The European Digital Single Market - where are we now? A sports industry perspective in 2018

Published 11 May 2018 By: Dylan Kerrigan

European Union Flags

"No more barriers to access, splintered markets or national distortions."1

An important issue for the sports media industry during the past few years has been the continuing development of European policy in the area of the digital economy and, specifically, reform of the copyright rules. The past year was however a very quiet one on this front, compared to those before it. It saw a communication from the Commission on the Mid-Term Review on the Implementation of the Digital Single Market Strategy2 which was first outlined by then President-elect of the European Commission, Mr Jean-Claude Juncker, in the July 2014 European Parliament Plenary Session (and then expanded on by the Commission in its communication setting out its Strategy for Europe released in May 20153).

Besides the mid-term review, the past year also saw a shift towards consideration of issues relating to the implementation of particular proposals, recently for example the consultation launched by the Intellectual Property Office of the UK Government specifically in relation to the cross-border portability of online content services and enforcement options relating to enforcement of the new rules.4

As a useful update, this article considers:

  • Where we are now in terms of the implementation of the Digital Single Market

    • Mid-term review

    • Current state of play

  • The sports media industry's perspective on the Digital Single Market

    • Cross-border portability of online content services

    • Proposal for a Regulation on geo-blocking

    • The ancillary online services proposal under the copyright package

  • Where to next in 2018?

The implementation of the Digital Single Market

Mid-term review

Having reached the middle of its mandate, on 10 May 2017 the Commission published its mid-term review of the Digital Single Market strategy.5 The sports media industry will be relieved that the review did not raise any new surprises to those from previous years in terms of the intended approach to the issue of territoriality of media rights.

Since May 2015, the European Commission has delivered 35 legislative proposals and policy initiatives as announced in its Digital Single Market strategy. The key message from the mid-term review is that the Commission's focus will now be on obtaining political agreement with the European Parliament and the Council on all proposals, above all the updated EU telecoms rules which will boost investments in high-speed and quality networks, which the Commission considers to be critical for the full deployment of the digital economy and society.6

Andrus Ansip, Vice-President for the Digital Single Market, summarised the mid-term review by saying:

"The Commission has lived up to its promise and presented all main initiatives for building a Digital Single Market. Now, the European Parliament and Member States need to adopt these proposals as soon as possible, for new jobs, business and innovation to take off across Europe. Two years on, we propose to update our strategy to reflect new challenges and technologies. We need cyber-secure infrastructure across all parts of the EU so that everyone – everywhere – can enjoy high-speed connectivity safely. We have already agreed on strong EU rules for personal data protection; we now need to make sure that non-personal data can flow freely to assist connected cars and eHealth services. We need high-performance computing along with a digitally skilled workforce to make the most out of the data economy. All these areas are essential for Europe's digital future.7

Given that, from a sports media perspective, there was scarce new news in relation to the Digital Single Market Strategy in 2017, this part of the chapter will now recap the three core areas that industry has been concerned about and will now be focused on, in respect of the implementation stage.

The current state of play

Relevantly for sports media, the changes to copyright rules in the strategy have been intended to make them more aligned with consumer behaviour.8 The Commission contends that all Member States are wrestling with similar problems relating to the digital economy, but on a national basis which is too limited to allow them to seize all the opportunities and deal with all the challenges of this transformational age.9

The Commission continues to hope that implementation of its new strategy at European level will deliver a substantial number of benefits for consumers, SMEs and start-ups, the creative sector and industry by coordinating approaches for a Digital Single Market,10 generating up to EUR 250 billion of additional growth in Europe in the course of the Commission's current mandate.11 Rights owners have understandably been sceptical about the Commission’s plans for reform, and want to protect the status quo on selling rights on a territorial basis.12

The remainder of this article will consider the sports media industry's perspective on the Digital Single Market and then focus on the developments to date in respect of the implementation of proposals in those policy areas which are most relevant to the industry. In particular, it will consider the extent to which the year's developments aggravate or allay concerns that the Digital Single Market Strategy may have an impact upon the way in which sports media rights are licensed in Europe.

