Brexit: What’s best for British TV?

Brexit: What’s best for British TV?

By Raymond Snoddy,
Thursday, 14th April 2016
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What impact would Brexit have on the UK TV community? Raymond Snoddy samples opinion ahead of the vote in June

The UK’s successful independent television produc­tion sector is having its own European Union “referendum” several months early.

John McVay, Chief Executive of Pact, which represents more than 450 indies, has sent out “voting” messages to gauge the attitude of his member companies. These make a major contribution to the estimated £1.28bn of international programme sales and associated services earned by the UK each year.

From a television business point of view, indies have been asked whether the UK should stay in or get out.

“Once I get the result of the survey I will be discussing with the Pact board what they would like to do,” says McVay. He believes it is very difficult to know what effect a UK Brexit vote would have on the TV industry.

What is clear is that about one-third, or £378m, of the UK’s international programme sales – including pre-sales and formats – comes from Europe. This could, at the very least, face a period of considerable uncertainty.

If there were to be a Brexit, McVay believes that “there is nothing to stop producers in other EU countries lobbying and saying: ‘These guys are no longer part of the club, let’s make sure they don’t get in [under foreign programme quotas].’”

He adds: “The French have never liked the Anglo-Saxon domination of their media.”

Veteran independent producer Bernard Clark is Chair of TVT, the international TV services company, which also makes factual programmes. In the Pact “referendum”, he is a definite “Out”.

Clark’s opposition is based largely on the levels of EU bureaucracy and regulation. He believes that, if people want programmes, they will buy them – whether the UK is in the EU or not.

Roger Graef, founder of Films of Record, which made the first film inside the European Commission during the last UK referendum in 1975, is an equally emphatic “In”. Both producers enjoy increasing trade with a variety of countries beyond Europe (including the US, Japan and China); neither think that their companies will be greatly affected either way.

John McVay, Chief Executive of Pact
(Credit: Paul Hampartsoumian)

Carolyn Fairbairn, Director-General of the CBI and a former strategy head for both the BBC and ITV, takes a trenchant view.

She says: “The biggest impact would be not being able to influence EU regulation, particularly around intellectual property and the Digital Single Market (DSM) – having all those rules imposed because we have a stronger industry than many of the European countries, particularly in TV production. There would be a real risk.”

The CBI chief believes the notion that the UK could escape the provisions of the DSM through Brexit is nonsense. “Because we still have to sell our programmes in Europe, we would have to abide by EU regulation,” argues Fairbairn. “We would simply have those regulations imposed on us without having had a chance to influence them.”

Tim Suter, a former Ofcom Partner and now a policy consultant, believes that the UK media industry has benefited greatly from the single-market approach.

He points out that this has enabled a programme licensed in the UK by Ofcom – it has issued more than 600 licences for commercial TV services here – to have access to all the other EU countries.

Leave: if people want programmes, they will buy them – whether the UK is in the EU or not

Following Brexit, the UK would have to renegotiate that kind of access “and it would be by no means certain to me that Europe would be keen, because it’s a principle that is already coming under a lot of strain”.

Compared with some other EU countries, the UK is relatively liberal on a range of broadcasting issues. These include children’s advertising, gambling and alcohol ads, and Russian-­language services. The latter are controversial, for example, when broadcast to the Baltic states.

“I think it’s very hard to imagine that, after all these years, Europe would just buckle given the sheer dominance of the UK industry. It’s a huge political problem for the French,” Suter argues.

He would expect UK producers to face tougher terms – although the overall impact would not be huge, he predicts, after a potential period of confusion.

Simon Spanswick, Chief Executive of the Association for International Broadcasters, agrees that one of the main issues would be the likely need to negotiate a new UK framework to replace the Television Without Frontiers directive.

However, Ofcom and the UK’s terrestrial broadcasters are declining to comment on the effects of Brexit on the television industry in advance of the referendum on 23 June, for fear of being seen to be taking sides.

The silent approach is particularly marked in the case of broadcasters that run news channels.

Remain: Access to the single broadcasting market would be very complicated and it would only take one veto to block

An executive at one such company suggests that there is a general view that access to the European market – particularly for US-based broadcasters – is one of the reasons why the UK has been able to create such a successful global production and broadcasting hub.

“Nothing would happen overnight [following Brexit] but, over time, there could be a diminution. If we were going to be broadcasting into Europe, we would need to think about where we would be based,” says the executive.

He adds that US broadcasters based in London might split their presence between the UK and a country with EU membership. 

Another executive, who works for one of the US majors located in London, notes that there is a general unease about the inevitable uncertainty that Brexit would bring.

“A vote to leave the EU would create uncertainty not just for June, July and August. It would take five years to negotiate something to put in its place,” he says. “Getting access to the single broadcasting market would be very complicated and it would only take one veto to block agreement.”

British programme-makers might not face tariffs on their programme sales but – in the absence of a deal – they would have to fight with US producers for their share of the non-EU quota. This is 50% (but only 40% in France).

Smaller British indies would also lose access to funding from the EU’s Media Programme for co-productions involving two or more countries. 

Sky, like the BBC and Ofcom, is not commenting on the Brexit scenario ahead of the referendum, but it is clear that the pay-TV company would barely be affected by a British exit.

The newly enlarged group runs broadcast services in five EU countries, (the UK, Ireland, Italy, Germany and Austria) and does not trade across borders in the conventional sense. Sky would undoubtedly qualify as an EU company still active in four EU countries following a Brexit.

The reality is that not many executives in the television industry have yet begun to think about the issue, mainly because they think that, on balance, it is unlikely to happen. This is an attitude that could change as we get closer to 23 June.

Scripps Managing Director for the UK and EMEA Phillip Luff, for example, says the company (co-owner of UKTV) is not looking at any plan B at the moment. “We think the impact on Scripps would be minimal because of our multinational approach to structuring our business,” he explains.

There could be at least one short-term benefit of Brexit for the UK industry. It could lift a threat from the Commission’s DSM plans, which could see the end of the traditional way of selling programme rights on a territory-­by-territory basis.

And there is one broadcaster that could privately favour a vote to remain in the EU. Such a referendum outcome might end the cabinet career of Brexit rebel and culture secretary John Whittingdale – and, with it, his ambition to privatise Channel 4.


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