Regulation or strangulation? Mapping out the rules for Europe's media

Findings from the European Media Leaders Summit 2006

The first day of the European Media Leaders Summit 2006 came at a critical point in the development of Europe's regulatory landscape. The conference opened on the very day when two things happened: the European Parliament's Culture Committee voted on amendments to the European Directive to regulate Audiovisual Media Services, and the Council of Culture Ministers from EU member states decided their position on the same draft legislation.

These decisions -- springing from the 1989 'Television Without Frontiers' Directive -- may sound disconnected from the cut-and-thrust of the entertainment & media industry. But they are set to shape the future of communications in Europe at a time of unprecedented change. As several speakers made clear, the widespread fear is that the regulators may apply a mindset developed during the era of traditional linear broadcasting to try and control the emerging world of non-linear, on-demand services such as IPTV and VOD. In their view, such an approach could undermine Europe's competitiveness against markets such as the US.

In the event, as the national newspapers reported on the second morning of the conference, there was some reasonably good news for Europe's TV industry in a planned relaxation of product placement rules across the EU. However, the extent to which linear broadcasting regulations on advertising will apply to new media remains unclear -- and will not be settled until a final vote by the European Parliament in 2007.

The danger of gatekeepers

Against this background, a number of delegates spoke out on the regulatory risks facing Europe's entertainment & media industry -- a theme initially highlighted by RTL Chief Executive Officer Gerhard Zeiler in the opening keynote address. "Having said that we shouldn't be scared about technology, we should at the same time make sure that the emergence of these new technologies doesn't lead to the emergence of gatekeepers," he commented. "New distribution channels should not be able to develop monopolies. While the limits of distribution in the analogue world were real technical limits, we must make sure that there are no new artificial constrictions in the digital world."

Pointing out that the enormous choice of channels and technologies available to today's consumers means broadcasters need wider options over when and how to insert advertising into their program flow, Mr Zeiler continued: "Nobody tells a magazine or a newspaper on which page they can put ads and on which they can't. But that is exactly what the regulators tell us broadcasters. I don't, however, see the value or necessity of that."

He went on to stress that the industry needs to make its voice heard at a pan-European level to have any real influence on the regulatory process. "If you look at the U.K. TV landscape, a lot of my colleagues in the U.K. think lobbying Ofcom is enough," he said. "Unfortunately it isn't. As an industry, we have to have a stronger voice in Brussels."

Principles under threat

Just such a pan-European perspective was provided by Francisco Pinto Balsemao, Chairman of the European Publishers Council (EPC) and Chairman & CEO of Impresa SGPS, in his presentation on navigating Europe's regulatory landscape. In his view, some basic freedoms were now in danger. "The 1989 Directive 'Television without Frontiers' ... established a vital principle: that the country of origin of the broadcaster was the place where media should be regulated, so that programs could freely beam across borders without interference from foreign governments and that the freedom of speech was paramount," commented Mr Pinto Balsemao.

He continued: "This principle of free circulation of ideas is now under threat...Allowing one member state to decide whether another country's programs, or the advertising which supports their production, meet their own version of 'general public interest', or their own interpretation of what is offensive to religious or political beliefs, or racially or sexually discriminating, can only stifle freedom of expression."

Mr Pinto Balsemao then highlighted the possible repercussions of proposed EU restrictions on content carried on European-hosted websites. "Put starkly: if the directive went into law as originally proposed it would place controls on website material emanating from within the European Union. But if that same material came from another continent it could be viewed and used openly and freely. Does that make sense? It would be an encouragement to website owners to go off-shore."

He added: "The problem -- and it's a tricky one -- is that when you look at some websites it is difficult to define what is and is not an online newspaper, what is and is not a TV channel. As your TV plays more video recordings, as your PC plays live TV, which is which? So when we hear regulators talking about rules to control what we might upload to the web we become very uncomfortable, because we view the web as a medium of free expression more akin to publishing than broadcasting."

Privacy, transparency and market access

As the European regulators continue their deliberations, other emerging trends in the industry are also raising regulatory perspectives. In the session entitled 'Live from a bedroom near you' on user-generated content, Andrea Mezzasalma, Head of Internet, TV and Radio Measurement at TNS, said the accuracy and uniqueness of the personal activity data that could now be generated was actually starting to limit its usage.

"Up until recently you could strip away the demographic data, the name and address of your respondents and there was no problem," he said. "Is that the case now? Probably not. The data now is so rich that if it came into the hands of someone who knows you, they could effectively reconstruct who you are. Think, for example, of travel data measured with GPS for outdoor media. You just can't anonymise that data. You need to aggregate it in some way before giving it to third parties."

Another interesting idea that arose during the summit was that the type of transparent reporting required by capital markets regulators might now start to emerge in the consumer arena, thanks to online scrutiny. During her presentation on Lifestyle Media, Deborah Bothun, Partner and Global Convergence Leader with PricewaterhouseCoopers, commented: "Our own global survey told us that 'trust in the service provider's ability to provide a reliable service' is at the top of the list when making provider choices ... Capital Markets have imposed transparency on the financial reporting and information sharing of public entities -- and now blogging and other online communications are doing the same for consumer products and customer service."

The imposition of regulatory barriers has never sat easily with the innovative and customer-focused mindset of the Entertainment & Media industry. Concerns over the impact of the EU's Television with Frontiers Directive reflect underlying worries that old-media restrictions may stunt the development and growth of Europe's new generation of leading-edge services. But the type of transparency envisaged by Ms Bothun suggests a more appropriate form of regulation for the digital age -- one based on opening up visibility rather closing down companies' options. It remains to be seen which type of regulation ultimately wins out.


Find out more about the European Media Leaders Summit 2006 at www.euromedialeaders.com. Or contact: Alex Maclean, Marketing Manager, Global Entertainment & Media practice, PricewaterhouseCoopers. Phone (44-20) 7804-3421; email: alexandra.r.maclean@uk.pwc.com.
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