In or out of the EU – the show must go on

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Louise McMurchie,founder of

media regulation and compliance specialists LJM Media Consulting, advises on Ofcom licencsing and provides training and guidance on Ofcom and BCAP Codes. The creative industries make a huge contribution to the UK economy with a significant proportion of UK TV programme formats, estimated to be worth £376m a year, being
sold into

This year turned into quite an eventful British summer. While the UK basked in Mediterranean temperatures and celebrated huge success at Rio 2016, commercial broadcasters and the advertising industry are trying to gauge the likely impact of our referendum decision to leave the European Union (EU). After the initial shock of the Brexit vote, the sector that openly supported the Remain campaign is adjusting to the uncertainty
of the situation and potential loss of revenue.
Political reshuffles and a new Secretary of State for Culture, Media and Sport make it impossible to know how government policy may affect the creative industries and the digital economy in the coming years.

The creative industries make a huge contribution to the UK economy with a significant proportion of UK TV programme formats, estimated to be worth £376m a year, being sold into the EU zone. While some independent producers perceive Brexit as removing EU bureaucracy, the old adage “be careful what you wish for” may prove apt.
When it comes to regulation the UK is known to be quite zealous, be it in food standards or health and safety regulation, but in the context of broadcasting regulation the UK is considered to be quite liberal as a licensing authority and regulator.

“The creative industries make a huge contribution to the UK economy with
a significant proportion of UK TV programme formats, estimated to
be worth £376m a year, being sold into the EU zone”

OFCOM

OFCOM, the UK communications regulator, licenses several hundred TV channels to produce a diverse ecology of TV for the UK population, including many Asian and ethnic channels. Securing a broadcasting licence in the UK allows TV channels access to the rest of the EU. Like it or loathe it, the EU has created a single market for TV services underpinned by an EU Directive designed to ensure fair competition and minimum standards of consumer protection.
The Directive, the Audio Visual Media Services Directive or AVMSD, sets minimum standards across the EU zone for advertising quotas, European production quotas, independent production quotas, editorial standards and rules for sponsorship and product placement. Member states are allowed to exceed the EU rules and, in the case of product placement, the UK and OFCOM imposed more restrictions on product placement than those of the AVMSD when this form of commercial communication was introduced to TV in 2011. This means that certain categories of products, such as alcohol, are prohibited from product placement in UK-produced programmes but not so on channels licensed in our European partners.

Single digital market

One of the biggest concerns for industry in the light of Brexit is that once we leave the EU we will no longer be able to influence new EU regulations affecting the single digital market and our UK-produced content will not qualify as European productions for the purposes of the European production quotas.
Some may say quality will win through and people will buy the programmes they want whether or not they are made in the UK and outside the EU zone. However, let’s not overlook the potential negative impact of producers and broadcasters no longer having access to Creative Europe, the EU fund supporting cultural and audio-visual projects, or the loss of co-production investment from other European broadcasters.

However, until Article 50 of the Lisbon Treaty is activated and the process of exiting complete, we remain part of the EU for a good while yet and are still able to influence EU regulations. For broadcasting, the timing is opportune as the AVMSD is
under review to create a “Media Framework for the 21st Century”. The proposal, which was adopted by the European Commission in May 2016, aims to be more flexible on commercial communications which is good news for advertisers and brand owners wanting to get exposure via TV sponsorship and product placement.

It proposes to maintain a limit on advertising time but will give broadcasters more flexibility as to when advertisements can be shown. This could mean advertising is limited to 20% (12 minutes per hour) between 07.00 and 23.00 hours but with no limits outside these hours, possibly enabling new forms of commercial presentation in downtime viewing hours. Of additional interest to brand owners is the proposal to allow promotional messages
in sponsor credits (thus far prohibited) and to remove the undue prominence rule currently applied to product placement. As product placement has struggled to establish itself as a meaningful revenue stream for broadcasters, these proposals provide some welcome news for the advertising and broadcastings sectors.

The new Culture Secretary, Karen Bradley MP, has not made any announcements on media policy at the time of writing but, as a sector, we should lobby Government to support and embrace the AVMS proposals as they could provide a welcome respite for the commercial television sector at a time of uncertainty. So whilst we face uncharted waters in the years ahead, let’s remember the sunshine and the Mediterranean temperatures and continue to
engage with our EU partners to secure the best opportunities for our creative industries.

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