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Senior media and entertainment industry executives are concerned about the possible impact of Brexit on their companies’ business, according to a recent survey by law firm DLA Piper.
Its report, based on an international survey of 246 in-house counsel and senior media executives and a series of interviews, found that 69 percent of U.K.-based respondents had concerns about the impact of Britain’s exit from the European Union next year.
Among other things, respondents wondered if a potential so-called hard Brexit, in which the U.K. would give up full access to the EU’s single market to have full control over its borders, “could mean the end of an era for binge-watching,” according to a representative.
Of the 60 percent Britain-based respondents with concerns, 40 percent said that their main concern was access to the single market, while 30 percent said their priority was “clarity around how licensing models will be affected across territories.” And 15 percent were concerned about a lack of clarity around the judicial system.
“The report comes at a time when media companies are announcing record levels of investment into online content to distribute outside their home markets,” DLA Piper highlighted in a summary of the findings. “With 82 percent of all respondents to the survey stating that over-the-top (OTT) content was a major growth area for their business, it is clear that the Brexit process will impact the entire industry, both those importing to and exporting from the U.K.”
Under a hard Brexit, there would be no so-called passporting of services governed by U.K. media regulator Ofcom into continental Europe as is currently the case, including on-demand content developed specifically as add-on services beyond linear scheduled broadcasting.
“Alternatively, companies will need to set up operations sufficient to comply with the [rules] in another EU member state to ‘passport’ their services throughout the EU,” DLA Piper said. “While several broadcasters have taken steps to do so, the process requires significant investment.”
According to Ofcom, there are 2,200 broadcasting licenses granted in the U.K., of which about a quarter are for non-domestic channels that air from the U.K. into other countries. There are also a number of channels that broadcast into the U.K. from other EU countries, including France, Germany and the Netherlands, and depend on the U.K.’s recognition of their home market licenses.
“The message which emerged, loud and clear, from our research is that many media companies in the U.K. and elsewhere think a hard Brexit may cause significant immediate damage, undermining the harmonization the European Digital Single Market Strategy had intended for the media and entertainment sector,” said Nick Fitzpatrick, partner and global co-chair of the media, sport and entertainment sector at DLA Piper. “Although the EU Withdrawal Bill will convert many European laws into U.K. law, there are likely to be a number of areas where previously harmonized laws may ultimately diverge, impacting broadcasters across the board — from advertising, to listed events to on-demand services.”
Added Fitzpatrick: “The boom in streaming platforms and the corresponding content production arms race has been nothing short of a revolution in the media industry, transforming the landscape, expanding competition and globalizing media platforms. Consumers around the world will continue to demand exactly what media they want to watch, exactly when they want to watch it. Media companies will have to work closely with regulators to make sure they get the deal they want.”
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