Report from the Commission to the Council, the European Parliament and the European Economic and Social Committee and the Committee of the Regions on the implementation of Council Decision 1999/784/EC of 22 November 1999 as amended by Decision 2239/2004/EC of the EP and the Council concerning Community participation in the European Audiovisual Observatory {SEC(2006) 1806}
Date: 2007-01-10
Institutions: European Commission
Subjects: European Union, audiovisual communications policy, audiovisual industry, cooperation policy, dissemination of information, information processing, international organisation, operation of the Institutions

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 10.1.2007 
COM(2006) 835 final 

REPORT FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN 
PARLIAMENT AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE 
AND THE COMMITTEE OF THE REGIONS 

On the implementation of Council Decision 1999/784/EC of 22 November 1999 as 
amended by Decision 2239/2004/EC of the EP and the Council concerning Community 
participation in the European Audiovisual Observatory 

{SEC(2006) 1806} 

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REPORT FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN 
PARLIAMENT AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE 
AND THE COMMITTEE OF THE REGIONS 

On the implementation of Council Decision 1999/784/EC of 22 November 1999 as 
amended by Decision 2239/2004/EC of the EP and the Council concerning Community 
participation in the European Audiovisual Observatory 

TABLE OF CONTENTS 

Foreword .................................................................................................................................... 3 

I. 

II. 

III. 

3.1. 

3.2. 

IV. 

4.1. 

4.2. 

4.3 

V. 

5.1. 

5.2. 

5.3. 

5.4. 

VI. 

Introduction .................................................................................................................. 4 

Community participation ............................................................................................. 4 

Implementation of the Council Decision ..................................................................... 5 

Formalising participation ............................................................................................. 5 

Community financial contributions ............................................................................. 6 

The Observatory's activity ........................................................................................... 7 

Market and financial area............................................................................................. 7 

Legal area ..................................................................................................................... 7 

European Platform of Regulatory Authorities (EPRA) ............................................... 8 

Dissemination of the Observatory's work. ................................................................... 8 

Market and financial area............................................................................................. 8 

Legal area ..................................................................................................................... 9 

Internet ......................................................................................................................... 9 

Other dissemination activities and conferences ......................................................... 10 

Conclusions ................................................................................................................ 10 

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FOREWORD 

1. 

2. 

3. 

4. 

5. 

6. 

This  report  covers  the  implementation  of  Council  Decision  1999/784/EC1,  as 
amended  by  Decision  2239/2004/EC2  of  the  European  Parliament  and  the  Council, 
concerning Community participation in the European Audiovisual Observatory. It is 
the  final  report  foreseen  under  article  4  of  the  Council  Decision.  It  describes  the 
bilateral  relations  between  the  Commission  and  the  Observatory  and  illustrates  the 
main activities carried out by the latter since 1999. 

Chapter II recalls the reasons for the Community participation in the Observatory. 

Chapter  III  of  the  report  summarises  the  main  legal  acts  concerning  Community 
membership and provides a succinct financial report. 

Chapter  IV  gives  an  overview  of  the  overall  activity  of  the  Observatory  since  end 
1999  up  until  mid-2006.  The  main  areas  examined  are  market/financial  and  legal 
issues. 

Chapter  V  assesses  the  dissemination  of  information  collected  and  analysed  by  the 
Observatory among the main professional categories.  

Chapter VI provides an overall assessment of Community participation with respect 
to  the  objectives  established  in  1999  and  the  implementation  of  bilateral  relations 
between the Commission and the Observatory. 

1 
2 

OJ L 307, 2.12.1999, p. 61 
OJ L 390, 31.12.2004, p.1 

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I. 

INTRODUCTION 

This  report  addresses  the  implementation  of  Council  Decision  1999/784/EC  concerning 
Community  participation  in  the  European  Audiovisual  Observatory.  It  covers  both  the 
Commission's  bilateral  relations  with  the  Observatory  and  the  latter's  main  activities  in 
response to the information requirements of industry and public authorities. The report covers 
the period from end 1999, the adoption of the Council Decision, to November 2006. 

