As a result of the outcome of the referendum on the UK’s membership to the EU, I would like to reassure the investment community, our colleagues and suppliers within the Broadcast Industry, that we remain committed to the goals defined within the AVTN | NewsNet247 proposal. We continue to believe strongly in the delivery of a balanced and impartial Business and Consumer focused News Service to the Aviation and General News Markets with Global Perspective.
We have for some months considered the possible effects of the UK leaving the EU upon the proposed business model, and are prepared to act appropriately as the terms of the UK’s departure become apparent.
I would like to set out below some areas in which we believe particular consideration is warranted:
The AVTN | NewsNet247 Market
We continue to believe in the case for and existence of this market, and emphasise that our plans to pursue it were not contingent upon the UK’s continued membership of the EU.
The Continued Case for Investment
It is clearly apparent that the Worldwide interest in News is not likely to decline, and given the implications of the UK’s departure from the EU is actually likely to increase for some considerable time, as the world seeks to understand the Political, Economic, and Cultural implications of this and subsequent events. As a result we feel that Broadcast and Digital News Media continues to represent a favourable investment.
As in any time of uncertainty economically or politically market and currency volatility has occurred and is seen as likely to be ongoing until negotiations between the UK and EU are concluded, and agreement reached. The Network expects to see effects on the costs of infrastructure, Real Estate, Personnel and Operational costs as a result, and is monitoring the variations carefully. We feel that it is as yet too early to specifically define those effects, but wish to give investors the assurance that they are under consideration and review. It is entirely possible that some currency fluctuations may be mitigated through attracting local investment for operations, particularly in the US and Singapore as they apply to Tier 1 requirements. Concern for the effects of fluctuations in £GBP against $USD, €Euro ¥Yen and $SIN exist, particularly in the case of US, European and Japanese manufactured infrastructure items. At present it is felt that these fluctuations may be contained with nominal effect on potential usage of overdraft facilities, though well within existing contingencies.
I would like to emphasise that the UK represents only a single revenue stream in our global and multi-national strategy. While we note that at least one UK broadcaster has announced a profit warning based on the potential decline in UK advertising budget, we re-iterate that the business model is not wholly dependent upon UK revenues. Network revenues have always been calculated on a conservative basis, with the application of average CPTs and discounts being applied in modelling. As a result, it is felt that at this time the buffer to market movements, whether in the UK, EU or on a global level, is adequate within the proposal at this time.
At present broadcast licenses issued by any EU member state apply to the whole of the Community. While it remains to be seen how this will be affected by the UK’s departure from the EU, an agreement to the continuation of access in this area is seen as more likely than not, due in part to the nature of Satellite broadcasting. However, we have for some months been considering a dual licensing approach to Europe as part of our structural and financial planning, with France, Holland and Germany under consideration for this purpose.
European Corporate Structure
As previously indicated, the establishment of a corporate entity within the remaining Member States of the EU is already under consideration. Amsterdam, Frankfurt and Paris are identifiable as the most likely locations for any European corporate registration and presence. There is currently no intention to locate European operations wholly outside the UK and in an EU Member State.
At present there are also no plans to locate any broadcast infrastructure permanently in mainland Europe. However, this would be reconsidered under unfavourable terms of access to the Single-Market for the UK. In the event that any infrastructure were to be based in Europe, then it is primarily expected to be representative of a division of current planned assets, than in terms of a significant additional requirement, excepting the decision to locate the entirety of operations within the remaining EU.
As a result of our commitment to delivering multi-lingual service, it has always been envisioned that our Network would employ personnel in EU member States other than the UK, and it was foreseen that to one degree or another, some form of minor corporate entity may be created in order to facilitate this requirement. With the event of the UK’s departure from the EU, the degree by which this is necessary will be somewhat determined by the terms of access to the Single Market negotiated by the UK. However, it is not seen as an un-resolvable issue.
The Network notes that political discussions on the terms of Single Market access have already included the potential terms for movement of citizens between the UK and EU. In the extremely unlikely event that Visas became a requirement either to enter the UK or EU, the financial impact has been considered for the movement of personnel not permanently based in any one Nation.
Given that the Network is most likely to employ native speakers for its alternate language offerings, and these personnel are more than likely to reside within their own nations in order to achieve both news gathering and coverage, the impact on European operations is seen as lower than if it were envisioned that solely UK personnel were to be employed.
Our Commitment to the UK & EU
We remain committed to the ideal of our place in society, and the potential to use that position for the benefit of other individuals, the nations in which we operate, and the planet as a whole. The timely resolution to negotiations between the UK and EU, as well as trade negotiations that will benefit the future of International trade with the UK is paramount to the future stability of the UK, and to ensuring the safety of investment into the proposed Network and AVTN | NewsNet247. Given our intention to be headquartered in London, to this end we offer all assistance to the UK Government at this challenging time for the Nation.
At this time I would like to thank you for taking the time to read this statement, and wish both the UK and EU every success for their respective futures.