Regulation of Media Ownership in the EU 1990 – 2004 Dr. Andreas Grünwald Attorney-at-Law

Regulation of Media Ownership in the EU 1990 – 2002

Dr. Andreas GrünwaldAttorney-at-Law

Hogan & Hartson Raue L.L.P. Berlin, Germany

Regulation of Media Ownership in the EU 1990 – 2004


Hogan & Hartson Raue L.L.P

Berlin, Germany

The National Broadcasting Council of PolandConference on the Promotion of Media PluralismWarsaw, December 9, 2004

Outline

National Markets and Regulation Two Examples

European Media Concentration Control Background, Legal Basis

Potential Impact of Converging Media New Regulatory Models / Existing Proposals

Conclusions / Discussion

Average 2003 Audience Share

Source: KEK

43,6

22,2

26,4

7,8

Public Service(ARD/ZDF)ProSiebenSat.1

RTL Group

Others

Germany – Television Market

No limit on number of licenses

Audience share approach (since 1996) for private broadcasters

Relevant threshold (dominant opinion-forming position is assumed): 30 percent audience share (viewers 3 years and older)

No cross-media ownership restrictions for national television

“Related markets” are considered if audience share exceeds 25 percent

Broadcaster’s audience share is fully attributed in case of ownership interest of 25 percent or more

Ownership rules are enforced by special authority (Commission on the Concentration in the Media, KEK)

Germany – Regulation

36,6

23,79,6

6,5

23,6

Public Service (BBC)ITV (Carlton/Granada)Channel FourChannel 5Others

Average 2003 Market Share

Source BARB

UK – Television Market

Major reform in 2003 (Communications Act 2003)

Former audience share model replaced by mix of general competition law (Enterprise Act 2002) and cross-media restrictions

Office of Fair Trade may intervene in media merger cases for “public interest” reasons

Role of media authority (Ofcom) was reduced to an advisory status

Only a few sector-specific rules were maintained Most relevant: Newspaper groups with more than 20% market share

may not hold an ITV license (“lex Murdoch”) ITV and Channel 5 may not hold a national radio license

No cross-media restrictions regarding Channel 5 license

UK – Regulation

Conclusions from National Markets and Regulations

Certain Similarities in Market Structure Strong public service broadcasting in many Member States Private sector dominated by only a few groups of channels

Certain Differences in Regulation Different regulatory approach (audience share model, cross-

ownership regulation, sector-specific / general competition law) Different regulatory conpetencies Different approach towards non-domestic licensees Different regulatory trends, influenced by national economic interests

Possible Arguments Market structures suggest that harmonization is needed Market sizes and regulatory models are too different to be

harmonized

Outline





EC TreatyNo specific provisions on media concentration

Television Without Frontiers DirectiveNo provisions on media ownershipCurrently under discussionNo media ownership rules to be expected

European Convention on Transfrontier TelevisionCouncil of EuropeNo provisions on media ownershipCurrently under discussionNo media ownership rules to be expected

Existing Legislation

The European Media Ownership Debate (1)

Major Initiatives by the Commission

1992: Green Paper „Pluralism and Media Concentration in the Internal Market“, COM (92) 480

No definite regulatory proposal by the Commission Potential actions discussed: No action, transparency obligation, or

harmonization (directive / order) Main focus on audiovisual sector, not on the press or other media

1996/97: Draft Directives on Media Concentration Ownership restrictions on television, radio and cross-media-

ownerships Directive was not adopted, mainly for reasons of lack of

competency Both Initiatives were rejected by EU Council


Major Initiatives by the Commission (cont’d)

May 21, 2003: Green Paper on Services of General Interest 10 years after first green paper the Commission called for further

comments on European media ownership control March 1, 2004: Speech by Commissioner Viviane Reeding

No further plans for sector-specific concentration control but to use general competition law in light of special requirements of the media

Potential interpretation: Define markets more carefully March 29, 2004: Report on the Public Consultation on the 2003

Green Paper Interested parties broadly rejected Commission proposal

Initiatives by Other European Institutions

European Parliament Supported and partly initiated Commission initiatives Until recently called for EU rules on media concentration e.g. Report on the parameters for determining the risks of

violation, in the EU and especially in Italy, of freedom of expression and information (April 2004)

