As Brexit Looms, UK Creative and Media Tech Industries at Risk
Brexit is already jeopardising the potential of broadcasting in the UK, and the heightened prospect of not securing a deal with the European Union paints an even bleaker future for the sector, according to speakers at a summit on Brexit strategies in London earlier this week.
Two years after the referendum in the United Kingdom on membership of the European Union, and just nine months until the deadline for leaving, the picture appears to be no clearer. Media and entertainment companies cannot afford to wait and see what the impact will be.
Vince Cable, leader of the Liberal Democrats and former secretary of state for Business, Innovation and Skills, rated the possibility of the UK crashing out at 20 per cent. He added he thought there was a 20 percent chance that Brexit will actually be stopped altogether, and just a 60 percent chance of a deal, according to Advanced Television, which co-produced the event.
"Creative industries have a huge impact on the economy, and there is a major impact on broadcasting," he said. "We need to ensure the creative industries are recognised [by the government's negotiating team]."
The UK government's most recent assessment of the creative industry's value is that it contributed £92 billion in 2016, representing more than 5% of the UK economy—bigger than steel or aviation,
Yet the creative industries receive little coverage "partly as there are no hard hats or high-viz jackets for politicians to wear, and partly because the media is poor at covering itself," Cable said.
The Commercial Broadcasters Association (COBA) warned that losing access to EU markets through Brexit could cost the UK's television market £1 billion ($1.4 billion) per year in investment from international broadcasters. COBA represents multichannel broadcasters, including A+E, Discovery, Fox, NBCU, QVC, Scripps, Sky, Sony Pictures TV, Turner, and Disney.
Adam Minns, COBA's executive director, claimed 650 channels are considering moving; "Companies will need 6 to 9 months to restructure, move staff and relocate … there is a real clock ticking."
Leaving the EU without a trade deal would "jeopardise" the territory's position as "Europe's leading international broadcasting hub," said Minns. "International broadcasters based here would, reluctantly, be forced to restructure their European operations."
This is primarily due to question marks over the Country of Origin (COO) principle of the European Audio Visual Media Services Directive (AVMSD), which allows media channels across the EU to be regulated in just one member state. For example, a third of the 1,200 television services regulated by Ofcom are never seen by UK viewers, but are broadcast across the EU.
"If a UK broadcasting licence is no longer recognised by the EU, international channels will have no choice," said Minns.
Discovery has already voted with its feet. Last month it announced it will shut its European broadcasting base in West London and shift playout to the continent. Options include Amsterdam, where businesses including Netflix have their European headquarters, Warsaw, and Paris where Discovery-owned Eurosport has its hub.
Conversely, there are 35 channels, including Netflix, that transmit to UK viewers but are licensed in other EU countries. UK content is therefore EU content, but would face sales limitations if banded outside EU quotas. Agreement on the country of origin principle is a priority in the negotiations.
"The EU will not cut the UK a deal on the single market—including the COO principle," said Paul Hardy, the DLA Piper Brexit Director who has previously been the advisor on European law to the UK Parliament. "It is giving us too much of the cake when we have already decided to leave the party. Businesses are quite right to be relocating."
There is also a concern that post-Brexit, UK citizens could lose their right to the portability of online content when they travel abroad, a right which is currently protected under EU law.The Digital Single Market law guarantees that consumers can enjoy paid subscription content everywhere in the European Union.
The UK government's most recent assessment of the creative industry's value is that it contributed £92 billion in 2016, representing over 5% of the UK economy. The sector grew by 45% between 2010 and 2016, faster than any other sector, according to the government.
The sector—which includes film, music, TV, fashion and architecture—relies on a highly mobile and international talent pool, often hired at short notice.
Analysis by the Creative Industries Federation (CIF)—an organisation for creative industries, cultural education and arts in the UK—suggests 75% of all the UK's creative companies employ people from across the EU.
According to Cable, this is one of the many reasons why an agreement must be made on the status of EU workers, and flexibility enshrined in the new system to allow broadcasters to continue to recruit EU citizens as freelancers when required.
CIF's chief executive John Kampfner wants the government to ensure reciprocal rights for UK workers abroad, to scrap non-EU minimum salary requirements, and to increase training in UK schools for creative skills, which it claims have been squeezed off the curriculum.
According to Advanced Television, he suggested Brexit would stop dead the UK's leadership in creativity and innovation and tech if the movement of skills are restricted.
Other industry groups including the UK Screen Alliance have called for flexible arrangements after Brexit that allow visual effects and animation companies (arguably the hardest hit since they employ significant global talent] to continue to access EEA talent without punitive visa charges or restrictive quotas that could impact UK firm's competitiveness.
A survey of CIF members prior to the EU Referendum in June 2016 suggested that 96% of them intended to vote to remain.
The focus has now changed to campaigning to prevent the creative industries from being left in a legislatively worse position than previously. It could be that the creative industries are just out of step with the popular vote (when 52% of voters opted to leave the EU), arguably showing a lack of diversity within a sector dominated by a cosmopolitan elite.
A more recent CIF survey suggested Brexit could cause "catastrophic" damage to the UK's booming culture industry.
The Confederation of British Industry (CBI) is also arguing the case for close alignment between the UK and the EU's Digital Single Market post Brexit.
A report released by the CBI in April highlighted that the UK is number one in the world when it comes to e-commerce, and stated that four out of five of the largest global investments in artificial intelligence businesses were for UK firms. It reported that the tech economy is creating jobs twice as fast as the rest of the economy and spurring jobs and investment across the UK.
The CBI argues that in order to sustain frictionless data flows, access to content and support for the UK's digital economy, "it is highly likely that UK businesses will be required to adhere to new Digital Single Market regulations post-Brexit."
Without a dea, all of this will be thrown in to the air.
The Media Summits Brexit Briefing was produced by informitv and chaired by the DTG, the association for British digital television broadcasters. Full audio of the event is available here.
Tech powerhouses like Google and Facebook have embraced London, but following the stunning referendum results, Britain's film, TV, and OTT industries could see talent and funding dry up