The Legal 500

As part of the process of adapting to EU legislation, Turkey made it a national goal to complete harmonization studies with more flexible audiovisual rules by the end of 2009. To this end, the Radio & Television Supreme Council (“RTUK”) prepared a draft broadcasting law (“Draft Law”) to replace the current broadcasting Law on Establishment of Radio and Television Enterprises and Their Broadcasts (“Broadcasting Law”). To a significant extent, the Draft Law was inspired by the EU Audiovisual Media Services Directive 2007/65/EC (“Directive”), a less detailed but more flexible and modernized regulation that covers all audiovisual media services, meaning traditional television (linear service) and video-on-demand (non-linear services). In this regard, the Draft Law introduces new terminology, notions and concepts and revises certain provisions in line with the Directive. It is currently pending before the Turkish Parliament.

Terminology of the Draft Law

In order to bring about technical and practical uniformity with the EU audiovisual legislation, and to provide a broader, more general reference to service providers (without limitation to traditional broadcasters), the Draft Law introduces new definitions and concepts, such as "editorial responsibility" (the exercise of effective control both over the selection of the programmes and over their organization either in a chronological schedule in the case of television broadcasts or in a catalogue in the case of on-demand audiovisual services), which is essential for defining the role of the "media service provider," the real or legal person editorially responsible for choosing the content of the audiovisual media service and determining the manner in which it is organized.

In addition to "television advertising" and "teleshopping," the term "audiovisual commercial communication" receives a broader definition from the Draft Law, and is defined as the images with or without sound that are designed to promote, directly or indirectly, the goods, services or image of real or legal persons pursuing economic activity. Such images are included in a program in return for payment or for similar consideration or for self-promotional purposes. Forms of audiovisual communication include inter alia television advertising, sponsorship, teleshopping and product placement.

Also featured are definitions of "television broadcasts" and "on-demand audiovisual media service," the basic concepts on which the Draft Law is structured. Television broadcasts are defined as the coded or non-coded audiovisual media services that a media service provider provides for simultaneous viewing of programs on the basis of a program schedule, whereas on-demand audiovisual media services refer to an audiovisual media service provided by a media service provider for the viewing of programs at the moment chosen by the user and his individual request, on the basis of a catalog of programs selected by the media service provider.

The Country of Origin Principle

The rationale behind the "Country of Origin Principle" is that it promotes a competitive and integrated audiovisual industry and enhance media pluralism. The Draft law introduces the Country of Origin Principle with the aim of creating an internal market in accordance with the Directive, which indicates that the principle should apply to all audiovisual media services to ensure legal certainty for media service providers as the necessary basis for new business models and the deployment of such services. In this respect, under Article 4 of the Draft Law, the media service providers under Turkey's jurisdiction are determined by taking the Country of Origin Principle as a basis. The relevant provision of the Directive is completely adapted to the Draft Law.

In respect of Article 4, a media service provider is deemed to be established in Turkey in the following cases:

• If a media service provider has its head office in Turkey and editorial decisions regarding the audiovisual media service are taken in Turkey;
• If a media service provider has its head office in Turkey, but editorial decisions on the audiovisual media service are taken in another state that is party to the European Cross-border Television Agreement, it shall be deemed to be established in Turkey if a significant part of the workforce involved in the pursuit of the audiovisual media service activity operates in Turkey. If a significant part of the workforce involved in the pursuit of the audiovisual media service activity operates in both Turkey and the other state party to the European Cross-border Television Agreement, the media service provider is deemed to be established in Turkey if it has its head office in Turkey. If a significant part of the workforce involved in the pursuit of the audiovisual media service activity operates neither in Turkey nor a state party to the European Cross-border Television Agreement, the media service provider will be deemed established in Turkey if it first began its activity in accordance with Turkish law, provided that it maintains a stable and effective link with the economy of Turkey,
• If a media service provider has its head office in Turkey, but decisions on the audiovisual media are taken in a third country or vice-versa, it shall be deemed established in Turkey provided that a significant amount of the workforce involved in the pursuit of the audiovisual media service activity operates in Turkey.

In the event that the foregoing provisions do not apply, media services (i) using a satellite uplink situated in Turkey and (ii) using satellite capacity appertaining to Turkey shall be deemed to be under Turkish jurisdiction.

