How Brexit Will Shape the U.K. Film and TV Industry From 2020
By Tim Dams
LOS ANGELES (Variety.com) – After more than three years of rancour and political infighting, the U.K. finally leaves the European Union at 11PM tonight, bringing closure to one of the most unsettling chapters in the country’s history.
A transition period running until the end of 2020 will now take effect, during which trade negotiations between the E.U. and U.K. will be finalized. This means that little will change in the short term for the U.K. film and television industry, and its European and international partners. But longer term, and depending on the outcome of trade negotiations, Brexit is likely to lead to both challenges and opportunities for the U.K.’s buoyant creative industries.
What is clear is that in recent months, the mood around has changed. A large majority of the U.K.’s creative industries voted to stay within Europe, and have expressed sadness and regret that the country is leaving the bloc.
However, following a large majority for Prime Minister Boris Johnson in December’s election , most now accept as fact the country’s departure from the E.U. – and in pragmatic British fashion, are determined to make a success of it.
Abi Morgan, writer of Margaret Thatcher biopic “The Iron Lady,” recently wrote a divorce drama of her own with BBC One and Sundance TV’s “The Split.”
“I consider myself European but unfortunately this divorce is happening and we’ve got to get on with it,” she tells Variety.
“Interestingly, Brexit has happened at the same time as we’ve had a massive strike in America with the WGA, so there has actually been a huge influx of interest in British talent and production companies and how we work.
“I hope (the government) recognizes how important our industry is when you get Netflix and Amazon wanting to invest in the U.K. and build and develop studios. We need to incentivize them and ensure that can keep going.”
John McVay, chief executive of powerful producers alliance Pact, insists people shouldn’t be talking down one of the U.K.’s most successful industries for political reasons. “It’s not an ‘end of the world’ crisis for us, and it never has been,” he says.
Meanwhile, Jane Root, chief executive of “One Strange Rock” producer Nutopia, remains concerned about what Brexit means for the country, but even she is hopeful.
“The end of easy travel to Europe is a factor and some rebates and potential co-productions are in doubt. But we’ll survive.”
Others see blatant opportunity. The weak pound caused by Brexit upheaval was one factor in attracting a record $4.7 billion of inward investment into film and high-end TV drama in 2019. British firms and talent might also look beyond the E.U. for opportunities, whether in the U.S. or in markets such as China.
Writing in Variety this week , British Film Commissioner Adrian Wootton noted that the U.K. film and TV industry has managed to grow at an unprecedented rate despite political change. He also spoke of the U.K. industry’s responsibility to dispel “misleading and erroneous information” circulating about what Brexit really means to the U.K’s international TV and film partners.
“The fiscal incentives and competitiveness of the U.K. will not be affected. The tax credits are primary legislation and will remain in place,” he wrote.
With this in mind, here is Variety’s guide to what will, won’t and might change in the wake of Brexit.
VISAS AND IMMIGRATION
This is the biggest issue for U.K. film and TV, which has thrived on the free movement of people within Europe and easy access to talent.
“My main concern lies with immigration,” says Sir William Sargent, the chief executive of leading VFX firm Framestore, which employs staff from each of the E.U.’s 27 member states in its London HQ. “We are a classic cluster – a European centre of excellence. If we mishandle immigration, we will damage that.”
The government intends freedom of movement to end after the U.K. leaves the EU, introducing an Australian style points-based immigration system that would be introduced from January 2021.
This week, the Migration Advisory Committee – a body that advises the government on migration issues – recommended a reduced £25,600 ($33,500) salary threshold for visas for EU skilled workers, down from a previously mooted £30,000 ($39,350) which would have inhibited the recruitment of junior VFX workers and animators.
Still, Neil Hatton, CEO of the U.K. Screen Alliance, which represents British visual effects and animation companies, says this will reduce the profitability of his members, and talent availability.
Hatton estimates that the financial impact of visa applications and salary increases to meet the new threshold for European VFX workers will be around £8 million ($10.5 million) per year. These, he says, will likely have to be absorbed by business rather than passed on to customers, possibly resulting in fewer job hires and a reduced investment in technology for Britain’s Oscar-winning VFX sector.
Meanwhile, EU citizens who have lived in the U.K. for five years or more can apply for ‘settled status,’ allowing them to stay permanently. Anyone who has not been in the UK for the five years can apply for pre-settled status, allowing them to remain in the U.K. until they have reached the five years required to apply for settled status.
More locally, some lawyers such as Bob Cordran of London-based international law firm Dorsey & Whitney, says U.K. employment law derives from EU law, which will remain in place through 2020.
“After the end of the transition period, the U.K. is, in theory, free to change its employment laws. However, this freedom may well be curtailed in the trade agreement which is to be negotiated with the EU. The EU wants ‘regulatory alignment,’ which would prevent the U.K. from deviating from its EU-derived legal standards, but the U.K. government says that it will not agree to this. Time will tell,” Cordran says.
