Discovery Eyes a Dutch Option If No-Deal Brexit Proceeds

(Bloomberg) -- Discovery Inc. is laying the groundwork to move employees and broadcast licenses to the Netherlands should it become clear that a no-deal Brexit is likely, according to people familiar with the matter.

The U.S. broadcaster, home to channels such as Animal Planet and Eurosport, is among global media companies that use Britain as a regional hub. Without a deal that extends the status quo, allowing them to continue beaming channels into the European Union with U.K. licenses, they risk their channels going dark in March 2019.

Discovery is considering applying for broadcast licenses in the Netherlands and moving some employees to Amsterdam, said the people, who asked not to be identified because the deliberations are private. No final decisions have been made, Discovery could yet grow its other European offices and London would continue to be a significant location for Discovery in any event, a company spokeswoman said.

“There’s the question of the transitional deal and whether it will come through or not,” Ross Biggam, vice president of government relations for Europe, Middle East and Africa, said Tuesday at a conference in Brussels. “Discovery hasn’t yet taken a decision as to any possible restructuring.”

It’s looking increasingly probable that British Prime Minister Theresa May won’t get her Brexit withdrawal deal through Parliament, which is forcing companies across sectors to think hard about the implications of the U.K. crashing out of the EU.

Some media companies are already taking action. Turner Broadcasting System Inc., a subsidiary of AT&T Inc.’s WarnerMedia, has started applying for broadcast licenses in Germany, though it plans to keep London as its main European base, a Turner representative said.

The Irish media regulator said last week that it had received its first Brexit-related application for a broadcast license, without revealing more details, the Irish Times reported.

The coming months will probably lead to a flurry of further license applications and restructuring if May’s Brexit withdrawal deal is voted down in Parliament, said Ed Hall, co-founder of Expert Media Partners, a consultancy that advises broadcasters on their Brexit planning.

“We’re at a crunch now. We’re going to see some very dramatic activity quite quickly in this sector,” Hall said.

The longer-term risk from Brexit is that investment in the U.K.’s broadcasting sector falls as companies decide to move operations to other EU member sates, said Maria Donde, head of international content policy at U.K. telecommunications regulator Ofcom.

International media companies such as Walt Disney Co., Viacom Inc. and 21st Century Fox Inc. collectively spend about 1 billion pounds ($1.27 billion) annually in the U.K. on things like content, production facilities and technology, according to research by media analysis firm Oliver & Ohlbaum commissioned by the Commercial Broadcasters Association lobby group.

“There’s a huge industry that’s grown up around the U.K. licensing hubs,” Donde said. “I can see certain functions of broadcasters moving quite quickly.”

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