II. 

COMMUNITY PARTICIPATION 

In December 1992, the Council of Europe established the Observatory for an initial period of 
three  years3,  and  in  March  1997  confirmed  the  continuation  of  the  Observatory  for  an 
indefinite period4. 

The  legal  basis  for  Community  participation  in  the  Observatory  is  Article  157  (3)  of  the 
Treaty (ex Article 130). This refers to Community activity to help industrial sectors to adjust 
to  structural  change,  to  encourage  the  development  of  undertakings,  especially  SMEs,  to 
encourage  co-operation  between  companies,  and  to  foster  better  exploitation  of  R&D  and 
innovation policies. 

In line with these objectives, the Community's decision to participate fully in the Observatory 
has  been  instrumental  in  providing  the  European  audiovisual  industry  with  much  needed, 
detailed, information in areas such as marketing, finance, legal rules and practice.  

The  Observatory  has  proved  highly  effective  in  dealing  promptly  with  information  requests 
and  the  public  dissemination  of  such  data,  notably  in  response  to  small  and  medium  sized 
enterprises.  

Moreover,  the  Observatory's  work  represents  an  important  asset  for  EU  industry  since  it 
covers  a  large  number  of  countries,  including  the  candidate  countries,  as  well  as  EEA  and 
most  of  the  other  European  states.  As  of  mid  2006  the  Observatory  had  37  members:  36 
countries5 and the Community. 

The  wide  scope  of  the  information  made  available  by  the  Observatory  and  its  capacity  to 
provide  'customised'  research,  is  not  only  essential  for  the  industry  but  has  also  proved 
important for policymakers, both at national and Community levels.  

The Observatory is not the only source of statistical information on the audiovisual sector. In 
particular, starting in 19996, Eurostat has been developing statistical information at EU level. 
The Observatory and Eurostat experts had  regular  meetings  in order to avoid duplication of 
work in the areas that fall within the remits of both institutions, notably market statistics.  

3 
4 
5 

6 

Resolution (92) 70 of the Committee of Ministers adopted on 15 December 1992 
Resolution (97) 4 of the Committee of Ministers adopted on 20 March 1997 
Members  of  the  Observatory  are  the  25  Community  Member  States  and  Albania,  Bulgaria,  Croatia, 
Iceland,  Liechtenstein,  Norway,  Romania,  Russian  Federation,  Switzerland,  The  former  Yugoslav 
Republic of Macedonia and Turkey. 
Report  from  the  Commission  to  the  European  Parliament  and  the  Council  on  audiovisual  statistics. 
COM(2004) 504 final of 16.7.2004. 

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III. 

IMPLEMENTATION OF THE COUNCIL DECISION 

Article  1  of  the  Council  Decision  establishes  that  the  Community  shall  be  a  member  of  the 
European Audiovisual Observatory, a Partial Agreement of the Council of Europe. Article 2 
of the Decision establishes that the Commission shall represent the Community in its relations 
with the Observatory. Article 5 originally provided that Community participation would last 
until  the  end  of  2004,  but  this  was  amended  by  Decision  2239/2004/EC  of  the  European 
Parliament and the Council, which extended the participation to end 2006. 

3.1. 

Formalising participation 

At the beginning  of 2000, the Commission opened negotiations with the Council of Europe 
and  the  Observatory  in  order  to  implement  the  Council  Decision.  The  main  points  under 
discussion  concerned  the  modalities  of  Community  participation  in  the  Observatory.  Two 
issues needed to be resolved. First, the Community is not a member of Audiovisual Eureka, as 
was the case for all other members. Second, the membership needed to accommodate certain 
specific  financial  requirements  of  the  Commission  concerning,  notably,  the  destination  of 
unused funds and obligations in case of withdrawal from the Observatory. 

