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What is the UK's decision to leave the EU likely to mean for the UK audio-visual sector?

24/06/2016

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United Kingdom

As a result of the Referendum, we must now focus on the direction of travel with the UK leaving the EU.

Overview

As a result of the Referendum, we must now focus on the direction of travel with the UK leaving the EU.  It is not clear what that direction of travel will be, but it is likely (after a period of time) to involve a new trading relationship between the UK and the EU (perhaps along the lines of existing EU relationships with non-EU countries, or perhaps sui generis).  We think it unlikely that the end result will be a "clean break" with no ongoing relationship with the EU other than under general international trade agreements.

Absent a "clean break", our view is that any new trading arrangement agreed with the EU is likely to involve some requirement that EU standards/regulations are adhered to where they are relevant to trade between the UK and the EU.

The UK will remain a member of the EU for some time to come, until the arrangements for its departure are concluded, but there can be no doubt that its ability to influence EU initiatives will be heavily diminished.

Copyright

We believe that the EU is likely to press ahead with its proposed comprehensive review of copyright.  Whilst the UK will have reduced influence (as a current but departing member) and then no influence (as a non-member, except to the extent it has influence under any new trading arrangement) in this process, we believe that any new trading arrangement agreed with the EU is likely to involve a requirement that UK copyright law be compliant in at least some regards.  Furthermore, even as a non-member, the UK may regard it as sensible to align its position (e.g. in relation to copyright exceptions) to a harmonised EU copyright regime.  Leaving any EU trading arrangement aside, the UK will continue to be bound by its international obligations as a member of WIPO and as a signatory to the Berne Convention.

Audio-visual media services

The EU has announced various measures following a review of the Audiovisual Media Services Directive.  The principle of "country of origin" (where a service is regulated in the EU state where it originates and then is available unrestricted in any other EU member state) has broadly been retained, but with some additional protections for the "country of destination" (i.e. the EU State(s) that the service is targeting); particularly augmented "take down" grounds and financial levies for some services.  The devil of some of these measures will be in the detail; the UK will have reduced influence (as a current but departing member) and then no influence (as a non-member, except to the extent it has influence under any new trading arrangement) in the process of refining these measures.  Furthermore, audiovisual service providers based in the UK but providing services to audiences in continuing member states will need to monitor closely the potential impact of these changes and their impact on services whose UK broadcast hub will ultimately be outside the EU.

European nationality

The EU rules as set out in the Audiovisual Media Services Directive require EU service providers to comply with quotas for European programming.   As a departing member, it does not follow that in the future UK originated content would so qualify and so, unless any new trading arrangement agreed with the EU preserves this qualification, UK content may not contribute to the quota and might, therefore, lose value in the European market.

State Aid: UK support for creative industries

The EU has historically restricted, through its State Aid rules, the level at which the UK (and other member states) can provide subsidised support (eg through tax credits) for the audiovisual sector.  Whilst in theory, the UK would be freed from these restrictions, we do not expect this to change as we believe that, in practice, any new trading arrangement agreed with the EU is likely to involve a requirement that UK be compliant with EU State Aid parameters.

European support for creative industries

Whilst any new trade arrangement may allow the UK audiovisual sector some continuing access to EU-wide support for the creative industries, there must be a danger that the degree of access will be diminished or lost as part of the exit process.

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