguity 

The particular blend of measures in the Directive was the result of a political  compromise 
complicated  by  the  fact  that  the  broadcasting  industry  is  of  both  economic  and  cultural 
interest.  The  final  text  was  adopted  in  1989  after  prolonged  discussions  within  the 
Community institutions. The Council reached agreement on a Directive containing certain 
provisions whose ambiguity  has led to quite widespread problems  of application.  This is 
particularly  true  of  Articles  4  and  5  on  the  proportions  of  European  works  and 
independent  productions to be broadcast. The flexibility  which was  deliberately  allowed 
in the application  of these measures by the inclusion  in these two  articles  of the  phrases 
"where practicable",  "progressively" and  "by  appropriate  means" opened  the  way  to  the 
creation  of  mechanisms  that  differed  markedly  from  one  Member  State  to  the  next  and 
entailed varying  levels of obligation. This has led to uncertainty  about  the application of 
the  principle  of  freedom  of  reception  and  retransmission  enshrined  in  the  Directive. 

A  specific  example  will  serve  to  illustrate  this  point:  the  broadcast  from 
the 
United  Kingdom  of television  channels known as TNT/Cartoon,  which  were the  subject 
of  complaints  by  a  European  professional  organization  and  a  French  special-interest 

30 

31 

This  article  establishes  the  principle  that  all  broadcasting  activity  intended  for  reception  within  the 
territory  of the  Community  must  comply  with the  laws  of the country  in which  it originates,  i.e. the 
Member  State  in which the originating  body  is established,  whether the  programme  is  intended to be 
received  by  the  public  in  that  Member  State or  in other  Member  States, (point  43  of the  explanatory 
memorandum). 
Broadcasters  may  wish  to "simulcast",  i.e. transmit  the same  programme  using  different  transmission 
standards  in  order  to  reach  different  geographical  markets  (PAL  or  SECAM)  or  different  types  of 
market,  e.g.  D2-MAC  or  PAL  PLUS  for  the  16/9  television  market. 

17 

television channel.32 The two channels had licences issued by the British authorities under 
the  special  scheme set up by British law for  "non-domestic" satellite television channels. 
This  scheme  contains  provisions  to  encourage  the  broadcasting  of  proportions  of 
European  works and independent productions that are noticeably  less strict than the rules 
laid  down  for  terrestrial  channels  or  domestic  satellite  channels. 

The wording  of Articles 4 and  5 ("wherever  practicable") thus gives such channels carte 
blanche, because of the freedom of reception and retransmission enshrined in Article 2(2), 
to transmit broadcasts across frontiers that contain very  few, if any, European works and 
independent  productions,  because of  the  alleged  "inapplicability"  of  such obligations  to 
channels  whose  programming  is  voluntarily  restricted  to  material  from  non-member 
countries  (despite  the  fact  that  the  programmes  broadcast  do  in  fact  fall  into  the 
categories  addressed  by  Articles  4  and  5). As  was  apparent  in  the  case  of  the  channels 
concerned,  such  a  situation  is  bound  to  lead  to  disputes  because  it  causes  serious 
problems  of  discrimination  and  unfair  competition  for  professionals,  broadcasters  and 
producers  in  the  various  Member  States.  An  example  here  would  be  the  case  of  the 
TNT/Cartoon  channel,  which  prompted  a  Belgian  court  to  submit  a  request  to  the 
European  Court  of  Justice,  on  29  November  1994,  for  a  preliminary  ruling  on  the 
interpretation  of  Articles  2, 4 and  5 of the  Directive. 

The  Commission  realizes  that  the  present  wording  of  Articles  4  and  5  allows 
Member  States to  introduce  arrangements  of varying  degrees of  flexibility  to  encourage 
compliance. However,  it strongly contends that a Directive should not be transposed into 
national  law  in  such  a  way  as  to  distort  its  fundamental  objectives.  It  is  worrying  that 
certain Member  States do not have adequate  legal instruments or  other  means  of  control 
or penalties to ensure that compliance with the application of the Articles in question took 
proper  account  of  the  objectives  which,  in  this  case,  were  essentially  to  promote  the 
production  and  circulation  within  Europe  of  European  and  independent  audiovisual 
programmes. 

Replying to a Parliamentary question on 4  January  1990, the Commission drew attention 
to the fact  that the Directive was legally binding on the Member  States in its entirety and 
pointed out that, while the flexibility  incorporated  into Articles  4 and  5 made assessment 
more  difficult,  it  in  no  way  detracted  from  the  legal  nature  of  what  amounted  to  an 
obligation  to  behave  in a certain  manner.33 

32  Other complaints  have been  received about the alleged non-application  of  Articles 4 and  5. The  most 

recent  -  from  Italy  -  is currently  being  examined. 

33 

Written  question  No  758/89  by  Mr  Kenneth  Collins  (OJ  C  97,  14.4.1990) 

18 

3.2 

Specific  problems 

3.2.1  Article  2(2)  -  Freedom  of  reception 

The  Red  Hot  Television case referred  to above  (point  3.1)  raised  an  important  question 
about the term  "retransmission" used in Article 2(2). This Article expressly  states that in 
the  event  of  an  infringement  of  Article  22v (protection  of  minors)  and  subject  to  the 
observance of the procedure specifically  laid down for this purpose, a Member State may 
provisionally  suspend  the  "retransmission"  of  the  offending  broadcasts.  The  question, 
then,  is whether  the  provisional  suspension ^applies only  to  cable  television. 

The  Commission's  view  is  that  retransmission  should  be  understood  in  the  broadest 
possible  sense. Restricting  it  to  cable television  would  imply  that  the  special  procedure 
for provisional suspension would not apply where a satellite channel  infringed  Article 22. 
In  practical  terms  this would  mean that in a Member  State with  both  satellite and  cable 
transmission systems the same channel might be provisionally  suspended from the  cable 
still  available  via  antenna.  Similarly,  a  Member  State  in  which  cable  television 
predominated  would  find  itself in a different  position from another  Member  State where 
direct reception was more common, because the first would have every opportunity to use 
the  suspension procedure  but the  second would  not. 

Such  an interpretation  would  have  the effect  of  emasculating  the  provision  in  question, 
creating  de facto  discrimination  contrary  to the  general  objectives  of  the  Directive.  The 
Commission notes that the purpose of the combined procedure of Articles 2(2) and 22 is 
to enable Member  States that deem it necessary to restrict the broadcast on their territory 
of  channels  infringing  Article 22. 

One  final  comment  should  be  made  about  this  procedure,  and  more  specifically 
subparagraph  (b).  The  Member  State  does  not  have  to  wait  a  full  12  months  before 
instigating  the  procedure;  it is sufficient  for  Article  22 to  have  been  infringed  twice  in 
the  course  of  the  12 months  preceding  the  instigation  of  the  procedure. 

3.2.2  Chapter III - Promoting the distribution and production of television  programmes 

Monitoring  Articles  4 and 5 

As  was  shown  aboye  (point  2.3),  the  Commission  issued  a  specific  Communication  on 
the  application  of  Articles  4  and  5, concluding  that  the  results  were  generally  positive. 
But  that  first  monitoring  exercise  revealed  a  series  of  problems  that  complicate  any 
evaluation  of  the  impact  of these measures in business terms, based  on  data  supplied  in 
the  national  reports. 

These  problems  stem  partly  from  the  ambiguity  of  the  wording  of  Articles  4  and  5 
(see point  3.1.2)  and  partly  from  other  methodological,  technical  and  legal  difficulties 
associated  with  the  monitoring  exercise  itself,  such  as  differences  in  presentation  of 
national reports, the different  reference  criteria used by the Member States, the  definition 
of  certain  concepts  used  (e.g.  independent  producer),  and the  failure  to  supply  statistics 
about certain new channels and, more  generally,  about the proportions  of  independent  -
and particularly  recent - productions. With regard to the latter, the Commission notes that 

19 

the main difficulty  Member States encountered was judging what constituted an "adequate 
proportion"  to  be  earmarked  for  recent  independent  productions. 

As  to  the  question  of  what  constitutes  an  independent  producer,  the  Commission  has 
carried  out  an  economic  analysis  and  consulted  representatives  of  the  Member  States  in 
the Ad-hoc  Group  and on this basis has suggested that  a producer  should be regarded  as 
independent  of  television  broadcasting  organizations  if: 

no  single  television  broadcasting  organization  holds  more  than  25%  of  the 
production  company's  equity  (or  <50%  in  the  case  of  several 
television 
broadcasting  organizations); 
the producer  does not  supply more than 90% of  its output  over  a period  of  three 
years to  a  single television broadcasting organization,  unless the producer  makes 
only  one  programme  or  a single  series in the  whole  of  this  reference  period; 

on the understanding that these criteria must also be applicable the other way round  (e.g. 
if  a  producer  has  a  significant  holding  in  a  television  broadcasting  organization).  The 
Commission  has  thus  given  the  Member  States  the  means  to  define  the  concept  of  an 
independent  producer  for  themselves, on  the basis  of  common  criteria,  for  the  purpose 
of  applying  Article  5 of the Directive. For  further  details  see Chapter  5 of the report  on 
application  of  Articles  4 and  5, cited  above. 

This being the very first report, the Commission's overall assessment of the exercise took 
account of the problems encountered by the Member States in implementing the necessary 
control mechanisms, in particular the problem of data collection.  Even so, it  considered 
it  unsatisfactory  that  the  vast  majority  of  the  Member  States  failed  to  indicate  the 
measures adopted or envisaged to deal with broadcasters under their jurisdiction that have 
not  achieved  the  required  proportions,  despite  the  fact  that  Article  4(3)  specifically 
requires this. In May  1994, a letter was accordingly sent to all the Member States directly 
concerned,  requesting  precise  information  on the  subject.  The  Commission  reserves  its 
position  on  whether  or  not  these  national  measures  adequately  comply  with  the 
requirements  of  Articles  4 and  5. 

To  sum  up  this  point,  the  Commission  considers  that  the  results  of  the  first  period  of 
application of Articles 4 and  5 are encouraging, primarily because of the general  upward 
trend. 

Article  4(4)  expressly  mentions  the  possibility  of  proposals  to  revise  Articles  4  and  5. 
When  adopting  its first monitoring  report, the Commission made clear  that  the  question 
of  refining  or  strengthening  the  system  set  up  by  Articles  4  and  5  was  under 
consideration, while making the point that harmonization in this area was essential to help 
independent  operators  in  the  context  of  the  new  Community  audiovisual  market 
established  by  the  Directive. 

However,  the  Commission  did  not  consider  it  appropriate  to  put  forward  proposals  for 
revision  in  March  1994,  given  that  it  was  due  to  present  an  overall  assessment  of  the 
application of the Directive before  the end of the year. It therefore  preferred  to await  the 
overall  assessment before  proposing  any  changes, which could  then  be brought  together 
in  a broader  set  of  proposals. 

20 

This  approach  also  allowed  it  to  take  into  account  the  outcome  of  discussions  on  the 
Green  Paper  on  audiovisual  policy. 

European  works 

The  Member  States  mentioned  no  particular  problems  with  the  application  of  Article  6 
as regards the definition  of European works, although there were requests for  information 
about  the  state  of  ratification  procedures  for  the  agreements  with  certain  non-member 
countries.  However,  the  Commission  is  aware  of  the  fact  that  parties  in  non-member 
countries  wishing  to  invest  in production  irf the  European  Union  sometimes  experience 
difficulties  because  of  disparities  in national  measures. 

Cinematographic  works 

The principle laid down in Article 7 that, unless agreed otherwise with the rights holders, 
a specified  period must elapse between a cinematographic work being shown for the  first 
time  in  the  cinema  and  being  broadcast  on television  has  presented  only  one  difficulty 
of application in a small number of Member States. This relates to the point which marks 
the  start of the period  in question, which is to be the  first  cinema  showing  in any  of the 
Member  States  of  the  Union. 

The  Commission does not  share the view of some Member  States that the  starting  point 
can be replaced  by the first showing in national cinemas. Such a change would have the 
effect  of undermining the intended harmonization in this area, by creating a chain reaction 
of  discrimination  between  broadcasters  in  the  various  Member  States  and  hence 
paralysing  the  commercialization  of  cinematographic  works.  These  problems  of 
discrimination would  also become increasingly acute as more satellite television services 
were  developed. 

While giving  a degree of priority to agreements between the professionals, the  Directive 
opts  for  a  certain  degree  of  harmonization  to  prevent  the  emergence  of  national 
regulations  diverging  so  widely  as  to  interfere  with  the  transmission  of  television 
broadcasts  across  frontiers.  Any  proposal  to count  the  period  from  the time  of  showing 
in  national  cinemas  would  completely  defeat  the  purpose  of  this  provision,  because 
harmonization  can  only  be  based on a single starting  point  for  the  requisite  period.  The 
Commission would  also stress that it remains convinced  that priority  should be  given to 
agreements  between  the  professionals. 

3.2.3  Chapter  IV  - Television  advertising  and  sponsorship 

The  measures  relating  to  television  advertising  and  sponsorship  have  presented  no 
fundamental  problems  and  have  on  the  whole  been  correctly  applied  in  all  Member 
States.  However,  the  Commission  has  been  asked  on  several  occasions  to  clarify  its 
interpretation of certain provisions, for  in certain cases it feels the Member  States should 
have  some  scope  for  adapting  measures  to  their  individual  situations  in  compliance, 
nevertheless,  with  Community  law.  Thus, on  9 February  1995,  in  a  preliminary  ruling, 
the  Court  of  Justice  recognized  that  a  national  measure  prohibiting  the  broadcasting  of 
advertising  for  the distribution sector by broadcasters established  in the Member  State in 
question  was  not  contrary  to  the  Directive  (Leclerc,  C-412/93). 