In order to accommodate the Commission requirements, the Council of Europe amended the 
Statute and Financial Regulation of the Observatory in September 2000.7  

Further  to  the  Council  of  Europe's  Resolution,  the  Commission  authorised8  Mrs  Viviane 
Reding,  as  member  of  the  Commission  in  charge  of  audiovisual  policy,  to  formalise 
Community participation in the European Audiovisual Observatory as an Agreement, in the 
form of an Exchange of Letters with the Secretary General of the Council of Europe. 

The  Exchange  of  Letters  in  November  2000  contained  a  review  clause  for  the  period  after 
2004,  given  that  Council  Decision  1999/784/EC  was  only  valid  until  31  December  2004. 
Therefore, to cover the years 2005 and 2006, the Commission again formally authorised9 Mrs 
Reding to formalise Community participation in the European Audiovisual Observatory for a 
further  two  year  period.  The  Agreement  took  the  form  of  another  Exchange  of  Letters  with 
the Council of Europe in July and September 2005. A review clause was again included for 
the period beyond the validity of Decision 2239/2004/EC, i.e. 31 December 2006. 

A  "Memorandum  of  Understanding"  (MoU)  was  attached  to  both  Exchanges  of  Letters.  It 
established certain specific terms for the yearly Commission financial commitments. The two 
subsequent versions of the document were updated and endorsed annually by the Commission 
and the Observatory.  

7 
8 
9 

Resolution (2000) 7 of the Committee of Ministers adopted on 21 September 2000 
Decision C(2000) 3308, 15.11.2000, unpublished 
Decision C(2005) 1989, 05.07.2005, unpublished 

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3.2. 

Community financial contributions 

The  Financial  Statement  attached  to  the  proposal  for  Decision  1999/784/EC  foresaw  total 
commitment  and  payment  appropriations  for  €  1,325,000  over  a  six-year  period  with  a 
maximum  yearly  amount  of  €  235,000  in  2004.  The  Financial  Statement  of  Decision 
2239/2004/EC extended the 2004 ceiling for the years 2005 and 2006. 

Owing  to  lengthy  negotiations,  formalisation  of  Community  membership  could  only  take 
place in November 2000, about a year after the adoption of the Council Decision. Therefore, 
in  order  to  avoid  interrupting  co-operation  with  the  Observatory  during  that  period,  on  31st 
January 2000 the Commission concluded a Grant Agreement with the Observatory for a total 
amount equal to the theoretical statutory contribution and not exceeding the sum indicated for 
1999 in the Financial Statement annexed to the proposal for the Council Decision. 

The provisions of this Grant Agreement were in line with the provisions of the Commission's 
financial  Regulation  concerning  grants.  Such  a  scheme  differs  from  the  features  of  the 
Memorandum of Understanding, insofar as under the MoU the amount of the yearly financial 
contribution is not directly linked to actual costs incurred the same year, but is fixed, with the 
excess payment being deducted from the following year's contribution.  

Application  of  the  financial  mechanism  of  the  Grant  Agreement  entailed  the  payment  of  a 
contribution  that  was  €  8,528  short  of  the  maximum  amount  foreseen.  The  Observatory 
requested  the  Commission  to  pay  the  full  amount.  The  Commission  always  contested  this 
request, arguing that it had fulfilled all  its financial obligations under the  Grant  Agreement. 
After an analysis carried out by a panel of experts, on November 2002, the Executive Council 
of the Observatory decided unanimously to waive this claim against the Commission. 

Thanks  to  the  development  of  the  Observatory's  supplementary  revenues,  in  addition  to  the 
members'  contributions,  commitments  and  payments  in  the  years  1999  to  2006  were 
consistently  lower  in  both  nominal  and  percentage  terms  than  the  amounts  foreseen  in  the 
Commission proposals for the Decisions of 1999 and 2004.  

