Brussels, Brexit and the Future of Television Channels

By Philip Frey

On June 23rd 2016, the world experienced a major earthquake. Not a seismic event, but among many, a political and economic earthquake. The aftershocks of Brexit are still been felt, with the departure date of the United Kingdom from the European Union less than a year away. Everyone involved and influenced by this earthquake has put a big red cross on this date, March 29th 2019, which is the date of the divorce between the UK and the EU. Try to imagine all the commitments the UK has made to the EU, such as implementing more than 100,000 pages of legislation and billions of euros worth of contributions to the EU. After this date, these 100,000 pages of legislation will in theory be null in the UK, the EU will delete or cross off the UK from all these pages and the UK will no longer be obliged to contribute to the EU budget, except for their already promised commitments. However, negotiations between the EU and the UK to limit the impact for each party have been ongoing since 2016. However, the British Chancellor Philip Hammond seemed to be quite optimistic about settling a good deal off with the EU at the closing ceremony at the European Business Summit. As he said: “Even though we are leaving EU, we are still Europeans”. He did also mention that the UK will not leave Eurovision, which is broadcasted to the entire Europe, plus Australia!

Try also to imagine the cultural influence the UK has in the different Member States. From movies, music, sports and others. Who has not watched the tv programmes: “Top Gear”, “Mr. Bean”, “The X Factor or “Britain’s Got Talent”? Others have maybe watched a Premier League football game. So why are these programmes and sport transmissions important to address at the European Business Summit? As the name of the summit suggests, there is a lot of business in the UK TV industry and the TV industry in the EU. For each programme, there are rights connected to either the producer, the distributor or transmitter of those programmes. Among the 100.000 pages EU legislation, some of them are protecting and granting certain rights to right holders of these programmes. This is where the big business is placed within. Country of origin, a term used in regard to the single market in order to clarify which member state legislation applies to which service provider. For example, a business based and established in the UK offers TV programmes to Germany will be governed by the laws in the UK. The Single Market gives access to all the markets in the EU member states. The country of origin has in this regard been a good business for the broadcasting industry in the UK, such as taxation wise.

What does Brexit has to do with anything?
Brexit has the consequence that these channels will not be able to operate across EU member states anymore. Brexit can in this situation pose problems for cross-border broadcasters, who are based in the UK. Broadcasters who wish to continue operating in the EU will need to have their editorial decisions and at least a significant part of their workforce in an EU member state. This means that they would have to either move their headquarters to a EU member state, create a hub in a member state or licence their rights out to third parties.

Whether or not the popular British television programmes will have an impact on the Brexit negotiations, there is a clear sense of unease among the UK’s production and creative industry. The main question still remains. Would the EU decide to impose tariffs on UK film and TV productions in order to promote and boost its own production? Today, there are more than 4,600 TV channels established in the main EU markets. The UK is the largest exporter, with more than 1,400 established  TV channels of which 1,000 are exported to the EU and other countries.

Some of the concerns addressed at the meeting were, whether the high skilled editors, technicians and experienced crew members in one of the world’s largest production hubs, would be willing to move to the EU or whether they would stay after Brexit. There is no doubt that the EU would struggle to compete with the UK, if they were to stay there after Brexit, since it takes many years to train specialized workers within the film and TV production. However, the market can open for competition in the EU and who knows, maybe in 5-10 years we will have a similar popular German version of James Bond or a Swedish version of “Sweden’s got Talent”. On the other hand, the restriction on the free movement of workers can limit the amount of non-UK talented and skilled workers to seek a job within the film and tv production industry.  I had the chance to ask one of the speakers, a spokesperson from the British Chamber of Commerce to the EU, about the fact that more than 600 non-British channels are licenced by the UK communications regulator Ofcom and then broadcasted freely to all the member states of the EU, which is a £5 billion a year business. The question I asked was, what would happen if these foreign channels had to find another ”country of origin” in one of the other EU member states? The answer was clear: the UK will remain to be the biggest production and broadcasting hub in Europe. I also asked whether the option of licencing would result in higher prices for the end consumer. I received a firm answer: “I don’t see the end users will be affected”.

It is possible that a London-based international broadcaster will have to get new broadcasting licences within the EU. It is far from clear just how large such a presence will be and how big the Brexit impact will be. Philip Hammond’s optimistic attitude towards the ongoing negotiations can hardly justify a positive impact on the UK based broadcasters and tv and film production industry in the UK.

 Philip is a recent law graduate from Paris with a specialization in International Business Law, combined with a Business programme at INSEAD Business School. He is currently working as a Blue Book Trainee at the European Commission in their Legal Service.