In terms of work trips to the E.U., the U.K. government says that after Jan. 1, 2021, travellers will need to follow local regulations about providing a service and complying with local business regulations. However, the E.U. has confirmed that U.K. nationals will not require a visit visa for short stays of up to 90 days in every 180-day period for things such as tourism.
Frank Spotnitz, CEO of London and Paris-based Big Light Productions, whose credits include “Leonardo” and “The Man in the High Castle,” says it’s in the interest of both the U.K. and E.U. countries to facilitate the ease of working between borders.
“I split my time between two European bases, travelling back and forth from Paris to London on the Eurostar, and to our current production, ‘Leonardo,’ which is shooting in Italy,” he explains.
“I think border control is likely to become more cumbersome, and potential delays for our pan-European team and cast may need to be factored into scheduling.”
As for filming in the E.U., the temporary movement of goods, which includes filming equipment, will continue as normal through the implementation period until the end of this year. After that, the rules will be subject to further negotiation with the EU.
U.K. AND EUROPEAN TAX INCENTIVES
Tax reliefs, which have underpinned the growth of production in the U.K., will not be affected by Brexit – this includes those available for film, high-end TV, animation programs, children’s television and video games, according to the BFI’s Brexit briefing document.
Meanwhile, producers’ trade body Pact has told members that “the cultural test (required to gauge a title’s British content and access tax reliefs) will not be changing post-Brexit, and companies will still be able to qualify for U.K. tax reliefs under this test.”
British productions, however, may find it harder to access European tax credits. Currently, U.K. personnel can qualify for other European member states’ cultural tests and can access tax credits there, but will lose this status after Brexit.
“Amendments to European Member States legislation will be needed to ensure that U.K. content and workers will continue to be able to access the same tax credits after the U.K. leaves the EU,” says Pact.
In some cases, though, there is no change. Access to French tax credits will remain unchanged by Brexit as U.K. content can qualify for these under the U.K.-France co-production treaty.
CO-PRODUCTION
Brexit will have no impact on companies’ ability to co-produce.
Co-production treaties between the U.K. and another country are not governed by E.U. law, says Pact, which points out that co-production agreements form part of U.K. legislation.
All co-production agreements, including bi-lateral co-production treaties and the European Convention on Cinematographic Co-Production signed by the U.K., will remain in place after Brexit.
“The European Convention on Cinematographic Co-Production is governed by the Council of Europe (an entirely separate body from the E.U.), not the European Union, and the U.K. will continue to be a party to the Convention, “ highlights the BFI.
The U.K.’s bi-lateral treaties with Australia, Brazil, Canada, China, France, India, Israel, Jamaica, Morocco, New Zealand, Occupied Palestinian Territories and South Africa form part of U.K. legislation, and are not affected by Brexit.
EUROPEAN WORKS
Crucially, U.K. films and TV programs will still count towards European quotas – which dictate that 30% of content on broadcasters and VOD platforms such as Netflix must be European – even after the end of the transition period.
This means that the sale of British-made content by producers and distributors will be able to continue unaffected by Brexit.
This is because the U.K. is party to the Council of Europe’s Convention on Transfrontier Television, meaning it is included within the ‘European Works’ content quota.
“This is a critically important Convention which has nothing to do with E.U. membership,” says Pact’s McVay, adding that it is important that the British government fends off any attempts by E.U. member states to change this.
CREATIVE EUROPE FUNDING
During the implementation period, U.K. companies will still be able to apply for Creative Europe funding, which was worth €15.9 million ($13.4 million) in 2018 and has supported films such as Ken Loach’s “Sorry We Missed You.”
The BFI says successful applications will receive funding as normal, even where their funded activity is set to take place after December 2020.
Currently, it is still unclear whether the U.K. will be a part of the 2021-2027 Creative Europe program.
BROADCASTING TO EUROPE
The U.K. is Europe’s leading international hub for global media groups, home to more television channels than any other EU country. Over 700 channels licensed in the U.K. actually broadcast to overseas countries, not to the U.K., employing thousands of people.
Adam Minns, executive director of the Association for Commercial Broadcasters and On-Demand Services (COBA), warns that leaving the single market means the U.K. has a weakness compared to remaining EU members: it cannot provide international broadcasters or SVODs with a recognized license for their non-domestic services to Europe.
“Over time, that may slow future growth or, if another country emerges as a genuinely competitive international media hub, lead to a loss of existing investment and jobs as companies migrate. The U.K. will have to work harder to head that off.”
The number of channels based in the U.K. dropped by 5% last year due to Brexit, according to the European Audiovisual Observatory. Discovery, ViacomCBS, Sony and SPI International have all shifted licences for international versions of their TV channels to Europe, with the main destination for new channel licences in the Netherlands and Spain.
INTELLECTUAL PROPERTY AND COPYRIGHT
Expect little change here. The U.K. and the E.U. are keen to preserve the current high levels of protection and enforcement of IP.
The U.K. is a member of numerous international treaties and agreements protecting copyright, meaning that the majority of U.K. copyright works are protected around the world. The U.K.’s relationship with the E.U. will not impact this, says Pact.