Shareholding Restrictions

The reasoning behind the Draft Law is that current provisions regulating shareholding ownership in media service providers (under the Broadcasting Law) are not compatible with Turkey's goals and today's media market realities. The Draft Law thus revises the relevant provisions to provide media pluralism and content diversity. It does this by preventing a concentration of media ownership (aka media consolidation) through further restricting consolidation of ownership in media service providers, while loosening foreign shareholding restrictions. The Draft Law also determines new arrangements for preventing monopolization and formation of a competitive environment, taking into account frequency capacity allocation and sector-specific income as the basis for its evaluations.

Under the Broadcasting Law, foreign capital in a media service provider cannot exceed 25% of the paid-in capital, and a foreign real or legal person who is a shareholder in a media service provider cannot be a shareholder in another media service provider. The Draft Law revises the foreign shareholding restriction and the single entity limitation as follows:

• The frequency capacity to be allocated to a real or legal person for terrestrial broadcasts may not exceed 10% of the total frequency allocation for such broadcasts.
• A foreign real or legal person may be a shareholder in a maximum of two media service providers. Nevertheless, the sector-specific income of the media service providers, whether directly or indirectly held by the foreign shareholder, may not exceed 25% of the total sector-specific income for the whole sector.
• • The foreign shareholding capital contribution may not exceed 50% of the paid-up capital of the media service provider. A foreign real or legal person may become a direct shareholder in a maximum of two media service providers. The foreign shareholder's capital percentage in the second media service provider may not exceed 25% of the paid-up capital of the same. In case a foreign shareholder becomes an indirect shareholder in private radio and television companies, the Chairman and Vice Chairman of the Board of Directors, a majority of the Board of Directors and the General Manager should be appointed from among Turkish nationals.

In addition to the above, the Draft Law allows manufacturing, investment, export, import and marketing companies and financial institutions to become shareholders in media service providers.

Frequency Planning and Broadcast License

Previously, certain arrangements with respect to authorizations and duties related to radio and television broadcasts were shared with the RTUK, the Communications Supreme Council and the Telecommunications Authority. However, with enactment of the Electronic Communications Law, the Communications Supreme Council was dissolved, and the duty of planning the frequency bands was allocated to radio and television broadcasts in the National Frequency Plan. Application of such plans was assigned to the RTUK. In line with the Electronic Communications Law, the Draft Law contains provisions authorizing the RTUK to plan the frequency bands and apply the plans.

Politicized Structure of the RTUK Remains the Same

The Draft Law - on the one hand - introduces new concepts and arrangements, and amends certain provisions to provide a competitive and integrated audiovisual environment. On the other hand, it keeps the politicized structure of the RTUK the same as indicated in the Broadcasting Law. As provided in the Broadcasting Law and completely retained in the Draft Law, the members of the RTUK are nominated by the political parties that have seats in the Turkish Parliament, and these representatives make up the RTUK in proportion to the share of seats that their respective parties have in Parliament. The RTUK is composed of nine members who serve for a term of two years.

However, the provision determining the powers and duties of the RTUK has been redrafted in the Draft Law by taking the acquis communautaire (aka EU acquis) into consideration. The reasoning behind the redrafting of this provision is to vest the RTUK with appropriate powers and duties, taking into account its character as the regulatory authority for Turkey's audiovisual market.

Following enactment of the Draft Law, certain secondary legislation is expected to be enacted or replaced by new legislation. In accordance with the references made in the Draft Law, it should be noted that:

• the procedures and principles of "re-transmission" will be determined in a separate regulation;
• the principles and procedures of broadcasts in other languages and dialects will be provided in a separate regulation;
• details of advertisements and teleshopping on television and radio will de indicated in a separate regulation;
• the procedures and principles with respect to "short screening" will de provided separately by the RTUK;
• the procedures and principles arranged for the shareholding restrictions will be indicated in a separate regulation;
• application of frequency plans will be determined by RTUK; and
• application of administrative impositions will be determined in a separate regulation.

In light of the foregoing, sector players, entities and persons interested in the audiovisual sector in Turkey should prepare themselves for significant amendments and developments. Turkey is currently in the mood and ready to fine-tune its audiovisual rules.

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