Hard Brexit: A turn-off for TV

Hard Brexit: A turn-off for TV

By Maggie Brown,
Tuesday, 25th October 2016
'Brexit Bring It On' at the London Conference (Credit: Paul Hampartsoumian)
'Brexit Bring It On' at the London Conference (Credit: Paul Hampartsoumian)
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Maggie Brown hears why broadcasters need to raise their voices in unison when talks to exit the EU begin in earnest

Lord Mandelson, a self-confessed “heartbroken European”, set the tone of this debate. Unpicking 40 years of EU membership was complicated, to say the least. He declared: “Brexit is the most complex policy exercise mounted in peace time. Transitioning Britain out of its current merger with 27 other economies is a massive task and it is going to take many years.” 

The advice of the former Labour cabinet minister and European commissioner boiled down to this: “What you as an industry must first do is take a view on what outcome best serves your needs”. 

Next, lobby very hard and speak with one voice to win the attention of government. This could be the deciding factor in whether “your industry is going to be high up in the pecking order, or too low down for your industry to be addressed”. 

Three months after the referendum result that too few had prepared for, a central question united the speakers: it is not clear how hard or soft the Government will be on the issue of immigration. 

That uncertainty is expected to linger, since Article 50 is not expected to be triggered until early next year. “Look, we haven’t the faintest idea. The Government is still negotiating with itself,” said Mandelson. 

In a terse video introduction, Conservative MP Damian Collins, who backed Remain and sits on the House of Commons Culture, Media and Sport Committee, said only that “things will be different”. 

Pressed by session chair Krishnan Guru-Murthy to predict whether we would end up with a “hard Brexit”, Mandelson replied: “More likely than not. But not inevitably so if, as time goes on, the UK side and EU side realise that mutually assured destruction is not a sensible outcome of this divorce/demerger, and that they have to find something more proportionate and middle-of-the-road to accommodate both sides.” 

He added: “The Government will have to choose whether it goes the doctrinaire route – a clean, quick break, as firmly as possible… or the more pragmatic approach, which I favour, which could result in our creating an entirely new, positive, co-operative relationship spanning all areas of economic activity. 

“Or is the Government going to say that there is only one show in town, it is freedom of movement [and], in my view, taking Britain to hell in a handcart.”

Krishnan Guru-Murthy, Rt Hon the Lord Mandelson, Josh Berger and John McVay (Credit: Paul Hampartsoumian)

The next speaker, Josh Berger, ­President and Managing Director of Warner Bros, UK, Ireland and Spain, outlined his areas of concern.  

“There are three.… The first is talent and freedom of movement, and the ability of the creative industries to attract world-class talent, whether from Europe or abroad. 

“The reason that our creative industries are so strong today is that we attract talent from all over the world… particularly from Europe, to visual-­effects and animation. 

“So, the certainty that they can work here and are not going to be subject to possible visa restrictions is critical. That will be part of the negotiations. 

“Whether hard Brexit means that the result of the negotiation [is that] it is going to be very hard for us to attract Europeans to work here.… If that happens, it would not be positive for the creative industries. Hopefully, we will find a better solution and common sense will prevail.” 

Wearing his broadcaster hat, Berger added: “The ‘country of origin’ (see box) is the other major issue facing us.” 

He pointed out that half of the 1,100 TV channels broadcasting across Europe are located and licensed in the UK under Ofcom’s regulatory regime. 

They may have to move following Brexit if a suitable licensing framework cannot be agreed. 

“If those broadcasters have to move to the Continent to license their broadcasters through an acceptable European agency – and this is conceivable – it is [the second] issue,” said Berger. Were that to happen, staff would need to be relocated. 

The Warner chief’s third concern was funding, specifically the £2m paid out annually under the Creative Europe scheme. This went directly to qualifying British productions – Ken Loach’s films were named as recipients. 

“Again, if we stay in as part of Creative Europe, we will continue to enjoy that, but that will be hard to do [under hard Brexit], so I suggest that the Government will have to continue to spend those monies. 

“They haven’t said anything about it; I am not sure whether they have got their heads around it. [We have to] make sure that the people who go in to negotiate… are fully briefed. It is one of the hot topics.”