Values: € 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

Maximum 
commitments  

Actual 
commitments 

Actual 
payments 

Maximum 
participation  

Actual 
participation  

200,000  

215,000  

220,000  

225,000  

230,000 

235,000 

235,000 

235,000 

198,184  

200,000  

219,945  

219,822  

220,080 

221,154 

232,150 

234,999 

189,656  

200,000  

219,945  

219,822  

220,079 

221,154 

232,150 

234,999 

12.25 % 

12.25 % 

12.25 % 

12.25 % 

12.25 % 

12.25 % 

12.25 % 

12.25 % 

9.68 % 

10.04 % 

10.89 % 

9.66 % 

9.81% 

9.68 % 

8.96 % 

9.52 % 

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IV. 

THE OBSERVATORY'S ACTIVITY 

According to Observatory's Statute, "The aim of the European Audiovisual Observatory shall 
be  to  improve  the  transfer  of  information  within  the  audiovisual  industry,  to  promote  a 
clearer view of the market and a greater transparency. In doing so, the Observatory shall pay 
particular attention to ensuring reliability, compatibility and comparability of information".  

In order to fulfil its remit, the Observatory has developed its activities along two main axes: 
publication of yearly statistics concerning audiovisual markets and publication  of periodical 
legal newsletters. Moreover, a number of ad hoc studies and publications have been released 
on various occasions. 

4.1.  Market and financial area 

The  Observatory  has  focused  on  the  collection  and  analysis  of  statistical  and  economic 
information  on  the  various  segments  of  the  audiovisual  market,  the  financial  situation  of 
companies  involved  in  audiovisual  activities,  and  on  public  subsidies  for  films  and 
audiovisual  works.  Particular  attention  has  been  paid  to  the  challenges  raised  by  the 
emergence  of  new  technologies  and  to  the  need  to  enhance  transparency  across  European 
audiovisual markets. 

Publications such as the Yearbook, FOCUS and several ad hoc reports have provided a wide 
range  of  information  with  the  view  of  supporting  the  work  of  many  operators,  professional 
categories  and  public  administrations.  Moreover,  free  on-line  services  have  been  launched, 
providing more detailed useful information, in particular for SMEs: the LUMIERE database 
on  film  admissions,  the  KORDA  database  on  public  funding,  the  PERSKY  directory 
providing  systematic  lists  of  links  to  the  websites  of  thousands  of  television  channels  and 
sources of information on the television national markets. 

In  order  to  implement  these  tasks,  the  Observatory  has  worked  with  various  specialised 
networks  of  “data  providers”  including  national  film  agencies,  professional  organisations, 
national statistics institutes, trade magazine and market research companies.  

4.2. 

Legal area 

The topics addressed by the Observatory include the digitisation of the media and electronic 
communications,  convergence  and  globalisation  and  how  these  will  affect  areas  such  as 
human  rights  and  economic  freedoms,  cultural  goals  and  heritage,  copyright  law,  criminal 
law,  commercial  law,  advertising,  consumer  protection,  free  access  to  information,  state 
support and EU aid programmes, tax schemes, transparency, education, etc.. 

In  order  to  serve  the  overall  audiovisual  industry  as  well  as  legislators  and  public 
administrators  in  the  member  countries  with  comprehensive  up-to-date  information  and 
analysis,  the  Observatory  built  up  a  network  of  national  correspondents  and  academic 
institutions.  Moreover,  it  kept  regular  contacts  with  legislators,  regulatory  authorities  and 
other  supranational  organisations.  Special  attention  was  paid  to  the  creation  of  an  external 
network  assuring  adequate  translation  skills  (including  the  training  of  proof-readers). 
Audiovisual law is a critical issue for an area of diverse cultures and multiple languages.  

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4.3 

European Platform of Regulatory Authorities (EPRA) 

Since the beginning of 2006, the Observatory has hosted the secretariat of EPRA. A specific 
agreement  with  this  body  was  signed  on  30  November  2005  after  approval  by  the 
Observatory's  Executive  Council  in  June  2005.  The  expenses  for  the  EPRA  secretariat  are 
recorded in the Observatory's budget but are wholly funded by EPRA itself. 

