The recent EU referendum has induced considerable questioning, even mild panic, from many in the cultural/creative sectors fearing the result may adversely impact the UK’s world-beating position.
Screen Daily reported that the EU referendum result is “devastating” for UK film and TV, C21 reported that the UK creative sector is to get Brexit support, and the BBC reported that acclaimed drama series Hinterland might not survive Brexit. Is the UK creative sector really going to be deeply troubled by Brexit (whatever that may actually mean)?
Martin Sorrell has predicted a tough transition for the UK advertising industry and the content creators that it supports. The Brexit result saw advertising-led UK businesses suffer immediate falls in share prices – ITV down 22%, Sky down 12%, WPP down 7%, Trinity Mirror down 20%. Most of these falls have since recovered – exceptions being ITV and Trinity Mirror who have the most exposure to UK-based advertising revenues.
ITV is particularly challenged by any advertising downturn with its mainly fixed cost base and advertising as its dominant revenue source. Channel 4 is similarly challenged, and as a result looks like it might now be safe from privatisation – a Brexit bonus?
A significant advertising downturn will result in a very real impact on TV content commissioning as falls in advertising revenues flow straight to the bottom line of important funders of UK content – ITV and Channel 4 in particular – challenging the extent to which they can invest in new content. Some of this TV content exports extremely well – especially in the drama, factual and kids genres, adding importance to the need effective funding. While exchange rate impacts will mean ex-UK content revenues will be higher when translated to sterling, there is nowhere enough exportable content coming out of C4/ITV for such exchange benefits to offset the potential advertising falls.
The impact on UK and European TV co-productions is expected to be negative due to uncertainty over EU membership and European quota rules (UK content may no longer count for EU quotas?). Co-production arrangements and treaties are complex and Brexit could destabilise a system that is yielding excellent drama series right now but great series will always find a way to be financed and realised.
What about the fear that EU subsidies for certain TV content productions will cease? Firstly, it is rather a pessimistic view that subsidies will disappear from a post-Brexit UK. The economic case for subsidy will remain strong given the UK’s record as a massive exporter of cultural goods and employer of creative people. Also, the savings to be made from reduced EU contributions will mean that the UK’s EU subsidy pot can be replaced – even increased – post- Brexit by the UK government. We now have an opportunity to create a better system whereby decisions over where subsidies are best spent will be both more efficiently made and more beneficial to UK creatives than is currently the case. And we will still have the BBC post-Brexit.
Much has been written recently about the impact on ex-UK touring if UK passports no longer carry the EU badge, the rise of touring costs due to the falling pound, or the loss of certain EU funded music-marketing initiatives. But these, as yet unrealised, impacts are nothing compared to the devastation that has been wrought on the music business by the growth of streaming as the dominant mode of music consumption, and the associated drop in royalties for writers and musicians.
Here’s an interview with Geoff Taylor of the BPI with his take on Brexit’s potential impacts – positive and negative – on the music industry. ┬áIn essence, the jury is out until it becomes clear what Brexit actually means for the music world. Meanwhile, the industry must continue to focus on how to replace the music revenues lost to the ongoing rise of low-rent digital streaming. Streaming may have resolved the issue of piracy but only by making it legal to consume music on the cheap, or for free, from major technology businesses like Apple, Google and Spotify! This is music’s big issue, not Brexit.
A c10% drop in the $ exchange rate has made the UK’s excellent film production facilities that bit cheaper for US and European film-makers. Cost isn’t the only factor that producers consider – they want the best whatever the cost, but 10% off certainly helps swing a decision to use UK studios.
In terms of UK film creation, Brexit is feared to cut off access to vital subsidies without which many independent films wouldn’t be made. As above for TV, the opportunity exists to lobby now for EU subsidies to be replaced by a better, British-film only, system that would make a post-Brexit UK better for the film industry. Our creative skills are world-class in film and strong arguments can be put forward for such support post-Brexit.
Is state intervention into popular culture effective?
State intervention has rarely impacted major cultural movements in a significant positive way. Minorities often require such intervention, and rightly so – but the major cultural happenings will always be people-led rather than state-led. Hollywood, for example, has led the film world for a hundred years – the reasons are more to do with location and the English language than government action. The UK has dominated the world’s music industry for so long despite (or possibly because of) government attempts to suppress it (intentionally or otherwise). For example, when the UK government raised tax rates to over 90% in the early 1970s the Rolling Stones, faced with being taxed out of existence, fled to the South of France and recorded the brilliant Exile on Main Street – this simply wouldn’t have happened without the unwitting action of the UK government!
The EU wants content to be freely available across the EU in order to ensure everyone has the same choice. Such regulation, if implemented, would end the age old way that TV programmes have been sold across the continent, namely broadcasters in each territory buying exclusive rights. This would massively reduce the commercial revenues generated from national broadcasters and cable channels and hence reduce investment into the international drama genre, which is currently enjoying a golden period right now. The beneficiaries will not be the European people (who have more choice than ever before) but the US global OTT players like Netflix, Amazon and Hulu. Not very progressive.
So what can governments and the EU usefully do? More legislation to protect copyrights (eg effectively challenging the Digital Millenium Copyright Act), challenging the dominance of major internet players, changing tax regulations to incentivise creatives for starters. Just a few areas where real benefit can be delivered with lasting positive impacts on our cultural future which will far outweigh the impacts of EU subsidies, lost or otherwise, as a result of the Brexit fall-out.
Culture is driven by people
The UK’s cultural heritage is deep and has a natural survival instinct – this is because of the inherent creative culture that exists in the UK and its people. The power of people to be creative and express effectively their creativity is much stronger now than it ever was – technological advances mean anyone can make good music now, anyone can make a decent film or a YouTube video. The means to express creativity are truly democratised in a way that gives people a much stronger hand in the creation of our cultural output. Add to this the ubiquity of social media to supercharge ‘word of mouth’ as the best means to spread cultural goods, and it follows that the UK’s cultural growth is entering a very healthy space. More than ever before, it is creative people who are determining what works and what doesn’t – not major gatekeepers like TV broadcasters, major record labels, other corporates or governments. For examples look at the rise of the YouTuber to challenge TV viewing, the rise of eSports to challenge traditional live sports, and the rise of the independent blogger to challenge established journalism and opinion-forming.
Brexit’s real impact
The Brexit referendum has served as a spark for action. In previous times of turmoil and uncertainty the UK has responded well due to its inherent creative culture. Punk, for example, was a popular culture phenomenon fuelled by working class discontent in the turmoil of the 1970s. Creativity is often fuelled by such discontent – the established TV and music industries may be the self-appointed arbiters of taste and popular culture, but it’s always the people who respond best and that’s where the true creativity exists. Look at Hollywood with its increasing reliance on action – technical creativity for sure, but is Iron Man 4 a true indicator of a new wave of popular culture? No. Did the numerous TV talent shows over the last decade usher in a new wave of brilliant music artists to rival those mentioned at the start of this piece? No.
It is people, and the new tools for creativity and awareness building that they now have, who are determining the popular culture of the future and adding further to the list of great UK contributions to world culture.
® Dan Allen