Draft Law on Audiovisual Media Services

The recently approved Draft Law 44/XIV (hereinafter Draft Law), transposes into the Portuguese legal framework Directive 2018/1808 of the European Parliament and of the Council of 14 November 2018 (hereinafter Directive), unifying in the European area the provision of audiovisual media services, introducing substantial innovations for the several stakeholders that act in this sector.

The legislator aims to keep up with the technological innovations that new stakeholders have brought to the market (such as the Streaming and Pay-Per-View platforms), without simultaneously forgetting about the interests of the Portuguese audiovisual industry.

This Draft Law proceeds to the fourth amendment of Law 27/2007, of July 30, and to the third amendment of Law 55/2012, of September 6:

• Law 27/2007, of July 30

Law 27/2007, of July 30, approved the Television Law, which regulates the access to the television activity and its exercise, as well as the public offer of audiovisual services on demand.

In this Law one should emphasize the changes connected with restrictions to the freedom of programming, in order to reinforce the free formation of the child and youth personality, from which we highlight:

• The television broadcast of any programs likely to have a negative influence on the personality formation of children and young people must be accompanied by the permanent broadcast of an appropriate visual identifier and may only take place between 24.00 hours and 6 hours;
• Video Hosting Platforms should provide parental control systems that are under the scrutiny of end users with respect to content that may harm the physical, mental or moral development of children and young people;
• Explicit prohibition of product placement in news and current news channels, consumer affairs programs, religious and children's programs;
• Reinforcement of the regulator's powers: The Media Regulatory Authority (ERC) will have the power to adopt proportional measures that cease infringements committed by operators that provide content and are subject to both Portuguese and foreign jurisdiction;
• Improvement of consumers' rights: It is now mandatory to notify the consumer 30 days in advance of any changes to the terms and conditions of the contract, with express mention of the option to revoke the contract, without any burden or charge.

It is important to clarify that these innovations are already foreseen in the Directive.

• Law 55/2012, of September 6

Law 55/2012, of September 6, established the state principles for the promotion, development and protection of the cinema and cinematographic and audiovisual activities.

The Draft Law intends to increase the activity of the industry through the revenues for the agents of the sector. It is in this context that Article 10 of the Proposal provides for the so-called "exhibition fee".

According to this fee, "commercial advertising shown in cinemas, audiovisual commercial communication broadcast or transmitted by television operators or, by any means, transmitted by distribution operators, audiovisual commercial communication included in audiovisual on-demand services or video sharing platform services, as well as advertising included in electronic programming guides, whatever the exhibition, broadcasting or transmission platform, is subject to a fee, called the exhibition fee, which constitutes an advertiser's charge, of 4% of the price paid".

We note that the Portuguese legislator decided to go further than the Directive and also impose this exhibition fee to video sharing platform services.

Finally, the Law also provides that audiovisual services on demand by subscription will be subject to the payment of an annual fee corresponding to 1% of the amount stated in the relevant income.

• Conclusion

The Draft Law was subject to intense discussion from the stakeholders, which, for example, raised several issues pertaining the effectiveness and lawfulness of the fees foreseen in Law 55/2012. As such, we anticipate that the implementation of the obligations imposed by the Proposal will pose a challenge to the applicable stakeholders.

Finally, it should be noted that the Portuguese Audiovisual Media Services Law was published on November 19. The Audiovisual Media Services Law will enter into force 90 days counting from today.

However, article 10, no. 3, which refers to the rate calculation method already provided for in paragraph 2 of the referred article (Pay-TV operators are subject to the payment of an annual fee of (euro) 2 for each access subscription to television services, which constitutes a charge to the operators) will have its effects retroact to January 1st, 2020.  

The Government now has 60 days to regulate technical details of its execution.