X-ray of the new General Law of Audiovisual Communication (III)

In this penultimate installment, we analyze key aspects of the new law such as the exclusive contracting of audiovisual content, events of general interest, the purchase and sale of rights, audiovisual communication service providers and limits on cross-participation in radio and television networks with different geographical coverage, mobile and high-definition television, competition, pluralism and the role of public providers, highlighting the total absence of advertising in state-owned media.

A key aspect that regulates the new General Law of Audiovisual Communication (7/2010 of March 31) is the exclusive contracting of audiovisual content. The new framework is based on the premise that the right will not be exercised in such a way as to deprive a substantial part of the public residing in another Member State of the possibility of following events classified as being of great interest to society.

Along these lines, the law states that the exclusive broadcasting right cannot limit citizens' right to information, leaving the door open to the issuance of an informative summary under reasonable, objective and non-discriminatory conditions of events of general interest that have been contracted exclusively. In these cases, exclusivist providers may not demand any compensation from third parties when the informative summary about an event, unitary set of events or sports competition is broadcast in a news program, delayed and with a duration of less than 3 minutes.

However, as Raúl Rubio, lawyer and senior advisor at Landwell-Pricewaterhousecoopers, recalled at the conference “Profitability and innovation in television in the new audiovisual scenario” recently organized by the Professional Development Institute, with the support of Panorama Audiovisual, “the compensation exception does not include, however, the expenses necessary to facilitate the preparation of the informative summary.”

To carry out this work, audiovisual communication service providers, as established by law, may access, in the authorized area, the spaces in which such event is held.

But what are the events of general interest? Although this is an issue that has been debated for years, now the new law puts it in the hands of the future State Council of Audiovisual Media to establish a catalog of events with a biennial validity that includes events of general interest to society that must be broadcast on open television and with state coverage. The summer and winter Olympic Games will be included, the official matches of the football section, the semi-finals and finals of the Euro Cup and the World Cup, the final of the Champion and Coopa del Rey, one match per day of the First Division, the motor racing and motorcycling grand prix held in Spain, the Vuelta Ciclista or the Spanish participation in the Davis Cup, among others.

Regarding the sale and purchase of exclusive rights, this must be carried out, according to the law, under conditions of transparency, objectivity, non-discrimination and respect for competition rules, in the terms established by the different pronouncements that, at any given time, are made by the Spanish and European competition authorities. The new law establishes that contracts for the acquisition of the rights to football competitions may not exceed 4 years, although it leaves validity open until their end for those contracts in force on May 1 of this year, the date of entry into force of the law.

Registration of providers

The General Law of Audiovisual Communication establishes the implementation of a state or regional registry, depending on the coverage of the broadcast, of audiovisual communication service providers. The holders of significant shares must be registered in this registry (5% of the share capital or 30% of the voting rights or a lower percentage, if it serves to designate, in the 24 months following the acquisition, a number of directors that represent more than half of the members of the company's administrative body).

Licenses

As Raúl Rubio comments, the new law clearly specifies that “technological improvements that allow greater use of the public domain for audiovisual communication will not allow the conditions established in the license to be exceeded, and in particular to enjoy a greater number of paid or open channels whose broadcast has been enabled.”

Regarding paid services, it will be possible to exploit channels with fully or partially paid content as long as the occupancy of the radio spectrum is less than or equal to 50% of the entire assigned spectrum. In any case, the coding system must be approved by the Audiovisual Authority.

As for the participation of natural or legal persons in the audiovisual communication service providers, this is limited to 25% in the case of not being a member of the European Economic Area (EEA). Likewise, the total of the shares in the same legal entity of various natural or legal persons of nationals of countries that are not members of the EEA must be less than 50% of the share capital.

An audiovisual communication license may only be transmitted to third parties in a sale or lease as long as at least two years have elapsed since the initial award of the license. When carried out with natural or legal persons who are nationals of countries that are not members of the EEA, they will be subject to the principle of reciprocity.

It is noteworthy that when the license involves the allocation of a complete multiplex or two or more channels, no more than 50% of the license capacity may be leased. In any case, as lawyer Raúl Rubio points out, the new law expressly prohibits subletting.

