Global streaming giants didn’t mince their words on Thursday when they reacted to a call from a U.K. parliamentary committee for a levy of 5% of U.K. subscriber revenue on foreign streaming services, including the likes of Netflix, Amazon, Apple TV+ and Disney+, to help finance British drama production.In a statement, Netflix highlighted that the U.K. is the streamer’s “biggest production hub outside of North America – and we want it to stay that way.” It added a thinly veiled warning that levies or taxes would lead to price increases: “In an increasingly competitive global market, it’s key to create a business environment that incentivizes rather than penalizes investment, risk taking and success. Levies diminish competitiveness and penalize audiences who ultimately bear the increased costs.”Since 2020, Netflix has invested billions of pounds in the U.K., worked with more than 200 producers and with 30,000 cast and crew members across the country, according to the company.“Netflix members have already paid the BBC license fee. A levy would be a double tax on them and us. It’s unfair. This is a tariff on success. And our members are going to be punished,” a source close to the matter told THR. “Ministers have already rejected the idea of a streaming levy. The creation of a Cultural Fund raises more questions than it answers. It also begs the question: Why should audiences who choose to pay for a service be then compelled to subsidize another service for which they have already paid through the license fee. Furthermore, what determines the criteria for ‘Britishness,’ which organizations would qualify for funding, why would a fund be better placed to determine what audiences want to watch, which individuals would be expected to allocate funding, how would the funding be spent? These recommendations risk being a step backward for the U.K. creative sector.”Concluded the source: “The committee’s proposals do not address the core issue: the long-term financial sustainability of public service broadcasters. This is a complex matter requiring thoughtful consideration and a long-term perspective. Protectionist measures and sensationalized headlines will not provide solutions.”The Association for Commercial Broadcasters and On-Demand Services (COBA) also argued that a levy could hurt streamers’ investment in Britain. “Especially in this economic climate, a levy risks impacting existing content budgets for U.K. shows, jobs, and growth, along with raising costs for businesses,” said COBA executive director Adam Minns. “Ironically, it could actually damage public service broadcaster dramas by reducing co-production budgets at streamers.”And Patrick Holland, executive chairman of production giant Banijay U.K., said: “We are pleased that the committee is recognizing the need for intervention in the scripted sector, however, we aren’t convinced the levy is the way forward. Banijay U.K. has long called for an increase in tax credits to support the mid-range U.K. production programming sector, which is at the most risk.”He added: “Shows like Peaky Blinders, SAS Rogue Heroes, Richard Gadd’s new series Half Man, and Jack Thorne’s new Channel 4 drama Falling required far more funding than the public service broadcasting license can provide to get into production. Both HBO and Netflix co-funded Half Man and Peaky, respectively. These types of shows, developed by brilliant British writers that speak directly to U.K. audiences, sit in the £2.5 million-£3.5 million bracket and are at real risk of not being made going forward if, as an industry, we can’t guarantee the funding they need.”As reported, urgent action” is needed “to protect distinctly British content,” the Culture, Media and Sport Committee of the House of Commons of the U.K. parliament concluded after holding an inquiry via a series of hearings.In its final report, published on Thursday, it called on the government of Labour Party leader and Prime Minister Keir Starmer “to ramp up support across film and high-end TV.” Among its proposals are additional tax incentives to benefit independent films, support for independent cinemas, and the streaming tax.The recommendation “for streamers, such as Netflix, Amazon, Apple TV+ and Disney+, which benefit from the creativity of British producers, to put their money where their mouth” called for them to pay 5% of their U.K. subscriber revenue into “a cultural fund to help finance drama with a specific interest to British audiences.” If the industry does not voluntarily establish such a fund, administered by the BFI, within a year, the U.K. government “should introduce a statutory levy,” the committee recommended.
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