21 

The requests for  interpretation have related to the following  questions: 

identification  of name or logo of sponsor  (Article  17H)(b) 

The  Commission  considers  that  the  provision  requiring  sponsored  programmes  to  be 
clearly identified  as such  at their  beginning  and end does  not mean  that  the  sponsor's 
name  and  or  logo  cannot  be  mentioned  during  the  programme;  but  all  other  relevant 
provisions must be complied with scrupulously, and the Member States retain the power 
to regulate broadcasters within their jurisdiction in a stricter  or more detailed  fashion. 

advertising  spots broadcast within a given one-hour period (Article  18(2) 

How is the hour to be measured  does the provision apply to a 60-minute period starting 
on the hour or to any 60-minute period whatever? The Commission, like the majority of 
Member  States and broadcasters, has chosen the first  option, to simplify  monitoring. 

programmed duration of audiovisual works for the purposes of advertising breaks 
(Article  11(4) and (5) 

Should the  duration include  advertising time, including  advertising  for  the  programme 
itself  and sponsorship? This has been a source of controversy in Germany in particular, 
where the Koblenz Court of Appeal was asked to rule in March 1994 on the "gross-net" 
issue. In the Commission's view  "gross" time (i.e. including the duration  of advertising 
spots)  constitutes  the minimum  level  required  for  the purposes  of  the  directive,  but it 
admits that here again the Member States retain the power to regulate broadcasters within 
their jurisdiction in a stricter or more detailed  fashion 

status and calculation of the maximum permissible volume of 'telepromotion'34 

The Commission has been at pains to point out that telepromotion should, in its opinion, 
be treated as a form of advertising that is lawful in principle and therefore  subject to all 
the provisions on advertising contained in the Directive.35 But there are two quantitative 
parameters that  are not alternatives but cumulative. The 20% maximum (Article  18(1)) 
and the  maximum  number  of  hours per  day  (Article  18(3))  are  both  applicable.  The 
Article  18(2) restrictions on advertising volumes per hour are not, however, applicable, 
since they apply  only to  spot  advertising.  The option open to  the  Member  States here 
relates to the possibility of raising by  15% to 20% the daily broadcasting time devoted 
to advertising. 

home shopping 

The Commission has been asked to specify that, under the Directive as it currently stands, 
a television service that includes  direct  offers  to  the public  for  the  sale  or  rental  of a 
produce  or  service  is covered by the  Directive's  definition  of  "television broadcasting" 

34  Television  promotion  of products  or  services  by  means  of games  or  studio shows. 
35 

IP(93)396,  24 May  1993. 

22 

schedule, is therefore  subject to the restrictions laid down in Article  18, which means that 
such  advertising  may  under  no  circumstances  exceed  one  hour  per  day.  However,  it 
should be added that services which comply with no limitations on broadcasting time may 
be  established  in  any  Member  State  provided  they  cannot  be  received  directly  or 
indirectly  in  one  or  more  other  Member  States  (see Article  20). 

This  system  of  restriction  applying  only » to  home  shopping  presents  problems  of 
application.  In  1994  several  complaints  were  referred  to  the  Commission  regarding  the 
failure of certain satellite television channels licensed in one Member  State and  therefore 
liable to be freely received in the others to comply with this restriction. The  Commission 
therefore  feels  it  should  emphasize the  fact  that the  development  of this activity,  which 
is facilitated  by the  increased  opportunities  for  broadcasting,  should  be encouraged  as it 
is highly  valued  by  consumers. It  accordingly  believes that the  principle  and  content  of 
this  restriction  should  be  revised  in  the  light  of  general  business  considerations  in  the 
broadcasting  industry,  in  order  to  avoid  a  large  increase  in  the  number  of  disputes  and 
promote  the  development  of  a new and  essentially  legitimate  type  of  service. 

3.2.4  Chapter  V  - Protection  of  minors 

A  second  question  put  in  the  Red  Hot  Television  case  (see  points  3.1.1  and  3.2.1)  is 
whether  programmes  likely  to  "seriously  impair"  the  development  of  minors  could  be 
considered  lawful  on the  same grounds as programmes  liable  simply  to  "impair"  it.  The 
latter can be transmitted  provided  that broadcasting  times or technical  means are  chosen 
to ensure that minors in the area likely to receive the broadcast are protected. But the aim 
of  the legislation  was clearly  to  establish a general prohibition  on programmes  likely  to 
"seriously  impair"  the  development  of minors. 

The  fact  that  a  national  court  felt  the need  to  refer  the  question  to  the  European  Court, 
however,  suggests  a  need  to  clarify  the  wording.  The  Commission  therefore  feels  that 
Article  22  should  be  formally  clarified  in  order,  first,  to  make  it  easier  for  a 
Member  State of  reception  to use the temporary  suspension procedure  authorized  in the 
event of repeated infringements  by a channel that is not under its jurisdiction (Article 2(2) 
in conjunction  with Article 22) and, second, to improve the application of the system for 
protecting minors.  Such a clarification  would,  incidentally,  help to  meet the concerns of 
the European Parliament, expressed in particular in its report on pornography  (rapporteur 
Mr  J.T. Nordmann),  adopted  in  December  1993.36 

3.2.5  Chapter  VI  -  Right  of  reply 

No  particular  problems  of  application  have been  cited. 

This  first  exercise  has  underlined  the  value  of the  Directive  in  the  body  of  Community 
legislation.  In  an  international  environment  that  is  changing  and  constantly  evolving  it 
constitutes the essential base on which to build the expansion of the European  audiovisual 

36  PE  204.592. 

23 

4) 

industry  and the  improvement of working conditions  for those  involved.  Growth in this 
sector is crucial and was recognized as an urgent priority by the Essen European Council 
(10-11  December  1994) which stressed the importance of  new information  services and 
content and the essential cultural contribution the audiovisual industry had to make to the 
development  of  the Information  Society. 

24 

PART  C:  EXPLANATORY  MEMORANDUM  AND  EXAMINATION 
OF  THE PROVISIONS  AMENDED 

1 

Nature  and  thrust  of  the  proposed  revision 

Article  26  provides  for  the  Commission,  if  necessary,  to  make  proposals  to  adapt  the 
Directive  to  developments  in  the  field  of  television  broadcasting,  over  and  above  its 
report  on  application.  The  Commission  has  accordingly  prepared  the  proposal  for  a 
revision  which  appears  as  Part  D  of  this  document,  taking  account  of  three  types  of 
< 
factor: 

the  conclusions  it  draws  from  the report  on  application  and  the  contributions  of 
Member  States on the practical  difficulties  they  have  encountered; 
the conclusions  it draws  from  the broad  consultation  process conducted  with the 
professionals  in  the  field  and  the  Member  States  in  the  course  of  1994  and  the 
first  few  months  of  1995; 
its analysis of  trends  in the audiovisual  industry,  particularly  in  the  Green  Paper 
and  its  work  on the  Information  Society. 

In formulating  its proposal the Commission has tried  to strike a balance, taking  account 
of  sometimes  incompatible  or  contradictory  interests,  seeking  above  all  to  enhance  the 
legal  certainty  of  a  Community  instrument  that  is  generally  well  regarded  by  all 
concerned and essential for the development of the industry. There  is a consensus on the 
essential value of the Directive, so it is neither necessary nor  desirable to rework the text 
substantially.  However,  while  leaving  the  general  structure  of  the  Directive  unchanged, 
certain  significant  changes  and  several  secondary  improvements  are  necessary  to  bring 
the  Directive  up  to  date  and  improve  the  way  it  operates, the  aim  being  to  produce  an 
instrument that can provide a stable legal framework  conducive to the development of the 
audiovisual  industry  in  the  Union  until  the  end  of the  century. 

With  regard  to  scope,  however,  the definition  of  television  broadcasting  in  Article  1(a) 
of the  1989 Directive has not been changed.  It covers  "traditional" television services as 
well  as newer  ones  such  as  "pay-per-view"  and  "near-video-on-demand".37  All point-to-
multipoint  services,  i.e.  services  broadcast  simultaneously  to  more  than  one  receiver 
(television  set)  are  already  covered  and  fit  into the  framework  created  by  the Directive. 

It  was  not  felt  to  be  advisable to  extend  the  scope of  the  Directive  to  the  new point-to-
point  services  because  of  the  specific  nature  of  the  problems  they  present.  The 
Commission  is  nevertheless  aware  of  the  urgent  need  to  start  constructing  a  legal 
framework  which  will  allow  these  new  audiovisual  services  to  develop  in  Europe,  in  a 
way which safeguards the public interest. The Commission has devised a legal  framework 
for  information  society  services  under  which  the  legal  regulation  of  each  one  of  them 
must  be  anchored  in  the  single  market  and  initiatives  must  always  towards  avoiding 
market  fragmentation,  over-regulation  in the  Community  context  and  conflicts  between 
instruments  that  might  be  prejudicial  to  the  development  of  these  services.  The 
Commission  is  of  the  opinion  that  it  is  too  early  and  too  risky  to  try  establishing  now 

37 

For  the  purposes  of  the  Directive,  NVOD  refers  to  pay-per-view  multiplexed  services. 

25 

what  the  future  Community  regulations  might  look  like,  since  there  is  inadequate 
information  about  the problems  these  services may  generate  and  the  proper  Community 
response  to  them.  The  Commission,  therefore,  prefers  to  launch  a  fact-finding  and 
consultation  exercise  on  individual  questions  such  as  copyright  (Qreen  Paper  in 
preparation),  legal  protection  of  encrypted  transmissions  (Green  Paper  in  preparation), 
commercial communication (Green Paper in preparation), media ownership (consultations 
in  progress)  and  transparency  of  national  regulations  and  their  consistency  with  the 
principles of trie single market (paper in preparation). A Green Paper on the development 
of  new  broadcasting  services  will  look  at  questions  of  encouragement  for  new 
broadcasting  services,  promotion  of  cultural  identities, and  language  diversity  and  the 
implications  for  the  protection  of  the  general  interest. 

At  this  stage, the  Commission  is therefore  convinced  of  the need  for  a  limited  revision 
of  the  Directive.  Three  are three  basic reasons: 

first,  certain  clarifications  of  the  existing  regulations  have  proved  essential  for 
reasons  of  legal  certainty  and  efficiency:  there  was  a  need  for  clearer  criteria 
determining which Member State has jurisdiction over a broadcaster and the rules 
on the protection  of  minors  required  clarification; 
second,  certain  rules  have  to  be  amended  to  take  account  of  the  new  economic 
and  technological  realities  of  the  industry:  this  means,  in  particular,  setting 
minimum  rules  to  allow  for  the  development  of  cross-border  home-shopping 
services, extending the opportunities for broadcasters to insert advertising material 
in their  programmes; 
third,  Member  States'  reports  in the  context  of  the  monitoring  of  Articles  4  and 
5 of the Directive, coupled with the conclusions of the consultations on the Green 
Paper,  have  demonstrated  the  need  to  amend  certain  aspects  of  the  rules  on  the 
promotion,  distribution  and production  of  European  works. 

In  proposing  this  limited  revision,  the  Commission  seeks to  build  on  the  achievements 
of the Directive, particularly  as regards  its principal  aim  of ensuring  the  free  movement 
of services, but also to maintain the balance which it strikes in  important  areas: between 
protecting  general  interests and the development of audiovisual services and between the 
development  of  these  services  and  strengthening  the  European  programme  industry. 

2 

The  provisions  amended 

(N.B.  the  paragraphs  of  this  section  follow  the  text  of  the  proposal  for  amending  the 
Directive.) 

2.1 

Chapter  I  -  Definitions  (for  the  current  Directive) 

Article  Kb)  and  (é) 

The proposed definition  of home shopping singles out the characteristic of home shopping 
that  distinguishes  it  from  advertising:  home  shopping  services  take  the  form  of 
programmes  or  spots  offering  goods  of  services  directly  to  the  public  in  return  for 
payment. The  new  home-shopping  provisions aim  to open  the  way  for  the  development 
of  televised  home-shopping  services  in  Europe  on a trans-national  basis. 

26 

2.2 

Chapter  II  -  General  provisions 

Article  2 

The amendments proposed here are necessary for  the reasons set out in point 3.1.1  of the 
report on the application of the Directive. They are a response to a general request by the 
Member  States meeting  in the Ad-hoc Group. The  growth  in the number  of  audiovisual 
services  will  make  it  increasingly  necessary  to  be  able  to  ascertain  clearly  and  with 
certainty  which  broadcasters  are  under  the  jurisdiction  of  which  Member  States.  The 
problem  particularly  concerns  channels  broadcast  by  satellite.  It  is  worth  restating  the 
Commission's technical  and  legal  analysis here. 

2.2.1  Establishment  as  the  criterion  laid  down  under  the  Directive  determining 

jurisdiction 

The  Directive  was  adopted  to  provide  the  legal  framework  for  the  free  movement  of 
television  broadcasts  in  the  Community.  This  movement  would  be  impeded  if  the 
legislations  of  several  Member  States  were  to  be  applicable  to  a  given  broadcast  at  the 
same time. 

Article  2(1)  of  the  Directive  therefore  provides  that  the  law  applicable  to  a  television 
broadcast  is  that  of  the  Member  State  under  whose  jurisdiction  the  broadcasting 
organization  falls,  ensuring  application  of  a  single  law. 

In  cases where  a  broadcaster  is active  on  the  territory  of  the  European  Community  but 
does  not  fall  under  the  jurisdiction  of  any  Member  State,  the  Directive  provides 
subsidiary  criteria  to  determine  the  law  applicable  to  the  broadcast  in  question.  These 
criteria,  set  out  in the  second  indent  of  Article  2(1), are  as  follows: 

the  use  of  a  frequency  granted  by  a  Member  State; 
the  use  of  a  satellite capacity  granted  by  a Member  State;  or 
the  use  of  a  satellite  up-link  situated  in a Member  State. 

The Commission takes the view that the decisive criterion  for  determining jurisdiction  is 
the  Member  State  where  the  broadcaster  is  established.  This  is  clear  both  from  the 
wording  of  the  Directive  itself,  its context,  its history  and,  above  all,  from  its purpose. 

