Brexit impacts the media industry: "We need to settle and see what happens"
The most volatile day in Europe for decades will have unknown repercussions. Here's our first look at how it might affect the media tech sector
We all know the UK has voted to leave the European Union - and Prime Minister David Cameron will step down. But how this upheaval will impact business, let alone the volatile TV and media sector, is anyone's guess.
During the run up to the UK referendum, some suggested that renegotation of trade deals might improve business in the UK and encourage better business relations with Europe. At this writing, however, the value of a number of currencies, especially the pound, have fallen massively overnight, and there has been a dramatic drop in FTSE 100. Their recovery is not likely to be as rapid.
Media company stocks have taken a particularly bad hit, with The Hollywood Reporter observing that ITV stock, the worst affected, was down 16.8 percent as of 9:30am London time.
"A major blow to the industry"
Michael Ryan, chairman of the Independent Film & Television Alliance, was quoted in The Reporter: "The decision to exit the European Union is a major blow to the UK film and TV industry. 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. The UK creative sector has been a strong and vibrant contributor to the economy - this is likely to be devastating for us."
A short term negative economic impact had been widely predicted as a result of a leave vote. But how to negotiate that impact is an open question.
No doubt there will be less fluid capital for the short term, as a result of the sudden shock, which might result in a slowdown of new technology adoption as well as greater caution in broadcasters, production companies and post houses making any non-essential purchases. There is likely to be some slowdown too in production, due to the economic dip the referendum has instigated and due to ongoing uncertainties about how production financing will change - ie, it's less likely you're going to get funding a project, if you can't guarantee what the terms of its distribution will be.
"Few short term impacts"
Alla Salehian, founder and CEO of TIMA (The International Media Associates), has built a thriving business on being an international news provider. Last year the company opened its own production arm. Salehian, reminded TV Tech Europe that though there might be some initial shock at the vote, the referendum decision would take years to come to fruition.
"Our newrooms are running flat out today. Broadcasters are quite anxious and concerned and wondering what will be happening next. It’s not just a European story. It’s a global story. If the vote had gone the other way, it would have been business of usual. This however is completely different.
"How it will affect business is a difficult question to answer. London is seen as a major media and broadcast hub. I personally don’t think that’s going to change. In the short term, there’ll be some confusion, but I think things will stabilise in the medium term. And the negotiations (which will begin when a new prime minister is elected in October) will take years. We’ll go back to business as usual until the Article 50 rules for exit are initiated. Then there will be a minimum two years time frame, maybe even three or more. Within that time frame we will still be part of the EU, and we will still be doing things as we are doing them now. The long term impact will depend on the outcome of those negotiations, but I don’t see any major short term impacts to how business is done."
"We need to settle"
Neil Hatton, chief executive of the UK Screen Association, also urges the industry not to jump to conclusions about the effects of the referendum: "The UK is going to continue to be an attractive destination for people to bring in investment for productions. We have great talent, we have great infrastructure, and we have the creative sector tax credits. Those tax credits are written into UK law, not EU law. We have a tax credit for film production – 25% rebate against 80% of the spend in the UK - for film and high-end TV.
"It’s too early to say how the volatility in the markets might affect the industry. A lot of that is based on knee jerk reactions. We need to settle and see what happens. One thing is our exports are now more competitive because of the drop in the pound against the dollar - ultimately that does make us more competitive. But that is in the short term. There's obviously a lot of political turmoil now, and we want to see how things play out."
Losing a global outlook
"Our clients are currently mostly in the UK and North America, so this result doesn't affect us directly in the short term," said Stephen Streater, founder of cloud editing company Forbidden Technologies. Streater was concerned that losing the UK's international vision could have a negative impact .
"In the longer term, the EU will lose the UK's outward-looking influence and could become more insular and less global in outlook. This could also impact English-language programming somewhat.
"Production itself is moving to the cloud, and the UK infrastructure is excellent. In an industry where talent likes to concentrate, London's cosmopolitan creative environment is still the best place. And the UK's lead in services (which were never covered by the European Single Market) will still continue. London shows every sign of continuing to attract global talent - including outside the EU, and even from Asia where future world growth lies."
The view from Europe
Continental media vendors and suppliers had mixed feelings about the referendum. Those we spoke to didn't foresee any dramatic alterations to the way business would be conducted, but pointed to more long-term effects.
Peter Poers, managing director of German vendor Jünger Audio, anticipated more impact on British businesses than European ones: "I don't feel like we need to worry too much - especially our company, as we are suppliers in a field that shouldn't be subject to too many negative effects.
"But for the British professional audio manufacturers it might be worse, since one of the ways to survive in a challenging and shrinking business arena is to access the huge size and potential of the integrated European market.
"Brexit will get wide support if it really does lead to some real positive economic impact. But I think the real effect will be quite different. My feeling is that what has driven the decision is an idea that there are too many foreigners in UK as a result of being member of EC. But with the UK being one of the important societies the world, this is not going to change."
Jan Eveleens, CEO at Dutch broadcast network infrastructure company Axon, sent an email to staff addressing the referendum:
"...On the business operational side I expect very few actual changes or impacts, certainly not initially. What we will see probably after some time is that we will need to start doing customs procedures again for goods in and out of the UK. That will be a nuisance and will probably mean that ‘next day delivery’ in the UK is going to be a thing of the past. But we have ample experience to export to other countries outside the EU, so it will not be more than some additional handling and paperwork (as I said, a nuisance). There is also the (remote) possibility that there will be import taxes between UK and EU, but I seriously doubt this will happen for the type of products we are making any time soon (if ever)."
Another point of view offered by one high-profile figure in the media tech industry was: "What a f*****g nightmare."