The sports industry perspective

"TV rights account for the largest chunk of games revenue and the $4.1 billion collected by the IOC for Rio coverage is again the highest amount on record.
. . . .
The IOC says it ploughs ninety per cent of revenues back into supporting athletes via the national Olympic bodies of each country."13

Everyone involved in sport, whether it be the professional athlete, amateur participant, organising body, broadcaster or spectator, has an interest in the value of sports media rights, the manner in which they are licensed and how these revenues are ultimately distributed.

Unsurprisingly, there has been much discussion about what the Digital Single Market Strategy means for those in sport, whether it be intended and unintended consequences of the strategy14 or whether the future of media rights is pan-regional.15 The exclusivity of sports media rights influences the price paid and ultimately impacts on the total pool of funds available for the organisation, operation and development of these sports. There has been concern about how some of the proposals in the Digital Single Market Strategy, if they were to affect the current model of sports media rights licensing, could alter the way in which sport is funded and adversely affect the positive benefit that sport brings to society, particularly in the context of the cultural specificity of sport and the integral role it plays in local communities and grass roots development.16

At the same time, audiences have an obvious interest in the possibility (in terms of both price and convenience) of being able to watch the sports they love, and the commitment and quality with which broadcasters cover and promote those sports.

If only multi-territory or pan-European rights are available, the market position of large multinationals could be entrenched at the expense of smaller EU producers and distributors currently focused on more differentiated local offerings.17 It should be understood, however, that national sports rights are often most valuable in their home market, with the English Premier League selling media rights annually for EUR 1.3 billion in the UK, and a total of around EUR 200 million in the other 27 EU national territories combined. 18 In France, the rights for Ligue-1 are sold for EUR 700 million and just EUR 70 million in the rest of Europe.19 There are also many sports which are generally much more popular in particular European countries than in others, with the value of respective media rights reflecting this.

Of course, the situation may be quite different for those events in which interest is more consistent across Europe, where the bigger threat of loss of exclusivity in a particular territory, or exclusivity only being granted on a pan-European basis, is any reduction in the incentives for the pan-European rights holder to offer differentiated local versions of its broadcast. Particularly for these sports media rights, it is conceivable that the aggregate value of exclusive pan-European rights could be much lower than the aggregate value of single territory rights throughout Europe, meaning less money paid by broadcasters to organising bodies for these rights overall.

Recap: Cross-border portability of online content services

On 9 December 2015, the Commission announced its proposal and draft Regulation on ensuring the cross-border portability of online content services in the EU.20 The draft Regulation aims to remove barriers to cross-border portability so that users can access in other Member States on a temporary basis the content that they pay for (or in some cases receive for free) in the Member State in which they are habitually resident, for example while on holiday or a business trip.

Recap: Proposal for a Regulation on geo-blocking

Part of the focus of the Commission's strategy is consistent with the EU Treaty principles aimed at prohibiting discrimination on the basis of nationality21 and liberalising the market for digital services.22 Accordingly, while the Commission's strategy is focused on preventing "unjustified" geo-blocking, there had until mid-2016 been little guidance as to when it considers geo-blocking to be legitimately justified.23

On 25 May 2016, the Commission finally made its position clearer by publishing its proposal for a Regulation on geo-blocking,24 which would prohibit traders from preventing consumers in one EEA Member State (e.g. the UK) from buying products in another (e.g. France). While this proposal does not apply to sports broadcasting, when considered alongside the Commission's ongoing investigation into the six major US film studios (as discussed below) it appears indicative of the Commission's broader interest in the area of geoblocking and territoriality.

On 26 July 2016, the Commission announced its acceptance of certain commitments by Paramount Pictures25 relating to the ongoing competition law investigation into licensing agreements between the six major US film studios (Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Bros) and Sky UK.

Under its commitments, in return for the Commission closing its investigation into Paramount Pictures' agreements with Sky UK, Paramount has agreed not to introduce or reintroduce contractual obligations which prevent or limit a pay-TV broadcaster from responding to unsolicited requests from consumers within the EEA but outside the pay-TV broadcaster's licensed territory, or which require Paramount to prohibit or limit pay-TV broadcasters located outside the licensed territory from responding to unsolicited requests from consumers within the licensed territory. The Commission's investigation into the other film studios and Sky UK is, however, ongoing.