Economic and Social Committee Initiative Action (March 2000): Pluralism and concentration in

the media in the age of globalisation and digital convergence Recommendation: Co-ordinate work of national regulatory

bodies through the Commission


Initiatives by Other European Institutions (cont’d)

Council of Europe Many activities in field of media concentration Consideration of media ownership control goes back to earlier

1990s October 2000: Report on media concentration in the digital

environment Most recently: Presented study on “Transnational Media

Concentrations in Europe” (November 2004), suggests ongoing monitoring and possibly a concenvtion on CoE level and further measures on Member States level


Competencies under Existing Legislation

EC Merger Regulation (1989, recently amended) Generally applicable to media mergers No special turnover thresholds for media mergers Exclusive EU competency to decide whether a merger falls within

the scope of the Regulation

Art. 21 Sec. 4: Escape Clause for Member States „Member States may take appropriate measures to protect

legitimate interests other than those taken into consideration by this Regulation [...]. Public security, plurality of the media and prudential rules shall be regarded as legitimate interests within the meaning of this subparagraph.“

EU Competency to Regulate Media Ownership (1)

Current EU Competencies (cont’d)

„Newspaper Publishing“ Case, 1994 Application of Merger Regulation escape clause Merger would have been approved pursuant to Merger Regulation

provisions UK regulator was nevertheless allowed to reject it for plurality

reasons


EU Competencies to Harmonize Media Ownership Rules

Principle of Limited Legislative Power, Article 5 EC Treaty „The Community shall act within the limits of the powers conferred

upon it by [the EC] Treaty and of the objectives assigned to it therein.“

Legislative Competency under Article 151 EC Treaty? „The Community shall contribute to the flowering of the culture of

the Member States [...]. [It] shall take cultural aspects into account in its actions under other provisions of this Treaty, in particular in order to respect and to promote the diversity of its cultures.“

However: Article 151 Par. 5 explicitly excludes any harmonization of cultural politics


EU Competencies to Harmonize Media Ownership Rules (cont`d)

EC Court of Justice on Tobacco Advertising (2000) The EC shall help to ensure a high level of human health

protection (Article 152 EC Treaty) However: If EC action qualifies as a measure to primarily promote

public health, it may not be a harmonization of national law


EU Competencies to Harmonize Media Ownership Rules (cont`d)

No Competency under Article 95 EC Treaty Aim of Harmonisation: Achievement of the EC Treaty’s objectives

as set out in Article 14 (including improvement of internal market)

EC has wide discretionary power when determining potential market hurdles

However: There is no internal media market in the EC due to language barriers between Member States

Also: EC-wide media ownership restrictions would obstruct EC media market (if existent) rather than improve it

EC Court of Justice (Tobacco): No harmonization of advertising restrictions by demanding restrictions on the highest level

EC Competency to Regulate Media Ownership (5)

Outline





Total Media Market(10 % Ownership Limit per Company)

Television MarketAudience Share

Radio MarketAudience Share

Press MarketCirculation

„Exchange Rate“Objective Criteria

„Total Media Market Approach“ (1995 UK Proposal)

Major problems with implementation Which markets to include in extended consideration? Which criteria to use as an „exchange rate“?

More a reaction to convergence-driven market changes than a reaction to convergence itself

„Real“ convergence issues were not solved: Which markets to include in extended consideration? Which distribution methods to include?

– Television: Webcasting as audience share?

– Press: Web hits as part of circulation?

“Related Markets Approach” (Germany) seems more practical

Practical Relevance from Today‘s Perspective

Outline





Media concentration is an issue in many EC Member States TV markets are generally concentrated Regulatory concepts differ significantly, though

Media mergers are subject to EC Merger Regulation, but not to sector-specific EC legislation

EC has no legislative competency to harmonize media ownership control

Article 151 (culture) explicitly excludes harmonization actions Article 95 requires improvements in the internal market

Conclusions


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Documents

Regulation of Media Ownership in the EU 1990 – 2004 Dr. Andreas Grünwald Attorney-at-Law