French Superior Audiovisual Council opinion on a draft decree concerning production obligations applicable to terrestrial broadcasters

Avis n° 2010-10 du 4 mai 2010 sur un projet de décret relatif à la contribution au développement de la production d'oeuvres cinématographiques et audiovisuels des services de télévision diffusés par voie hertzienne terrestre (Opinion n° 2010-10 of May 4, 2010 on a draft decree concerning the contribution to the development of the production of cinematographic and audiovisual works by terrestrial television services)


The French Superior Audiovisual Council (Conseil supérieur de l'audiovisuel), having been consulted by the government pursuant to articles 9 and 27 of the amended law no. 86-1067 of September 30, 1986 on freedom of communication, on a draft decree concerning the contribution to the development of the production of cinematic and audiovisual works by terrestrially broadcast television services, and having deliberated in plenary session on May 4, 2010, issues the following opinion.

I. General observations

The draft decree enshrines the various agreements concluded between terrestrial television service editors and professional organizations representing authors and producers of audiovisual and cinematographic works.

The Council notes that the negotiations for these agreements brought together service editors from different audiovisuel groups and the professional organizations concerned.

Regimes adapted to each service editor.
The Conseil notes that the ways in which different service editors contribute to the development of audiovisual production may vary from one editor to another, depending on their resources and specific commitments. Taking into account the agreements signed by the publishers, the different schemes will be subject to increased contributions and reduced rates of obligation, depending on the amount of the publisher's sales.

While the scheme may appear complex, the Conseil considers that it goes a long way towards taking into account the specific characteristics of different publishers, and adapting regulations to the particularities of the sector.

It notes, however, that the draft decree, which is intended to govern the contribution to the development of audiovisual and cinematic production by all terrestrial broadcasters, incorporates the specific features negotiated in the various agreements in force to date, and could consequently give rise to difficulties in its future application to broadcasters who do not exist on the date it comes into force, or who have not signed agreements with representatives of audiovisual and cinematic producers.

It therefore seems to the Conseil that the text in fact requires all new publishers to sign agreements with representatives of professional organizations, setting out their specific commitments and the terms of their contribution to the development of audiovisual and cinematic production.

Increasingly stringent obligations

sales or resources thresholds.
The draft decree introduces a gradual scheme, making provision for strengthening the rates at which publishers contribute to the development of audiovisual production, and reducing the flexibility of the scheme as the sales of a free-to-air service editor or the number of subscribers of a pay service editor increases.

The flexibility of this scheme takes into account the relative economic power of publishers, and has the advantage of avoiding major threshold effects by allowing for a gradual increase in obligations as sales figures develop.

The scheme to promote new audiovisual works.
The Conseil once again affirms its commitment to the development of contributions to the production of new audiovisual works, an essential condition for the renewal of the creative process.

It therefore regrets that the draft decree, in line with the agreements negotiated by publishers, no longer guarantees a minimum level of investments in new audiovisual productions (pre-purchases, co-productions and writing agreements), unlike the provisions for contributions to cinematic production development, which make provision for minimum pre-purchase obligations.

Indeed, the draft decree only subjects free-to-air broadcasters with sales of 300 million euros or more to the obligation to show 120 hours of previously unbroadcast European or EOF audiovisual works, with broadcasting starting between 8 p.m. and 9 p.m., with no obligation to invest in new audiovisual production.

For their part, publishers of free-to-air services with sales of less than 300 million euros have committed in their agreements to ensuring that a proportion of their expenditure, in certain genres of audiovisual works only, is made up of investment in new production or the purchase of rights to new works for diffusion on the digital terrestrial network.

In addition, the draft decree gives the Conseil the option, taking into account professional agreements, of setting the minimum proportion of their contribution allocated to the unpublished production of audiovisual works in the agreements of pay service editors, in the knowledge that these agreements do not contain any stipulations in this respect.

The Conseil fears that the schemes set out in the draft decree do not offer sufficient guarantees to meet the objective of preserving the volume of new productions. It therefore believes that the only truly effective scheme to promote the renewal of audiovisual creation would be to set a minimum percentage of contributions or sales devoted to new production expenditure.

The decree's effective date.
The Conseil underscores the difficulties that publishers will face if two different regimes are applied to the same financial year in 2010.

As the terms and conditions of the contribution will be radically altered under the provisions of the draft decree, it will be very difficult for publishers to ensure compliance with the 2001 decrees for the first part of the year, and with the forthcoming decree for the second part of the year (modification of the basis of calculation...), revenues from the operation of catch-up TV services being added to the sales or resources of editors, modification of the rates applicable to the contribution, modification of the expenses taken into account by the addition of new expenses, modification of the criteria defining independent production, modification for certain editors of the exercise of taking into account expenses for the purchase of diffusion rights).

To resolve this difficulty, the decree could make provision for the agreement between the Conseil and each publisher to set out, with effect from the decree's date of entry into force, the terms and conditions for implementing the contribution to the development of audiovisual production for the 2010 financial year, allowing, where appropriate, for the application of the rules set out in the new decree to all expenditure for that year.

