Changing markets: European Union audiovisual policy in an
enlarged European Union

David Mahon
Consultant, Directorate-General X, European Commission

The 1980s witnessed immense change in the structure of the European audiovisual sector. The deregulation and re-regulation that occurred during this decade were a direct consequence of the transformation of the market from one largely dominated by public service broadcasters to one made up of a multiplicity of broadcasters: public service broadcasters, private commercial broadcasters, cable operators, satellite broadcasters, pay television channels and specialist channels.

The choice on offer, as well as the continued (and continuing) development of new technologies, not only changed the structure of the market, but also presented new opportunities both to the viewing public and to the content providers. Europe became increasingly aware of the economic potential and the social importance of the audiovisual media. Moreover, the rapid development and relative success of new technologies and new audiovisual services during the 1980s brought to light the fact that television broadcasting would no longer be confined to national boundaries. The viewing public across Europe would, in future, be directly exposed to an expanding European audiovisual area with an expanding amount of services on offer. The notion of transfrontier broadcasting had become a reality which would necessitate an overhaul of existing policies and legal frameworks.

The changing audiovisual market structure in Europe created a pressing need for pan-European regulation. Indeed, the explosion of new services transmitted by cable and satellite, which were transfrontier by their very nature, rendered purely national broadcasting sovereignty outdated. At the same time, the new market structure revealed the need to maintain, to a certain degree, the specific 'European' features of the audiovisual media. In this sense, it became clear that issues such as pluralism and the need to protect social and linguistic diversity (largely within the remit of public service broadcasters) were important to maintain. Therefore, towards the end of the 1980s, the European Community (EC) set about addressing this situation with the view to creating a functioning European Audiovisual Area, conducive to the development of the European audiovisual sector, taking into account economic, social and cultural factors.

Audiovisual policy at EC level was thus provided for in the period 1989-1990. In 1989, the first Television Without Frontiers Directive was adopted. This was followed in 1990 with the adoption of a complementary financial support programme for the audiovisual sector - the Media Programme. The Television Without Frontiers Directive (which was amended in June 1997 to take account of the further developments in the sector) is designed such that television broadcasts, all adhering to a basic set of rules, can move freely throughout the European Union (EU), thus helping the market to expand further. The basic principles of EU audiovisual policy are twofold and complementary. On the one hand, the EU strives for a free and open market for audiovisual products. On the other hand, it pursues the interdependent aim of promoting European audiovisual production.

In parallel to the structural changes in the European audiovisual sector, the end of the 1980s and the beginning of the 1990s witnessed the collapse of the Iron Curtain and the return to an 'open' Europe for the countries of Central and Eastern Europe. The EU responded to the difficult challenges facing these countries by providing financial and political support. This support was enhanced following the Copenhagen and Essen summits of 1993 and 1994, when the heads of government and state of the Union decided that those countries of Central and Eastern Europe which so desired would be permitted to become members of the EU, as soon as they were able to assume the obligations of membership.

To this end, a series of Association Agreements (known as Europe Agreements) were signed with the ten 'candidate' countries that are known as the Associated Countries of Central and Eastern Europe. Within the framework of the Europe Agreements the pre-accession strategy was established. The pre-accession strategy plays a role of vital importance in the preparation of the Associated Countries for accession to the EU and is designed such that it should lead to successful integration. One of the key elements of the strategy is the preparation of the associated states for integration into the internal market of the Union. To help identify the principal areas of the legislation that should be harmonised in this respect, in 1995 the European Commission produced the White Paper on the Preparation of the Associated Countries for Integration into the Internal Market of the EU. The White Paper identifies key measures (Stage I measures) that present the sequence in which legal harmonisation should be tackled. The Union's audiovisual legislation (specifically the Television Without Frontiers Directive) forms part of the Stage I measures of the White Paper. Moreover, each Association Agreement contains an article specifically referring to audiovisual, which uniformly stipulates in each Agreement that 'The Parties shall co-ordinate, and where appropriate, harmonise their policies regarding the regulation of cross-border broadcasts, technical standards and the promotion of European audiovisual technology'.

In this context it can be said that the need for comprehensive regulation for the audiovisual sector in the Associated Countries of Central and Eastern Europe is pressing. Almost a decade after the political changes, the audiovisual industries in many of the Associated Countries have either been taken over by foreign interests or are in a state of stagnation. Most strikingly, the role of public service broadcasters has considerably diminished as regulatory polices have, in general, allowed private commercial broadcasters to operate under more liberal terms. While the public service broadcasters are squeezed by advertising restrictions, dwindling licence fees (which have rarely been adjusted since the political changes, and in any event, are not always efficiently collected), lack of state funding and political interference, the private sector has been thriving, taking most advertising revenues and operating under conditions less restrictive (and less expensive) than the public service broadcasters (who have obligations to produce and broadcast programmes of a public service nature).

Audiovisual professionals from the ten Associated Countries agree that if these trends continue the audiovisual sector in Central and Eastern Europe will develop unevenly and will be unable to meet the challenges of membership of the EU. The pessimistic scenario is that without effective legislation applying equally to all kinds of broadcasters, private operators will steal the market. As a result, indigenous audiovisual production is bound to decrease as bought-in (largely North American) programmes fill the schedules. As a result of this, creativity, know-how, skills and employment opportunities will be lost and cultural identity will be eroded.

On the other hand, some interesting developments which would negate such pessimism are beginning to take place in certain countries already dominated by private commercial broadcasting. Some commercial broadcasters are realising that the 'Hollywood deficit' (that is the supposed post-Communist yearning for North American production) is no longer such an important factor and that there is increasing demand for locally produced programming with local themes. Czech TV NOVA (with a 74 per cent market share in mid 1997) responded to this audience demand with the result that one of its highest rated programmes in 1997 was not one from its daily diet of United States (US) shows, but a locally produced and locally themed drama called 'The Pub'. The TV NOVA example has been noted by commercial broadcasters in other countries and several similar 'local' production projects were under consideration in 1997.

In spite of such token developments, surely the audiovisual sector in Central and Eastern Europe will lack the basic elements to thrive unless the necessary regulatory environment is created? Without the necessary legislation in place, it is possible, if not probable, that the industry will be severely affected. Should this happen, and when the ten Associated Countries accede to the EU, it is also probable that such a situation will have a negative impact on the audiovisual industry of the EU. The enlargement of the EU to the east will increase the scope and scale of European audiovisual policy to new territories, and should ideally benefit the sector as a whole, as markets become larger and possibilities of economies of scope and scale increase. However, legislative change (in line with the EU legislation in this field), followed by effective implementation, will be necessary in order to avoid distortions of competition between broadcasters established in incumbent and in acceding Member States. In this sense, the greatest, and certainly the most immediate challenge for the ten Associated Countries of Central and Eastern Europe, is the enactment and implementation of comprehensive regulations applicable to all players in the audiovisual market and based on the EU model.

David Mahon (BA Hons), historian and media researcher, was a Consultant for Directorate-General X (Information, Communication, Culture, Audiovisual Media) of the European Commission at the time of writing this article. Working in Directorate C (Audiovisual policy, Culture and Sport), Unit C.1 'Regulatory Framework and International Relations'. Unit C.1 has responsibility for the legal aspects of EU audiovisual legislation (in particular the Television Without Frontiers Directive), as well as international relations in the audiovisual and cultural fields. Mr Mahon's particular responsibilities concern relations with the Associated Countries of Central and Eastern Europe and mainly cover matters to do with these countries' applications to join the EU (advising on legislative harmonisation with EU norms)

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