V. 

DISSEMINATION OF THE OBSERVATORY'S WORK. 

Three groups of actors are the main targets for the products and services of the Observatory: 

- the core industry (film, broadcasting, video/DVD and multimedia) as well as neighbouring 
segments (eg. telecommunication), 

- the service sector of the core industry (consultants, lawyers, financial services, specialised 
press, etc.), 

- national, European and international policy-makers, authorities and the public service sector 
in  general  (ministries,  broadcasting  authorities,  public  funding  bodies,  international 
organisations, etc).  

The Observatory is bound by its Statute to charge users for its services but is also required, as 
a public service institution, to provide comprehensive free-of-charge services to its members 
and target groups . 

5.1.  Market and financial area 

The  Yearbook  is  the  main  statistical  publication  of  the  Observatory;  it  has  been  published 
yearly since 1994. During the period 2002-2005, the Yearbook was made of 5 volumes. (1. 
Economy  of  the  Radio  and  Television  Industry  in  Europe;  2.  Household  Audiovisual 
equipment –  Transmission – Television Audience; 3. Film and Home Video;  4. Multimedia 
and New technologies; 5. Television Channels – Programme Production and Distribution). In 
2006  it  was  published  in  3  volumes  (1.  Television  landscapes  in  36  European  countries;  2. 
Development of television in Europe; 3. Film and video). 

The  Yearbook  is  also  available  in  electronic  format  on  a  subscription  basis.  This  formula 
allows users to have access to information before the printed release of the Yearbook, with the 
additional possibility of accessing the information in Excel format. 

FOCUS – Trends of the World Film Market is published every year in May on the occasion of 
the  Cannes  Film  Market.  This  publication  provides  an  up-to-date  analysis  covering 
developments  not  only  in  Europe  but  also  other  parts  of  the  world.  It  is  now  widely 
recognised as a reliable and user-friendly information tool. 

Moreover,  ad-hoc  reports  are  published  by  the  Observatory  on  specific  topics.  They  are 
released either as printed publications, or made available on-line. Some are written directly by 
the experts and analysts of the Observatory; others are commissioned from external experts. 

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5.2. 

Legal area 

Since 1999, the Observatory steadily increased the legal information collected, processed and 
disseminated through different publications branded under the "Iris" name. 

The  "IRIS  newsletter",  launched  in  1995,  is  published  10  times  a  year.  It  is  also  available 
online.  More  than  3600  articles  concerning  laws,  judgments,  administrative  decisions  and 
policy documents have been published over the years. The newsletter covers activities from 
56 different countries and all major supranational organisations.  

"IRIS plus" began publication in 2001. It is a thematic supplement attached to every second 
edition  of  "IRIS  newsletters".  It  focuses  on  topical  issues  of  international  significance  and 
compares  how  issues  are  treated  under  the  laws  of  different  countries.  Issues  covered  by 
"IRIS  plus"  range  from  copyright  through  state  film  funding,  convergence,  classical 
broadcasting to new media and to Human Rights. 

"IRIS  Specials"  are  major  publications  between  50  and  150  pages  supplying  detailed 
information about applicable legal frameworks (European and national legislation) as well as 
examples of regulatory models. On many occasions, for comparison purposes, IRIS Specials 
also supplied information on the United States regulatory structure. "IRIS Specials" started in 
1999  as  a  legal  guide  for  audiovisual  media  in  Europe.  Eight  more  have  followed  since. 
Recent  IRIS  Specials  include  a  work  on  “Implementing  the  Regulation  of  Transfrontier 
Audiovisual Media Services”, which was released end-2006.  

5.3. 

Internet  

The  Observatory  maintains  two  economic  and  financial  databases  and  an  on-line  directory 
freely available on its website. 

