The draft decree “cable-satellite”: The short circuit of specialty channels?
Suffering from the pandemic and the exponential competition from streaming platforms, specialty channels fear further setbacks with the arrival of this new regulation.
A consultation on the draft “cable-satellite” decree, opened by the Ministry of Culture at the end of July 2021, is currently being closed. The draft decree will set out the obligations of television service providers to contribute to the national and European film and audiovisual landscape. This project is complementary to the so-called “Smad” decree[1] published last June, which regulates video-on-demand platforms, and to the DTT decree, which targets terrestrial channels and which is currently being finalised. These three decrees constitute the triptych of the reform of the audiovisual ecosystem.
Specialty television channels [2] view this draft decree with a bad eye, worried about new obstacles that would only add to the difficulties this business model has experienced in recent years. Richard Maroko, president of the Association des Chaînes Conventionnées éditrices de Services (ACCeS) [3], expressed his apprehensions to the French newspaper Les Echos, fearing bankruptcy of thematic channels “under the pretext of uniformity” imposed by this decree.
Indeed, since the 2010s [4], many channels have been forced to close. One of the main reasons was that distributors, such as CanalSat, Numericable and Orange, resisted financing an offer that was already widely available, free of charge, on the twenty-five DTT channels accessible to all free of charge. Then, faced with the emergence of video on demand offers by subscription [5] which propose a wide selection of films and series, the thematic channels were weakened. Yet the sector represents a turnover of over one billion euros and thousands of jobs. In addition to these complications, the health crisis, which has allowed video on demand by subscription to impose itself on the audiovisual market, has increased the obstacles to overcome for an economic model already in difficulty. All the more so as “operators are finding it difficult to charge for their pay-TV packages and remunerate free-to-air TV channels”[6]. This has resulted in the loss of “7% of advertising revenue and between 15 and 20%” of distribution revenue in 2020, according to Richard Maroko.
The draft “cable-satellite” decree could add an additional burden on the publishers of specialty channels. Like terrestrial channels, specialty channels will also have to contribute to the financing of these productions [7]. Eric Brion, general delegate of the ACCeS, told “Les Echos” that this draft decree provides for “a rate of 16% in the audiovisual sector, whereas in most cases, specialty channels are at 12% due to agreements with the production sector“. In his view, although there is an exception for small channels [8], the size of this rate will result in additional costs for specialty channels, which could prove dangerous for those whose revenues are at risk.
These obligations to invest in French film and audiovisual production will also concern specialty channels established abroad. The association adds in this respect that this obligation should be fulfilled by a larger group of specialty channels and that it could, according to the association, have allowed all specialty channels to regain ground and make possible a “decrease in the overall rate of contribution to national production“.
More concretely, in order to allow specialty channels to find their stability, ACCeS explains its request for a lower rate, a simplification of the system, and its wish that the Audiovisual and Digital Communication Regulatory Authority (Arcom) adapts the obligations of television channels according to their specificities to guarantee a better balance in the share of each one in the contribution to and broadcasting of film and audiovisual production. Thus, its request for the exemption of the smallest thematic channels was noted, but this does not concern all specialty channels.
The simplification of the decree is also desired by the Conseil Supérieur de l’Audiovisuel (CSA). Although it welcomes the relaxation of the decree, the CSA points out that the numerous exceptions listed in the draft “cable-satellite” decree multiply the number of applicable regimes, which is precisely what the specialty channels would like to see developed in order to better adapt to the specificities of their services. The CSA argues that this complexity could prevent the implementation and monitoring of certain provisions proposed by the decree, and practices aimed at circumventing its obligations could also develop.
The ACCeS met on Tuesday, September 7th with the Ministry of Culture to discuss this text, which should be prepared to enter into force on 1 January.
By UGGC Avocats IP/IT team
References:
communiqué de presse : https://www.acces.tv/wp-content/uploads/2021/09/CP-ACCeS-se-mobilise-contre-le-decret-CabSat_7_09_21.pdf
[1] For more information, see https://www.uggc.com/decret-smad-consecration-des-obligations-de-financement-pour-les-plateformes-de-video-a-la-demande/
[2] Television channels whose range of programmes targets a given theme or a specific category of viewers.
[3] The ACCeS, an association created in 1997, brings together some one hundred pay channels such as Disney Channel, Tiji, Mezzo and Canal+ channels. Its purpose is to bring together all the publishers of pay-TV channels, regardless of their shareholders or distributors, in order to defend their common interests and to promote their specific characteristics to all the players in the communication sector, in particular to ensure that the legal and economic framework in which they operate enables them to develop their activity in the long term. In this respect, ACCeS is the privileged interlocutor of public authorities, such as ministries and administrations, and the Conseil Supérieur de l’Audiovisuel (CSA) for all matters concerning their legislative and regulatory environment and the economic regulation of the sector. For more information, see https://www.acces.tv/qui-sommes-nous/
[4] Indeed, the ACCeS reports to the “Echos” that thirty-five specialty channels have closed since 2010.
[5] Including Netflix, Amazon Prime, Disney+, etc.
[6] See the article https://www.lesechos.fr/tech-medias/medias/fronde-des-chaines-thematiques-contre-la-nouvelle-reglementation-1343700
[7] On this subject, see the first section of Chapter II of the “cable-satellite” decree, which lays down the common provisions of the contribution rules for the production of cinematographic and audiovisual works. Article 15 of this decree establishes a list of expenses eligible for the contribution of French and European cinematographic and audiovisual productions applicable to television service providers.
[8] Article 13 of the “cable-satellite” decree exempts television channels with less than 5 million revenues per year.