The Effectiveness of Audiovisual Regulation Inside the European Union: The Television without Frontiers Directive and Cultural Protectionism

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In early January of 2002, Jean-Marie Messier, the chief executive of French audiovisual giant Vivendi Universal, held a press conference to discuss his company's latest acquisition: American-based USA Network's media business. (1) During the conference, a French journalist asked Messier whether this latest $10.8 billion purchase marked a shift toward the Americanization of French cinema. (2) While the answer to the question is debatable, Messier's response undoubtedly marks a shift in the attitude of the private audiovisual sector in France, and perhaps in the European Union as a whole. "The Franco-French cultural exception is dead," he declared, referring to the notion that media product is cultural product, and thus must be dealt with differently than other trade goods. (3) The response was an immediate and overwhelming criticism of Messier and the initiation of an investigation, by France's highest administrative court, of Vivendi's shareholder register to determine whether Vivendi's Pay-TV arm, Canal Plus, was more than 20 percent owned by non-European Union shareholders. (4) After a turbulent summer at the helm of Vivendi, Messier stepped down under fierce criticism in early July. (5)

The drama may be lost on American film and television consumers. The American audiovisual industry has long enjoyed a position of dominance in the global market which has, in many respects, insulated American consumers from the kind of conditions inside the French and broader European markets that have resulted in a sort of audiovisual dysfunction amongst the family of European Union regulatory policies and Member State practices. The patriarch of this family, the Television Without Frontiers Directive (6) (the "Directive") is under renewed scrutiny from the Commission which, in November of 2002, published a five-year evaluation of the Directive's effectiveness (7) expected to stimulate a new debate in the coming months on possible amendments to the law. (8) Messier's bell-tolling episode and the resulting political fallout in many ways encapsulates the underlying issues for audiovisual regulation inside the European Union. The French view of media as culture is in no way aberrant; it is pervasive throughout the European Union. (9) On the other hand, the United States, whose audiovisual industry earned over $530 billion in 200l (more than 5 percent of the U.S. GDP) and exported $90 billion in audiovisual product overseas in the same year, (10) has consistently argued that while media products have a cultural component, they should be treated as goods rather than services for purposes of trade law. (11) This position is at odds with the Directive, which requires, among its other provisions, (12) quotas for the broadcasting of European programming and independent European production (13)--quotas which would clearly be illegal under the General Agreement on Tariffs and Trade ("GATT"). (14)

But in the wake of the Commission's five-year report, both the effectiveness and the purpose of the Directive are being questioned not just by the U.S. audiovisual industry, but by those inside the European Union as well. (15) Messier's position embodies concerns within the European Union that liberalization of audiovisual regulatory policies is necessary in order to develop a more competitive European audiovisual sector. With the collapse of the public broadcasting model across much of Europe (including France) and its gradual replacement by commercial and pay-TV networks broadcasting a large quantity of American programming suffused with American culture, it seems likely that in order to address the cultural concerns embodied in the Directive, a more competitive European audiovisual industry is needed. One viewpoint is that the audiovisual sector need only be nurtured under European Union regulation in order for it to become more competitive. (16) Another is that liberalization is the only way to compete. (17)

This is, essentially, the question the European Union must now resolve: whether protection of European culture is best accomplished by strengthening the Directive or by liberalizing regulation. …