Analysis: Brexit’s threat to UK’s broadcasting business

Brexit has cast uncertainty over the fate of international broadcasters using the UK as a European base, writes Raymond Snoddy. If no deal is reached, the cost could be substantial

No matter what your opinion on the EU referendum may be, it is difficult to argue that things are going well, with irreconcilable positions on everything from trade and the Northern Ireland border to financial services all being kicked down the road more in hope than expectation.

Even when agreement is reached between squabbling shades of Brexiteers in the Government there is more than a chance that Brussels will say non, to what is put forward.

There is now even acrimony about whether enough is being done to prepare for a failure to reach any agreement, something that can no longer be ruled out.

Where in this morass can the impact of Brexit be divined on the future of the UK’s creative industries? Depending on definitions used, they account for at least 5 per cent of GDP, or more than £90 billion a year, and just happen to be one of the fastest growing sectors of the UK economy.

The short answer is that as Brexit day approaches it’s almost impossible to say anything with certainty.

Culture Secretary Matt Hancock makes all the right noises about the importance of the creative industries and the tech sector.

Prime Minister Theresa May has demonstrated her knowledge of the country of origin principle that enables any channel licenced in the UK to travel seamlessly to all the countries of the European Union. Yet detail comes there none.

The Government’s industry-by-industry impact reports, published under pressure earlier this year, provided no guidance on possible Brexit impact whatsoever. It merely set out the present shape and structure of the creative industries.[advert position=”left”]

So the only honest answer at the moment is that it all depends on what, if any, deal is eventually done.

But a few things can be ruled out and some educated guesses made about the rest.

It can be officially confirmed that, for good or ill, the UK will not be kicked out of the Eurovision song contest because Eurovision is an association of broadcasters including Israel and Jordan that has nothing to do with the EU.

Following the vote on this year’s rather good entry, Storm, Brexit will mean that we will be hovering around the nil points mark for the foreseeable future in the face of persistent revenge voting.

It is also extremely unlikely that tariffs will be imposed on British television programmes exported to Europe in future.

There are no tariffs on foreign programme imports to the EU now and that would only change if the Commission should adopt a post-Brexit punitive mode, although the French might have a go.

German Chancellor Angela Merkel is hardly likely to approve tariffs on her favourite television programme Midsomer Murders.

The UK production industry is unlikely to be affected materially by Brexit even though a pre-vote poll among independent producers showed an 85 per cent Remain majority.

UK producers would, however, almost certainly be excluded from the EU funds that encourage programme development and production with no guarantee that the UK Government would produce their own version.

The British film industry might actually benefit from Brexit. The big studios like British film-making talent and infrastructure and the fall in the value of the pound against the dollar – itself a consequence of Brexit – should provide a continuing advantage.

A further fall in the value of the pound if talks with the EU collapse would hit the general UK economy but attract even more mobile film projects.

The biggest area of uncertainty is the fate of the international broadcasters, mainly American, who use the UK as their European base. It has been estimated that it is a business worth more than £5 billion a year.

While London will remain an important media city for international broadcasting production, perhaps £1 billion of that business could walk out the door to Amsterdam, Dublin or Milan.

The scale of the potential problem has just become clear with the decision by Discovery, according to The Guardian, to close its European broadcasting base in London and move the retransmission of nearly 100 channels to either Amsterdam or Warsaw with the loss of 100 jobs.

Discovery says the potential move has more to do with technology than Brexit but that claim surely must be taken with a large dose of salt.

Ofcom is the regulator of choice for most of the international players because it is seen as rational, reasonable and forward looking on broadcasting standards.

As a result more than 600 channels are licenced in London by Ofcom and that gives those broadcasters the right to broadcast unhindered throughout the rest of the EU.

Ofcom has warned the Government that unless there is an agreement with the EU on broadcasting that business may be in jeopardy.

It could be one of the myriad of unintended, detrimental consequences of Brexit for the UK economy.

Without an agreement international broadcasters would have to uplink their channels from a remaining member of the EU and it is likely that a significant broadcasting presence would be required in order to qualify for a licence.

Sticking a brass plate outside an office in Amsterdam would not be acceptable.

The other big issue, though one that is difficult to quantify, is talent – or more precisely the mobility of talent.

Obviously at the moment young people interested in a career in the creative industries stream into London from all over the EU.

With the Prime Minister and the Government intent on leaving the single market, and with it rights to free movement, change is inevitable.

No-one knows what sort of visas and permit rules will apply in future although they will almost certainly be more restrictive than they are now.

Famous film directors are likely to come and go as before. The danger is that young, specialist technicians needed urgently on a production will be tied up in red tape, or that young entrepreneurs will no longer feel that the UK is as welcoming as it once was.

Advertising could also be badly hit, a little perhaps from reduced mobility of talent, but more because of the impact of a bad Brexit deal on the general economy and advertising supported media businesses.

The most important thing is that broadcasting and the other creative industries manage to make a case for standing out among all the other pleas for individual treatment.

Broadcasting has to be kept exempt from conventional free trade agreements.

As John McVay, chief executive of producer’s organisation Pact puts it: “We don’t want [broadcasting] to become a tradable commodity in a negotiation to get chlorinated chicken or more avocados.”