The (low) cost of balancing broadcasting rights with the public interest

After a long day at work, there is
nothing which is more reinvigorating
than 1 beer and a 3-hour chat
on exclusive broadcasting rights

This morning the Court of Justice of the European Union (CJEU) published its judgment (not yet available on the Curia website) in Case C-283/11 Sky Österreich GmbH v Österreichischer Rundfunk, a reference from the Bundeskommunikationssenat (Federal Superior Council for Communication, Austria) addressing, once again, exciting issues such as football and exclusive broadcasting rights.

The Austrian court had reverted to the CJEU seeking guidance as to whether Article 15(6) of Directive 2010/13/EU (the 'Audiovisual Media Services Directive') was compliant with the respect of fundamental rights, in particular the freedom to conduct a business and the right to property, pursuant to Articles 16 and 17 of the Charter of Fundamental Rights, respectively. 

Article 15 of the Directive confers on broadcasters the right to make short news reports on events of high interest to the public which are transmitted on an exclusive basis by a television broadcasting organisation. To this end, broadcasters are allowed access to the signal emitted by the body that holds the exclusive transmission rights in order to enable them to choose the short extracts that will make up their news reports. Article 15(6) of the Directive lays down the rule that where, in the implementation of the right thus granted to broadcasters, compensation is provided for, it may not exceed the additional costs directly incurred in providing access to short extracts.

As explained by Advocate General Bot in his Opinion on 12 June last, the reference for a preliminary ruling raised the question of reconciling requirements relating to the protection of various fundamental rights, namely the freedom to conduct a business and the right to property on the one hand, and the freedom to receive information and media pluralism on the other.

Background

Sky had been authorised by the Austrian communication regulatory authority (‘KommAustria’) to broadcast via satellite the coded digital television programme ‘Sky Sport Austria’. In 2009 the latter acquired exclusive rights to broadcast from time to time UEFA Europa League matches in the 2009/2010 to 2011/2012 seasons within the licence territory of Austria. Sky spends several million euros each year on the licence and production costs. 

In the same year, Sky and the Österreichischer Rundfunk (‘ORF’, a public body whose object is to carry out the public-law tasks entrusted to it by the federal law on Austrian broadcasting, including the provision not only of sound and television broadcasting programmes, but also online contributions related to those programmes) entered into an agreement granting the ORF the right to produce short news reports and providing for the payment of EUR 700 per minute for such reports.

In 2010 ORF asked KommAustria to declare that Sky was required to grant it the right to produce short news reports on Europa League games involving Austrian teams, without ORF having to pay it remuneration greater than the additional costs incurred directly by the provision of access to the signal. 

KommAustria held that, as the exclusive right holder, Sky was under an obligation to grant ORF the right to produce short news reports and was not entitled to the reimbursement of any costs beyond the additional costs directly incurred in providing access to the signal. It also laid down the conditions under which this right could be exercised by ORF. Among those, it was stated that the additional costs incurred directly by the provision of access to the satellite signal were zero in this case.

Both parties appealed this decision to the Bundeskommunikationssenat.

In its appeal Sky argued, among other things, that the obligation under Article 15(6) of the Directive to grant the right to make short news reports for no consideration contravened the Charter, the European Convention for the Protection of Human Rights and Fundamental Freedoms, and Austrian constitutional law. Sky emphasised, in particular, that Article 15(6) of the Directive systematically precludes any compensation for the limitation to which the exclusive rights are subject, and this was not only unfair, but also contrary to the principle of proportionality.

The Austrian court was not sure on how the points raised by Sky should be addressed, so it referred the following question to the CJEU:

“Is Article 15(6) of [the Directive] compatible with Articles 16 and 17 of the Charter ... and with Article 1 of Protocol No 1 to the [ECHR]?”

According to AG Bot, the answer should have been in the affirmative, as he found no factors which were such as to affect the validity of Article 15(6) of the Audiovisual Media Services Directive. The CJEU upheld AG Bot’s Opinion.

CJEU's response

According to today's press release from the Court, the Charter does not preclude a limitation like that envisaged by Article 15(6) of the Audiovisual Media Services Directive. In fact:

"In so far as concerns the protection of property, as a fundamental right, the Court recognises that exclusive broadcasting rights, as acquired by Sky, have asset value and do not constitute mere commercial interests or opportunities [really?]. However, when Sky acquired those rights by means of a contract (in August 2009), EU law already provided for the right to make short news reports, while limiting the amount of compensation to the additional costs directly incurred in providing access to the signal. Therefore, Sky cannot rely on an established legal position enabling it to exercise its exclusive broadcasting rights autonomously. Consequently, Sky cannot rely on the protection of property, laid down in the Charter of Fundamental Rights.  

[Although] the Court finds that the legislation in dispute encroaches upon the freedom to conduct a business ... [that] freedom ... is particular in that it may be subject to a broad range of interventions on the part of public authorities which may limit the exercise of economic activity in the public interest [see the second part of Article 17(1) of the Charter]. That fact is reflected, inter alia, in the way in which the principle of proportionality must be implemented.  

[T]he limitation in dispute on the freedom to conduct a business is justified and ... is in line with the principle of proportionality, inter alia.  

Exerting the exclusive right to invade the football 
pitch and hitting the news, all at once

That limitation pursues, without affecting the essential content of the freedom to conduct a business, an objective in the general interest in that it seeks to safeguard the fundamental freedom to receive information and to promote pluralism of the media, guaranteed by the Charter. In that respect, the Court states that the marketing on an exclusive basis of events of high interest to the public is increasing and is liable to restrict considerably the access of the general public to information relating to those events.  

...

[T]he contested legislation ensures a fair balance between the various rights and fundamental freedoms at issue in the case. The Audiovisual Media Services Directive provides that short news reports may only be produced for general news programmes and not, for example, programmes serving entertainment purposes. In addition, those short extracts should not exceed ninety seconds and their source must be indicated. Moreover, the directive does not prevent holders of exclusive broadcasting rights from charging for the use of their rights. Similarly, the absence of a possibility of refinancing through set-off and any reduction in the commercial value of those exclusive broadcasting rights may, in practice, be taken into account during contractual negotiations relating to the acquisition of the rights at issue and be reflected in the price paid for that acquisition."