Brexit may mean Ireland taxes TV ads

By Seán McCárthaigh

Brexit could have at least one positive development for Ireland — by allowing greater control over “opt-out” advertising by UK stations.

A report commissioned by the Department of Communications claims a wide range of options would be open to the Irish authorities to regulate opt-out UK channels if the UK proceeds with a full withdrawal from the EU.

Opt-out advertising is where TV channels based in another jurisdiction broadcast advertising tailored to a local market in another country.

An increase in such advertising in recent years has become a major concern for domestic stations like RTÉ and TV3, which claim UK channels are taking a growing share of the overall TV advertising revenue, which was estimated at €236m in 2016, at the expense of Irish channels.

They also point out that stations offering opt-out advertising are not subject to regulation by the Irish authorities despite broadcasting into Ireland.

It is estimated that around 20% of all TV advertising revenue now goes to the opt-out channels, with 46% to public service broadasters like RTÉ and TG4, and 32% to TV3.

Under EU legislation and the “country of origin” principle, channels based in the UK are solely regulated by the UK regulator, Ofcom. T

he report by consultancy firm Indecon said Brexit would allow the Government to implement a wide range of actions.

The report also recommended that in the short term the Government should consider the introduction of a non-discriminatory levy that would apply to both domestic and overseas broadcasters to fund indigenous content.

However, it said the impact of such a levy could be small as there is a lack of precedence for such a scheme..

The report also suggested the Government should seek an amendment to the country of original principle that would allow EU member states to require a financial contribution from broadcasters targeting audiences in their territories to fund production of local or indigenous content.

The vast majority of opt-out advertising offered to Irish advertisers is by UK-based stations including Sky News, ITV and Channel 4 as well as specialist channels like Nickelodeon and MTV.

However, it acknowledges that the effect in terms of audience size is dramatically lower compared to TV advertisements carried on Irish stations.

In 2016, on average TV spot on Irish channels was seen by 23,200 compared to just 1,800 for TV commercials on opt-out channels.

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