NFLX Netflix Inc

BRUSSELS—The European Union's executive body on Wednesday proposed legal changes that could force Netflix Inc. and other online-video providers to help finance European-made films, a first step by the bloc to update its digital rules to account for rapidly growing Internet platforms.

In its proposal updating the region's audiovisual media and TV rules, the European Commission said member states can require on-demand services established in a different European country to fork up cash to finance production of its domestic film and TV content. The financial contributions would only be based on the revenue generated in the imposing country, the EU said.

"The way we watch TV or videos may have changed, but our values don't," said EU Digital Commissioner Gü nther Oettinger. "We also want to ensure a level-playing field, responsible behavior, trust and fairness in the online platforms environment."

The changes have a potentially significant financial impact for companies such as Netflix, whose European headquarters are in the Netherlands, but which may now have to contribute between about 15% and 26% of its French revenue to France's government-enforced system to support film and television production.

Netflix has signaled its opposition to such a change. "[T]he focus of European audiovisual media policy should be on incentivizing the production of European content and not imposing quotas on broadcasters," the company wrote as part of a public consultation last year on the new rules.

"We appreciate the Commission's objective to have European production flourish, however the proposed measures won't actually achieve that," a Netflix spokesman said Wednesday.

France, which has been pushing the EU to impose stricter rules on Web companies, has for several years been pressing for a way to force firms like Netflix to contribute to its system for promoting film and TV production, looking to compensate for declining revenue as viewers migrate away from traditional TV.

Under the proposed changes, the commission also said web platforms with a large catalog of videos would also be required to shield minors from harmful content and protect citizens from incitement to hatred. It would also require on-demand services to ensure that at least 20% of their content is European. The share of European films for both Netflix and Apple's iTunes is already at 21%, according to the EU.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com and Sam Schechner at sam.schechner@wsj.com

(END) Dow Jones Newswires

May 25, 2016 07:15 ET (11:15 GMT)

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