I 

Background 

The  Commission's original  proposal  of  6 June  1986 clearly  defined  establishment  as the 
determining  criterion  for  "jurisdiction".  Paragraph  43  of  the  Explanatory  Memorandum 
contained  an  explicit  definition  of  the  notion  of  "jurisdiction"  as  meaning  "the 
Member  State  where  the  broadcaster  is  established". 

Paragraph  43  reads:  "This  article  establishes  the  principle  that  all  broadcasting  activity 
intended  for  reception  within the territory  of the Community  must comply  with the laws 
of the country  in which it originates, i.e. (he Member State in which the originating  body 
is  established." 

27 

The revision of  the wording  to refer  to  "jurisdiction" was made  solely to solve a  specific 
problem  arising  in  Germany,  where  Allied  Forces  radio  broadcasting  (the  original 
proposal  encompassed  radio  broadcasting)  in  Berlin  originated  and  was  established  in 
Germany  but  was  not  under  the jurisdiction  of  the  Federal  Republic. 

The original legislative intent to define the Member State's jurisdiction as the place where 
a  broadcaster  is established  was  not  abandoned. 

II 

Wording 

The Commission's position is also consistent with the wording of Article  2(1) first indent. 
The  reference  to  "broadcasters"  means  that  the  Member  State  responsible  is  to  be 
identified  on  the  basis  of  criteria  which  are  relevant  to  the  organization  which  is 
responsible  for  the  broadcast, and  not to the  services which  it  broadcasts. 

It  is also  of  relevance  that  Article  2(1)  second  indent refers  to  purely  technical  criteria. 
The  legislator  would  have  explicitly  made  reference  to  a  technical  criterion  in  the 
first  indent  also,  if  the  intention  was  to  take  technical  operations  to  determine  the 
Member  State  which  has jurisdiction  over  a given  broadcaster. 

III 

Context 

Television broadcasting  constitutes a "service" within the meaning  of Articles 59 and 60 
of  the  Treaty.38  Similarly,  the  Directive  aims  at  ensuring  the  freedom  to  provide 
broadcasting  services  within  the  Community.  Beneficiaries  of  the  freedom  to  provide 
services within  the meaning  of Articles  59 and  60 are  "nationals  of  Member  States who 
are  established  in  a Member  State  other than that  of the  recipient  of  the  service." 

With  regard  to  companies,  Article  58(1)  of  the  Treaty  stipulates  the  criteria  of  the 
registered  office,  central  administration  or  principal  place  of  business  when  defining 
companies  entitled  to  benefit  from  the  chapter  on the right  of  establishment.  Article  66 
provides  for  the  application  of  Article  58  for  companies  in  the  context  of  freedom  of 
services  as  well.  Therefore,  beneficiaries  of  the  freedom  to  provide  services  within  the 
meaning  of Articles  59 and  60 are companies which  have their  registered  office,  central 
administration  or  principal  place  of  business  in  a  Member  State  other  than  that  of  the 
recipient  of  the  service. 

The  terrh  "jurisdiction"  in  Article  2(1)  of  the  Directive  cannot  be  construed  in  a  sense 
which  fundamentally  differs  from  Article  58  of  the  Treaty.  The  Community  legislator 
would have had to lay down specific and precise rules if the intention had been to set the 
conditions  for  the freedom  to provide broadcasting  services following  a different  pattern 
from  the  usual. 

Court of Justice case law substantiates this view and provides further  guidance. The Court 
of  Justice  stated  in  the  Factor tame case39 that  the  "concept  of  establishment  within  the 

38  ECJ,  Case  155/73  [1974]  ECR  409. 
39  ECJ  Case  C-221/89  [1991]  1-3905. 

28 

meaning  of  Article  52  et  seq.  of  the Treaty  involves  the  actual  pursuit  of  an economic 
activity  through  a fixed establishment  in a Member State for  an indefinite  period." The 
Court pointed out further that the concept of establishment coincides with the place where 
an  economic  activity  is  managed  and  from  where  the  operations  are  directed  and 
controlled.  In this regard, Advocate-General Mischo pointed  out the  significance  of the 
fact that Article 58 lays down the criterion of the registered office,  central administration 
or principal  place  of  business when defining  the companies  entitled to benefit  from the 
chapter on the right of  establishment. 

Other Community documents may be quoted which consistently underline that the mere 
fact of  an organization having  its legal  seat in a Member State  is not in itself  sufficient 
to determine its establishment within the meaning of the Treaty, but that an effective and 
durable link with the economy  of the Member State concerned  is also  required (see for 
example  the  General  Programme  for  the  suppression of  restrictions  on  the freedom to 
supply services, adopted by the Council  in  1962,  OJ No  32/62,  15.1.62). 

Applying  these  principles  to  broadcasting  as  a  specific  activity,  the  Commission 
recommended in its Suggested Guidelines for the monitoring of the TV without  frontiers 
Directive, dated 15.2.93 (discussed at length with the Member States in the ad-hoc group) 
that relevant criteria for determining the place of establishment should bear upon the real 
economic  activities  involved,  such  as  programme  producing,  assembling  of  schedules, 
exercise of editorial control in relation to each programme service in question, rather than 
on purely technical  operations on the telecommunications  side. 

IV 

Purpose and practical  considerations 

Besides the legal  arguments, the Commission believes that the place of establishment is 
by far the most effective  basis for determining jurisdiction in the light of the objectives 
of the Directive. 

Article  2(1)  seeks to  ensure the application of  a single  law to  all  broadcasts within the 
Community,  namely  the  law  of  the  originating  Member  State.  This  requires  the 
application  of  a  criterion,  or  criteria,  guaranteeing  as  high  a  degree  of  stability  as 
possible. 

The criterion of jurisdiction, determined on the basis of the place of establishment of the 
broadcaster,  is  the  most  appropriate  and the  most  efficient  in terms  of  allocating  legal 
responsibility for broadcasting organizations. Because of its emphasis on the broadcasting 
organization,  it  is less likely  to give rise to problems in conferring  responsibility over a 
particular programme  service. 

The up-link criterion does not guarantee stability as technological progress has been such 
that satellite up-links have become highly  mobile and are used in several ways. It is for 
example  increasingly  common to up-link  different  time  slots or "windows" of the same 
programme  service from different  Member States. Broadcasters may choose to transmit 
the  signal  of  a  single  programme  service  from  one  up-link  at one  time  of  the  day and 
from  another at another time, e.g.  mornifigs and evenings. 

29 

It  may  also  be  the  case  that  a  broadcaster  up-links  the  same  programme  to  different 
viewers  via  different  satellites,  for  example  using  the  option  of  "simulcasting", 
i.e.  transmitting  the  same  programme  using  different  transmission  standards  in  order  to 
reach  different  geographical  markets  (PAL  or  SECAM)  or  different  types  of  market 
(e.g.  PAL-PLUS  or  D2-MAC  for  the  wide  screen  market).  In  such  cases  it  may  be 
appropriate  to  up-link  the  same programmes  from  different  places  at  the  same time. 

The  up-link  criterion  could  give  rise  to  legal  uncertainty,  as  it  would  be  possible  for  a 
broadcaster simply to move its satellite up-link into the territory of another Member State 
and thus escape from the application of the law of a Member  State. The case of Red Hot 
TV  has clearly  demonstrated  the risk  of  a  legal  vacuum. 

The  increasing  number  of  problems  which  can  be  attributed  to  the  up-link  criterion 
strengthens the  case  for  not  taking  it as the  criterion  for  determining  jurisdiction. 

This phenomenon will accelerate with the advent of digital transmission techniques which 
will  eliminate  to  a  large  extent  the  technical  constraints  traditionally  applying  to 
broadcasting  as an  activity. 

2.2.2  Clarification  of the  "establishment" criterion  as applied  to  audiovisual  services 

In view of the above, the Commission remains convinced  that  establishment  is the most 
effective  basis on  which to  determine jurisdiction.  However,  in  the  light  of  experience, 
it believes  it  is necessary  to  refer  in Article  2 itself to  the  cumulative  criteria  identified 
by  the  Court  of  Justice,  namely  actual  pursuit  of  an  economic  activity  and  a  fixed 
establishment  in the  Member  State  in  question. 

The  proposal  would  also  add  a  recital  specifying  a  sçries of  relevant  factors  qualifying 
the  notion  of  establishment  for  the  purposes  of  applying  the  Directive,  with  a  view  to 
identifying  and  clarifying  the  establishment  rule  in  order  better  to  achieve  the  basic 
objectives  of  stability  and  legal  certainty.  These  criteria  must  also  take  account  of  the 
legal  context  of  Community  law as  regards  establishment as well  as the  specific  nature 
of  broadcasting  as an  activity. 

The  following  criteria  are  suggested: 

the  place  where  the  broadcasting  organization  has  its  head  office  (i.e. where  the 
company  is set up under  the law of  a Member  State, having  its registered  office, 
central  administration  or  principal  establishment  in this  Member  State), 
the place  where  decisions on programming  policy  are usually  taken. 
the place where the programme  to be broadcast to the public  is finally  produced. 

These are the principal criteria, the second and third relating specifically  to broadcasting. 
However,  they  many  not  in  themselves  be  sufficient  to  ensure  an  "effective  and  stable 
link"  with  the  economy  of  the  Member  State  concerned.  A  further  condition  should 
therefore  be  added: 

provided  a  significant  part  of  the  workforce 
Member  State. 

is  employed 

in  the  same 

30 

"Significant"  here  should  be  taken  to  mean  a  quantitatively  important  share  of  the 
workforce  but also, and above all, a qualitatively  significant  part (people with an activity 
directly  linked  to  the  production  and/or  marketing  of  the  programmes). 

Any  disagreement that  still arises between the Member  States, despite the  application  of 
these  criteria,  will  be  for  the  domestic  courts  or,  ultimately,  the  Court  of  Justice,  to 
resolve. 
Finally,  a broadcaster which  is not  "established" in  a  Member  State within  the  meaning 
of  paragraph  2  but  uses  a  frequency,  satellite  capacity  or  satellite  up-link  under  the 
jurisdiction  of  a  Member  State  will  be  subject  to  the  law  of  that  state  pursuant  to 
paragraph  3.  This  is  the  same  provision  that  appears  in  the  current  Directive  and  its 
purpose  is to  ensure that all  broadcasts transmitted  in the  Union  which have  a link  with 
one  of  its Member  States -  in this case  a technical  link  - comply  with  the  Directive. 

2.2.3  Article  2a 

This is the current Article 2(2), the central mechanism of the Directive which justifies the 
fact  that  it  is based  on Articles  57(2) and  66 of  the Treaty  (see also  the ninth  recital  of 
the  1989 Directive, which  refers  to  freedom  of expression  as enshrined  in Article  10(1) 
of  the  Convention  for  the  Protection  of  Human  Rights  and  Fundamental  Freedoms, 
ratified  by  all  the  Member  States).  The  proposed  amendments  specify  in  detail  the 
technicalities  of  the  exceptional  procedure  whereby  a  Member  State  may  take  steps 
against  broadcasts  infringing  Articles  22  and  22a  and  were  prompted  by  the  lessons  of 
the  Red  Hot Television  case  (see Report  on  application,  point  3.2.1). 

The  proposal  also  seeks  to  add  a  recital  referring  to  the  fact  that  the  Court  has 
consistently  held  that  a  Member  State  retains  the  right  to  take  measures  against  a 
broadcasting  organization under the jurisdiction of another  Member  State in the event of 
a  clear  and  deliberate  attempt  to  bypass  its  legislation.  The  relevant  case  is  Van 
Binsbergen40  which  is referred  to  in a Commission statement  entered  in  the  minutes  of 
the  Council  meeting  of  3 October  1989. 

This  case  law was  recently  supplemented  by  the  Court's  decision  of  5 October  1994 in 
Case C-23/93  TV 10 SA v Commissariaat voor Media.41 This was a preliminary  ruling on 
the interpretation  of the provisions of the EC Treaty  relating to the provision of services. 
Although the judgment makes no reference  to the Directive, which had not been  adopted 
at the time the  events which  form  the  subject  of the case took  place  (the  Commissariaat 
voor  de  Media's  decision  of  28  September  1989),  it  is  important  to  take  note  of  the 
conclusions  for  the  areas  covered. 

The  Court  confirmed  that: 

the concept  of provision  of  services used in Articles  59 and  60 of the  EC  Treaty 
embraces the broadcasting, through the intermediary of cable operators established 

40 

41 

ECJ,  Case  33/74  [1974]  ECR  1299. 
Not  yet  published. 

31 

in  one  Member  State,  of  television  programmes  supplied  by  a  broadcasting 
organization  established  in  another  Member  State; 
a  Member  State  may  impose  restrictions  on  the  transmissions  of  a  broadcaster 
which  establishes itself  in another  Member  State but whose activities are  entirely 
or  partially  directed  at  the  territory  of  the  first  Member  State,  if  the  choice  of 
establishment  was  made  with  a  view  to  enabling  this  organization  to  evade  the 
rules  that  would  have  applied  to  it had  it  been  established  in the  territory  of  the 
first  Member  State. 

The  Commission  draws  the  following  conclusions from this. 

Firstly, the Court confirms  that broadcasting and cable retransmission are services within 
the  meaning  of  Articles  59  and  60  of  the  Treaty;  circumvention  of  national  laws  and 
regulations  does  not  take  a case out  of  the  Directive. 

Secondly,  the  decision  endorses  the  place  of  establishment  as  the  criterion  determining 
the  sole law applicable  to a broadcaster,  except  where  establishment  is selected  with the 
obvious  intention  of  evading  the  rules  of  a  state  to  whose  territory  the  broadcasts  in 
questions are entirely  or partially  directed (paragraph  21 of the Court's decision refers  to 
establishment  for  the  purpose  of  providing  such services). In this  specific  case the  state 
of  reception  can  treat  a broadcaster  under  the jurisdiction  of  another  state  as  equivalent 
to a domestic broadcaster. This should be provided  for by inserting a recital to this  effect 
in the  Directive. 

