Commentary

The Brexit Vote: What It Is Ain't Exactly Clear

The cold hard facts of the Brexit results in Great Britain won’t be apparent for a while but it would seem some content providers and helpers might have a tougher time of it than others.

For others in general content provider biz, or advertiser offshoots, it’s just good old uncertainty.

Right after the vote, MoffettNathansonLLC wrote, “the most tangible short-term risk is on the translation impact of U.S.-owned enterprises that are based in the U.K.”  

For broadcasters and cable companies, that doesn’t look too bad. For example, MoffettNathanson says, CBS reports that only 2% of its revenue comes from the United Kingdom.It gets worse for CBS and other TV-related media groups when calculating how much of their revenue comes from Europe--CBS is just in the mid-teens but Discovery counts 35% of its revenue exposure in EUville.

Among Web-centered businesses, Netflix’s percentage of revenue from Europe is in the mid-teens, but Netflix counts on increasing its presence worldwide now that it appears it U.S. biz is slowing down.

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The report says, “If the economic uncertainty in the U.K. impacts economic growth in the Eurozone, the most impacted companies across our coverage universe would be Priceline with 43% Euro exposure, Discovery at 30%, Twitter at 29%, Alphabet at 28%, and TripAdvisor at 26%.  The list is heavily skewed to Internet names.”

MoffettNathanson sees two big potential downsides--lower advertising because of an expected economic slowdown, and a big reduction in discretionary spending, most pointedly travel.

But on the bright side, movies and pay TV might not get hit bad because those two segments hung tough through other economic shocks.

In London Martha Lane Fox, a well-known Internet entrepreneur who’s been at it since before the dotcom bust, blogged:

“As you would expect from a sector peppered with entrepreneurs, there is a level of optimism and belief that there is opportunity even in turbulence, that I find inspiring.

"One in five tech companies in this country is started by an immigrant. There are lots of suggestions about what the sector should be doing to keep talent motivated as well as being able to find the best people. It seems that access to skills as well as, unsurprisingly, access to the single market are key concerns for the start up community. It’s vital to help UK tech businesses continue to grow – it’s not rocket science – the Internet economy is the future and we must support it.”

At Unruly, the British-based media company now owned by News Corp. (whose Rupert Murdoch has cheered the Brexit results), COO and co-founder Sarah Wood admitted in an email to me that the Brexit outcome “wasn’t our first choice.” But she quickly regained her stiff upper lip, too.

“There's a long way to go with regards to how Brexit plays out politically and economically; there'll be no shortage of noise, no lack of sound and fury over at Westminster in the coming months. While that's going on, we'll be doubling down on innovation and doubling down on international expansion.”

But before the vote, she wrote a cogent analysis of a potential Brexit victory on LinkedIn, with dimmer analysis, pointing out doing business in the EU right now is expedient, right down to avoiding passports and visas. Plus, she said London is now ranked right behind San Francisco as an attractive place for investors, and Brexit would endanger that.

More eloquently, (but then again, apparently not) she wrote, “From an ad technology perspective, coming out of the EU feels completely countercultural. The digital opportunity is so exciting precisely because it’s a global one - our clients think globally, they use Unruly to amplify global video conversations and when they’re not thinking globally they’re thinking regionally.”

pj@mediapost.com

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