The UK as a hub for cross-border television. Alison Harcourt, University of Exeter. UK in a Changing Europe project. The United Kingdom has become an internationally leading base for companies broadcasting and providing communications products and services to Europe. Single market legislation allows for the receipt of television channels (services) and the downloading of films (goods) via satellite and the internet across Europe. Hundreds of channels have based themselves in the UK to take advantage of a liberal and stable regulatory environment for operation. The Commercial Broadcasters Association (COBA) reports that, since the 1989 Television without Frontiers Directive, this market has expanded at a rate of 18.5% per annum and that the multi-channel sector has doubled in employment over the last decade.
More generally, the communications sector is a growth area for the UK. According to the Department for Culture, Media and Sport (DCMS), the Creative Economy accounted for 2.55 million jobs in 2012, 1 out of every 12 jobs in the UK, and for 8% of total service exports. In 2016, the DCMS reported that the UK's Creative Industries brought in £118.3 billion (GVA), accounting for 7.3 % of the UK Economy, with an annual growth rate of 8.9. The DCMS reported to the House of Lords, "Industry figures indicate that the UK is Europe's leading exporter of TV programmes and second only to US globally. We are the world's No.1 in sales of TV format shows. Domestically the multichannel sector contributes £4.2 billion in Gross Value Added (GVA) to the UK economy through expenditure in employment, advertising and marketing, distribution and support services, as well as content investment".
As a direct result of the Single Market, the UK has benefitted from regulatory arbitrage wherein communications companies have established companies or geographically relocated their headquarters to the UK to license broadcast and other services. Successive UK governments have supported this on a cross-party consensus basis. Key factors affecting company location in the UK are a stable regulatory environment, favourable licensing requirements, and the supply of production chains, flexible spectrum allocation and structures in media ownership. The UK has become a major hub for channels targeting other EU Member States. The growth in cross-border satellite provision has been flanked by an increase in the provision of on-demand services.
The UK actively sought foreign investment in the sector beginning with implementation of the 1989 Television without Frontiers Directive. Sky relocated to the UK from Luxembourg in 1990. In 2003, Sky launched Sky Italia and Sky Deutschland in 2009 both licensed in the UK. Today, Sky broadcasts to the UK, Ireland, Germany, Italy and Austria. The company has over 20 million customers for UK licensed channels and recorded an operating profit in £1.14bn over the nine last nine months to April 2016. The company employs 25,000 in the UK and Ireland and feeds the downstream sector in content production and hardware supply such as Pace which operates out of Salts Mill in Bradford which provides set-top boxes for Sky across Europe. Sky’s move was followed by the establishment of other companies in the UK in the 1990s including a number of large operators with multi-channel packages such as Disney, Discovery, Turner, Viacom and Viasat. At present, the Modern Times Group (MTG) is broadcasting 60 channels in 36 countries from the UK. MTG is the largest commercial operator broadcasting in Scandinavia and the Baltics, and has broadcasting operations in Bulgaria, Czech Republic, Hungary, Russia and the Ukraine. Former domestic providers such as the BBC and ITV now broadcast across Europe. As ITV reports in its 2015 response to the SatCab Directive, “ITV productions are now broadcast in all 28 Member States”.
Today, the UK is a base for 1523 out of 5141 television channels operating in the EU, 65% of which target other EU countries. There was a 42% increase of channels established in the UK from 2009 to 2013, with 448 UK-based more channels established during this period. According to the EOA, the number of UK channels targeting other states has increased by 109% from 487 in 2009 to 1017 in 2014. The main increases can be seen in entertainment, culture, HD services, children and sport. Many companies operate channels in different languages simultaneously such as AXN Europe (Sony), Disney, Discovery, National Geographic, Turner (e.g. Boomerang, Cartoon Network, TCN, TNT) and Viasat (Modern Times Group).
Number of TV channels established in the EU targeting other countries in 2013
The UK is also a hub for on-demand services such as video-on-demand and catch-up services over DTT, cable, satellite, IPTV channels or online. These services are increasingly being accessed via mobile communications. By 2014, 515 of the 2563 such services on offer in the EU had been established in the UK representing a 20% share, with 69 of these services targeting other EU countries. Other countries are emerging as potential hubs for these types of services. Luxembourg is the runner up with 29 services which target other states including iTunes. The Czech Republic has 24 services targeting other EU Member States and is a base for HBO. Sweden runs 18 services that target other states including SF Anytime, CMore, CDON and Viaplay. And the Netherlands has 13 services and is a base for Netflix which set up office in Amsterdam in 2015. This is significant as Netflix provides a different classification for films which is voluntary, different to that in the UK, which is imposed by the regulator.