EU’s new av rules a poisoned chalice?

  •   
  •   
  •   
  •   

Earlier this week the European Parliament’s laid out new rules for audiovisual services. Equity analysts at investment bank Exane/BNP say that the important 30 per cent oquota rule will impact all broadcasters including OTT players.  The bank says: “Designed to support the diversity of the European audiovisual sector, the new regulation will apply to both broadcasters and online platforms such as Netflix and YouTube.

More specifically “VoD platforms are also asked to contribute to the development of European audio-visual productions, either by investing directly in content or by contributing to national funds (…). The level of contribution in each country should be proportional to their on-demand revenues in that country – member states where they are established or member states where they target the audience wholly or mostly” said the European Parliament in a statement.

Until now, says the bank, only traditional broadcasters were under this regulation. “We see this principle as a fair normalisation of the regulatory framework between the players. We don’t see that as a significant positive for TVs, as:

a) platforms are already and increasingly investing in local content – as a reminder, Netflix is this year doubling its European programming budget to c$1 billion.

b) this is unlikely that the disruption power of platforms will be impacted by the regulatory framework.

Also important are the new rules on advertising’s limits. “Now ads can take up a maximum of 20 per cent of the daily broadcasting period between 6am and 6pm, giving broadcasters the flexibility to adjust their ad periods. In primetime, between 6pm and midnight, ads can only take up 20 per cent of time,” the bank reminds us.

The bank’s view is that broadcasters have argued for a long time that increasing the advertising time was a means to further invest in content and therefore to better compete with Netflix/Amazon.

However, the bank’s bottom line is that it remains cautious on the prospects for the sector’s commercial broadcasters. “Consumers viewing is shifting from linear (where TVs have an oligopoly on viewership and content) to an on-demand world – were incumbent TVs enjoy a much smaller share of viewing. Clearly incumbent TVs are reacting to this trend: new alliance in France to build a common OTT platform, international cooperation, more digital investment by ITV, Pro7, RTL or TF1. It seems the regulators are also reacting with these new content investment rules. Yet we doubt any European player has the scale (but Sky within Comcast?) and the willingness to compete against online giants. Even worse, forcing online giants to invest in local content at a time virtually all broadcasters are prioritising local content broadcasting could be a poisoned chalice. We continue however to believe that players having built a strong content business suited to the changing demand should fare better – with RTL and ITV the best placed relatively.” 


  •   
  •   
  •   
  •   

You must be logged in to post a comment Login