Thirdly,  however,  this  case  law,  as  formulated  by  the  Court,  does  not  relate to: 

broadcasting  organizations  that  have  been  established  for  a  certain  time  in  a 
Member  State  and  wish  to  extend  the  range  of  their  broadcasts  from  that 
Member  State  (TV 10 was  a new  organization  that  had  chosen  to  establish  itself 
in  a  Member  State  other  than  the Netherlands,  which  was  to  be  the  main  target 
of  its transmissions, and  in  fact  never  began  broadcasting); 
broadcasting  organizations  whose transmissions are  directed  either  mainly  at the 
territory  of  the  Member  State  under  whose jurisdiction  they  operate,  or  at  the 
territory  of  several  Member  States; 
broadcasting  organizations  whose transmissions are directed  either  mainly  at the 
territory  of  a single Member  State  and which have  not  established themselves  in 
another  Member  State  solely  in  order  to  escape  the  rules  that  would  have  been 
applicable  if  they  had  been  established  in the receiving  Member  State. 

It  is reasonable  to  conclude  that  the  Court  framed  its  decision  in  this  very  precise  way 
specifically  to avoid undermining the meaning of the relevant provisions of the EC Treaty 
and  the  Convention  for  the  Protection  of  Human  Rights  and  Fundamental  Freedoms. 
There can be no  question  of circumvention  in this context  if the  national  rules that  have 
been  evaded  were  themselves  incompatible  with  Community  law.  Finally,  it  should  be 
noted  that  the  facts  as ascertained  by the  court referring  the case  concern  an area that  is 
not coordinated  by the Directive, namely Dutch domestic measures to ensure the pluralist, 
non-commercial  content  of  the  programmes. 

32 

The  Commission  concludes  that  there  is no  need  to  propose  a  fundamental  amendment 
to  Article  2(2)  of  the  Directive. 

2.2.4  Article  3 

In  order  to  give  the  Directive  greater  legal  consistency  and  in  view  of  the  Leclerc 
judgment  (Case C-412/93,  9 February  1995,  already  referred  to  in  the  report  on 
application)  the  Commission felt  it was preferable  to  merge the exceptions  provided  for 
in  Articles  8  (linguistic  objectives)  and  19  (exemptions  regarding  advertising)  into  a 
single, general  exemption,  though  this is not  to be  exhaustive. 

Since the Directive came into effect  it has transpired that certain provisions have not been 
applied  in the  spirit  of  the  Directive,  either  because  of  incorrect  transposai,  or  because 
of  differences  in  interpretation,  or  because broadcasters  have  simply  not  complied  with 
them. 

This  has  led  some  observers,  including  certain  Member  States,  to  call  for  the  state  of 
reception  to  be  given  a right  of  enforcement. 

This  request  flies  in  the  face  of  the  principle  of  free  movement  of  services  and  of 
Article  2,  establishing  the  rule  of  a  single  law  applicable  to  each  broadcasting 
organization,  and  it  could  not,  therefore,  be  met.  However,  mindful  of  the  concerns 
expressed by  certain professionals  and  Member  States, the  Commission felt  the  need  to 
lay down more detailed provisions on national enforcement  of the Directive's  obligations 
by  television  broadcasters  in  the  second  paragraph,  and  in  particular  to  provide  for 
penalties on a sufficient  scale to serve a veritable enforcement  function.  Incidentally, any 
failure by a Member State to discharge its supervisory function  would itself be a violation 
of  the  Directive,  and  specifically  of  Article 3(2). 

Independently  of  the  checks  to  ascertain  that  national  rules  are  compatible  with  the 
Directive,  which  must  be carried  out at  Community  level,  it  is clear  that  legal  certainty 
for  broadcasting  organizations  is  also  a  function  of  the  possibility  of  obtaining  interim 
protective  measures  swiftly  in  the  event  of  infringements  of  national  rules  by  another 
broadcasting  organization,  regardless  of  which  Member  State  has jurisdiction. 

The  Commission also takes the  view  that  a recital  should  be  included  to the  effect  that 
specific measures exist in all of the Member States enabling any interested party to assert 
its rights  in the  event  of  infringement  of the  provisions  of  this  Directive. 

2.3 

Promoting  the  distribution  and  production  of  programmes 

2.3.1  Promotion  of  European  works  f Articles  4  and 5^ 

A number of Member States had their own regulations promoting domestic and European 
production  prior  to  1986  proposal.  Provisions  of  the  same  type  therefore  had  to  be 
incorporated  into  the  areas  coordinated  by  the  Directive.  In  its  initial  proposal 
(July  1986),  the  Commission  had  suggested  that  the  minimum  broadcasting  quotas  for 
European works be set at 30% at first, rising to 60% after  three years. Despite opposition 
from  Parliament  on  this  point,  the  Directive  as  adopted  by  the  Council  insisted  on  a 

33 

"majority  proportion"  "wherever practicable", with an "absolute minimum" clause  to the 
effect  that  where  a  majority  proportion  was  unattainable,  it  must  not  be  lower  than  the 
average  for  1988  in the  Member  State  concerned.  A monitoring  system  was  also  set up 
and the  Commission is required  to produce  a  report  every  two years  on the  percentages 
achieved  by each of the television channels within the jurisdiction  of the Member  States. 

The first such report was adopted on 3 March  1994.42 In its conclusions, the  Commission 
made  the  following  remarks  on the first monitoring  exercise: 

"Articles 4 and  5 apply to all broadcasting stations  under the jurisdiction  of the Member 
States  except  local  stations  that  are  not part  of  a  national  network  The  Commission 
realizes  that  the  wording  of  the articles,  and  in particular  of  the  use  of  the  terms  such 
as  "where practicable"  and  "progressively", posed  interpretation  problems  for  both 
national  authorities  and operators. The use of such terms reflects the  need for  flexibility 
in  a  system  that  covers  both  generalist  land-based  broadcasters  and  special  interest 
satellite  services, for  instance. 

"The  ideal  answer  would probably  be  to  include  in  the  Directive  more  detailed  rules 
better tailored to cater for  the differences between the various types of channel. However, 
the Commission's view is that this first  monitoring exercise has helped to clarify the scope 
of the two articles. It clearly emerges that the majority of channels covered in the reports 
-  in particular  those that have been established for  some time - are  economically  able to 
present  a  majority  proportion  of  European  works  and  at  the  same  time  achieve 
satisfactory  audience  ratings. 

"The. Commission  therefore  considers  that  Article  4  requires  all  channels  under  the 
jurisdiction  of  the  Member  States  to  transmit,  in  principle,  a  majority  proportion  of 
European  works where they exist in sufficient number for  the type of  channel  in question 
or  where  the  European  programme  industry  is  potentially  able  to  produce  them  in 
sufficient  quantity.  The aim of the provision,  after all,  is to stimulate  the development  of 
the  industry and  to  enable viewers to have  access  to such productions.  Furthermore  the 
Directive  establishes  a legal framework  that applies to all  broadcasters;  the principle  of 
competition  means  that  this  framework  must  be  applied  equitably  and  as  uniformly  as 
possible.  The reports show that there are no grounds  (in terms of economic  viability) for 
any  significant  differences  in  applying  the  rules  of Articles  4  and  5  to  channels  of the 
same  type  in whatever  market, simply because  the  broadcaster  in question  comes under 
the jurisdiction  of  another Member State.  The term  "progressively" makes  it possible  to 
make  allowance for  the  special  circumstances facing  new  broadcasters,  but  does  not 
release  them  from  the  obligation to attain  a  majority proportion  in  the  long  run. In this 
connection, Article  4(2) lays down a reference threshold which applies  in all the Member 
States  if the  majority proportion  is not  attained. 

Article  5  imposes  rather  less  onerous  obligations  on  broadcasters.  The  Commission 
therefore feels  that  the same  degree of flexibility  is not appropriate  as for  Article  4 and 
that Article  5 should  therefore be applied  more  rigorously  by the  Member  States. " 

42 

COM(94)  57  final,  op.  cit. 

34 

The  proposed  amendments  to  Articles  4  and  5  follow  the  same  approach,  with  due 
consideration  for  the  outcome  of  the  comprehensive  consultations  that  were  held  in 
political  circles  and  with  professionals  in  the  industry,  and  the  round  of  consultations 
launched by the Green Paper from  April  1994. The main features  of the proposed  system 
are  as  follows: 

Article  4 

The  broadcasting  obligations, are  identical  to  those  in  the  1989  Directive  for 
general-interest  channels, i.e. broadcasters  must reserve  a  majority  proportion  of 
transmission  time  for  European  works,  excluding  the  time  appointed  to  news, 
sports,  games  and  advertising.  Thus  there  is  no  change  to  the  "base",  which 
continues to encompass studio productions, as under the  1989 Directive. The first 
monitoring  report,  referred  to  above,  revealed  that  the  general-interest  channels 
had  no  difficulty  complying  with  this  requirement. 

However,  the  system  does  need  to  be  adjusted  for  the  special-interest  channels, 
whose  numbers  are  steadily  increasing.  These  channels  could  be  given  the 
opportunity  to  opt  for  a  minimum  investment,  i.e.  25%  of  the  programming 
budget,  as defined  in the  proposal. 

The  "absolute minimum"  clause  (Article 4.2  of  the  1989 Directive)  is  deleted. 

The  channels  have  three  years  after  they  are  launched  to  attain  the  required 
proportions. 

Channels  broadcasting  in  a  non-European  language  to  specific  cultural  target 
audiences  are not  required  to  comply  with  Articles  4  and  5. 

The  monitoring  system  has  been  left  largely  intact,  though  the  new  version 
acknowledges that the proportions may not be attained, in which case the Member 
States must inform the Commission, giving reasons and stating what measures are 
being  taken  to  redress the  situation. 

The  Article  is to be applicable  for  ten years  from  the entry  into force  of the new 
Directive, after which period Community provisions will no longer apply. National 
measures obstructing the free movement of television programmes will,  however, 
continue  to  be prohibited.  The restriction  on  the  period  of  applicability  does  not 
preclude  the  Commission  from  making  proposals  for  measures  to  meet  evolving 
needs. 

Article  5 

The  only  change  is  that  broadcasters  will  have  to  earmark  at  least  50%,  rather 
than merely  "an adequate proportion"  for  recent works. Not  only  does this  clarify 
matters,  it  is  also  intended  to  promote  the  production  and  distribution  of  new 
independent  works. 

35 

In both cases, the vague phrase "wherever practicable", which resulted  in legal disputes43 
and was incompatible with the idea that Article  4 would eventually  be repealed, has been 
deleted.  This  will  lead  to  greater  legal  certainty  and  ensure  fair  competition  between 
channels of the  same type in various Member  States. However,  deleting the phrase  does 
not  detract  from  the  flexibility  of  the clause, as a result  of  the  following: 

retention  of  the  1989 base, including* studio  productions; 
deletion  of  the  "absolute minimum" ^clause; 
the  fact  that  special-interest  channels  can opt  for  a minimum  investment; 
realistic  requirements  (majority  proportion  of  transmission, time  or  25%  of 
programme budget), compatible  with  current  market  practices; 
gradual  introduction  over  three  years  and  general  exemption  for  channels 
broadcasting  in a non-European  language. 

The grounds for  scrapping the system will be all the stronger if it is capable of  achieving 
its  objectives.  It  is  worth  recalling  that  the  requirement  that  broadcasters  reserve  a 
majority  of broadcasting time for European works and a percentage of broadcasting time 
or a share of the programming  budget for  independent  productions  reflects  both a desire 
to  help  audiovisual  professionals  make  the  most  of  a  market  enlarged  by  the  free 
movement  of  television  services and a wish to promote  awareness  of  European  cultures 
in  the  Union,  through  measures  to  stimulate  the  production  and  distribution  of  their 
works.  This  aim  found  broad  support  among  the  professionals,  most  notably  at  the 
Audiovisual Conference  in July  1994;  they complain that the few  legal measures that do 
exist  at  European  Union  level  specifically  to  help  promote  the  European  programme 
industry  are  not  applied  consistently.  Furthermore,  the  approach  is  consistent  with  the 
1994 Green Paper  which  stressed that the next ten years would  a decisive period  for  the 
future  of  the  European  programme  industry  -  a  view  confirmed  by  subsequent 
consultations. Either  the  industry  will  become  competitive  on the  world  markets  and  in 
the  multi-service  environment  or  it will become  essentially  a second-rate  player,  unable 
to  progress  beyond  the  confines  of the  national  markets. 

The  monitoring  report  concluded  that  Article  5 was basically  capable  of being  enforced 
and  was  indeed  complied  with  by  and  large.  The  Article's  value,  which  is  ultimately 
structural, has been highlighted  by the professionals,  who  see it as securing pluralism  in 
a  world  of  media  mergers. That  is why  the obligation  to  use material  from  independent 
sources from the first day a channel broadcasts remains, the proportions being unchanged, 
and  will  not  disappear  at the  end  of  the  ten-year  period. 

2.3.2  Detailed  examination  of the proposed  amendments 

Certain aspects of the proposed amendments  call  for  more  detailed  explanation  from  the 
Commission. 

a) 

Special  rules  for  channels  specializing  in  drama  and  documentaries 

43 

In  view  of  the  objective  of  the  measure,  i.e.  to  promote  the  distribution  and  production  of 
European works, a teleological interpretation of the clause, in the Commission's  view, would mean 
that the majority  proportion  was the rule and that exceptions would have to be justified  on a case-
by-case  basis  on  the  basis  of  objective  criteria. 