Although audiovisual licenses will be granted from now on for fifteen years, one aspect to highlight is that after a maximum of six months has elapsed since a reservation of public radio domain has been planned without the competent Administration having requested its allocation to the public radio and television broadcasting service, or calling for the corresponding tender, any interested party will be entitled to request said call.

The renewals of the licenses will be automatic, and for the same period, provided that the established conditions have been met, there are no supervening and insurmountable technical obstacles in relation to the spectrum of the affected licenses and that, of course, the owner of the service is up to date with the payment of the fees for the reservation of the public radio domain that the law includes.

On the other hand, the license may be revoked if it is not used within a period of one year from when there was a legal obligation to begin emissions.

Mobile and high definition TV

Although many would have liked the new Audiovisual Law to have precisely included the framework for mobile television and high definition, the text is only limited to establishing that for the first services it will be necessary to have a license under the same terms as the audiovisual communication service providers, establishing that at least 10% of the content must be adapted to the specificities of mobile television derived from the size of the screens of the reception terminals. A percentage, without a doubt, very high taking into account the current business model. As for HD, the law only states that providers may make high-definition broadcast compatible with standard resolution within the limit of the assigned capacity.

Competition and pluralism

The law establishes the rules for the maintenance of a competitive, transparent and plural audiovisual market, establishing that no natural or legal person may acquire a significant participation in more than one state-level audiovisual communication service provider, when the average audience of all the channels of the considered state-level providers exceeds 27% of the total audience during the 12 consecutive months prior to the acquisition.

As Raúl Rubio reviews, “exceeding 27% of the total audience after the acquisition of a new significant participation will not have any effect on the owner of the same.” The law establishes that the same provider may not have two more than two multiplexes at the state level and one at the regional level, and in any case there must be a minimum of three providers at the state level.

For the first time, a wide-ranging audiovisual law includes a series of provisions that ensure information pluralism in the radio medium. The new law establishes that the same natural or legal person may not, in any case, directly or indirectly control more than 50% of the licenses that substantially coincide in their scope of coverage. In any case, the same natural or legal person may not control more than five licenses in the same coverage area.

In the same Autonomous Community, no natural or legal person may control more than 40% of the existing licenses in areas in which only a single license is covered, establishing itself at 1/3 in the entire territory of the State. The law excludes broadcasting stations managed directly by public entities from these limitations.

Public providers

Perhaps one of the most striking aspects of the new framework is that, as already established by the RTVE Corporation Financing Law, advertising is eliminated from public radio and television. In addition, it establishes that all publicly owned television providers may not dedicate channels exclusively to broadcasting commercial communication.

When the new law comes into force, according to jurist Raúl Rubio, "the improperly allocated public financing will have to be reimbursed or will be reduced from the budgeted compensation for the following year. In order to quantify the net cost of the public audiovisual communication service, the providers of this service must have a separation of accounts by activities as well as maintain an analytical accounting system that separates the allocation of income and costs of the public service activity, of the commercial content and of the remaining activities."

Access to X-ray of the new General Law of Audiovisual Communication (II)

Access to X-ray of the new General Law of Audiovisual Communication (I)

The Audiovisual Law, in depth on June 1

On June 1, the Business Development Institute with the support of Panorama Audiovisual will organize a conference at the Westin Palace Hotel in Madrid in which the new General Law of Audiovisual Communication will be analyzed, outlining the legal framework for the provision of audiovisual services, the impact of this regulation on content, the protection of minors and advertising, and the challenges and opportunities that it will also entail, among many other issues.

Fernando Castillo (Ministry of Industry, Tourism and Commerce), Raúl Rubio (Landwell-Pricewaterhousecoopers), Lola Molina (TVE), Esperanza Martín (LaSexta), Ignacio Fernández-Vega (Telefónica de España), Alfonso Sánchez Izquiero (CRTVG-FORTA), Eduardo García Matilla (Multimedia Corporation), José Miguel García-Gasco (Antena 3 Group), Carlos Ergueta (Sogecable) and José Antonio Ortega (Pricewaterhousecoopers) are some of the speakers who will participate in this day.
More information here.