An important new precedent in the regulation of on-demand services has been set by the recent successful appeal by News Group Newspapers’ (‘News Group’) to Ofcom against a determination by ATVOD (the Authority for Video On Demand). ATVOD had found that News Group’s ‘Sun Video’ service was an on-demand programme service (ODPS) within the meaning of Part 4A of the Communications Act 2003 (the Act), but Ofcom set aside ATVOD’s decision. This development has led to ATVOD withdrawing several other determinations against the online versions of most of the UK’s national newspapers. Yet its effects are also likely to extend well beyond Fleet Street and may radically alter how ATVOD interprets the scope of this nascent, controversial regulatory regime.
Background
Part 4A of the Act established a new framework for the regulation of ODPSs and was inserted by the Audiovisual Media Services Regulations 2009 (as amended by the Audiovisual Media Services Regulations 2010) to implement the Audiovisual Media Services Directive (2007/65/EC – note that, since the AVMS Regulations came into force, the AVMS Directive has been consolidated with other Directives into Directive 2010/13/EU). Under s 368BA of the Act, any provider of an ODPS must make a notification to ATVOD. Each ODPS is currently subject to a regulatory fee, normally £2,900, and its editorial content and advertising must comply with rules enforced by ATVOD and the Advertising Standards Agency respectively. Ofcom designated ATVOD as the appropriate regulatory authority to carry out certain functions under the Act, including making determinations as to what constitutes an ODPS. Any such determination is subject to appeal to Ofcom.
Under s 368A of the Act, a key part of the criteria for determining whether a service is an ODPS is that ‘its principal purpose is the provision of programmes the form and content of which are comparable to the form and content of programmes normally included in television programme services‘. Much of the ‘Sun Video’ appeal centred around the application of this central aspect of the criteria in the Act.
The Appeal
ATVOD issued its final determination that the ‘Sun Video’ service was an ODPS on 11 February 2011, following which News Group instructed Harbottle and Lewis and appealed to Ofcom on 22 March 2011, making detailed submissions.
ATVOD referred to its own guidance and to the criteria in s 368A of the Act, pointing to factors such as the audiovisual content being collated in a separate section of The Sun’s web site, it being similar to the type of programming one might find on television, and the fact that, in ATVOD’s view, the ‘Sun Video’ section of the website was a video on demand service in its own right and was marketed as such.
News Group’s grounds for appeal were straightforward: in its view, (a) the ‘Sun Video’ section of The Sun’s website is not a ‘service’ within the meaning used in s 368A(1) of the Act; and (b) even if it were such a service, it does not have the principal purpose of providing ‘TV-like’ programming.
News Group strongly disagreed that The Sun’s online video section was marketed or presented as a VOD service in its own right. It argued that the section was clearly ancillary to the main function of the web site – the provision of an online version of The Sun newspaper.
News Group further submitted that the programming on ‘Sun Video’ was not TV-like but, in any case, the question of comparability to TV was relevant only if the principal purpose of The Sun’s web site was to provide audiovisual material, which it was not.
Ofcom’s Decision
Ofcom upheld the appeal and set aside ATVOD’s determination. It found that the ‘Sun Video’ section of The Sun’s web site was not a service with the principal purpose of providing TV-like programming. Central to its reasoning was the view that ATVOD had misapplied the statutory criteria by focussing too much on the Sun Video section of The Sun’s web site and not looking enough at the web site as a whole.
In addressing the key definition in s 368A(1)(a) of the Act – that an ODPS is a service with the principal purpose of providing programmes comparable to television programmes – Ofcom did not agree with News Group’s assertion that the question of whether the ‘Sun Video’ section was a ‘service’ should be assessed separately to the ‘principle purpose’ of what is provided. However, it stated that the elements of the definition to be assessed were (a) the ‘principal purpose’ part; and (b) the ‘comparability’ part. Both Ofcom and ATVOD agreed that, since Ofcom had concluded that ‘Sun Video’ did not have the relevant ‘principal purpose’, it was unnecessary for it to analyse the ‘comparability’ element in order to conclude that the service was not an ODPS.
In establishing that the service did not have the requisite ‘principal purpose’, Ofcom cited several recitals of the AVMS Directive, including Recital 24, which articulates a key aspect of the new regime – that of meeting users’ reasonable expectations of regulatory protection. It also referred to Recital 22, which makes clear that audiovisual elements which are ‘ancillary’ to a non-audiovisual service should not be covered by the new regulations and Recital 28, which states that the scope of the AVMS Directive ‘should not cover electronic versions of newspapers and magazines‘, though Ofcom made clear that this principle did not mean that a newspaper or magazine’s web site could never contain an ODPS.
Looking at the specific characteristics of The Sun’s web site, Ofcom pointed to a number of factors which indicated that the Sun Video service did not meet the ‘principal purpose’ test, including the generally limited duration of the material, the significant linking between the videos and substantial written articles and the limited independence of the videos when viewed without the accompanying non-audiovisual material. Ofcom recommended that ATVOD consider amending its guidance document in the light of this appeal decision.
Other Appeals
Two previous appeals against ATVOD determinations were made to Ofcom by Playboy TV in 2011; in each case, Ofcom ruled in ATVOD’s favour. However, all eyes are likely to be on the pending appeal decisions in relation to BBC Worldwide’s online video services ‘BBCW on Mediaset’ (available in Italy) and its YouTube channels for Top Gear and BBC Food.
In considering those appeals, Ofcom will need to address both the concept of editorial responsibility and the comparability test, which were not analysed in detail in the ‘Sun Video’ appeal. These cases may thus perhaps provide another useful precedent in interpreting the new framework.
Conclusion
The digital media industry will now be watching ATVOD with anticipation in the hope that it may be further reined in as a consequence of forthcoming Ofcom appeals. One thing is certain however: by emphasising the importance in the Sun Video Appeal of looking at each online service with a wider lens and taking into account the entire range of audiovisual and non-audiovisual content that the site may offer, Ofcom has asked ATVOD to broaden its mind in applying the Act and thereby to narrow its remit. No doubt this will increase the volume of dissenting industry voices at ATVOD’s quarterly industry forum and during the consultation on its regulatory fee structure early this year.
David Lewis is an Associate at Field Fisher Waterhouse LLP specialising in Digital Media, Technology and Outsourcing. Before returning to private practice, David spent 3 years as an in-house lawyer at BBC Worldwide advising on broadcast and digital media issues as well as technology services and procurement: david.lewis@ffw.com