36 

The  Member  States  must  allow  television  channels  which  devote  at  least  80%  of  their 
time to cinematographic works, drama, documentaries or animation to opt to allocate 25% 
of  their  programming  budgets  to  European  works  instead  of  complying  with  the 
transmission-time  requirement.  The  proposal  uses  the  same  phrase  -  "programming 
budget"  -  as  Article  5  of  the  1989  Directive,  but  defines  it  in  precise  terms  as  the 
accounting  cost  of  acquiring  or  commissioning  broadcasting  rights,  producing  and  co-
producing  for  all  programmes  broadcast  by  the  channel  in  any  given  year. 

The  Commission  feels  that  the  minimum  investment  requirement  is  best  expressed  in 
terms  of  the  programming  budget.  It  enables  the  objective  to  be  clearly  defined,  i.e.  to 
encourage  channels broadcasting  stock programmes44 to  invest  in  production  in  Europe 
while  leaving  the  irrelevant  activities  that  broadcasters  may  be  involved  in  out  of  the 
calculation  This  applies  in  particular  to  organizations  broadcasting  a  range  of  special-
interest  channels,  some of which,  such as news and  sports channels,  may  not  be  subject 
to the  majority  proportion  requirement  or the  minimum  investment  requirement. 

It  should  be  made  clear  right  away  that  the  measure  does  not  seek  to  establish  any 
transmission  time  requirements  and  minimum 
hypothetical  equivalence  between 
investment requirements. To do so would be pointless, if only because the concept of the 
"average  hourly  cost"  bears  no  relation  to  the  way  the  audiovisual  industry  is  actually 
financed. 

The  condition  a  special-interest  channel  should  have  to  meet  in  order  to  be  able  to  opt 
for  the  investment  requirement,  i.e.  at  least  80%  of  programming  devoted  to  stock 
programmes,  was  based  on  an  examination  of  figures  relating  to  the  programme 
distribution  of  a  number  of  such channels  in Europe.  The  percentage  is high  enough  to 
ensure that only special-interest channels qualify  while allowing them to devote a limited 
share of  their  broadcasting  time  (20%)  to  other  categories  of  programme. 

The minimum  investment - 25% - is based on figures from  a study  commissioned by the 
Commission  aimed  at  determining  what  was  reasonable,  i.e.  what  would  not  hinder  the 
development  of  the  services  in question,  but  would  be  sufficiently  effective  in terms of 
the  boost  to  the  European  programme  industry. 

b) 

The  gradual  approach  for  new  channels 

The  second  major  proposed  amendment  seeks  to  define  precisely  the  notion  of 
progressivity. New television channels will have three years to comply  with the requisite 
proportions.  These  must  be  attained  in  stages, i.e.  regular  progress  must  be  made.  The 
three-year  deadline was suggested by businesses and  some national  reports  produced  for 
the first monitoring exercise as being necessary for attaining financial  equilibrium in most 
cases. It  is  also  consistent  with  the  ten-year  limit  on the  validity  of  European  measures 
to  promote  the  industry. 

44  Stock  works  differ  from  flow  programmes,  which  have  a  limited  shelf-life  and  profitability,  such  as 
game-shows  and studio productions, in that the initial costs of producing them  presuppose a long-term 
profitability  strategy  (several  television  showings)  on  different  supports  (cinema,  video  tape,  video 
game  version,  etc.)  and  on  as  many  geographical  markets  as possible,  given  the  more  durable  nature 
of  their  content. 

37 

2.3.3  Article  6 

The  amendment  to  paragraph  1(a) is of  a formal  nature  and  serves  to  update  the  text. 

The  amendment  to  paragraph  3  seeks  to  include  European  non-member  countries  with 
which  the  European  Union  has  concluded  Europe  agreements  covering  the  audiovisual 
industry in order to ensure the legal certainty" needed for the application of the obligations 
in Articles 5 and  6 while at the same time encouraging partnerships between  audiovisual 
companies in the Union and their counterparts in these countries. This amendment  reflects 
the  overall  approach  to  cooperation  with  these  countries  advocated  by  the  Commission 
in  both  regulatory  matters  and  questions relating  to  financial  support. 

The  insertion  of  a  new  paragraph  4  reflects  the  desire  to  conduct  an  active  policy  on 
in  particular  by 
investment  in  European  programme  production, 
extra-European 
encouraging  co-production  agreements with  non-member  countries  outside  Europe  with 
which  bilateral  agreements  already  exist  in  this  field.  It  is  a  response  to  the  need, 
reiterated  several  times  by  the  professionals,  to  open  profitable  markets  for  European 
programmes  while  respecting  their  cultural  identity.  For  this  reason  the  Commission 
proposes  that  programmes  produced  by  financial  partnerships  in  which  investors  from 
these  non-member  countries  do  not  have  a majority  holding  continue  to  be  regarded  as 
European  works.  This  co-production  policy  should  raise  the  profile  of  European 
programmes  on  the  markets  of  these  non-member  countries  and  develop  the  synergies 
necessary  for  the  creation  of jobs  with  other  industries  on  the  world  market. 

2.3.4  Article  7 

The  new  Article  7  does  not  alter  the  basic  principles  of  the  earlier  system  whereby 
Member  States  introduce  time  limits  on  broadcasts  of  cinematographic  works  but 
broadcasters  are  free  to  negotiate  different  limits  with  rights  holders.  The  Commission 
wishes to  stress that  the purpose  of  this  provision  is to  strike the  best possible  balance, 
in  the  context  of  the  free  movement  of  television  broadcasts,  between  the  television 
showing of a cinematographic work and its first appearance  in the cinema. The principle 
of freedom  of contract, however, takes precedence, with the previous provision acting as 
a  safeguard  clause  in the  event  of  a failure  by the  parties to  reach  agreement. 

As it made clear  in the report on application, the Commission believes that responsibility 
for  organizing  the  time-scales  for  the  television  broadcast  of  cinematographic  works 
should, ideally, be left to contractual agreements between rights holders and broadcasters. 
Maintaining  the  principle  of  contractual  freedom  in  this  area  thus  complies  with  the 
wishes  of  the  vast  majority  of  professionals  who  are  keen  to  bring  profitability  to  a 
creative  activity  in  a  state  of  crisis.  Producers,  who  generally  hold  all  the  commercial 
rights, must have their hands free to negotiate the sales of their works in accordance with 
their  own  ideas and  in their  own best economic  interests. These  economic  interests vary 
from  one  production  to  another  and  from  one  market  to  another,  adapting  to  very 
different  situations  based  on  diverse  cultural  traditions. 

However,  it has proved necessary to incorporate the new forms of television  exploitation, 
namely  pay-per-view  services, in the system of time-scales, given  the  important  position 

38 

these  will  occupy  in  the  broadcasting  markets  of  the  future  and  the  impossibility  of 
imposing  on  them  the  two-year  delay  provided  for  in  the  1989  Directive.  To  even  out 
competition  between  the  various  television  media,  the  Commission  decided  on  the 
following  order  of  succession from  the time  of  a  film's  first  cinema  showing: 

1) 
2) 
3) 

television  communication  services operating  pay-per-view 
television  communication  services requiring  a specific  subscription 
other  television communication  services. 

In  setting  the  time-scale  the  Commission  has  been  influenced  by  the  fact  that 
broadcasting  organizations  are  currently  the  largest  investors  in  cinematographic 
production and by contractual practices and agreements which generally  allow the release 
of  the  video  edition  of  a  film  six  months  after  its  appearance  in  the  cinema  (which  is 
intended to maximize producers' revenue). The choice of a single period for each category 
of  service  is  intended  to  simplify  the  application  of  the  system. As  they  stand,  the  time 
periods reflect  the real-life  situation and are best placed to create a time-scale  compatible 
with  the  need  to  ensure  fair  competition  between  the  different  television  media  to 
generate  an  active  investment policy  in the  cinema. 

The Commission would  also like to clarify  the reasons for  retaining  the  first  showing of 
a  cinematographic  work  in  the  cinema  of  a  Member State  of  the  Union  as the  starting 
point  for  calculating  the first possible date  of  its broadcast  on  television.  They  relate to 
both legal considerations and a desire to encourage broader  strategies for  the  commercial 
marketing  of  films.  As the  Directive  is based  on  the  coordination  of  national  laws,  the 
Community legislator opted for the principle of a single starting point in order to provide 
legal  certainty  for  broadcasters  and  to  avoid  discriminating  between  broadcasters  in 
different  Member  States.  This  option  is  similar  to  the  cable-satellite  Directive  that 
provides  for  the  contractual  acquisition  of  a  programme's  satellite  rights  in  accordance 
with  the  laws of  one  place  only,  namely  the  Member  State  of  broadcast.45 

The Commission would also point out that this principle  is consistent with a commercial 
practice  that  is becoming  increasingly  common  in the Union,  whereby  big-budget  films 
are  released  in  several  countries  at  the  same  time.  The  Commission  sees  this  broader 
strategy,  which  gives  more  and  more  Europeans  access  to  new  cinematographic  works 
at the same time, as having the effect  of increasing mutual understanding among Europe's 
peoples. It  believes that  encouraging  such moves  is rather  like  indirectly  supporting  the 
restructuring  of  the  cinema  sector,  because  it  leads  film  producers  and  distributors  to 
develop  from  the  outset  marketing  strategies  suited  to  the  nature  of  the  works  they  are 
producing.  A  promotion  budget  will  be  defined  differently  depending  on  whether  the 
work  has national  or  European  potential  and  according  to  the  economic  risks  entailed. 

2.3.5  Article  8 

Since its content has been incorporated into the new Article  3, Article  8 has been deleted. 

45  Directive  93/83/EEC  (OJ  L  248,  6.10.93)  states  that  "The  act  of  communication  to  the  public  by 
satellite  occurs  solely  in  the  Member  State  where,  under  the  control  and  responsibility  of  the 
broadcasting organization,  the programme-carrying  signals are introduced  into an uninterrupted  chain 
of  communication  leading  to  the  satellite  and  down  towards  the  earth."  (Article  l(2)(b)) 

39 

2.4.  Chapter  IV  - Television  advertising,  sponsorship  and  home  shopping 

2.4.1  Article  11 

The  purpose  of  this  Article  is  to  regulate  the  way  in  which  programmes  may  be 
interrupted  for  advertising  and  home-shopping  breaks. 

The  proposed  amendment  takes  account  ofthe  fact  that  films  made  for  television  can, 
from  the  outset,  have  natural  breaks  built  in  allowing  advertising  spots  to  be  inserted 
without  detracting  from  the  integrity  of the $vork. Films  made  for  cinema,  however,  are 
constructed  differently  for  different  media,  i.e.  the  cinema  and  subsequently  video, and 
there  are  no  planned  advertising  breaks. 

It also takes account  of the business life  cycle of television  films,  which is closer to that 
of  other  television  material  (serials,  for  instance);  they  tend  to  make  the  bulk  of  their 
profits  on  a  single  showing. 

The  Commission  would  also  point  out  that  the  phrase  "for  each  complete  period  of 
45  minutes"  in  the  third  paragraph  should  be  interpreted  as  allowing  a  broadcaster  to 
interrupt  a  feature  film  once  per  period  without  having  to  wait  for  the  45th  minute, 
provided,  of  course that the other provisions  of the same Article  are  complied  with  (the 
20  minute period,  for  example, though that is also to be viewed  as a principle rather than 
a  rule  to  be  enforced  to  the  nearest  second).  And  since  a  full-length  feature  film  is by 
definition  longer  than  45  minutes, the proviso  can  safely  be  deleted. 

2.4.2  Articles  12 to  16 

Articles  12 to  16 on the protection of television audiences are extended  to include home 
shopping  programmes  and  spots, as  defined  in  the  new  Article  1(e)  (see  point  3.2.4  in 
Part  B of  the  report  on  application). 

2.4.3  Article  17 

The prohibition  of sponsorship by companies  whose main  activity  is the manufacture  or 
sale  of  pharmaceutical  products  available  only  on  prescription  creates  unwarranted 
discrimination vis-à-vis other companies effectively  in the same position but with the sole 
difference  that  activities  devoted  to  the  manufacture  or  sale  of  these  products  do  not 
exceed  49%  of  their  total  operations.  The  proposal  therefore  seeks  to  lift  the  ban  on 
sponsorship  by  the  first  category  of  companies.  This  does  not  undermine  the  consumer 
protection  objective  ofthe  Article as a whole, as the general rules on sponsorship clearly 
prohibit  the  promotion  of  goods  or  services  supplied  by  the  sponsor.  Moreover,  unlike 
tobacco  companies,  whose  name  is  often  associated  with  their  products,  the  companies 
targeted by this measure are not generally associated in the public's mind with a particular 
pharmaceutical  product. 

40 

2.4.4  Article  18 

Television  advertising  is  in  a  state  of  constant  flux.  New  forms  are  emerging.  But  the 
advertising slot remains the most conventional, and commonly  the most profitable,  form. 
It  generally  lasts  between  a  few  seconds  and  one  and  a  half  minutes  and  is  inserted 
between  programmes  or  parts  of  programmes. 

The reference to "other forms of advertising" (than slots) was introduced  into paragraph  1 
to make the  article  more  flexible  so that it will  cover  new  forms  of  advertising,  such as 
tele-promotion and "Dauerwerbesendungen\  which are longer and actually constitute part 
ofthe  programme itself, as and when they emerge. Member States that  so wish may raise 
the  aggregate  limit  on  advertising  to  20% of  daily  broadcasting  time  to  allow  for  these 
new forms of advertising, the broadcaster remaining free to determine how the  aggregate 
is  shared  out  between  the  different  forms  within  the  general  limit  of  15%. 

