A European Court of Justice ruling may threaten traditional territory-by-territory sales to specific countries within the European Union and the financial model which underpins co-productions.
The ruling, handed down this week, means that all co-production treaties with individual European countries could be against EU regulations because they favour one country and exclude others within the Union.
The decision was prompted by a dispute between broadcasters and certain UK pubs, who were using cheap decoder cards from Greece to show England’s Premier Football league broadcasts, rather paying for the local, more expensive, BSkyB broadcast.
However, in a blow for pay-TV broadcasters, the Court of Justice ruled against an initial copyright protection claim.
It ruled that “national legislation which prohibits the import, sale or use of foreign decoder cards is contrary to the freedom to provide services and cannot be justified either in light of the objective of protecting intellectual property rights or by the objective of encouraging the public to attend football stadiums.”
And in a move with wider implications for filmmakers, it also ruled that “a system of exclusive licences is also contrary to European Union competition law if the licence agreements prohibit the supply of decoder cards to television viewers who wish to watch the broadcasts outside the member state for which the licence is granted.”
Australian producer Mario Andreacchio warned that the ruling may limit the number of buyers, who would now hold larger territory rights.
"Of course, if it’s a Euro co-production it will always fetch a better price than if it was purely an Australian production but either way, it would be very seriously bad news indeed,” he said.
Andreacchio is currently working on two co-productions and recently released the first official Australia-China co-producton, The Dragon Pearl, this year.
"I'm in the final stages of establishing two European co-productions and this announcement definitely can affect how we structure the financing. For instance, one is a co-production with Germany, and traditionally you assign the territory to your co-producing partner. But assigning territory rights of Germany to my German partner under this new ruling, means assigning the whole of Europe to him – a very different kettle of fish."
He also said the judgement categorically confirms that co-production treaties with single European countries will apply more broadly. For example, a French co-production would be able to employ anyone that is an EU national, so the difference between a German and a French co-production will be more about where the expenditure is made rather than where the actors or crew are from.
Andreacchio also raised the prospect that the ruling may speed up the idea of selling "language rights" rather than "territory rights" as different distribution platforms begin to converge.