Breaking up the exclusivity of sports broadcasts – a Hungarian lawyer's perspective

Published 22 May 2013 | Authored by: Péter Rippel-Szabó, Bálint Halász

This article provides an overview of the provisions of Hungarian law addressing exclusive sports broadcasting rights in the territory of Hungary. First, the authors address the relevant provisions of the Hungarian Media Act on events of major importance to society. Secondly, the authors focus on the legal background and practical implications of fair dealing provisions for providing information as set forth in the Hungarian Copyright Act. Under certain circumstances these provisions may enable third party broadcasters to gain access to exclusively broadcasted sports events.1

Exclusivity of sports broadcasts is an important tool for both sports rights holders and broadcasters to achieve their goals through screening popular sports events. On the one hand, right holders seek to maximize their income to be generated through (joint) selling their broadcasting rights for definite period of time, territory and platform to only a limited number of broadcasters. On the other hand, broadcasters acquiring these media rights strive for high viewing figures and revenues to be generated by advertisements. There are however legal provisions which may ‘break up’ of the exclusivity of broadcasts and consequently reduce the value of exclusively sold and acquired rights.

 

Provisions of the Media Act on events of major importance to society

The Media Act contains provisions on (i) exclusive broadcasting rights and (ii) short news reports in connection with events of major importance to society which constitute the Hungarian implementation of Art 3a of the Television Without Frontiers Directive (’TWFD’) and Art 14-15 of the Audiovisual Media Services Directive (‘AVMSD’) respectively.

 

Mandatory sublicensing of exclusive broadcasting rights

Under the Media Act, no audiovisual media service provider (broadcaster) may exercise exclusive broadcasting rights so as to deprive a substantial part – more than 20 % – of the Hungarian audience of the opportunity to access an audiovisual media service broadcast of an event of major importance to society. In order to determine which events are considered as events of high importance to Hungarian society, the Hungarian Media Council must publish an official list. This list must also reveal which events must be broadcasted live and which may be subject to subsequent (deferred) coverage. The Media Council has not published the final version of the list yet. The draft list contains a wide range of sports events, i.a. the summer and winter Olympic Games; the Hungarian Formula One Grand Prix; the final of the UEFA Champions League; qualifying, knockout and group stage matches of the UEFA Champions League and Europa League played with the participation of Hungarian clubs and further sports events e.g. concerning handball, ice hockey or basketball.2 This draft list, in accordance with Art 3a(2) TWFD and Art 14(2) AVMSD, is currently subject to notification procedure before the European Commission.

If the exercising of the exclusive broadcasting right would deprive at least 20 % of the Hungarian audience of following the listed events, the broadcaster with exclusive rights is obliged to accept a contract, made on reasonable terms and conditions, from a linear audiovisual media service provider that provides services accessible by at least 80% of the citizens of Hungary (‘operator with nationwide coverage’) to access the event without the payment of a subscription fee. Practically, this constitutes a mandatory sublicensing of exclusively acquired rights. There are currently three operators with nationwide terrestrial broadcasting network that can be regarded as operators with nationwide coverage in Hungary: MTV1 (state owned public broadcaster), TV2 (a joint venture of MTM and SBS broadcasting groups) and RTL Klub (RTL Group).

In the event that the parties fail to conclude an agreement within 15 days of the initial offer made by the operator with nationwide coverage, either party may initiate a resolution procedure before the Media Council. After the parties entered into agreement, the event concerned will be screened by both the broadcaster who exclusively acquired the rights and the operator with nationwide coverage in its full length.

It is important to note that the above provisions do not apply for exclusive rights which were lawfully acquired prior to the first announcement of the final list or the announcement of subsequent amendments thereto. Therefore, as long as there is no official list on events of major importance to Hungarian society approved by the European Commission and announced by the Media Council, broadcasters do not need to worry about the risk of loss of their exclusivity on these legal grounds.

 

Short news report

Pursuant to the Media Act, any linear audiovisual media service provider (broadcaster) established within the territory of the EU may have, for the purpose of producing short news reports, access in a fair, reasonable and non-discriminatory manner to the broadcast of showing events of major importance to society listed by the Hungarian Media Council or designated as such in any Member State and broadcasted under an exclusive broadcasting right by the broadcaster established in Hungary. The access may take place by (i) obtaining the signal of the media service; or (ii) making a record at the location of the event; or (iii) receiving the footage recorded on the event. The parties concerned are subject to the same obligation to enter into contract as in case of sublicensing of exclusive broadcasting rights except for the specific requirement according to which the consideration for the right of access may not exceed the costs arising directly as a result of providing access.