Because  of  the  growth  in  home  shopping,  the  time  restrictions  imposed  by  this 
paragraph  1 apply  to  only  one  form  of  home  shopping,  namely  home-shopping  spots, 
which, like traditional advertising spots, are relatively  short. They are distinguished from 
advertising  spots by being  direct offers  to sell or hire rather  than  promotional  messages. 
They  are  not  to  be  confused  with  the  broadcasting  slots  devoted  to  home  shopping 
referred  to  in Article  18b(l),  which are not spots inserted  between  programmes  or  parts 
of programmes but programmes  in their own right. Home shopping  spots are covered by 
the  general  limit  of  15%/20% of  daily  broadcasting  time. 

Paragraph  2  aims  to  restrict  excessive concentration  of  advertising  in  a  given  period  of 
time, in this case an hour. The  1989 Directive did not define  an hour, with the result that 
the  provisions were  applied  differently  depending  on  whether  the  calculation  was based 
on a  sliding hour  or  a clock  hour. The  sliding hour  restricts the  scope  for  concentrating 
advertising  in a  given period more. The complexity  of the calculations  that  broadcasters 
and national  authorities would have to carry out to ensure compliance  with the rule, and 
the  attendant  costs  constitute  another  argument  in  favour  of  the  clock  hour,  which  is 
simpler to calculate. The Commission has therefore proposed an amendment to this  effect. 
But, given that the advertising spot is still the most profitable  form of advertising in terms 
of  revenue  per  unit  of  time  from  the  broadcaster's.point  of  view,  especially  at  peak 
viewing times, there  is no  obvious need for  the restriction  to be extended  to other  forms 
of  advertising  that  take  up  more  air  time  or  to  home-shopping  spots  (which,  it  will  be 
remembered,  are  governed  by  Article  18a -  see below).  The  effect  of  these  advertising 
market  factors 
is  that  broadcasters  unlikely  to  excessively  concentrate  forms  of 
advertising  other than  advertising spots, especially  at peak viewing  hours  when the need 
to  achieve  equilibrium  in  the  viewer's  interest  is most  acute. 

2.4.5  Article  18a 

Home shopping is expanding rapidly at national level  in most Member  States and outside 
the Community  and cannot be allowed to develop outside the legal  framework  created by 
the  Directive. 

41 

Because of  the  impact  that  seeing the product  on the  screen  can  have  on  the  decision  to 
buy,  measures to protect both the television  viewer  and the consumer  must be  laid down 
in  the  Directive  for  the  sake of  setting  standards  and  preventing  abuse. 

The  general  principles  laid  down  in  paragraph  1  on  the  content  of  home  shopping 
broadcasts  therefore  set  minimum  standards  intended  to  ensure  that  viewers  can  clearly 
distinguish  such broadcasts  from  advertising or  other  programmes  such  as game  shows, 
for  example. 

In  order  to  extend  the  protection  already  prpvided,  paragraph  2  draws  expressly  on  the 
Directive on the protection  of consumers in respect of contracts  negotiated  at a distance, 
on  which  the  Council  adopted  a common  position  on  30  March  1995.46 

2.4.6  Article  18b 

Restricting the daily volume to one hour, as the 1989 Directive does, is not an appropriate 
way  to  deal  with  home  shopping  in  all  its different  forms. 

The present proposal therefore  seeks to encourage television home shopping by repealing 
the  restriction  on  hours  for  channels devoted  exclusively  to  this  activity.  This  idea  of  a 
Community-wide  market  for  home  shopping  reflects  widespread  demand  among 
professionals  in  the  Member  States. 

This Article  seeks also to enable broadcasters operating  channels not  devoted  entirely to 
home  shopping  to  create  broadcasting  slots  devoted  to  home  shopping  for  up  to  three 
hours in any 24-hour  period.  This would  help them to make slack viewing  periods  more 
profitable. 

2.4.7  Article  19 

This  main  provisions  of  this  Article  have  been  incorporated  into  the  more  general 
framework  of  Article  3. Article  19 as such has been  repealed. 

2.4.8  Article  20 

This provision extends to home shopping the possibility granted to Member States to take 
separate  measures  for  broadcasts that  are  intended  solely  for  their  national  territory  and 
cannot  be  received  directly  or  indirectly  in one  or  more  other  Member  States. 

2.4.9  Article  21 

In order to enhance the legal coherence of the Directive, the contents of this Article have 
been transferred  to Article  3, which introduces a number of measures aimed at  enforcing 
the  rules  laid  down  in the  Directive  more  effectively.  Article  21  as  such  is  repealed. 

2.5 

Chapter  V  -  Protection  of  minors  and  public  morality 

46  COM(93)396  final  -  SYN  411. 

42 

2.5.1  Article  22 

The  protection  of  minors  is  an  area  where  Member  States  have  the  right  to  block 
transfrontier  broadcasts,  in  accordance  with  the  procedure  in  Article  2a  (formerly 
Article  2(2)).  This  provision  has  been  slightly  reworked  to  draw  a  clear  distinction 
between  programmes  that  are  the  subject  of  a  general  ban  (those  likely  to  "seriously 
impair"  the  physical,  mental  or  moral  development  of  minors)  and  those  which  are 
authorized  subject  to  guarantees  about  technical  means  (e.g.  coding)  or  timetabling 
(late-night  broadcast). 

2.5.2  Articles  22a and  b 

The original Article 22 has been divided in two to make the public order provision easier 
to  understand.  This  has  a  much  more  general  scope  than  the  protection  of  minors  and 
seeks  also  to  protect  adults  from  programmes  that  are  physically,  mentally  or  morally 
harmful.  Member  States, of  course, remain  free  to  invoke  the  procedure  of  Article  3 in 
the  event  of  repeated  infringements  of this Article. 

In  view  of  the  concern  expressed  by  Parliament  and  certain  Member  States  at  the 
increasing  number  of  television  programmes  containing  excessively  violent  scenes, the 
new Article  22b is intended  to ensure that the matter  is given  due attention  in the  report 
on  application,  provided  for  in  Article 26. 

2.6 

Chapter  VI  - Final  provisions 

2.6.1  Article  25 

A one-year  deadline  is set for  transposing the Directive  into  national  law,  given that  the 
proposed amendments are merely adjustments or additions to laws and regulations already 
existing  in  the  national  legal  orders.  It  is  important  to  reduce  to  a  minimum  the  delay 
between the adoption ofthe  amended Directive and its application, during which time the 
current  Directive  will  remain  in  force  in the national  legal  systems. 

2.6.2  Article  26 

The  amended  Directive  will be subject to another  examination  by the  Commission three 
years  after  its  adoption,  to  review  the  experience  gained  in  the  meantime  and,  if 
necessary, prepare  new proposals to take  account  of  developments  in  the  sector. 

3. 

International  aspects 

3.1 

The  European  Convention  on Transfrontier  Television 

A number  of Member  States have ratified  the Council of Europe's  European  Convention 
on  Transfrontier  Television,  which  entered  into  force  on  1 May  1993. 

To enable  the  broadcasting  organizations -and national  regulatory  authorities  to  organize 
their  activities  efficiently,  the  Directive  and  the  Convention  should  obviously  be  as 
compatible as possible, given the respective roles ofthe  European  Union and the Council 

43 

of  Europe.  It  is  fortunate  in  this  respect  that  the  two  instruments  cover  essentially  the 
same  fields. 

There  are,  however,  significant  differences  in  certain  provisions,  although  these  do  not 
necessarily  make  for  incompatibility.  Articles  4 and  5 of  the  Directive,  for  example, on 
the  promotion  of  the  production  and  distribution  of  television  programmes,  go  beyond 
what  is  provided  for  in Article  10 of  the Convention  as regards  cultural  objectives,  but 
this does not  lead  to  incompatibility,  provided  that Member  States of the  Union  that are 
parties  to  the  Convention  are prepared  to  receive  broadcasts  from  countries  that  are not 
members of the Union but are parties to the Convention which do not necessarily comply 
with  the  standards  of  Articles  4 and  5. 

There  are  also  a  number  of  institutional  differences.  Article  21  of  the  Convention 
establishes a permanent committee qualified  to make recommendations on the application 
and  interpretation  of the Convention and to propose amendments. There  is no  equivalent 
provision in the Directive, given that under the Treaty it is for  the  Commission to ensure 
the correct application of Community law, subject to the authority  of the Court of Justice. 

Other  examples  of  differences  between  the  Directive  and  the  Convention  are  more 
fundamental.  Article  16 ofthe  Convention on targeted  advertising  has  no  equivalent  in 
the  Directive  (given  that  it would  be fundamentally  incompatible  with  Article  59 of  the 
Treaty).  The  same  is  true  of  Article  5(2)  of  the  Convention  on  the  criteria  of 
jurisdiction.47 

It  is  clear  that  some  of  the  amendments  to  the  Directive  proposed  by  the  Commission 
pursuant  to  Article  26 will  increase the disparities between the  two  texts. The  proposed 
amendments to the rules governing home shopping are a striking example.  However, the 
Commission  would  stress the  following: 

firstly,  Article  26  of  the  Directive  expressly  provides  for  the  possibility  of 
adapting the Directive to take account of developments in television broadcasting. 
In  an  area  such  as this  it is  essential that  the  legal  and  regulatory  framework  be 
able  to  evolve  to  take  account  of  technological  advances  and  changes  in  the 
market; 
secondly,  Article  27(1)  ofthe  Convention  states that  in their  relations  with  each 
other the Parties that are Members of the Community will  apply  thé  latter's rules, 
and  will  therefore  apply the rules of the Convention  only  in  so  far  as there  is no 
Community  measure  relating  to the  particular  subject  in  question.  It  is  therefore 
quite  possible  to  amend  the  Directive  without  causing  any  additional  legal 
difficulty  for  the  three  Member  States  of  the  Union  that  have  ratified  the 
Convention. 

It is worth  noting  also that Articles 21 and 23 ofthe  Convention provide  for  a relatively 
flexible  amendment  mechanism  which  would  make  it  possible  to  adapt  the  Convention 
if  the  Parties  so  desired.  In  due  course,  once  the  two  instruments  had  become  fully 
compatible,  the  Commission  feels  it  would  be  worth  considering  the  possibility  of 

47  See  Part  B  point  3.1.1  and  Part  C  point  3.1.1  above. 

44 

suggesting  that  the  Community  accede  to  the  Convention  (a  possibility  provided  for  in 
Article  29(1)).  In the  meantime,  Commission representatives  participate  in the  meetings 
of  the  permanent  committee  and,  similarly,  representatives  of  the  Council  of  Europe  sit 
in  the  ad-hoc  group.  This  overlap  is  conducive  to  the  exchange  of  information  on  the 
implementation  of  the  two  instruments. 

3.2 

Europe  agreements 

The  association  agreements  between  the  Union  and  certain  countries  of  Central  and 
Eastern  Europe,  known  as  "Europe  agreements",  provide  for  the  possibility  of  the 
non-member  states  concerned  participating  in  the  Union's  audiovisual  policy,  including 
its  regulatory  aspects,  by  making  explicit  reference  to  the  approximation  of  laws  and 
regulations on broadcasting. The agreements with Bulgaria, the Czech Republic, Hungary, 
Poland,  Romania and Slovakia have now entered  into force. Negotiations  are under  way 
with  Slovenia  and  the  three  Baltic countries. 

The  Commission  will  examine  the  practical  arrangements  for  implementing  all  the 
relevant  provisions  with the  countries  concerned. 

3.3 

Towards  a world  broadcasting  convention 

With  technological  progress  and  the  development  of  satellite  broadcasting  the  issue  of 
"extra-territorial"  channels  is  becoming  increasingly  common.  It  is  a  problem  of 
broadcasting organizations that direct their transmissions at the territory  of the  European 
Union  without  being  under  the jurisdiction  of  a  Member  State  within  the  meaning  of 
Article  2  of  the  Directive  (i.e.  without  being  established  in  a  Member  State  or  using  a 
satellite  facility  under  the  jurisdiction  of  a  Member  State).  Member  States  may  take 
whatever  steps they  consider  appropriate  with regard  to  such broadcasts, providing  they 
comply  with  their  international  commitments  and  those  entered  into  by  the  Union.  For 
the  purpose  of  clarification  it would  seem to  be  helpful  to  add  a  recital  to  this  effect. 

However, over and above the Directive, and in order to enable international  broadcasting 
activities  to  develop  within  the  framework  of  certain  common  rules  aimed  notably  at 
protecting public order and the public interest, it is worth considering the possibilities that 
an  international  (i.e.  intercontinental)  agreement  might  offer  in  this  area. 

Such an agreement  might cover  matters such as criteria  for  determining jurisdiction,  the 
procedures  to  be  observed  by  the  receiving  state  in  the  event  of  unilateral  action, 
provisions  on public  order  and the protection  of minors and,  possibly, certain  aspects of 
advertising.  If  such  an  instrument  attracted  a  sufficient  number  of  signatories  it  could 
make  it  possible  to  set  minimum  common  standards  and  prevent  the  emergence  of 
"broadcasting  havens"  designed  to  evade  the  rules  regarded  as  essential  by  the  states 
concerned.  As  a  first  stage,  the  Commission  intends,  in  consultation  with  the 
Member  States,  to  look  more  closely  at  certain  aspects  of  the  content  of  any  such 
initiative  in  this  field  and  at  the  sort  of  institutional  context  in  which  it  might  operate, 
while  at  the  same  time  developing  informal  contacts  with  non-member  countries  that 
might  be  interested.. 