“It is hard to see very clear opportunities unless we make a sensible deal with the Europeans"

Mandelson commented: “Welcome to the world of Brexit. The Government has to decide over how many areas, and to what extent, is it going to try to negotiate agreements that maintain the present trade links between Britain and the EU, and to what extent it is prepared to take on the cost of new conditions.” These could, in theory, be met by the savings from quitting membership. 

Pact CEO John McVay explained that he was preoccupied with compiling a report on what the creative industries wanted from Brexit. 

The report, commissioned by the Department for Culture, Media and Sport and (newly named) Department for International Trade, would be sent to their respective secretaries of state in October (see box). 

Asked about the UK’s loss of influence in shaping moves towards a single digital marketplace, Mandelson said Britain was already being marginalised. The Audiovisual Media Services Directive, he said, was currently being revamped, and Germany was pushing it strongly in the European Parliament. 

McVay, however, said that although “most of the directive is a threat to our territorial licensing, I am not sure our Government had much of a voice in the first place”.  

He added that it had also done very little to oppose recently published new country-of-origin guidelines, which will extend free video-on-demand services. In effect, these rules give European and UK broadcasters the right to cross borders with VoD services and reduce the value that UK content owners get by selling rights by territory. 

“This is cross-border access, which they are doing through the back door,” said McVay. “A broadcaster in Germany can extend its service to Austria, under these rules, without having to seek a local licence. That could damage our sales to Europe. I fear that, because of the hiatus around Brexit, the UK is not being seen as the biggest player.”  

McVay revealed that he was chairing the UK Digital Single Market lobby group, to take the argument to Europe, because it threatens the way producers fund their content.

"China is a massive opportunity"

In the final stages of the session, the three panellists were asked if they saw any advantages to Brexit through freedom from regulations, including advertising minutage.  

Berger replied: “It is hard to see very clear opportunities unless we make a sensible deal with the Europeans. If we make a bad deal, I have difficulty seeing how the markets outside the EU are going to soak up the loss of our biggest trading partners. 

“The only potential caveats to that: China is a massive opportunity, and, if it forces us to look for other markets, we may be more aggressive, arriving at better co-production deals.” 

In the interests of fairness, he pointed to the optimistic – if lonely – views of Mathias Döpfner, CEO of the Axel Springer publishing group, who thinks that entrepreneurial Britain will fare better than Europe without Britain. 

McVay also sounded a positive note: “We are trading globally. The world is open to us, it is up to us to redesign how we can come up with better ways that are not subject to European bureaucrats.” 

There could be virtue in the UK Government funding schemes directly to producers and boosting the home market. He pointed out that the UK Government is rethinking how to restructure support for exports. The broadcasting industry “should be planning for this now, so that when we do get to the point, we are fit for purpose.” 

Mandelson reiterated his advice: “The problem of this industry is that it is not properly on the radar. [Unlike] manufacturing, services, financial or legal, they don’t know where to put your product.  

“Work out your tactics, your vital interest to this country. You can’t be relegated. And, in the hierarchy of negotiations, get the Government batting for you among thousands of negotiations. You are not there yet, in my view.” 

In a contribution from the floor, Daniel Toole, media and entertainment industry leader, Europe, for IBM Global Business Services, said that the prospect of five to seven years of Brexit negotiations was simply far too long. 

The panellists were: Josh Berger CBE, President and Managing Director, Warner Bros UK, Ireland and Spain; The Rt Hon the Lord Mandelson, Chair, Global Counsel; and John McVay, Chief Executive, Pact. The session was chaired by Krishnan Guru-Murthy, Channel 4 News, and produced by Dan Brooke, with VT by ITN.


What worries the creatives?

Delegates were asked to rank their top areas of concern about Brexit 

45% believed that the ability of EU citizens to continue to work and live in the UK, with the same freedom for UK citizens across Europe, should be the top priority in forthcoming Brexit negotiations. 

16% chose tariff-free trade with the EU single market for goods and services. 

14% picked maintenance of the ‘country of origin’ principle, which allows UK broadcasters to provide services across the EU under a single regulatory Ofcom regime. 

11% identified the need for UK content to continue qualifying as European for the purposes of EU production quotas.