Reed Smith Client Alerts

Authors: Nick Swimer

By its decision of 21 July 2015, Ofcom has upheld an appeal by Vice UK Limited, ruling that Vice should not be classified as an on-demand programme service (ODPS) for the purposes of the Communications Act 2003 (Comms Act) (Ofcom’s decision is available here).

This decision overturns the previous determination made by the Authority for Television on Demand (ATVOD) on 14 August 2013, which judged the video tab made available on the Vice website to be an ODPS.

Background The relevant legislative framework to this decision is derived from the Audiovisual Media Services Directive 2010/13/EU. The Directive has been implemented into English law by the Audiovisual Media Service Regulations 2010, which amended the Comms Act to give effect to the Directive.

One of the aims of the Directive is to provide a fair level of competition between traditional (linear) television broadcasting services and on-demand services that are considered similar enough to compete with them.

ATVOD’s initial determination considered Vice to provide an ODPS because the video tab constituted “a service in its own right, the principal purpose of which is the provision of television-like programmes”. Vice appealed this decision to Ofcom.

Ofcom appeal Ofcom made its decision on the basis of new information provided by Vice, which submitted that the person with editorial responsibility for its video tab was established in the United States and therefore outside the jurisdiction of the UK for the purposes of the Act. Ofcom agreed with Vice’s submission.

In determining where Vice’s service was established, Ofcom considered article 2(3) of the Directive, which states:

“For the purposes of this Directive, a media service provider shall be deemed to be established in a member state in the following cases:

(a) …The media service provider has its head office in that member state and the editorial decisions about the audiovisual media service are taken in that member state;

(b) If a media service provider has its head office in a member state but decisions on the audiovisual media service are taken in a third country, or vice versa, it shall be deemed to be established in the member state concerned, provided that a significant part of the workforce involved in the pursuit of the audiovisual media service activity operates in that member state.”

Ofcom determined that the entity with editorial responsibility, for the purposes of article 2(3)(a) of the Directive, is the US-based Vice Media Inc, rather than Vice. It based this conclusion on the following facts:

  • The UK team had no role in selecting which video content to include;
  • All US video content had to be included (except if deemed culturally offensive or legally problematic); and
  • Decisions on arranging the content were also made by the team based in the United States.

Ofcom also considered the jurisdiction test at article 2(3)(c); it found this to be relevant as although Vice’s head office was in a third country, some decisions on the audiovisual media service were taken in a member state. Ofcom determined that there was no significant part of the UK workforce involved in the audiovisual media service activity because only an estimated 18 of the firm’s 192 staff were based in the UK. In addition, it was determined that the U.S. head office’s authority greatly limited the decision-making capacity of the UK-based staff.

Ofcom additional observations Although not strictly required to comment on ATVOD’s determination that Vice was “a service the principal purpose of which was the provision of TV-like programmes”, Ofcom did offer some observations for future reference.

Ofcom said that it is necessary to look at what the website offers as a whole; both the written content and the audiovisual material. It noted that a video tab could be an incidental part of a text and photo-based magazine-style website. It also said that faced with similar decisions in future, ATVOD may find it helpful to seek evidence to show how consumers in fact access and use the audiovisual material on the site in question.

Conclusions Ofcom’s decision provides a clear indication that where editorial responsibility for an on-demand service is established outside the EU, that service will not fall within the definition of an ODPS for the purposes of the Comms Act and so will not be subject to regulation in the UK.

The question of who is deemed to have editorial responsibility is a question of fact, for which the following factors will be relevant:

  • Where the majority of content originates from;
  • Who selects and arranges the content to be included on the service; and
  • Who is responsible for signing-off on content.

Looking to the future As part of its Digital Single Market strategy, the European Commission has opened a consultation to take views on whether the Directive should be adapted. The consultation includes the question of whether to extend the application of the Directive to audiovisual media services established outside the EU that are targeting EU audiences.

Client Alert 2015-216