45 

Proposal  for  a 
EUROPEAN  PARLIAMENT  AND  COUNCIL  DIRECTIVE 

amending  Council  Directive  89/552/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 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Articles  57(2)  and  66  thereof, 

Having  regard  to the  proposal  from  the Commission(1), 

Having  regard  to  the  opinion  of  the  Economic  and  Social  Committee(2), 

Acting  in  accordance  with  the  procedure  referred  to  in  Article  189b  ofthe  Treaty(3), 

Whereas Council Directive 89/552/EEC(4) constitutes the legal framework  for broadcasting 
in  the  internal  market; 

Whereas  Article  26  of  Directive  89/552/EEC  states  that  the  Commission  shall,  no  later 
than  the  end  of  the  fifth  year  after  the  date  of  adoption  of  the  Directive,  submit  to  the 
European Parliament  and the Economic and  Social Committee a report on the application 
ofthe  Directive  and,  if necessary,  make further  proposals to adapt  it to developments in 
the  field  of  television  broadcasting; 

Whereas the  application  of Directive  89/552/EEC  and  the  report  on  its application  have 
revealed the need to clarify  certain definitions  or obligations on Member States under this 
Directive; 

Whereas  the  Commission  in  its Communication  of  19 July  1994  entitled  "Europe's way 
to  the  information  society.  An  action  plan"  underlined  the  importance  of  a  regulatory 
framework  applying to the content of audiovisual  services which would help to  safeguard 
the  free  movement  of  such  services  in  the  Community  and  be  responsive  to  the 
opportunities  for growth in this sector  opened up by new technologies, while at the same 
time  taking  into  account  the  specific  nature,  in  particular  the  cultural  and  sociological 
impact,  of  audiovisual  programmes,  whatever  their  mode  of  transmission; 

Whereas  the  Council  welcomed  this  action  plan  at  its  1787th  meeting  on  28  September 
1994  and  stressed  the need  to improve  the competitiveness  ofthe  European  audiovisual 
industry; 

(i) 

(2) 
(3) 

(4) 

OJNo 
OJ  No 
OJ  No 
O J N oL  298,  17.10.1989,  p. 23. 

46 

Whereas  the  Heads of  State and  Government  meeting  at the European  Council  in  Essen 
on  9  and  10 December  1994  called  on  the  Commission  to  present  a  proposal  for  a 
revision  of  Directive  89/552/EEC  before  their  next  meeting; 

Whereas  the  application  of  Directive  89/552/EEC  has  revealed  the  need  to  clarify  the 
concept  of jurisdiction  as applied  specifically  to the audiovisual  sector;  whereas,  in view 
ofthe  case law ofthe  Court  of Justice ofthe  European  Communities,  the  establishment 
criterion should be made the principal criterion determining the jurisdiction  of a particular 
Member  State;: 

Whereas, the  concept  of establishment,  according  to the  criteria  laid  down  by  the  Court 
of Justice in its judgment  of 25 July  1991 in Factortame(5). involves the actual  pursuit  of 
an  economic  activity  through  a  fixed  establishment  for  an  indefinite  period; 

Whereas  the  establishment  of  a television  broadcasting  organization,  for  the  purpose  of 
Directive  89/552/EEC,  as amended  by this Directive,  may  be  determined  by  a  series  of 
practical  criteria  such  as the  location  of the  head  office  of  the  provider  of  services,  the 
place  where  decisions  on  programming  policy  are  usually  taken,  the  place  where  the 
programme  to be broadcast to the public is finally  mixed  and  processed,  provided  that a 
significant  proportion  of  the  workforce  required  for  the  pursuit  of  the  television 
broadcasting  activity  is located  in the  same Member  State; 

Whereas the Court  of Justice has constantly  held(6) that  a Member  State retains the right 
to  take  measures  against  a  television  broadcasting  organization  that  is  established  in 
another  Member  State  but  directs  all  or  most  of  its  activity  to  the  territory  of  the  first 
Member  State  if  the  choice  of  establishment  was  made  with  a  view  to  evading  the 
legislation  that  would  have  applied  to  the  organization  had  it  been  established  in  the 
territory  of  the  first  Member  State; 

Whereas  any  interested  party  in  the  Community  must  be  able  to  assert  its  rights  in  the 
competent  courts  of the Member  State with jurisdiction  over the television  broadcasting 
organization  that  is  failing  to  comply  with  the  national  provisions  arising  out  of  the 
application  of  this Directive; 

Whereas Member  States are free  to take whatever  measures they  deem  appropriate  with 
regard to broadcasts coming from  third countries, and which do not satisfy  the conditions 
laid down in  Article 2 of Directive 89/552/EEC, provided  they  comply  with  Community 
law  and  the  international  obligations  of  the  Community; 

Whereas in-order to eliminate the obstacles arising from  differences  in national  legislation 
on  the  promotion  of  European  works, Directive  89/552/EEC  contains  provisions  aimed 
at harmonizing  these regulations; whereas those provisions which,  in general,  permit the 
liberalization of trade must contain provisions harmonizing the conditions of competition; 

(5) 

(6) 

Case  C-221/89,  Queen  v  Secretary  of  State  for  Transport,  ex  parte  Factortame. 
[1991] ECR  1-3905, para.  20. 
in  Case  33/74,  Van  Binsbergen  v 
See, 
Bestuur  van  de Bedrijfsvereniging.  [1974]  ECR  1299  and  in  Case  C-23/93, 
TV  10 SA v  Commissariaat  voor  de Media.  [1994]  ECR  1-4795. 

in  particular, 

judgments 

the 

47 

Whereas, moreover,  Article  128(4) of the Treaty  requires the Community  to take cultural 
aspects' into  account  in  its  action  under  other  provisions  ofthe  Treaty; 

Whereas  the  Green  Paper  on  "Strategy  options  to  strengthen  the  European  programme 
industry  in the context  ofthe  audiovisual  policy  ofthe  European  Union",  adopted  by the 
Commission  on  7  April  1994,  emphasizes  in  particular  the  need  to  step up  measures  to 
promote  European  works  in  order  to  further  the  development  of  the  sector; 

improving 

the  competitiveness  of 

Whereas, in addition to the considerations cited above, it is necessary to create conditions 
the 
for 
Communication  on the application  of Articles 4 and  5 of Directive 89/552/EEC,  adopted 
by  the  Commission  on  3 March  1994 pursuant  to  Article  4(3),  shows that  the  measures 
to  promote  European  works  can  contribute  to  such  an  improvement,  but  that  they  need 
to be  modified  to  take  account  of  developments  in  the  field  of  television  broadcasting; 

industry;  whereas 

the  programme 

Whereas,  if  Article  4  of  Directive  89/552/EEC,  as  amended  by  this  Directive,  is 
effectively  implemented  over  a ten-year  period,  it  should  be  possible,  given  the  impact 
of  the  financial  instruments  available  to  the  Community  and  the  Member  States,  to 
achieve  the  objective  of  strengthening  the European  programme  industry; 

Whereas  it  is necessary  to  ensure the  effective  application  of  such  measures  throughout 
the Community  in order to preserve free  and fair  competition  between  firms  in the  same 
industry;  whereas  the  application  of  such  measures  could  help  to  reinforce  mutual  trust 
between  Member  States; 

Whereas,  at  the  end  of  the ten-year  period,  any  national  measures  in  this  field  must  not 
interfere  with  the  principle  of  free  circulation  of  services by  restricting  the  reception  or 
retransmission  of  television  broadcasts  from  other  Member  States; 

Whereas  the  proportions  of  European works must be  achieved  taking  economic  realities 
into  account;  whereas,  therefore,  it  is  necessary  to  introduce  a  progressive  system  for 
achieving  this  objective; 

Whereas  account  should  be taken  of the  specific  nature  of  transmissions  broadcast  only 
in  a  language  other  than  those  of  the Member  States; 

Whereas  the  question  of  specific  time  scales  for  each  type  of  television  showing  of 
cinematographic  works  is  primarily  a  matter  to  be  settled  by  individual  contracts; 
whereas,  however,  in  the  absence  of  agreements  between  the  interested  parties  or 
professionals  concerned,  a schedule tailored to the needs at each  stage in the  showing of 
such  works,  should  be  drawn  up; 

Whereas  it  is  important  to  facilitate  the  development  of  teleshopping,  an  activity  with 
an  economic  importance  for  operators  as  a  whole  and  a  genuine  outlet  for  goods  and 
services  within  the  Community,  by  modifying  the  rules  on  transmission  time;  whereas, 
to  ensure  the  full  protection  of  consumer  interests,  teleshopping  should  be  governed  by 
a  number  of  minimum  standards  regulating  the form  and  content  of  broadcasts; 

48 

Whereas it is necessary  to clarify  the rules for the protection of the physical,  mental and 
moral  development  of  minors; whereas the establishment  of  a clear distinction  between 
programmes that are subject to an absolute ban and those that may be authorized subject 
to appropriate technical  means should satisfy  concern about the public interest expressed 
by  Member  States and the Community; 

Whereas  the  Court  of  Justice  has  constantly  held(7)  that  the  concept  of  services,  as 
referred  to  in  Articles  59  and  60  of  the  EEC  Treaty,  embraces  the  broadcasting  of 
television  programmes,  including  transmission  through  the  intermediary  of  cable 
operators; whereas in accordance with Article 3b ofthe Treaty action by the Community 
should  not  go  beyond  what  is  necessary 
to  achieve  its  objectives  in  the  sphere  of 
television  broadcasting;  whereas the principle that Member  States  are free  to lay  down 
stricter  or  more  detailed  rules  for  the  broadcasters  under  their jurisdiction  should  be 
reaffirmed, 

Whereas Article B ofthe  Treaty on European Union states that one ofthe  objectives the 
Union  shall  set itself  is to maintain in full  the  "acquis communautaire", 

HAVE  ADOPTED  THIS DIRECTIVE: 

Article 1 

Directive  89/552/EEC  is amended  as follows: 

1. 

Article  1 is  amended  as follows: 

(a) 

point (b) is replaced by the  following: 

"(b) 

"television  advertising"  means  any  form  of  announcement 
broadcast  in  return for  payment  or for  similar  consideration  by a 
public or private undertaking in connection  with a trade, business, 
craft  or  profession  in  order  to  promote  the  supply  of  goods  or 
services,  including immovable property,  or rights and obligations, 
in return for payment.  It does not include teleshopping;" 

(b) 

the following  point (e)  is added: 

"(e) 

"teleshopping" means television  programmes and spots containing 
direct  offers  to  the  public  with  a view  to  the  sale,  purchase  or 
rental of products or with a view to the supply of services in return 
for payment;" 

(7) 

See, in particular, the judgments in Case  155/73,  Sacchi.  [1974] ECR 409 and in 
Case  52/79,  Procureur du Roi  v Debauve.  [1980] ECR 833. 

49 

2. 

Article  2  is  replaced  by  the following: 

, < 

"Article 2 

1. 

2. 

3. 

Each Member  State shall  ensure that all television  broadcasts transmitted 
by broadcasters under its jurisdiction  comply with the rules of the system 
of 
law  applicable  to  broadcasts  intended  for  the  public  in  that 
Member State. 

The  broadcasters  under  the  jurisdiction  of  a  Member  State  are  those 
established in the territory of that Member State, in which they must have 
a  fixed  establishment  and actually  pursue an economic activity 

Broadcasters established outside the territory of the Community  shall also 
be  under  the jurisdiction  of  a  Member  State  if  they  satisfy  one  of  the 
following  conditions. 

(a) 

they  use a frequency  granted by  that Member State, 

(b) 

(c) 

although they  do not use a frequency  granted by a Member State, 
they  do use a satellite capacity  granted by that Member State, 

although  they  use  neither  a  frequency  nor  a  satellite  capacity 
granted by a Member State, they do use a satellite up-link  situated 
in that Member State. 

4. 

This  Directive  shall  not  apply  to  broadcasts  intended  exclusively  for 
reception  in  third  countries,  and  which  are  not  received  directly  or 
indirectly  by the public in one or more Member States." 

3. 

The following  Article  2a is inserted: 

"Article 2a 

Member  States  shall  ensure  freedom  of  reception  and  shall  not  restrict 
retransmission on their territory of television broadcasts from other Member States 
for reasons which fall  within the fields coordinated by this Directive.  They may, 
provisionally,  take  appropriate  measures  to  restrict  reception  and/or  suspend 
retransmission  of television broadcasts if the following  conditions  are  fulfilled: 

(a) 

(b) 

(c) 

a  television  broadcast  coming  from  another  Member  State  manifestly, 
seriously  and gravely  infringes  Article 22  and/or Article 22a; 

during  the  previous  12  months,  the  broadcaster  has  infringed  the  same 
provision(s)  on at least two prior occasions; 

the  Member  State  concerned  has  notified  the  broadcaster  and  the 
Commission in writing ofthe  alleged infringements  and of its intention to 
take  measures to  restrict  reception  and/or suspend  retransmission  should 
any  such infringement  occur again; 

50 

(d) 

consultations  with  the  transmitting  State  and  the  Commission  have  not 
produced  an  amicable  settlement  within  15  days  of  the  notification 
provided  for in point (c),  and the alleged  infringement  persists. 

The Commission shall, within no more than two months following  notification  of 
the measure taken by the Member  State, take a decision on whether the measure 
is compatible with Community  law.  If it decides that it is not, the Member State 
will  be required to put an end to the measure in question as a matter of urgency. 

The  provision  referred  to  in  the  first  paragraph  is  without  prejudice  to  the 
application of any procedure, remedy or sanction to the infringements  in question 
in the Member  State which  has jurisdiction  over the broadcaster concerned." 

4.  r  Article  3 is replaced by the  following: 

"Article 3 

1. 

Member  States shall  remain free  to  require television  broadcasters under 
their jurisdiction to comply with more detailed or stricter rules in the areas 
covered  by  this  Directive.  These  rules,  which  must  be  compatible  with 
Community  law, may  concern,  inter alia: 

the achievement  of language policy  goals; 

the taking into account of the public interest in terms of television's 
information,  education,  culture  and 
role  as  a  provider  of 
in  the 
entertainment  and  the  need  to  safeguard  pluralism 
information  industry  and the media 

2. 

Member States shall, by appropriate means, ensure, within the framework 
of  their  legislation,  that  television  broadcasters  under  their  jurisdiction 
comply  with the provisions  of this Directive. 

Each Member  State shall  determine the penalties  applicable  to  television 
broadcasting organizations under their jurisdiction who do not comply with 
provisions  adopted  for  the  implementation  of  this  Directive,  which 
penalties  shall be  sufficient  to enforce  compliance. 

