Saturday 10 December 2016

Ireland seeks cut of UK channels' €50m ad revenue

Government in new push to get share of advertising as EU reviews TV regulations

Published 13/11/2016 | 02:30

Emilia Clarke as Daenerys Targaryen in Sky’s smash-hit series ‘Game of Thrones’
Emilia Clarke as Daenerys Targaryen in Sky’s smash-hit series ‘Game of Thrones’

The Government is to step up its efforts at an EU level to get a slice of the €50m in ad revenue which goes to UK television stations every year.

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In recent weeks, the Department of Communications has appointed consultants Indecon to carry out a review of so-called 'opt-out advertising' in the State.

This is where Sky, Channel 4 and other UK channels stream advertising slots aimed solely at viewers in the Irish market. It is estimated that around €50m in revenue goes to those stations and the department, as well the broadcasting sector and independent producers, have long argued that some of this revenue should be captured in Ireland.

The EU regulatory framework for broadcasting, known as the Audio-Visual Media Services Directive (AVMSD), is currently up for review and the Government will push for changes to the country of origin principle, whereby a television service is regulated in the country in which it is based.

The review will bolster Ireland's argument that the directive is having a negative consequence for the Irish indigenous broadcasting sector and in turn the independent production sector.

A spokesman for the department said: "The report will be finalised before the end of the year and its findings will feed into the department's interactions with the European Commission on the issue and will support the State's position in negotiations on the Commission's review of the AVMSD."

A number of models to address this have been proposed over the past year, with sources suggesting that a portion of the ad revenue could contribute to a fund for the independent sector. Among the measures which have been considered is a levy or tax on the ad spend going to opt-outs, although there is some scepticism among regulators that the Commission would countenance this.

Indecon will evaluate the impact of the growth of opt-out advertising and will seek to identify potential policy options "which the State can pursue at both a national and a European level".

Last year, senior officials from the Department of Communications made a presentation to the Commission which was highly critical of the impact of the current directive on this market. They said that out of an advertising market of less than €200m, broadcasters such as Sky and Channel 4 "extract" over €50m.

The department also sent a letter to the commission and made a detailed submission on its concerns.

The current directive aims to encourage inter-cultural exchange among European countries, but the department argued that this was not being achieved in Ireland.

"Unfortunately, the practice of exploiting 'opt-out advertising' is undermining the achievement of the directive's objective," said the submission.

"Ireland has concerns regarding the growing detrimental impact that these channels are having on the ability of locally based broadcasters to create new and culturally diverse content," it added.

Opt-outs have grown rapidly in recent years. There were a total of 43 channels selling in the Irish market in January 2014 , of which 34 channels were "opting out." There is little investment in return.

However, Sky, which broadcasts huge TV hits such as Game of Thrones, argues that it is a significant employer in Ireland and also invests in local programming, such as comedy series Moone Boy.

Sunday Indo Business

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