(Bloomberg) -- For U.K.-based international broadcasters like Discovery Communications Inc. and Walt Disney Co. concerned about the consequences of Brexit, the European Union has some rather unhelpful advice: look to the 1980s.
If broadcasting isn’t covered by a negotiated free-trade deal between Britain and the EU, the fallback is the 1989 European Convention on Transfrontier Television, the European Commission said in a notice on March 19.
Signed in the very year in which Tim Berners-Lee wrote his proposal for what would become the World Wide Web, that convention probably isn’t enough to stop the broadcasters from relocating staff and operations to the EU. The treaty excludes seven member states, including Ireland and the Netherlands, lacks a mechanism for dispute settlement and of course doesn’t cover online streaming, which is a rapidly growing source of revenue for broadcasters.
“It’s a major problem,” said Alice Enders, a former economist for the World Trade Organization and head of research at media research firm Enders Analysis. “The online transmission point is a killer.”
At stake for the U.K. in resolving the broadcasting issue is about 1 billion pounds ($1.4 billion) of annual investment on content, production facilities, wage costs and technology, according to research by media analysis firm Oliver & Ohlbaum Associates commissioned by the Commercial Broadcasters Association.
Move to EU
Akin to global banks, media companies that use London as their European hub are weighing relocating staff and operations due to Brexit. The likes of Sweden’s Modern Times Group AB and Time Warner Inc.’s Turner International currently broadcast channels into the EU using U.K. licenses, a permission that will end when Britain leaves the European single market.
The inadequate contingency plan provided by the 1989 convention has media companies fretting because there’s little precedent of the sector being included in free-trade deals. Broadcasting is one of the least liberalized sectors in global trade. Countries like France seek to limit what can be beamed in from overseas on cultural grounds and broadcasting was excluded from the EU’s recent trade accord with Canada.
Countries such as Ireland, the Netherlands, Luxembourg and Belgium are all trying to woo companies considering a move. The Irish broadcasting regulator met with company officials in London earlier this month, while the President of Estonia will make a direct pitch to media executives on Wednesday.
A transition agreement between the U.K. and the EU announced earlier this month gives the companies some breathing space, but some will still want to relocate operations well in advance of Britain’s departure to guarantee transmission of their channels, said Helena Brewer, chief executive of RedBerry Media Ltd, a consultancy.
“It’s not possible for all broadcasters to sit on their hands and play the waiting game,” Brewer said. “They are more likely to move to provide certainty.”
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