Since  1996  the  LUMIERE  database  provides  detailed  information  on  the  yearly  film 
admissions  of  all  films  with  a  commercial  release  in  any  of  the  27  European  countries  it 
covers.  More  than  15  000  films  are  included  in  LUMIERE.  This  database  offers  powerful 
tools  for  statistical  analysis  (market  shares,  analysis  by  genre,  etc.)  making  it  an  effective 
source of information for professionals. 

The  KORDA  database  provides  for  comprehensive  information  on  about  600  support 
schemes provided by more than 200 public funding bodies in Europe. A search tool allows the 
user to identify specific support programme schemes according the country, the genre and the 
production phase. 

The  PERSKY  directory  provides  a  systematic  linkage  to  the  website  of  all  TV  channels 
existing  in  the  36  Members  State  of  the  Observatory,  as  well  as  links  to  broadcasting 
regulatory authorities, sources of information and national reports. 

Since  2003,  the  Observatory  offers  free-of-charge  access  to  a  legal  database  named  "IRIS 
Merlin"  containing  almost  4,000  articles,  and  more  than  4,200  referenced  documents  (laws, 
decrees, court cases, etc.). IRIS Merlin, which has a specific search and filtering function, is 
not  only  compiled  with  articles  from  "IRIS  newsletter"  but  also  includes  articles  especially 
written for the database (eg. the collection of co-production agreements, published in 2005).  

Also available on the Observatory's Web portal are a number of legal articles such as country 
reports  (e.g.  on  Russia,  Turkey  and  Switzerland)  or  on  other  special  topics,  as  well  as 

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overview  tables  on  the  state  of  signature  and  ratification  of  European  conventions,  together 
with  other  international  treaties  and  national  lists  concerning  events  of  major  importance  to 
society. 

5.4. 

Other dissemination activities and conferences 

The Observatory co-organised eleven workshops in the legal area during the past seven years. 
The latest one took place in November 2006, focusing on “The Future of Broadband Video”. 
Each workshop has been the subject of specific coverage by an IRIS publication. Moreover, 
the Observatory contributes regularly to conferences, workshops and similar events organised 
by other institutions, the EU Member States and the Cannes Film Market. 

In 2003, the Observatory for the multiple purpose of contacting the members of the various 
networks, the international press and current and potential customers set up a contact database 
named "Oriel". 

VI. 

CONCLUSIONS 

The  positive  assessment  of  the  Community/Observatory  relations  expressed  in  the 
Commission 2002 Interim Report10 on the Community participation in the Observatory can be 
surely re-affirmed. The success of publications and databases such as the Yearbook, Iris and 
Lumière  have  elevated  the  Observatory  to  a  position  where  it  is  seen  as  a  key  source  for 
economic  and  legal  information  among  market  actors  in  the  various  segments  of  the 
audiovisual industry as well as by public authorities, both at national and Community levels. 

In  addition  to  the  publications  released  on  a  regular  basis  and  the  on-line  databases,  the 
Observatory has been able to release accurate analyses that it would be difficult to procure at 
such reasonable prices, either for industry or, given the amount of the membership fee, for the 
participating public bodies. 

The  capacity  of  the  Observatory  to  establish  and  maintain  effective  networks  of  scientific 
partners  is  among  the  most  valuable  assets  of  this  institution  and  has  proved  essential  for 
continuing provision of the highly diversified inputs for the Observatory's economic and legal 
analysis over the years. The Observatory, in turn, has provided the audiovisual sector and, in 
particular,  the  small  and  medium  operators  with  comprehensive  instruments  that  provide  a 
clearer view of the markets and of the legal/regulatory framework. 

In order to continue to support the Observatory's activities, the Commission has proposed that 
the  Community  participation  in  the  Observatory  will  continue  up  to  2013  within  the 
framework of the new Media 2007 programme.11 

10 
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COM(2002) 619 final 
COM(2004) 470 final 

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