The UK has long been considered the media capital of Europe. Over half of the 2,200 broadcasting licences granted across the European Union are by Ofcom in the UK.
American tech and media companies, including Facebook and Google, have sizeable offices in London and it’s an English speaking base for US firms wanting to do business in Europe.
Already, since the announcement in June 2016 that the UK would leave the EU, we have seen market volatility and a drop in the value of the pound. This has hit UK broadcasters’ advertising income and increased the cost of content imports. It has also brought rising costs for international broadcasters based in the UK through exchange rate losses.
The news on 8 December 2017 that the UK and the EU had agreement on the major points around payment, citizens’ rights and the border in Ireland means that they can start to work on the detailed nature of their relationship. This will cover areas including defence, immigration, human rights as well as trade and labour. This will come into effect after the expected date the UK will leave the EU in March 2019.
Brexit won’t upend the sector completely. It’s likely that the EU and the UK will work out an agreement to maintain trade and labour ties. But the lack of clarity about the nature of the transition – whether it is a ‘hard’ or ‘soft’ Brexit – threatens all those companies that have reliance on Europe in some form. Whilst there are no firm definitions in place, a hard Brexit will likely see the UK give up full access to the single market and full access to the European Union Customs Union (EUCU) along with the EU. A soft Brexit would keep unfettered access to the European single market.
The distinction is as pertinent for companies planning to set up in London so that they can do business across the EU as those that have been based here for years. For all these companies, as across all sectors, lack of certainty is no safeguard to a good outcome and they are planning accordingly.
There are 5 core issues:
Country of Origin principle
The EU’s ‘country of origin’ principle allows media companies operating across the EU to be regulated in just one member state. This means that broadcasters can transmit across the entire EU, provided they comply with the rules of their host country. Ofcom licenses all 1200 UK based channels to operate in this way. But if the UK falls out of the EU, will these channels have to move their operations to a country that falls within the EU?
Several major UK-based broadcasters have stressed the importance of this issue. Some are having to consider the disruption of relocation. Others are committed to remaining in the UK, but worry about their ability to reach EU audiences unhindered. Many are making contingency plans which could be activated as early as this year. Others have put plans for new investment in the UK on hold.
Media companies across Europe have international, highly skilled people, many from overseas. Estimates suggest up to 40% of people working in the UK’s creative industries may be EU nationals with no UK citizenship. Their work is seen by audiences from Amsterdam to Zagreb.
All employees, of course, need certainty. The UK Government has made the status of EU workers a priority in its negotiations. We hope that progress there will provide clarity to staff across industries, and to the companies who rely on them.
Today, digital information travels freely within the European Economic Area governed by shared standards of privacy and protection. Personal data cannot leave the European Economic Area unless it is to an accredited receiving country – of which there are currently 12 outside the EU.
Media companies need certainty that the UK will retain this status as without that assurance, pan-European operators will face practical and commercial disruption. This could mean potentially negotiating separate data agreements with their European partners, or moving their data centres.
Major broadcasters rely on cross-border data to distribute their content and this issue may be a bigger issue than the Country of Origin principle.
Production, content, distribution and rights
Leaving the EU could impact the UK industry by limiting access to finance and markets. The European Regional Development Fund and the Creative Media Fund, invested approximately $180 million in UK co-productions between 2007 and 2015. UK producers are asking how this will be replaced. Similarly, the UK is currently part of a system of quotas which means that all countries have to buy a certain volume of content from EU suppliers. If the UK is no longer included in these quotas, this could reduce the value of UK productions across Europe.
The UK’s dominant position in the European media landscape means that it is able to influence regulation across Europe. As an outsider, the UK will lose that right of influence but will continue to be bound to EU regulations, particularly around intellectual property and copyright, and the Digital Single Market (DSM). Similarly, the European Commission may no longer have a role in the development of the UK’s legal frameworks.
Red Bee Media: Your Brexit contingency
Broadcasters and producers with a mature base in the UK will not want to needlessly move if these issues are resolved in the course of the Brexit negotiations. Similarly, these companies will need some level of contingency in case the outcomes are not favourable to their needs. For all these issues, companies need to plan their business continuity.
Red Bee Media is a global company with 6 hubs across Europe in the UK, France, the Netherlands, Sweden, Finland and Spain, with additional hubs in Abu Dhabi, Australia and the US.
As a truly global organisation we are able to take the stress out of the situation by flexing our resources and infrastructure to respond to the market as circumstances unfold. Thus we are able to locate services in the most favourable market, with representatives in your local area. This includes our data centres which are flexible across our global network and data can be relocated as needed. And finally our people are global, already working across Europe as demand dictates. In summary, we are well placed to provide continuity, conviction in delivery and support during any future transition.
Claire Harvey, Key Account Manager UK, Red Bee Media