Industry Reacts To Brexit Win; Media Stocks Crash; Execs Plan For Uncertainty
3RD UPDATE: 9:30 AM PT: Reactions have rolled in from industry execs following last night’s vote by Britain to exit the EU and as media stocks crashed in London. Harvey Weinstein, who has major television dealings in the UK and is in Cannes for the Cannes Lions Creativity Festival, told Deadline he is “shocked” at the outcome which he called a “disaster.” Wild Bunch co-founder Vincent Maraval sees it slightly differently: “I’m sad because my wife is English and she’s sad. But I’m happy because I hope that Europe will realize that it must build itself on cultural bases and not economic.”
Also weighing in today was UN Secretary General Ban Ki-moon, who was coincidentally speaking to the media industry in Cannes. “I have never been more convinced that when we work together we are stronger. That’s the key for a better world and it’s in our hands… Despite the turmoil in today’s world, we can find common ground.”
Separately, one prominent Chinese film and TV industry exec tells Deadline the perception in the Middle Kingdom will be, “very bad. China was counting on the UK as a partner for its EU play.”
Discovery Communications said to that it “respects the decision of the UK people in this historic vote to leave the European Union. … As a global company with a significant presence in 220 markets, we are accustomed to operating in an industry and a world where change is constant. We will work closely with UK and EU leaders to successfully navigate this change and find new opportunities to shape our future. In the short-term and medium-term, our currency-hedging program will significantly minimize the foreign exchange impact of the Brexit vote on our financial performance.”
2ND UPDATE: 3:30 AM PT: Media stocks crashed Friday morning on London’s FTSE in the wake of the shock Brexit victory in the EU referendum. Shares in pan-Euro pay TV giant Sky were down almost 8% by noon UK time, while ITV was down by almost 19%. eOne’s share price was down just over 10%. Pinewood’s share price was faring better, dropping just over 3%.
The stock market woes extended to Europe as well, with French media titan Vivendi down 6% by midday local and Italy’s Mediaset down more than 8%. Vivendi, which ones Canal Plus, Studiocanal and Universal Music Group, has significant UK-based interests, notably Studiocanal UK, which is set up to become the content engine across the group and was the UK’s biggest indie distrib last year, as well as the London HQ of UMG, by revenue the world’s biggest music company.
“Short term it’s bad news for the currency and terrible news for film acquisitions, which are normally done in dollars or euros. UK companies will suffer in the short term,”Studiocanal UK chief Danny Perkins tells Deadline. “What is significant is that Swiss films qualify as European. My concern had been that if UK films were not going to be European qualifying, that would have a big bearing on our business. In terms of operations, it will be tougher for the smaller guys and not to be involved in the Digital Single Market conversation will be tough. In terms of Studiocanal and Vivendi, though, we’re a global company, we have international reach and will continue to operate that way on the ground. Movement within the company will be tougher, which is a real shame.
“I still believe though that London is such a vibrant city. The results of the referendum show it’s outward facing and inclusive and still a good base for an international business. It just means things will get tougher so we’ll have to work harder to manage them. We’ll still make films we want to travel.”
With the shock and disbelief still palpable among UK media execs, many of whom have been up since 4:30 in the morning following the news, the focus is now on digesting what lays ahead for both the country and the media business. One word everyone agrees on: uncertainty.
One Euro film exec based in London told Deadline, “The short-term economics of this are devastating. The pound is down, house prices will come down, interest rates will come up. And this uncertainty is going to go on for at least another two years. And look who’s the face of the country now, the spokesperson of the UK. It’s Nigel Farage. I’ve been here for 20 years and I want to get out of here.”
Another exec told Deadline, “It’s clear the globalization and austerity have left a great number of people behind and they don’t feel they have anything to lose. As for the film business, it’s going to make it harder to hire, harder to work across Europe. I fear we will become the UK that was here back in 1991. It is scary and depressing. On the other hand, UK films will be cheap to make so that may be good in some small way for inward investment.”
UPDATE: 2:30 AM PT: London’s FTSE 100 predictably tanked within minutes of opening, at one point dropping almost 9% and momentarily wiping £120B of value off shares, before recovering slightly to currently stand at being 4.64% down for the day. Sterling was trading at its lowest point against the U.S. dollar for over 30 years following business fears over the new and unexpected reality.
Key figures in the UK film and TV industries are also coming to terms with the consequences. One prominent producer quipped to Deadline they were “disappearing” after the vote. Another called it a “nightmare.”
PREVIOUS, 1:42 AM PT: Britons and the rest of the world are waking up this morning to find that the UK has voted to leave the European Union. Industry orgs are beginning to react with statements which we will continue to update. Here’s one from Michael Ryan, Chairman of the Independent Film & Television Alliance and partner in GFM Films who sees the move as potentially devastating for the indie biz and its relationships across the U.S., UK and Europe:
“The decision to exit the European Union is a major blow to the UK film and TV industry. Producing films and television programs is a very expensive and very risky business and certainty about the rules affecting the business is a must. This decision has just blown up our foundation — as of today, we no longer know how our relationships with co-producers, financiers and distributors will work, whether new taxes will be dropped on our activities in the rest of Europe or how production financing is going to be raised without any input from European funding agencies. The UK creative sector has been a strong and vibrant contributor to the economy — this is likely to be devastating for us.”
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