3. 

Member States shall also provide in their legislation, as regards television 
broadcasting  organizations  under their jurisdiction,  for  the  possibility  of 
invoking  interim  measures  aimed  at  remedying  an  infringement  of  the 
provisions  of this Directive,  if  necessary  by  suspending  the broadcasting 
licence." 

5. 

Article 4  is replaced by the  following: 

"Article 4 

1. 

Member  States  shall,  by  appropriate  means,  ensure  that  broadcasters 
reserve for European works,  within the  meaning  of  Article  6,  a majority 

51 

2. 

3. 

4. 

5. 

proportion  of  their  transmission  time,  excluding  the  time  appointed  to 
news, sports events, games, advertising, teletext and teleshopping services. 

drama, 

documentaries 

In  the  case  of  channels  which  devote  at  least  80% of  their  transmission 
time,  excluding  the  time  appointed  to  advertising  and  teleshopping,  to 
animation, 
cinematographic  works, 
Member  States shall allow television broadcasting organizations to choose 
between  complying  with  the  first  paragraph  or  allocating  25%  of  their 
programming budget to European works within the meaning of Article 6. 
For  the  purposes  of  this  Directive,  "programming  budget"  means  the 
accounting cost of acquiring,  commissioning, producing and co-producing 
all  those  programmes broadcast  by  the  channel  in  question  in any  given 
year. 

or 

The  proportions  referred  to  in  paragraphs  1  and  2  shall  be  attained 
progressively,  in stages, no later than three years after the date of the  first 
broadcast by the channel  in question. 

Channels  broadcasting  entirely  in  a  language  other  than  those  of  the 
Member States  are not covered by the provisions of this Article  or those 
of  Article 5. 

Member  States  shall  provide  the  Commission  with  a  report  on  the 
application  of this Article, and Article  5 every two years from the date of 
adoption  of this Directive. 

That  report  shall  in  particular  include  a  statistical  statement  on  the 
achievement of the proportion referred to in this Article and Article  5 for 
each  of  the  channels  falling  within  the jurisdiction  of  the  Member  State 
concerned. Member States shall notify  the Commission  of the reasons for 
the failure to attain those proportions and the measures they are taking in 
each  case  to  ensure  that  the  television  broadcasting  organization  does 
actually  attain them. 

The  Commission  shall 
inform  the  other  Member  States  and  the 
European Parliament  of  the  reports,  which  shall  be  accompanied,  where 
appropriate,  by  an opinion.  The Commission  shall  ensure the application 
of  this  Article  and  Article  5  in  accordance  with  the  provisions  of  the 
Treaty. The Commission may take account in its opinion, in particular, of 
progress achieved in relation to previous years, the share of first broadcast 
works in the programming, the particular circumstances of new television 
broadcasters and the specific  situation of countries with a low audiovisual 
production  capacity  or restricted  language area." 

Article  5 is  replaced by the  following: 

"Article 5 

Member  States  shall  ensure,  by  appropriate  means,  that  broadcasters  reserve at 
least  10% of their transmission time, excluding the time appointed to news, sports 
events, games, advertising, teleshopping and teletext services, or alternately, at the 

52 

discretion  of  the  Member  States,  at least  10%  of  their  programming  budget,  for 
European  works  created  by  producers  who  are  independent  of  broadcasters. 

This  proportion  must  be  achieved  by  earmarking  at  least  50% for  recent  works, 
that  is to  say  works  transmitted  within  five  years  of  their  production." 

7. 

Article  6  is  amended  as  follows: 

(a) 

in  paragraph  1, point  (a)  is replaced  by  the  following: 

"(a)  works  originating  from  Member  States" 

(b) 

paragraph  3 is replaced  by  the  following: 

"3. 

The works  referred  to in  point  (c)  of  paragraph  1 are works  made 
exclusively  or  in  co-production  with  producers  established  in  one 
or  more  Member  States  by  producers  established  in  one  or  more 
European third countries with which the Community has concluded 
agreements  relating  to  the  audiovisual  sector,  if  those  works  are 
mainly  made  with  authors  and  workers  residing  in  one  or  more 
European  States." 

(c) 

the  following  paragraph  3a is  inserted: 

"3a.  Works  that  are  not  European  works  within  the  meaning  of 
paragraph  1  but that are produced within the framework  of bilateral 
co-production treaties concluded between Member  States and third 
countries  shall be deemed  to be European  works provided  that  the 
Community  co-producers  supply  a majority  share ofthe  total  cost 
of  the  production  and that  the production  is not  controlled  by  one 
the 
or  more  producers  established  outside 
Member  States." 

the  territory  of 

(d) 

in  paragraph  4,  the  words  "and  paragraph  3a"  are  added  after  the  words 
"within  the  meaning  of  paragraph  1"; 

8. 

Article  7 is  replaced  by  the  following: 

"Article  7 

limits  for  broadcasting 
Rightsholders  and  broadcasters  shall  agree 
cinematographic works. In the absence of such agreements, television broadcasting 
organizations  shall  not  broadcast  any  cinematographic  work  until  the  following 
periods  have  elapsed  since  the  work  was  first  shown  in  cinemas  in  one  of  the 
Member  States: 

time 

(a) 

six  months  for  pay-per-view  services; 

(b) 

twelve  months  for  pay-television  services  other  than  those  referred  to 
in  (a); 

53 

(c) 

eighteen  months  for  services  other  than  those  referred  to  in  (a)  and  (b). 

Member  States  shall  ensure  that  the  television  broadcasting  organizations  under 
their jurisdiction  comply  with  these  provisions."-

9. 

Article  8 is  deleted. 

10. 

The  title  of  Chapter  IV  is  replaced  by  the  following: 

"Television  advertising  and  sponsorship,  and  teleshopping" 

11. 

In  Article  11,  paragraph  3 is replaced  by  the  following: 

"3. 

The  transmission  of  feature  films  may  be  interrupted  once  for  eaGh 
complete  period  of  45  minutes.  A  further  interruption  is  allowed  if  their 
scheduled  duration  is  at  least  20  minutes  longer  than  two  or  more 
complete  periods  of  45  minutes." 

12. 

In  Article  12, the  introductory  words  are replaced  by  the  following: 

"Television  advertising  and  teleshopping  shall  not:" 

13. 

Articles  13 and  14 are  replaced  by  the  following: 

"Article  13 

All  forms  of  television  advertising  and  teleshopping  for  cigarettes  and  other 
tobacco  products  shall  be  prohibited. 

Article  14 

Television  advertising  and  teleshopping  for  medicinal  products  and  medical 
treatment  available  only  on  prescription  in  the  Member  State  within  whose 
jurisdiction  the  broadcaster  falls  shall  be  prohibited." 

14. 

Article  15 is  amended  as  follows: 

(a) 

The  introductory  words  are  replaced  by  the  following: 

"Television  advertising  and  teleshopping  for  alcoholic  beverages  shall 
comply  with  the  following  criteria:" 

(b) 

Points  (a) to  (f)  are  replaced  by the  following: 

"(a) 

they  may  not  be  aimed  specifically  at  minors  or,  in  particular, 
depict  minors  consuming  such  beverages; 

(b) 

they shall not link the consumption of alcohol  to enhanced physical 
performance  or to  driving; 

54 

(c) 

(d) 

(e) 

(f) 

they shall not create the impression that the consumption  of alcohol 
contributes  towards  social  or  sexual  success; 

they  shall  not claim  that  alcohol  has therapeutic  qualities or that it 
is  a  stimulant,  a  sedative  or  a  means  of  resolving  personal 
conflicts; 

they  shall  not  encourage  immoderate  consumption  of  alcohol  or 
present  abstinence  or  moderation  in  a  negative  light; 

they  shall  not place emphasis on high  alcoholic content  as being a 
positive  quality  of  the beverages." 

15. 

Article  16 is  amended  as  follows: 

(a) 

The  introductory  words  are  replaced  by  the  following: 

"Television  advertising and teleshopping  shall not cause moral  or physical 
detriment to minors and shall therefore  comply with the following  criteria 
for  their  protection:" 

(b) 

Points  (a) to  (d)  are  replaced  by  the  following: 

"(a) 

they  shall  not directly  exhort minors to buy  a product  or a service 
by  exploiting  their  inexperience  or  credulity; 

(b) 

(c) 

they  shall  not  directly  encourage  minors to  persuade  their  parents 
or  others to  purchase the goods  or  services being  advertised; 

they  shall  not  exploit  the  special  trust  minors  place  in  parents, 
teachers  or  other  persons; 

(d) 

they  shall  not unreasonably  show minors in dangerous  situations." 

16. 

Article  17(2)  is replaced  by  the  following: 

"2. 

Television  programmes  may  not be  sponsored  by  natural  or legal  persons 
whose  principal  activity  is  the  manufacture  or  sale  of  products,  or  the 
provision of services, the advertising of which is prohibited by Article  13." 

17. 

Article  18 is  replaced  by  the  following: 

"Article  18 

1. 

The amount of advertising  shall  not exceed  15% ofthe  daily  transmission 
time.  However,  this  percentage  may  be  increased  to  20%  if  it  includes 
forms  of advertising other than advertising spots and/or teleshopping  spots 
inserted  in  a  service  that  is  not  exclusively  devoted  to  teleshopping,  on 
condition  that  the  amount  of  spot  advertising  does  not  exceed  15%. 

55 

2. 

The amount of spot advertising within a given clock hour shall  not exceed 

20%." 

18. 

The following  Articles  18a and  18b are inserted: 

1. 

2. 

1. 

2. 

"Article  18a 

Teleshopping  programmes  and  spots  must  be  easily  identifiable  as  such 
and if they are inserted in a service that is not exclusively  devoted to this 
activity  they  must  be  clearly  distinguished  from  that  service's  other 
broadcasts, including advertising broadcasts, by optical or acoustic means. 

Teleshopping  programmes and spots must comply  with the provisions  of 
Council Directive [concerning consumer protection with regard to distance 
selling](8), and in particular with those provisions that relate to information 
on contractual  obligations. 

Article  18b 

Windows devoted to teleshopping and inserted in a service not exclusively 
devoted  to  this  activity  shall  not  exceed  three  hours  in  any  twenty-four-
hour period. 

Services  devoted  exclusively  to  teleshopping  shall  not  be  subject  to any 
scheduling  restrictions  as regards time-limits." 

19. 

Article  19 is deleted. 

20. 

Article  20  is replaced by the  following: 

"Article 20 

Without  prejudice  to  Article  3,  Member  States  may,  with  due  regard  for 
Community law, lay down conditions other than those laid down in Article  11(2) 
to  (5)  and  Articles  18  and  18b  in  respect  of  broadcasts  intended  solely  for  the 
national  territory which cannot be received,  directly or indirectly,  in one or more 
other Member States." 

21. 

Article 21  is deleted. 

22. 

The title  of  Chapter V  is replaced by the  following: 

"Protection  of  minors and public morality" 

(8) 

OJ No L 

56 

23. 

Article  22  is  replaced  by  the  following: 

"Article  22 

1. 

2. 

Member  States  shall  take  appropriate  measures  to  ensure  that  television 
broadcasts,  including  trailers,  by  broadcasters  under  their jurisdiction  do 
not include programmes which might seriously impair the physical, mental 
or  moral  development  of  minors,  in  particular 
those  that  involve 
pornography  or gratuitous  violence. 

The  measures  provided  for  in  paragraph  1  shall  also  extend  to  other 
programmes  which  are  likely  to  impair  the  physical,  mental  or  moral 
development  of  minors,  except where  it  is ensured,  by  selecting the  time 
of  the  broadcast  or  by  any  technical  measure,  that  minors  in  the  area  of 
transmission  will  not  normally  hear  or  see  such  broadcasts." 

24. 

The  following  Articles  22a  and  22b  are  inserted: 

"Article  22a 

Member  States  shall  ensure  that  broadcasts  do  not  contain  any  incitement  to 
hatred  on  grounds  of  race,  sex,  religion  or  nationality. 

Article  22b 

The Commission  shall  attach  particular  importance  to application  of this  chapter 
in  the  report  provided  for  in  Article 26." 

25. 

Article  25  is  deleted. 

26. 

Article  26  is replaced  by  the  following: 

"Article  26 

Not later than the end ofthe  third year after  the date of adoption of this Directive 
and  every  two  years  thereafter,  the  Commission  shall  submit  to  the  European 
Parliament,  the Council,  and the Economic  and  Social  Committee a report  on the 
application  of this Directive  and,  if  necessary,  make  further  proposals to adapt  it 
to  developments  in  the  field  of  television  broadcasting." 

Article  2 

1. 

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative 
provisions  necessary  to  comply  with  this  Directive  not  later  than  one  year  after 
the date of  its adoption.  They  shall  immediately  inform  the  Commission  thereof. 

When  Member  States  adopt  these  provisions,  these  shall  contain  a  reference  to 
this  Directive  or  shall  be  accompanied  by  such  reference  at  the  time  of  their 
official  publication.  The  procedure  for  such  reference  shall  be  adopted  by 
Member  States. 

57 

2. 

Member  States  shall  communicate  to  the  Commission  the  text  of  the  main 
provisions of national  law which they adopt in the field  covered  by this Directive. 

Article  3 

This Directive  shall enter into force  on the twentieth day following  that of its  publication 
in  the  Official  Journal  of  the European  Communities. 

Article  1 point  5 shall  be  effectively  applied  for  a period  often  years  from  the  date  of 
entry  into force  of  this Directive. 

This Directive  is  addressed  to the  Member  States. 

Article  4 

Done  at  Brussels, 

For  the European  Parliament 
The President 

For  the  Council 
The  President 

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COM(95) 86  final 

DOCUMENTS 

EN 

15 

Catalogue number  :  CB-C0-95-119-EN-C 

ISBN 92-77-87040-0 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg