Twenty-First Century Fox 2014 Annual Report Download - page 26

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The TRAI enacted new regulations in March 2013, which limit the amount of advertising time allowed on
television channels. These new regulations replace the regulations enacted by the TRAI in May 2012 which had
been challenged in the Indian courts. The March 2013 regulations have also been challenged and such challenges are
currently pending in the Indian courts.
The Indian government has mandated sports content rights owners to simultaneously share a feed free of
advertisements of the live broadcasting signal of sporting events of national importance with the Indian government
owned broadcaster to enable it to re-transmit the signal on its terrestrial networks and DTH networks. For such
shared events, the regulations also provide for sharing of advertising revenue, 75% to the content rights owners and
25% to the government owned broadcaster.
The Copyright laws in India were amended in June 2012 to provide, inter alia, for rights to receive royalties
for authors of underlying work and to permit broadcasters to access content under a statutory license at royalty rates
to be determined by the Copyright Board.
Latin America. The Company broadcasts television programming throughout approximately 18 Latin
American countries, as well as the Caribbean. Certain countries in which the Company operates have a regulatory
framework for the satellite and cable television industry. These regulations vary in each country as does their impact
on the Company’s business. In Argentina, the government imposes restrictions on the ability to effectuate price
increases on rates charged to pay TV operators and has also implemented certain measures in currency exchange
controls which have caused significant impediments and limitations to any person or entity moving money out of the
country resulting in exposure to currency devaluation. Pay TV operators are required to carry certain government
operated channels. Argentina regulations reduced the available advertising inventory on the channels by half to six
minutes and impose a withholding tax on advertisers purchasing advertising inventory on international
channels. The Company continues to work to minimize the impact of the reduction of advertising inventory and tax
implications on advertisers. In Mexico, international programmers were granted a temporary injunction which
allowed them the right to transmit up to an average of 12 minutes per hour of advertising within a 24 hour period,
however a new law was recently passed that could require compliance with a six minute per hour limitation. In
Brazil, regulations require, among other things: (i) that all channels distributed in the region contain at least three
hours and thirty minutes per week of Brazilian content during prime time hours, an increase from the previous
requirement of two hours and twenty minutes per week, half of which must be produced by a Brazilian independent
producer; (ii) registration of all channels, programmers, local content and advertisements; (iii) website disclosure of
programming and advertising content to ensure compliance with tax and other regulations; and (iv) mediation of
local agency requirements and taxation on all advertising that is contracted abroad. While such tax shall primarily be
paid by advertisers, programmers are ultimately responsible for the tax payment, and failure by advertisers to pay
the required tax could subject programmers to fines or penalties. Compliance with these regulations increases the
cost of doing business by imposing additional production/acquisition costs as well as third party administrative and
legal expenses.
Europe. The sectors in which the Company operates in Europe are subject to both general competition laws
and sector specific regulation. The regulatory regime applicable to the electronic communications and broadcasting
sectors is, to a large extent, based on European Union (“EU”) law comprised in various EU directives that require
EU member states to adopt national legislation to give effect to the directives’ objectives, while leaving the precise
manner and form of the national legislation to the discretion of each member state. The Electronic Communications
Directives regulate the provision of communication services, including networks and transmission services that are
involved in the broadcasting of television services as well as the provisions of services and facilities associated with
the operation of digital television platforms. The AudioVisual Media Services Directive sets out the basic principles
for the regulation of television broadcasting activity, including broadcasting licensing, advertising and content
regulation and imposes production and investment quotas, obligations to transmit European content for at least 50%
of the day and limitations on advertising time. Each European country also has the right to adopt more strict rules.
In January 2014, the European Commission (“EC”) initiated formal antitrust proceedings to examine certain
provisions in licensing agreements between several U.S. film studios, including Twentieth Century Fox, and a
number of European pay-TV broadcasters, including Sky Italia, Sky Deutschland and BSkyB. The EC is
investigating whether provisions which prevent broadcasters from providing their services across borders, for