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Pan-Euro portability: A true solution?

Last week the European Commission published its proposals to enhance cross-border content portability for TV, radio and online access to programming and entertainment when outside the country of origin.

Deutsche Bank’s media analyst Laurie Davison, in a report on the proposition, described the potential benefits as: “In theory, this would allow a SkyGo user to watch Premier League football while on holiday in France; a Swedish Netflix sub could access his service in Italy etc. Currently this is blocked by copyright on rights typically licensed country-by-country.”

But he adds that the Commission’s proposals are vague in that they do not specify the duration of access that would be permitted.  “This could be limited to short stays; holiday access, in effect. But if not limited tightly, it would break down the territorial restriction, negate country-by-country rights sales and lead to pan-EU rights for major sports leagues and movie studios. It would also be applied retroactively with just a 6-month implementation period.”

Davison also suggests we have been here before: “Investors could be forgiven for dismissing this as a big yawn. The EC Cable & Satellite Directive proposed cross-border rights in 1993; the origins of the infamous “Portsmouth landlady” case at the European Court of Justice in 2011. For more details see “ECJ ruling: uncertainty reigns, but risks to the upside, October 5th 2011 and Feedback from lawyer conference call, October 10th 2011). But despite much ado, there has been no change in the practice of country specific rights sales to date. Likewise, these are just proposals at this point; yet to be implemented and the duration point is key. The legislation is being consulted on and national ratification would be required, so nothing is changing imminently. But the direction of travel is clear.”

The bank’s report says: “These portability proposals are coming at the same time as the EC pursues the 6 major US film studios and Sky for antitrust violations on not allowing films to be broadcast outside of the UK & Ireland, in breach of Single Market rules. This started 18 months ago and could be extended across other territories the Commission has stated. There are signs of shift in sales approach from content owners. Sky signed its first pan-European rights deal in November with HBO; extending separate deals for the UK, Italy and Ger into a single contract.”

However, there could be media “winners” if the new proposals get implemented, says Davison: “The winners from pan-Euro rights would be the pan-European pay-TV distributors with largest sub bases: the newly merged Sky Europe entity, DISC, now with Eurosport, beIN (Fr, Sp) and NFLX do operate across multiple geographies but have smaller sub bases and/or lower ARPU. Single-market players, unable to justify the higher upfront cost of taking on pan-EU packages and the risk and complication of resale of rights, would be at a disadvantage: VIV/C+, Altice, Mediaset, P7/Maxdome. Sky would be able to apply increased leverage in major sports/movie negotiations, limiting rights inflation. This could also better monetize mobility services. We have flagged Sky’s leadership with SkyGoExtra; this could be extended to roaming packages for travelling subscribers.”

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