Professor Alison Harcourt of the University of Exeter explains the impact of Britain leaving the European Union on the television and video on demand market, and the implications of UK government proposals for changes to how the sector is regulated.
Prior to Brexit, no fewer than 1523 UK-based television channels and 515 on-demand services targeted other EU countries which represented 65% and 20% share of the EU market respectively (EAO, 2018). In 2018, there were 4,106 broadcasting channels licensed by Ofcom in the UK, 1,340 of which solely targeted other Member States, including Discovery, Viacom, Sony, the Modern Times Group, 21st Century Fox, AMC Networks, Time Warner, Universal Studios and AETN Disney. The UK was also home to international channels such as Al Jazeera, Bloomberg TV Europe, CNBC Europe and CNN International. However, by the end of 2020, UK based channels only represented 10% of the European market.
Audiovisual services were excluded from non-discriminatory treatment and commercial considerations in the EU–UK Trade and Cooperation Agreement. This meant that UK licenses for broadcasting and on demand services granted by Ofcom in the UK could only continue to broadcast to EU Member States until December 31, 2020. The UK Withdrawal Act notices and Department for Culture, Media and Sport (DCMS) recommended that broadcasters continue broadcast to Europe under the 1989 Convention on Transfrontier Television (ECTT) which was agreed by the Council of Europe. However, this option is limited as a number of states (Belgium, Denmark, Greece, Ireland, Luxembourg, the Netherlands and Sweden) have not signed the ECTT, it does not cover video on demand services, and the EU considers AVMSD to take precedence over the ECTT. In parallel, the European Commission is drawing up plans to reduce UK content by removing it from the European works requirement in the AVMSD.
Complex licensing system
UK based services currently operate under a complex licensing system wherein multiple licences are needed for domestic broadcasting services from Ofcom and separate licences from the respective regulatory bodies across Europe in the 22 states receiving broadcasts from the UK who have signed the ECTT. VOD services are however not covered under the ECTT, so companies providing services must be headquartered within an EU state and adhere to the 2018 Audiovisual Services Directive (AVMSD).
Due to this complexity, by 2022, most cross border broadcasters had left the UK for licences abroad. AMC, BBC Studios, Discovery, Disney, Sony and Viacom relinquished their Ofcom licences in April 2018. Viacom International Media Networks obtained licences in the Netherlands and MTV, MTV Hits, the Paramount Channel, BET, Nickelodeon, Nickelodeon Junior, Nickelodeon Teen and Paramount Channel in France. VIMN channels for Denmark have been operating under a Dutch licence from 2018. In November 2018, Turner attained licences in Munich for the television channels TCM Ireland/Malta, TCM Greece, TCM France, WBTV France, TNT Poland and TNT Romania. In November 2018, WarnerMedia’s Turner applied for Munich licences for all of its channels including CNN. In December 2018, NBCUniversal procured licenses for Munich licences for its DIVA, Entertainment Television (E!), Entertainment (2x), 13th Street and Syfy channels.
In terms of on-demand services, in 2019 Discovery moved its operations to Netherlands. Amazon moved jurisdiction for its Amazon Prime Video service to Germany in 2020 registering with the Bavarian media authority, BLM. To continue operating across Europe, the BBC secured licences in the Netherlands for BBC First, BBC Entertainment, BBC Brit and BBC Earth; Luxembourg for BBC Global News, BBC One, BBC Two, BBC Four, CBBC and CBeebies for distribution in the Netherlands and Belgium from 2021. The last operator to relocate licences away from the UK was Stingray which relocated to Germany at the end of 2021.
Within the UK, Digital Television Programme Services (DTPS) and Digital Television Additional Services (DTAS) received from ECTT states need only apply for Ofcom licences if services are included in electronic programme guides (EPGs). States which have not signed the ECTT (Belgium, Denmark, Greece, Ireland, Luxembourg, the Netherlands and Sweden) need licences for all DT services.
The UK 2018 Audiovisual Media Services extended European audiovisual rules extended to video-sharing platforms and user-generated videos shared on social media platforms when providing audiovisual content. VOD services from non-ECTT signatory states are however not required to obtain an Ofcom licence. This includes streaming services such as Netflix (based in the Netherlands) and Amazon (Germany). In a 2021 communication, Ofcom stated that it “will only regulate a service if both its head office and editorial decision-making capacity are based in the UK”.
The White Paper Up Next – The Government’s vision for the broadcasting sector published by DCMS in April 2022 proposes that online streaming services such as Amazon Prime Video, Netflix and Disney+ be brought under Ofcom jurisdiction and subject to the Broadcasting Code. The White Paper proposes fines of up to £250,000, or an amount up to 5% of an organisation’s revenue, for non-compliance.
The consultation leading up to the proposal recognised that streaming services with large audience share “including Netflix and Apple TV+, are not regulated in the UK at all” even though 75% of UK households subscribe to at least one provider. The majority of respondents to the consultation leading up to the proposal submissions did not support the proposals for Broadcasting Code compliance. What is expected is a new Broadcasting Code specifically designed for on-demand services which will run in parallel. The on-demand services Code is expected to be lighter touch than the existing Code for traditional broadcasters. Overall, this presents a loss for the UK not only in terms of company exodus but in jurisdiction given that UK citizens are receiving content from a large number of Europe-based broadcasting and platform services which are not regulated in the UK.
This article reflects the views of the author and not those of the Media@LSE blog nor of the London School of Economics and Political Science.