On 15 September 2016, the Commission published its provisional findings from its E-Commerce Sector Inquiry.26 The provisional findings indicated market practices which raise potential competition concerns, most notably contractual restrictions on online and cross-border sales, resale prices and price comparisons. In public comments since the provisional findings were published, senior Commission officials have indicated that they intend to prosecute (or encourage national competition authorities to prosecute) individual companies that are involved in such practices. As with the proposed Regulation on geo-blocking, this does not apply to sports broadcasting, but is again indicative of the Commission's sentiments about territorial restrictions.

The role of copyright in preventing cross-border access is of course more pertinent for sports media than for e-commerce. The issue of cross-border access as it applies to sports media is complicated by the fact that copyright is a territorial right, and copyright laws vary from country to country even within Europe. Rights under copyright are granted by national law and the geographical scope of copyright protection under each national law is limited to the territory of the relevant Member State.27

While the sports media industry will be relieved that the Commission's geo-blocking proposals have spared them the same effects that the e-commerce sector is now experiencing, there is a general trend towards slowly eroding the principle of absolute territoriality in a piecemeal, gradual manner.

Recap: the ancillary online services proposal under the copyright package

On 14 September 2016, the Commission presented its draft copyright package.28 In relation to cross-border access to content, the Commission is proposed a legal mechanism for radio and television broadcasters to obtain more easily the authorisations they need from rights holders for simulcasting or catch-up in other EU Member States. The Commission is proposing that broadcasting organisations should only have to clear rights for these ancillary online services in their country of origin, even if they are made available to audiences more broadly.29 This would allow broadcasting organisations to make these ancillary online services available in other Member States without having to clear rights in those Member States.

The interim effect of this could be that broadcasting organisations will compete more readily across national borders in respect of these services. Moreover, the Commission has stated that the changes it intends to bring about do not impinge on 'the contractual freedom of the parties [to a licensing agreement] to limit the exploitation of the rights'.30 However, a 2016 Oxera and O&O report31 has warned that cross-border access initiatives that have the effect of eroding the territorial nature of rights could result in large and complex second-order effects and unintended consequences, such as loss of value in the individual benefits derived by people consuming media services, loss of producer revenue and less content being made. This in turn could reduce the total pool of funds available for the organisation, operation and development of sport.

Where to next in 2018?

Players in the sports media rights industry will need to continue to carefully consider their legal, commercial and technical positions in relation to the Digital Single Market initiative, although these should by now be much clearer than when the initiative was first communicated a few years ago.

Central to the debate for the sports media industry (as with other content-based industries) to stave off any further potentially adverse proposals in future will be continuing to articulate why the principle of territorial licensing remains a valid (and protectable) model. Policymakers will need to balance the mechanics of the way in which sports content is licensed and distributed in the modern day with how they envisage the Digital Single Market functioning in order for the debate to move forward in this complex policy area.32

Thrown into the mix of these questions is of course the result of the Brexit referendum and questions about the nature and timing of the UK leaving the EU, including any transitional arrangements. EU Regulations with direct effect on the UK will apply while it remains a member, but cease to apply when it leaves (unless a different position is agreed). The situation regarding EU Directives, which must be implemented into national law to be effective, is less clear. This is particularly the case for arrangements which rely on reciprocity (such as in relation to copyright) which cannot be implemented unilaterally. Brexit is of course critical to the sports industry in a number of other areas, including employment and immigration..

While there are no new copyright-related Digital Single Market initiatives expected to be announced in 2018, the sports media industry will be interested in seeing previously announced proposals finalised through the legislative processes, in areas including data security, e-privacy and value added tax.

While sport in Europe is well poised to take advantage of the digital economy, it is crucial that European law creates the right conditions for it to flourish.33

This is an extract from the Media Rights chapter of the LawInSport and BASL Sports Law Yearbook 2017/18. To obtain a full copy of the Yearbook, which contains 10 chapters and over 50 articles like this from the industry’s leading sports lawyers, please visit our website:

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Dylan Kerrigan author profile picutre

Dylan Kerrigan

Dylan is an Associate in the TMT practice at Dentons, focusing on clients in the media, entertainment, sports and technology industries.

He primarily advises on IP, contracts and regulatory issues, and has very broad cross-border transactional and commercial experience.

Many of Dylan's clients reach a global audience and he regularly advises in relation to the UK, Europe, Middle East and Africa activities of some of the world's largest media companies.  

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