Implications of Brexit on the UK’s AV Sector

Whilst there is a large amount of uncertainty surrounding Brexit, it is possible to look at some of the more obvious implications of Brexit for the Audiovisual (“AV”) sector. We also look at current EU developments which are to be implemented in the near future and which we may therefore by missing out on.

What does EU Membership give our AV sector?

Freedom of Movement

A key principle of EU law is that workers can come and work in the UK without the need for visas or work permits. The UK is an attractive and successful creative hub, and draws on the best talent from around the world, especially the EU.  It is estimated that there are around 2.4 million EU citizens working in the UK, with around 10-20% of the UK’s AV workforce made up by EU citizens. It is unknown what will happen to EU citizens working in the UK post-Brexit, and companies are already experiencing difficulties recruiting EU workers and reassuring their existing EU staff. There has been talk of a transitional period which may see the UK remaining under EU law for 2-5 years after March 2019. This would, in all probability, mean the UK would have the same Freedom of Movement rules during this period.

Digital Single Market

There are various innovations which affect the UK’s AV sector including copyright harmonisation measures, recent proposals to apply the single country copyright clearance regime established by The Satellite and Cable Directive to online transmissions in the EU, and the Content Portability Regulation passed in July 2017 which is to take effect in March 2018. We may well miss out on these.

Audiovisual Media Services Directive (“AVMSD”)

EU Membership has also given the UK the AVMSD and the following key measures:

  • Quotas – the requirement that 50% of content is comprised of European Works and at least 10% is comprised of Independent Productions (25% in the UK).
  • Protection of Minors – this is largely around the Watershed and prohibiting content that might seriously impair the wellbeing of minors.
  • Advertising – regulation both of content and quantity/Sponsorship/Product Placement which was previously prohibited but is now allowed, subject to tight rules.
  • Listed Events – keeping main sporting events on free-to-air television.
  • Freedom of Movement for Broadcast Services – the country of origin principle, (see below).

Country of Origin Principle

This ensures that broadcasting services under the jurisdiction of one Member State are receivable across the EU; no licence is required in the receiving Member States and the Service only has to comply with the regulations of the originating Member State. The UK has done well under this and of the estimated 2,200 broadcast services licensed in the EU, half (1,100) are licensed here by Ofcom. Ofcom says that in turn that half of those (650) are broadcast from the UK to other countries, meaning that the UK has become the world’s leading hub for international broadcasting.

The same freedom of movement principle applies to video on demand, although notably two of the biggest providers are based elsewhere in the EU (Netflix in Holland and Amazon in Luxembourg).

Ireland is making a concerted pitch for this, pointing to the similarities between the UK and Irish licencing regimes and is said to be receiving enquiries from International Broadcasters who are considering re-locating there.

Funding

The Creative Europe Media Programme gave €1.5 billion between 2014 and 2020. Its likely loss would be felt particularly by Welsh and Gaelic language producers.

What are the consequences of no Brexit deal?

Liam Fox recently said: “If we have no deal and we trade on current WTO terms, that’s the basis not only Britain trades with countries like the US, but that the EU trades with the rest of the world in most circumstances. So it’s not exactly a nightmare scenario.”

However, this could be a serious issue for broadcasting as AV services are excluded from WTO free trade agreements because there is a long recognised exception in respect of cultural services. This would mean it would not be captured by any WTO agreement.

However, the UK is a signatory to the Council of Europe Convention on Transfrontier Television 1989 (“CTT”). This is a Convention similar to the ECHR, which is outside the EU. It creates a form of co-operative, but on the grounds of Freedom of Expression rather than with a view to creating a single market. It would therefore not be affected by Brexit and a benefit of the CTT is that by being a signatory, UK programmes would continue to qualify as European Works under the AVMSD. It does however, have certain limitations:

  • 7 Member States are not signatories (although 3 non EU countries are also members);
  • It is rather basic, dating back to 1989, and only applies to Linear services;
  • It does not contain an effective enforcement mechanism so on its own it has no legal basis, more a moral basis;
  • It is arguably moribund as the European Commission now has exclusive competence in relation to such matters even though it is not a party to it.

Going back to what Liam Fox said, a no deal situation may not qualify as a nightmare scenario, but it would be messy and full of uncertainties. If the UK tries to do a deal which is outside the Single Market, there will be lots of challenges, for example, the UK is a net exporter of broadcasting and programmes to Europe, so why would the EU want to give us a good deal if there are little benefits for Member States?

What is in the EU pipeline for the AV sector?

There are current plans to make certain revisions to the AVMSD, though if these do not happen before Brexit then the UK is likely to miss out on these important developments. There is no implementation date as yet and it is still possible that these amendments will come into force before Brexit and therefore would presumably be part of the Great Repeal Act. Here are some of the planned revisions:

  • Aligning Protection of Minors – Non-linear rules will be tightened, ie protective measures will be required for all harmful content, not just that causing serious harm, and linear rules will be reduced, ie content causing serious harm may no longer be prohibited on linear, provided effective access controls are in place.
  • European Works – extending quotas to non-linear: Video on demand services would be required to secure at least 20% of their catalogues from European Works and to ensure adequate prominence of these.
  • Commercial Communications – further liberalisation and increased flexibility.
  • Video Sharing Platforms –Video sharing platforms such as YouTube, Facebook, Instagram and Snapchat will be regulated for the first time (they are currently excluded from existing video on demand regulation under the AVMSD), in two important respects:
    • Harmful Content – Minors will now required to be protected eg by flagging and reporting/parental controls/age verification.
    • Inciting Content – All citizens are to be protected from content inciting hatred.

In other words, be afraid. Be very afraid!

This article was written by Paul Herbert, Partner, Corporate, with assistance from Judith Seifert, Trainee Solicitor.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.