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CINEMA AND AUDIOVISUAL MEDIA SERVICES: A WIDER PROTECTION FOR EU WORKS

On 2 October 2017, the Italian Council of Ministers approved a new Legislative Decree (“Decree“), aimed at ensuring a wider protection to EU (and Italian) works in the audiovisual media services (“AVMS“) sector. A brief outline of the new provisions is set out below.

A. The Main Contents of the Decree

The Decree amends Article 44 of the Italian AVMS Code (Legislative Decree no. 177/2005 and ff. amendments), setting forth the general framework for the promotion, distribution and production of EU works.
The Decree provides for increased quotas for: (i) Italian films or fictions in prime time; and (ii) compulsory shares of advertising revenues to be invested in Italian / EU works.

B. Increased EU and Italian quotas of transmission:

i. Overall Quotas
With the current regime, the overall quotas of transmission of EU works are equal to 50%. With the Decree, starting from 2019, such quotas will increase up to 55% of the productions broadcast (and, starting from 2020, the 60%). Furthermore, respectively for the Italian public broadcaster and the other private broadcasters, at least half and a third of the quota shall be used for Italian works.

ii. Prime Time Italian Quotas
The Decree sets out the minimum quantitative amount of Italian productions to be transmitted within the prime time hours, between 21:00 and 23:00. AVMS providers will schedule two Italian programs, ranging from film, fiction, documentaries and animation programs, per week and one must have a cinematographic character.
The new prime time quotas of Italian programs that must be included in the EU transmissions quotas:
• 12% of the programs broadcasted by the Italian public broadcaster; and
• 6 % of the programs broadcasted by the other private broadcasters.

C. Investment Quotas
The revenue (as a percentage) to be invested in Italian and European productions varies between what must be invested by the Italian public broadcaster and by the other private broadcasters and will increase each year between now and 2020. It’s no surprise that the Italian public broadcaster has to invest more than other private broadcasters. The new investment quotas are as follows:

i. Private Broadcasters
• 2018 – 10% of the annual revenues
• 2019 – 12.5% of the annual revenues
• 2020 – it will increase further to 15% of the annual revenues

Within the overall percentage for European works, the Decree reserves for the Italian cinematographic works 3.5% of the annual revenues. Such percentage will also increase up to 4% in 2019 and 4.5% in 2020.

ii. Public Broadcaster
As per the prime time programs, certain public broadcasters has different and higher percentage to respect.
• 2018 – 15% of the annual revenues
• 2019 – 18.5% of the annual revenues
• 2020 – 20% of the annual revenues

Within the overall percentage for European works, the Decree reserves for the Italian cinematographic works 4% of the annual revenues. Such percentage will also increase up to 4.5% in 2019 and 5% in 2020.

D. OTTs
It should also be noted that under the Decree, also other OTT services providers, like, for instance Netflix, will have to comply with the quotas and investment obligations. This should be achieved through the early transposal in Italy of the contents of the Proposal for a Directive amending the European Directive on the Audiovisual and Media Services, approved by the European Commission on 25 May 2016.

E. Concluding Remarks
The Decree is clearly aimed at fostering more investments in EU and Italian audiovisual works. Some broadcasters challenged the Decree, depicting it as “an unsustainable taxation against the operators” with “disproportionate” administrative sanctions (ranging from Euro 100.000,00 up to Euro 5.000.000,00 or to 3% of the annual revenues).
Now that the Decree has been approved, it will have to be further examined by the Italian State Council (Consiglio di Stato) and by the competent Italian Parliamentary Committees (Commissioni Parlamentari). Whether it will be subject to further changes is yet to be determined.

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Dario Malandrino

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