On 5 December 2019, the French Ministry for Culture launched what was qualified as a major reform with respect to the media and entertainment sector, filing a Government Bill at the French National Assembly. This Government Bill aimed in particular at implementing into French law the provisions set under the DSM Directive, Directive 2019/789, known as the "Cable and Satellite" Directive, and Directive 2018/1808, known as the "AVMS Directive".
This was months before the COVID outbreak which ultimately forced the French Government to take a step back and contemplate a reform which would be implemented one step at a time.
The French Government therefore spread provisions regarding the implementation of the above mentioned Directives in four distinct ordinances.
On 29 October 2020, the Government released both a draft Ordinance and a draft Decree. The Ministry indeed attempts to catch-up with the deadline for implementing the AVMS Directive (a deadline set on 19 September 2020 and not complied with).
In more detail, the draft Ordinance notably amends Law no. 86-1067 of 30 September 1986 relating to freedom of communication implementing the extension of the contribution to development of production of cinematographic and audiovisual works to on-demand audiovisual media service (“AVMS”) providers which are not French-based and target French territory. The High Council for Audiovisual Sector (“CSA”) is in charge of concluding conventions addressing the terms of the contribution.
The grant of any state aid for development and production of cinematographic and audiovisual works would also be subject to compliance with author’s moral rights in the agreement entered into between author and production companies.
The draft Decree, which pertains to the draft Ordinance, is the result of a public consultation and discussions with international on-demand AVMS providers. It amends the earlier AVMS Decree of 2010, which only addressed the French-based on-demand AVMS providers, creating a highly complex extended contribution system and extending the minimum requirements relating to the offer of European and French works.
Only French-based on-demand AVMS providers having a net annual turnover of at least 1 million euros, would have to enter into a convention with the CSA. All foreign-based on-demand AVMS providers, on the other hand, would have the possibility to enter into such conventions with the CSA.
The contribution is also applicable to any on-demand AVMS provider which makes a net annual turnover higher than 5 million euros and which has an audience higher by 0,5% to the total audience in France of those service providers. The contribution is based upon the net annual turnover made by the service provider, and limited to turnover made in the French territory when it is not French-based. Nonetheless, when the service provider offers unrelated services in addition to on-demand AVMS, the convention signed with the CSA limits the contribution base, which is fixed taking into consideration the economic value of the on-demand AVMS within the services as a whole. Shall a convention not be signed, the turnover as a whole amounts to the contribution base. The turnover must therefore be disclosed to the CSA and be certified by a third party.
As to rates, the draft Decree provides 3 different percentages of contribution which depend on the range taken by the on-subscription on-demand AVMS provider in the media chronology:
- 25 % when at least one work is screened within 13 months following its theatrical release in France;
- 22,5 % when at least one work is screened between 13 and 25 months following its theatrical release in France; or
- 20 % for any other case.
85% of this contribution shall be dedicated to the development of production of original French-speaking works. Both cinematographic and audiovisual works shall be invested in, as each share cannot be lower than 20% of total contribution. Within this framework, 75% of the investment made into development of cinematographic works shall be dedicated to independent production whilst 66% of the investment made into development of audiovisual works shall be dedicated to independent production. Independent production is strictly defined in the draft Decree.
Derogatory rates can apply to service providers having a net annual turnover below 10 million euros, except where they have been on the market for more than 3 years.
The draft Decree also extends the minimum required percentages for the offer of European and French works set under the 2010 AVMS Decree to any on-demand AVMS provider which makes a net annual turnover higher than 1 million euros, which has an audience higher by 0,1% to the total audience in France of those service providers and which offers at least 10 feature cinematographic works. That minimum is therefore twice the minimum of 30 % set under the AVMS Directive (Article 13.1).
Although the draft Decree provides for an entry into force in 2021 based on 2020 net turnover, this is subject to any amendment resulting from the public consultation which ended on 10 November 2020.
In any event, on-demand AVMS providers should get ready to comply with heavier obligations, financial as well as material.