Senior representatives of Netflix’s UK team and broadcaster Sky have told a UK government committee that Public Service Broadcasters (PSBs) remain an important part of the country’s wider entertainment industry.
The ‘future of Public Service Broadcasting’ committee is analysing factors including how the influx of streaming services such as Netflix is impacting the UK’s PSBs, which include the BBC as well as ITV, Channel 4, Channel 5 and regional stations. It is considering funding models and its recommendations could have an impact on the future of the license fee and in particular the BBC’s finances.
Today, Netflix’s Anne Mensah, Vice President of Original Series, and Benjamin King, Director of Public Policy, UK and Ireland, faced questions over how changes to the PSB ecosystem could impact the streamer’s business on these shores.
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Despite firm questioning from the panel, the pair declined to offer their own opinions on what changes to the license fee could or should be made, a crucial debate topic right now as the BBC faces growing holes in its finances and enhanced scrutiny from the incumbent government over the fee. Both Mensah and King did, however, make a point of proclaiming that PSBs are crucial to the UK biz and thus also Netflix’s work here.
“You can’t take the PSBs out of the ecology of the UK,” said Mensah. You can’t extract one part of the creative industries from another.”
“PSBs account for 80% of primary commissioning,” noted King. “PSBs have a fundamental role in financially supporting that ecosystem. The quality of producing helps to build the brand of the UK as a creative hub.”
Netflix has been benefiting from both that ‘brand’ and the production infrastructure that the UK can provide, with highly trained experienced crews, quality talent, and good amounts of studio space.
That point led the committee to ask if Netflix’s approach to paying tax here is fair. The streamer benefits heavily from production tax breaks, as do many foreign entities that locate shoots here, but its European operations are headquartered in Amsterdam, a move that some claim is done to avoid paying its fair share. A report from Tax Watch in February was critical of the streamer’s approach, noting it pays very little tax despite surging revenues.
King and Mensah refuted this assertion when presented with the report by the committee. “We pay all of the tax required to us under UK law,” responded King, adding that the company’s profits were offset by money spent on production, which he said was “indicative of the investment we’re making here”.
The committee asked the speakers if they benefited so strongly form the PSBs in terms of talent incubation and investment, should they not have to support them in return?
Mensah said that Netflix has benefited from backing talent that has come from the PSBs, but also said Netflix in turn was nurturing writers. “It works both ways,” she commented. Mensah also noted that Netflix remains a “huge customer” of the PSBs in terms of spending money on licensing programming.
Challenged by the panel on whether Netflix’s activities here, which through its enormous ramping up of production has seen the streamer come to dominate certain studio spaces and wrap up some crew onto lengthy contracts, is inflating prices, Mensah rebuffed this.
“We have a very strong interest of our own to keep price inflation under control. We would be the first to feel that [increase in costs],” she responded. “There is inflation, reflection of an extremely competitive market, and pressure on studio infrastructure and crew. We are trying to alleviate that ourselves.”
The content chief also said that the service was producing more content that “fits the remit of public service broadcasting”, particularly in terms of diversity and especially regional production, but that it had no plans to move further into PSB programming such as news and current affairs.
“Moving into news or current affairs would require a different mindset and would be a distraction from what we do,” added King. “We have no intention to move into that space.”
The panel quizzed Mensah over comments made by Michaela Coel in a recent Vulture profile, where she said she had turned down a lucrative offer for her series I May Destroy You from the streamer because it wouldn’t let her own a decent percentage of the rights to her IP. Mensah stated that there is no blanket policy not to share IP, “Absolutely not, we have a number of different models.”
Speaking on a later panel, Sky’s Zai Bennett, Managing Director, Content, and Ali Law, Director of Policy, said that competition between the PSBs and the more commercial broadcasters was healthy for the industry.
“The competition pushes you to create even better programming. We believe the system is working and having that rich mix is working,” said Bennett.
Sky also benefits significantly from the UK tax credit for production, and Law said that the system of government financial intervention was fairest when it was “open to everyone”.
Both the Netflix and Sky speakers did, however, agree that the industry faces a challenge from the pandemic in terms of how it has affected freelancers workers. Bennett said that the prospect of freelancers moving into a separate industry because of a lack of production was “an issue for us all”, while King flagged numerous financial initiatives the streamer has backed here in the UK, but noted that Netflix is also “very worried about freelancers who could leave the industry”.