II. -Comments on certain schemes

Taking into account the operation of catch-up TV services

in the obligation to contribute to cinematic production.
Revenues from the operation of catch-up TV services are included in the sales or resources of editors used to calculate their contribution to the development of audiovisual production, and the sums paid for the acquisition of rights to exploit audiovisual works on their catch-up TV service are naturally included in the expenses retained for the obligations.

The Conseil regrets that these revenues and expenses have not been taken into account by the draft decree for the contribution to cinematic production by non-theatrical service editors.

It also notes that the sums spent on acquiring rights to show cinematographic works on catch-up TV services are included in the overall obligation of certain cinema services. However, it regrets that revenues from the operation of these services are not included in the service editor's total annual resources.

The threshold for increasing the obligation

of pre-purchasing cinematographic works.
For free-to-air service editors with annual net sales of less than 150 million euros, the draft decree makes provision for a minimum proportion of the obligation to be devoted to the purchase of exclusive diffusion rights (pre-purchases), starting at 75 million euros.

In view of the growing importance of the new free-to-air DTT channels, which are largely based on the programming of cinematographic works, the Conseil considers that this threshold could be set at 50 million euros. It is essential that these editors contribute, alongside historical service editors, to the dynamism of cinematographic creation.

Film service editors with annual revenues in excess of 350 million euros must devote at least 80% of their obligation to broadcast original EOF cinematographic works to pre-purchases.

The Council regrets that there is no similar scheme for film service editors with annual revenues of less than 350 million euros. Such a measure would be desirable, at least for first-run cinema service editors, to encourage them to contribute to the production of original EOF cinematic works, once their total annual resources have reached 50 million euros.

Editorial clarification:
The sales threshold triggering contribution obligations

to the development of audiovisual and cinematic production.
The draft decree sets out various obligations based on different sales thresholds, without specifying whether these sales are for the current year or the previous year. The text should be more precise and explicitly list the previous year's sales.

The proportion of European audiovisual works which are not

EOF in the contribution of pay services.
The agreements signed by pay-TV service editors and professional organizations limit the share of European works that are not of original French expression, both in the contribution to the production of audiovisual works as a whole, and in the contribution to the production of heritage audiovisual works. Article 25 II of the draft decree should therefore explicitly mention both obligations.

The transposition in article 29, 5°, of stipulations included in the

in the agreement signed with DTT pay-TV publishers.
The agreements signed by pay-TV service editors and representatives of producers and authors include an option to reduce the rate of the editors' contribution, provided that the full amount spent on the production of audiovisual works other than heritage works, and on the production of on-set programs, is not taken into account.

Article 29(5) does not strictly transcribe the provisions of the negotiated agreement. It suggests the possibility, not provided for in the agreement, of a system with a lower rate of obligation, but without taking into account expenditure on on-set programs. Strict transposition of the agreements would require more precise wording.

III. Schemes proposed by the Council

Improving the circulation of works.
The Council once again stresses the importance for the entire audiovisual industry of the smooth circulation of audiovisual works on the rights market.

This circulation is expected both by DTT service editors, who are dependent on the second market and whose economic health depends on acquiring appealing works for their channels, and therefore on extended access to catalogs, and by audiovisual producers and distributors who wish to freely promote their catalogs. Positive effects on audiovisual creation can also be expected insofar as the proceeds from program sales on the second market provide audiovisual producers with additional cash flow, giving them greater flexibility in their investments in the production of new audiovisual works.

One of the measures likely to encourage the circulation of audiovisual works would be the inclusion in the draft decree of a provision for the early termination of diffusion rights following the last effective diffusion of the works, in order to accelerate their availability on the second market for diffusion rights. The Conseil reaffirms its wish, already expressed in its opinion no. 2009-8 of July 15, 2009, to see this measure implemented.

Improving practices concerning payment deadlines.
The Conseil has frequently been alerted to the sometimes excessive payment deadlines applied by publishers, with final payments to producers sometimes made several months after delivery of the audiovisual work. The audiovisuel production sector suffers from this situation, which reduces production companies' capacity for reinvestment.

The Conseil recalls that the French law no. 2008-776 of August 4, 2008 on the modernization of the economy aims to "promote the development of small and medium-sized businesses", and includes provisions in the French Commercial Code governing payment terms due to service providers.

It notes that in terms of contribution to cinematic production development, the inclusion of certain expenses is conditional on the actual payment of sums due by publishers.

To encourage publishers to reduce payment times for audiovisual production, it therefore recommends the introduction of a scheme comparable to the one in place for cinematic production.

It recommends that, in application of the French law of August 4, 2008, a scheme be introduced making the taking into account of expenses conditional on the actual payment by the publisher of a substantial part of its financial contribution within a reasonable period of time, depending on the nature of the expenses: after the end of the shooting period in the case of pre-purchases. Or after delivery of the program, in the case of purchases of diffusion rights.


In order to implement the above remarks, the Council proposes the drafting changes listed in the appendix to this notice.

Paris, May 4th 2010.

For the French Superior Audiovisual Council,
Le président,
M. Boyon

Annex to the present notice :
Browse the Official Journal page of July 3, 2010