Sky warns Disney and Discovery of no-deal Brexit blackout

Sky has delivered an ultimatum to broadcasters including Disney and Discovery to sort out their post-Brexit licensing plans by the end of 2018 or face being taken off its pay-TV service.

Sky has sent the deadline letter because it needs to know the licensing plans of its channel partners to make sure it abides by European broadcasting regulations in the event of a no-deal Brexit in March.

The letter, a version of which rivals including Virgin Media and BT are also likely to have to send to channel operators, informs partners that they must notify Sky before 31 December of their future broadcasting and licensing plans.

“We continually work with our partner channels to ensure they have the licences they need to broadcast,” said a Sky spokesman.

US media companies including Discovery, Disney, the MTV owner Viacom, and WarnerMedia’s Turner, which operates CNN, use the UK as their European broadcasting hubs, with one British licence allowing a channel to be broadcast across the continent.

This means Sky can currently legally make partners’ channels available on its pay-TV service, which broadcasts to more than 12m households across the UK and Ireland under a single UK licence.

It is understood the letter has also been sent to British broadcasters including ITV, Channel 4 and UKTV, which are transmitted on Sky under a single UK licence.

However, if the government fails to strike a deal to keep EU-wide broadcast rights post-Brexit, companies will have to look to relocate significant parts of their businesses and TV licensing arrangements to other EU countries to continue to transmit across the rest of Europe.

This means many channels on Sky’s UK service will need to hold two licences to continue to legally broadcast in both the UK and Ireland. In a no-deal scenario those partners that do not get licences to broadcast in Europe will be unable to be legally aired in Ireland by Sky UK.

“It looks like Sky is preparing for a no-deal scenario; it is sensible contingency planning,” said Ed Hall of the consultancy Expert Media Partners. “A UK TV licence acts as passport to Europe effectively, but with no deal once the UK leaves the EU broadcasters will need a European and UK licence if they want to be across Sky’s UK and Ireland service.

“Sky can’t risk airing channels illegally, so they need to know licensing arrangements or channels will simply have to come off the platform.”

The ultimatum ups the pressure on the large number of international broadcasters that use the UK as a European licence and broadcast hub to commit to making decisions on post-Brexit contingency plans.

US giants such as Discovery, the biggest broadcaster to use the UK as a hub for the continent with licences for more than 100 TV channels, have been evaluating locations for a second European licensing and broadcasting hub if a Brexit TV deal fails to be struck.

Countries that have emerged as major contenders for broadcasters to move some operations to in order to secure new European licences include Luxembourg, the Netherlands, where Netflix has its European headquarters, Ireland, Estonia and Malta.

The Commercial Broadcasters Association (Coba) has said that if Brexit results in UK TV licences no longer allowing EU-wide broadcast, it could cost the economy £1bn in annual investment from international broadcasters.

The UK, through the broadcasting regulator, Ofcom, licences about 1,000 channels and is estimated to be the home of more than a third of licences for all channels broadcast across the EU.

Last October, Sharon White, the Ofcom chief executive, revealed to an audience in Brussels that a number of major UK-based broadcasters had told her they had contingency plans to move editorial functions to other cities in Europe.