The broadcaster obtaining the right of access may freely select the sequences of the sports broadcast it intends to show in the short news report. However, there are certain restrictions, for instance the total length of sequences is limited to ten percent of the total length of the entire sports broadcast and the maximum length of the short news report may not exceed fifty seconds; the right holder of the exclusive broadcasting right must be indicated; and a short news report be incorporated into a general news and information broadcast.

The provisions on short news reports, similarly to mandatory sublicensing of exclusive broadcasting rights, will apply to Hungarian sports events once the Media Council officially announces the final list of events of high importance to society.

 

Main difference between the provisions on exclusive rights and short news reports

From the viewpoint of broadcasters, who exclusively acquired the broadcasting rights to events of major importance to society for the territory of Hungary, the main differences between the legal concept of mandatory sublicensing of exclusive broadcasting rights and short news reports are the followings:
in case of exclusive broadcasting rights the exclusivity may only be broken up by operators with nationwide coverage who, after concluding the relevant contract, may broadcast the listed events in their full length either live (i.e. parallel with the exclusive broadcast) or in subsequent (deferred) coverage;
in case of short news reports the exclusivity may be broken up, after having concluded an agreement, (i) by any linear broadcaster established in the EU, (ii) not only for Hungarian listed events but also for events listed by the Member State where the broadcaster seeking for showing short news report is located, provided that the event is not showed by a third broadcaster who is established in the same Member State where the broadcaster seeking for showing short news report, and (iii) only short sequences may be shown in compliance with specific statutory conditions.

 

Fair dealing for providing information under the Hungarian Copyright Act

Fair dealing provisions of the Copyright Act may also be relevant for broadcasters who exclusively acquired sports broadcasting rights for the territory of Hungary. Within the meaning of Copyright Act fair dealing is free use of copyright material without the author’s consent (i.e. there is no need to seek authorization and pay licence fee) for providing information in compliance with mandatory statutory criteria. The Copyright Act, implementing Art 5(3)(c) of Directive 2001/29/EC (‘Infosoc Directive’), contains a broader and a narrower interpretation of fair dealing for providing information as well as a set of general criteria which apply in both cases.

 

Fair dealing in broader interpretation

The Copyright Act sets out that certain works may be used freely for the purpose of providing information on current, daily events in any media platform to the extent justified by this purpose. In the case of such a use, the source and the name of the author must be indicated, unless it proves to be impossible.3 Extent permitted by this provision depends on the circumstances of each individual case. Generally speaking, as a relevant decision of the Hungarian Supreme Court emphasizes, fair use of copyright material may not exceed the extent which is reasonable for providing information and necessary for the identification of the work and event concerned (e.g. persons, date and location). In latter case the Supreme Court ruled that broadcasts of sequences, the signal and introductory text of an advertisement of another broadcaster’s programme constituted reasonable use, and as such it was subject to a fair dealing exemption. It must be noted that the subject matter of latter proceeding was not a sports broadcast.

 

Fair dealing in narrower interpretation

The Copyright Act also sets forth that articles published or works broadcasted on current economic or political topics may freely be reproduced and communicated to the public – including via on-demand services – in the press, provided that the author has not expressly prohibited such a use. In the case of such a use the source and the name of the author must be indicated.4 This is a narrower, more specific provision on providing information in comparison with the rule mentioned in section 2.1 above, as it relates to articles published or works broadcasted on current economic or political topics. Although sports broadcasts do not necessarily constitute topics relating to economical or political issues, the possibility may not be excluded that some exclusively broadcasted sports events may be qualified as economical or political topics in special cases (e.g. racism or illegal betting). However, even if broadcasts of sports events were regarded as events of economic or political importance the author (i.e. the broadcaster holding the exclusive rights) may object and prevent such content from being broadcast.

 

General criteria of fair dealing

In addition, any broadcasters relying on either the ‘broader’ or ‘narrower’ fair dealing exemption for showing sequences must also comply with general criteria applicable to fair dealing exemptions. The so called three-step test provides that a fair dealing exemption is only valid if (i) it does not conflict with the proper use of the work concerned and does not unreasonably jeopardize the author’s legitimate interest, (ii) the work is used in good faith, and (iii) the purpose of use complies with the concept of fair dealing.

 

Fair dealing in practice

As athletes are not authors or performers under the Copyright Act and, as a result, sporting activity itself usually does not fall within the scope of copyright protection under the Copyright Act, the actual application of fair dealing exemptions for broadcasts of sports events is controversial.

While interpreting the fair dealing provisions of the Copyright Act the relevant European case law should be taken into consideration. The CJEU decided in the Murphy ruling that rights holders cannot claim copyright in sporting events (matches) themselves, as they cannot be classified as works, since, to be so classified, they would have to be original in the sense that it is its author’s own intellectual creation. However, sporting activities are subject to rules of the game, leaving no room for creative freedom for the purposes of copyright. Thus, as the CJEU concluded, sporting events cannot be regarded as intellectual creations classifiable as works within the meaning of the Infosoc Directive (FAPL v. Murpy, joined cases C-403/08 and C-429/08, Para. 96-99). Nonetheless, authors can rely on the copyright which attaches to the works exploited within the framework of broadcasts. It is common ground that rights holders (in the proceedings the FAPL) can assert copyright in various works contained in the broadcasts, in particular, the opening video sequence, the anthem attached to sporting events, pre-recorded films showing highlights of matches, or various graphics (Para. 149).

