John McVay: "Producers stand to lose $9bn from DSM"

The Cannes red carpet has been rolled up and the last private jet has left town for another year, but there is a gathering storm on the horizon for the film and TV industries.

The European audiovisual sector is worth approximately $108bn (€97bn) and employs over a million people, but the Commission’s Digital Single Market agenda including the long-term plans for so-called ‘cross-border access’ to film and television content is raising serious concerns.

The proposals, due in the autumn, would erode the exclusive territorial exploitation of film and television rights, with film and TV producers and audiences across Europe losing out.

Content risks

A recent independent report compiled by economic consultancy Oxera and media consultancy Oliver & Ohlbaum found that, under the new proposals, consumers would lose access to content they currently enjoy.

The report, backed by film and audiovisual producers, distributors, broadcasters, platforms and film agencies throughout Europe and across the world, predicts a drastic drop in investment in new content and revenue losses for producers of up to $9.2bn (€8.2bn).

The research demonstrates that the Commission’s plans will deliver the exact opposite of their stated intentions, leaving audiences with a poorer range of content, higher prices and a devastating impact on cultural diversity both in production and distribution.

The report reminds us of the unique characteristics of the film and TV industries and the inherently risky nature of content production. Financing models for producing new content rely on the freedom to license content on an exclusive territory by territory basis, thereby attracting pre-production funding. Undermining this freedom would drastically reduce investment in new content, leading to significant negative impacts for viewers.

The report also finds there will be up to 48% less local TV content in certain genres and 37% less local film production, with the most marginal or risky content at particular risk of being dropped.

All types of content – international, European and independent local productions – would be negatively affected, threatening cultural diversity. Even content that still gets made could suffer from reduced production values, impacting the quality of content available to consumers. Consumers would face higher prices or lose access to content they currently enjoy, with some being priced out altogether.

Funding issues

Producers in many European countries have expressed particular concern that undermining the principle of territorial exclusivity would jeopardise their ability to secure public funding and make it more difficult to enter into co-production agreements that secure commercial funds from other countries before filming can begin. The funding for recent TV success stories such as Poldark and independent films such as The Lobster and Amour could be put at risk if the proposals are enforced.

It is essential that the established principle of exclusive territorial exploitation be maintained. TV and film producers share the Commission’s objective to develop a stronger digital economy for film and television but the Commission needs to urgently rethink its approach and work with member state governments to ensure no changes are made that would end up leaving audiences worse off.

We all want to develop a stronger digital economy for film and television. But the Commission must work with, not against the industry, to deliver for consumers. Let’s hope the spring-like optimism felt at Cannes does not turn into a pessimistic gloom come the autumn.

John McVay is CEO of the UK’s Pact (Producers Alliance for Cinema and Television)