The Government was told to introduce a content levy to fund domestic production at “the earliest possible date” by outside consultants employed to assess the impact of such a step.
However, it has decided not to go ahead with a so-called ’Netflix levy’, citing the impact on consumers.
According to a report for Coimisún na Meán, which was prepared by consultancy firm Nordcity Limited and chartered accountants Saffrey LLP, the Government was recommended to introduce a charge at different levels for different types of operator, which would increase over time.
Last month, Minister for Arts and Media Patrick O’Donovan said that he did not support a levy on streaming services, outlining that people were “paying enough” for content and that he would not introduce one while minister.
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His Department said at the time that Mr O’Donovan believed there was a real risk of levies being passed on to consumers in the form of higher prices.
The report, however, found that a “levy is indeed feasible for Ireland”, outlining that nearly half of European single market countries have some sort of financial obligation in place and just over one third have a levy of some form.
It said such an intervention would supplement financing available and permit domestic producers to “further pursue creative excellence while also forging more international partnerships”, which in turn would “enhance cultural diversity and help the domestic production industry” while offering a path to “improved financial sustainability”.
It found a levy should minimise financial harm to operators who have public service media obligations or deliver audiovisual infrastructure, who have less capacity to absorb shocks.
It found that Ireland should prioritise a variable rate option, with a levy of one per cent for ad revenue and pay-TV subscription revenue, and a higher rate on commercial video on demand services – potentially as high as five per cent. Low turnover and audience exemptions could mitigate the impact on domestic video on demand services.
It said there should be a “gradual mechanism” to introduce the levy, launching it at 0.5 per cent for ad revenue and pay TV subscriptions at 0.5 per cent, and three per cent for video on demand.
It recommended variable rate levies such as those in place in Germany and Croatia, which it said “could be used to moderate the impact on Ireland’s ad-dependent media companies” while raising funds from global streamers. It estimated such a levy could ultimately raise €20.3 million annually for a fund for content creation, with RTÉ facing a bill of €900,00 and TG4 around €35,000.
By setting it at a lower level, it would initially yield €11.5 million annually, increasing over time.
The report estimated that approximately €1 billion in revenue would be subject to a levy.
Domestic broadcasters TG4 and RTÉ have argued for a levy of around 2-5 per cent, while Screen Producers Ireland have called for a rate closer to 10 per cent. Commercial operators like Sky and Virgin Media, it outlines, are “strongly opposed” to a levy.
Global streamers such as Netflix are also dead set against it, preferring to deal with “direct investment obligations” whereby they must directly finance work rather than contributing to a fund for the creation of suitable work – however, the Irish legislation does not permit this approach, only envisaging a levy.
Industry operators have issued a variety of warnings, according to the report, which outlines that consumers may have to pay higher subscription rates, or that less could be spent on content in Ireland, or that it could be of lower quality.
Under a European directive transposed into Irish law in 2022, member states have the option to impose financial obligations on media companies that target audiences in their borders but are based in another member state.
The report assessed several options: including, to do nothing or “wait and see”.
It outlines that doing nothing, given moves made by the government such as initiating the Future of Media Commission, “it would be unusual for that momentum to be stalled or stopped, unless for some pressing reason” – also pointing to the fact that there has been “many years of lobbying by some stakeholders”.
A “wait and see” approach could be justified if there was a clear likelihood of significant economic harm to Ireland through a reduction in inbound production or an increase in costs. However, it argues “that neither scenario is likely”.
Nonetheless, Fine Gael sources believe that there would, in fact, be significant economic harm arising from a levy, which they attribute to worsening economic headwinds arising from the Trump presidency. Most recently, the US administration announced a plan to impose a 100 per cent levy on movies made outside the US.
The government set criteria for the report – including that a levy should not diminish Ireland’s position as a destination for inbound production, that it would minimise harm to public service media and audiovisual infrastructure, and that it would provide additional funds in a manner that added to the current ecosystem and was sustainable.