Considering the CJEU’s above findings it can not be excluded that some parts of broadcasts are work within the meaning of the Copyright Act and therefore one can rely on a fair dealing exemption to some extent. However, fair dealing may only apply to broadcasts in specific cases and only as main purpose of fair dealing is to allow use of copyright works to a limited extent for reporting on current, daily events. For instance this exception allows a broadcaster to show a short sentence of a video clip of a performing artist in relation to an upcoming concert. Consequently, there is high chance that including broadcasts, especially highlights of sport events, in news reports or sports programmes does not meet the fair dealing criteria set forth in the Copyright Act.


Conclusion

Broadcasters, who acquire exclusive rights to show sports events in the territory of Hungary, are advised to consider the relevant provisions of both the Media Act and the Copyright Act.

The Media Act provides clear legal framework which will be applicable once the Media Council publishes the official list of events of major importance to Hungarian society. If this happens, broadcasters acquiring exclusive rights must take into account the mandatory sublicensing of rights while negotiating, paying for and showing events subject to the list on events of major importance to Hungarian society.5 In the light of the provisions on mandatory sublicensing of exclusive rights it is rather questionable whether there will be a private broadcaster, other than the abovementioned three operators with nationwide coverage, who would be willing to pay for rights of listed events, as the value of these rights seems to be strongly depressed due to the mandatory sublicensing scheme.

Apart from the Media Act, broadcasters could face some risk that their exclusive broadcasts are shown by third parties under fair dealing exemptions of the Copyright Act without their prior consent and payment of license fee. However, due to the currently uncertain interpretation of fair dealing exemptions, which seems to be more favourable for exclusive rights holders to sports events, broadcasters may successfully prevent third media service providers from showing sequences of their sports broadcasts. It is also worth mentioning that, as relying on fair dealing exemptions triggers high legal risks on the side of third parties, Hungarian broadcasters seem to be reluctant to include material of other broadcasters in their programming. As a result of this Hungarian operators usually seek authorisation from other broadcasters to screen their content.


 

1 This contribution is a follow-up piece to the articles ‘Exploitation of sports rights under the Hungarian Sports Act’ and ‘Agreements on the exploitation of broadcasting rights to sports events in Hungary’ previously published on LawInSport. The first article provided general insight into the regulations of the Hungarian Sports Act on the mechanism of exploiting sports rights in Hungary (accessible at https://lawinsport.com/articles/commercial-law/item/exploitation-of-sports-rights-under-the-hungarian-sports-act). The second article dealt with legal background and practical structuring of agreements on the exploitation of broadcasting rights concluded by Hungarian sports rights holders (accessible at https://lawinsport.com/articles/intellectual-property-law/item/agreements-on-the-exploitation-of-broadcasting-rights-to-sports-events-in-hungary).

2 The draft list of events of major importance to society in Hungary is accessible on the website of the Hungarian Media Council (only in Hungarian) at https://mediatanacs.hu/dokumentum/3114/A_tarsadalom_szamara_kiemelten_nagy_jelentoseggel_biro_esemenyek_osszesitett_listaja__PDF.pdf.

3 This provision corresponds to second sentence of Art 5(3)(c) Infosoc Directive.

4 This provision is the implementation of first sentence of Art 5(3)(c) Infosoc Directive.

5 The only rather insignificant exemption which could already be applicable now is, if a broadcaster, who is established in a Member State other than Hungary, would seek to show short news report on an event which is exclusively broadcasted by a Hungarian operator and listed as an event of major importance in the Member State where the broadcaster concerned is established.

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About the Author

Péter Rippel-Szabó

Péter Rippel-Szabó

Péter Rippel-Szabó is an attorney at law with Bird & Bird (Hungary) where he provides advice on sports law, corporate law, general commercial matters and competition law. Péter is a lecturer at the Faculty of Law of University ELTE Budapest, co-authored the textbook 'Sports Law - The Civil Law of Sport' (Budapest 2011) and has publications in law journals and on other prominent sports websites on a regular basis.

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Bálint Halász

Bálint Halász

Bálint Halász is an attorney at law with Bird & Bird (Hungary) and member of the Council of Copyright Experts (Hungary). Bálint has significant experience in intellectual property matters, including copyright, licensing, database matters, trademarks and patents. He also advises clients in relation to data protection, IT and media matters.

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