Luxembourg and broadcasting

by Vincent Wellens
Since the UK Parliament has rejected the Withdrawal Agreement between the EU and the UK on 15 January 2019, a so-called “no deal” scenario becomes a bit more likely. It goes without saying that this has a tremendous impact on the broadcasting sector as it is one of the sectors to typically benefit from the “country of origin”-principle under EU law. A broadcasting company having an establishment in one EU/EEA Member State can, by virtue of Article 3 of the 2010 EU Audiovisual Media Services Directive (“AVMSD”), freely broadcast into all other EU/EEA Member States. The latter can only intervene in very exceptional circumstances (in case of a serious risk for public health and public security).

A “no deal”-Brexit hits the broadcasting sector particularly hard as more than half of the +/- 2.200 channels that are broadcast EU-wide have a UK broadcasting license. In a “no deal”-Brexit scenario, such broadcasters must seek for a license in another EU Member State to freely broadcast their programs across the EU. And they furthermore have to do so before 29 March 2019, now that it is likely that there will be no transition period as was foreseen in the Withdrawal Agreement and which would have permitted the UK to continue the current “country of origin”-principle until 31 December 2020. Indeed and as confirmed by the UK governmental guidance released in September 2018, UK based broadcasting firms cannot benefit from access to the EU/EEA market on the basis of the “country of origin” principle in a hard Brexit scenario any more.
An alternative to assure their broadcasting in other EU Member States would be not to seek a license in another EU Member State but to rely on the European Convention on Transfrontier Television (CTT), which allows UK licensed broadcasters to broadcast programs in most EU Member States. This will in many cases not be a viable alternative as the CTT has the following important limitations: it does not apply to on-demand services, 6 EU Member States are not party to the CTT or did not ratify it [1], and there are questions as to its enforceability [2]. Therefore, a relocation to another EU/EEA Member State remains the most plausible option.
Furthermore, UK broadcasting firms would also need to relocate in order to preserve many other benefits of its current access to the EU/EEA market. For example, without establishment in the EU broadcasters fall outside the scope of the EU Satellite and Cable Directive (which is in the course of review) and will have (it more difficult) to clear copyrights in the different EU/EEA Member States.
This being said, and has been confirmed by numerous reports, Luxembourg is an ideal venue for such relocation and a perfect gateway for currently UK licensed broadcasting companies to assure their access to the EU/EEA market. Luxembourg has a long standing tradition as a venue for broadcasting companies. Luxembourg hosted SKY before the latter moved to the UK in 1990 and still is the home country of a large number of channels of the RTL Group (including the most important Dutch commercial channels RTL4, RTL 5 and RTL7) and of United Media.
Advantages from a regulatory perspective
Luxembourg attracts a large number of broadcasting companies thanks to its regulatory landscape which has the following attractive features:
General positive stance towards broadcasting: very short communication lines to the Ministry of Communications as well as the latter’s agility and the swift handling of license applications; also the supervisory authority, ALIA, follows a pragmatic approach; licenses can be applied for in English.
No regulations in addition to the AVMSD: the Luxembourg 1991 Electronic Media Act (Loi modifiée du 27 juillet 1991 sur les médias électroniques) implements quasi textually the AVMSD and does not lay down additional requirements, in other words and in comparison to many other countries (including some of the countries where many UK broadcasting firms intend to relocate) Luxembourg has the following advantages from a regulatory perspective:
* no language or local production quota requirements (other than the EU production rules laid down in the AVMSD thus with flexibility to reduce until 10%);
* more flexibility on advertising (split screen, alcohol…);
* program classification categories are liberal;
* no specific guidelines on a minimum or airtime limits for disabled persons;
* signal integrity: no restrictions as such for overlaying restricted material with another piece of programming.
Low regulatory cost of set up/annual fees
Only localisation requirements for the head office and editorial decision taking: in order to fall within the jurisdiction of the Grand-Duchy of Luxembourg, it is sufficient to have the head office in Luxembourg and to take the editorial decisions in Luxembourg (as set out in the AVMSD, as lastly amended in December 2018).
This means that a lot of other, support and back-office functions can remain located in the UK. Both the AVMSD and the Luxembourg 1991 Electronic Media Act even allow to have no establishment in the EU/EEA but merely to have recourse to a satellite uplink in Luxembourg in order to obtain a Luxembourg broadcasting license and an access to the EU/EEA market.
The attractive Luxembourg regulatory framework is not the only advantage for broadcasting companies that may want to relocate to Luxembourg, also the following other advantages that contribute to a favourable broadcasting ecosystem in Luxembourg, are worth mentioning:
* Content: also from the content side of broadcasting, the Luxembourg ecosystem has a sound reputation, amongst other, thanks to the different funding mechanisms that are available for the creation of audiovisual productions (i.a., via the Luxembourg Film Fund);
* Experienced service providers: as Luxembourg has an extremely well developed media industry market with many global media and satellite companies based in Luxembourg (Enex, Intelsat, RTL Group, UPC, etc.), there is a very mature business ecosystem around broadcasting services, with major satellite players (SES and Intelsat) assuring uplinking services, technical players such as Broadcasting Center Europe S.A. which provides for all necessary technical support services especially in terms of play out services as well as with experienced managers and consultancy services providers (such as DevelUP);
* Geographic position and mobility – access to talents: Luxembourg has a very central geographical position with a good transport network and excellent flight connections. The good accessibility of Luxembourg also makes that skilled workforce can be attracted quite easily;
* HQ presence of many global players: the general advantages of doing business in Luxembourg were the reason that several multinational firms, such as Amazon, Paypal, Ferrero… chose Luxembourg as their EU headquarters.
The author, Vincent Wellens is Partner at NautaDutilh Luxembourg.