Britain awoke to a changed political landscape this morning, with 53 per cent of the electorate voting to remove the nation from the European Union. The closely-fought contest has left many in the Remain camp stunned and disappointed, with much more immediate shockwaves reverberating through UK’s financial industry.
The London stock market plunged in the early hours of the morning as the referendum results filtered through, and the FTSE 100 index fell more than eight per cent before regaining some ground by mid-morning.
Stocks in media and entertainment have been hit by the news: ITV was down 16.8 per cent at £1.823 this morning, after earlier losing more than 30 per cent and dropping to a 52-week low of £1.410, according to the Hollywood Reporter. Sky’s stock was also down 7.7 per cent at £8.245, after earlier dropping 11.8 per cent, and shares of Pinewood Group fell 5.7 per cent.
The ramifications of the decision will undoubtedly be felt throughout the broadcast and media markets. These sectors have gained from EU funding, as well as having been able to take advantage of the framework the body offered, in terms of ease of travel, dialogue, and cooperation across countries. Creative Europe, for example, has provided €1.4 billion to support the cultural, creative and audiovisual sectors, with training programmes, TV productions, and community projects among the hundreds of UK activities to have benefitted.
Many of the UK’s media and entertainment sectors currently generate over 50 per cent of revenue from exports to Europe, and as result, predicted Jean-Benoit Berty, EY’s UK technology, media and telecommunications leader, “it will be important to look out for any changes to trade agreements in these areas.” He told TVBEurope this morning: “It remains to be seen whether global media powerhouses with European or international operations based in the UK will relocate if it becomes more cost effective to operate within the EU.”
Mohammed Hamza, senior analyst, media and communications at SNL Kagan, an offering of S&P Global Market Intelligence, echoed this sentiment of uncertainty: “Are some of the major companies likely to relocate to the EU? What happens to existing relationships for content producers and distributors? And will the fundamental structures of lower tariffs and taxes, unrestricted collaboration (co-production), access to wider pools of funding and to talent that many organisations in the media space are built on be undermined?
“Consumer expectation is everything to an economy, and especially a recovering one at that. The uncertainty over the impact of Brexit will not help maintain confidence in the economy, and the biggest concern and most likely impact will likely be on employment.
“The uncertainty on how the creative industry can resolve these issues will last as long as it takes for the UK to thrash out new trade deals – long enough to steer vital investments away in the short term.”
Speaking to Variety, Michael Ryan, chairman of the Independent Film and Television Alliance, described the UK’s decision to leave the EU as “a major blow to the UK film and TV industry.” He continued, “Producing films and television programmes is a very expensive and very risky business and certainty about the rules affecting the business is a must.
"This decision has just blown up our foundation: as of today, we no longer know how our relationships with co-producers, financiers and distributors will work, whether new taxes will be dropped on our activities in the rest of Europe, or how production financing is going to be raised without any input from European funding agencies.”
TVBEurope 2020 will offer a timely platform to further debate the implications of the UK’s annexation from the EU. Among those taking part will be Russell Grute, managing partner at independent advisor Broadcast Innovations, who spoke with TVBEurope this morning. “The UK works hard to earn its position as a major player in global media content and technology,” he said. “Sadly, the significant business risks and rewards for the whole European media market didn’t feature prominently enough during the referendum discussions. The UK and Europe’s broadcasters, media players and of course its technology developers and manufacturers now face increased threat on a global scale.
“Thanks to the headline grabbing debate and the simplistic result on 23 June, even harder work is now required for all broadcasters and media technology manufactures to attract investment and continue innovating.”
I attended a conference this month in Italy hosted by the European Digital Forum, which works in collaboration with the European Commission’s Startup Europe initiative. Representatives from across the EU were in attendance and despite language barriers, the event offered a forum for discussing common, continent-wide challenges and opportunities in the broadcast and media industries. Martina Dlabajova, a Czech MEP, spoke at the event about the Parliament’s work and the need to have “harmonisation at a European level.” The disappointing result this morning will undoubtedly strike this a destabilising and long-lasting blow.