London has long been considered the financial and media capital of Europe. American tech and media companies (Facebook, Google) have huge offices there, and it’s an English-speaking toehold for American firms doing business on the continent.
Brexit probably won’t upend that completely; thousands and thousands of workers aren’t going to learn German or Dutch over two years, and it’s likely that the EU and the U.K. will work out some agreement to maintain trade and labor ties.
But that doesn’t mean there aren’t consequences for firms in the media business or for the media sector in London.
Frank Sinton is the CEO of Beachfront Media, a company that makes an advertising platform for mobile video.
In a phone call with Recode, Sinton said that until very recently, his company was planning to open its European office in London. Then, Brexit happened.
“We’d been thinking about an EU extension for the last year, and we took a month-long trip to figure out where we wanted to set up base,” Sinton said. “It became pretty clear among the media and ad community that London was the clear choice. But the ‘Leave’ campaign winning has us completely reevaluating.”
A big cause for Sinton and everyone else’s headache is that they set up shop in London so that they could do business across all the European Union member states. But because no one knows what the terms of trade are going to be between companies in the U.K. and the EU going forward, a number of firms are apprehensive about remaining in London.
Sinton said that Beachfront planned to use its London office as an entry point for the company into Europe, but “now Berlin seems to be a clear winner in this.”
Carter Pilcher, the head of Shorts International, a video company that specializes in (surprise) short-form video, largely concurs with Sinton’s analysis. He told Recode that “the safest thing would be to put your operation in France or Germany.”
Pilcher, whose office is located in the same tony London neighborhood that houses Facebook and Google, thinks that “all of [the U.K.-based tech and media companies] will have to move big chunks of our operation out of London.
“I think it will go from the capital of media in Europe to capital of the U.K.,” he added. “The biggest beneficiary is possibly Germany, but probably the Netherlands, because their regulation system is effective.”
The regulatory aspect, as both Sinton and Pilcher describe it, is a huge part of why tech and media companies operate in the U.K. in the first place. Because the U.K. has been a part of the EU’s single market, Pilcher says, companies have been able to use its relatively lax digital and broadcasting regulations to their advantage while serving all the European Union countries.
“A lot of American TV-type businesses — MTV, CNN, Discovery — are all headquartered in London because it’s a much easier place to live ... it’s an enormous set of media companies,” Pilcher explained. “And they haven’t yet negotiated what will happen, but I am almost certain that the EU will not allow TV networks created outside the EU to broadcast because media is too precious to be regulated outside the trade zone.”
Pilcher, who sounded justifiably exasperated by the end of his conversation with Recode, is unsure what Brexit will mean for his company. He wants to “keep as many people as we can,” but doesn’t know whether it will involve moving his company to somewhere like Berlin or Amsterdam or Dublin.
“It all depends on what’s negotiated,” he said, sighing. “But we're hopeful it'll be something that doesn't destroy what’s been built here in Britain.”
This article originally appeared on Recode.net.