Contribution to the public consultation on the draft COMMUNICATION FROM THE COMMISSION ON STATE AID FOR FILMS AND OTHER AUDIOVISUAL WORKS

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1 Contribution to the public consultation on the draft COMMUNICATION FROM THE COMMISSION ON STATE AID FOR FILMS AND OTHER AUDIOVISUAL WORKS EUFCN-European Film Commissions Network Av. Michel Ange 68 B-1000 Bruxelles Company Registration No Register ID number: Preliminary comment The European Film Commissions Network (EUFCN) is a Non-Profit Organisation representing 81 European film commissions from 27 EU countries. The EUFCN was established to support and promote the European film industry and culture. In March 2007, the organisation was officially registered in Brussels. The main objective of the EUFCN is to market the European film industry and culture on an international level and to create an efficient information network for every EUFCN member in the European Union. All members are required to promote and campaign the film industry either nationwide or in a specific region. Film Commissions consult producers in terms of local funding and also promote their local funding. They provide target-oriented advice and comprehensive information regarding film locations, filming permits, artistic and technical service as well as scouting young talent. In addition, the service includes granting filming permits for film and TV productions. In this context, the film commission acts as a mediator between the respective authority and the film industry, guaranteeing that the relevant country or community offers sufficient support. In comparison to state film support they provide service rather than subsidies. The most common tools used by film commissions are location guides (location index) and production guides (professional filmmaker index). The following position paper refers to the draft of the cinema communication of March 14, State aid to the film industry EUFCN welcomes the Commission's viewing the state provision of support on the national and regional levels as being necessary to and important for the maintenance of Europe's audiovisual sector, and, primarily, for the securing of the diversity of the continent's culture. EUFCN shares the Commission's belief that high-performance production companies and a reservoir of experienced and well-trained professionals constitute the preconditions for the successful creation of films in Europe. EUFCN supports the comments made by Commission on the important role played by culture in all its various forms in the European Union. This yields the fact that cultural diversity is not to be addressed by specialized European policies orienting themselves exclusively on the requisites of the EU's domestic market. EU member states will have to continue to be able to proprietarily develop and implement their 1

2 identity-building national cultural policies, as the alternative would be a threat to European film in all its cultural and linguistic special characteristics. It is these characteristics that contribute to the film's identity-building import. The EU's approach to the development of culture and to the maintenance of national and regional diversity in its member states is furthermore contractually stipulated. This hinders the fostering of a uniformity of cultural output. EUCFN agrees with the Commission on the fact that a film can be commercially exploited does not exclude its also being a cultural product. A film thus correspondingly expresses the dual nature of cultural products. EUFCN cannot share the Commission's concern that the territorial spending obligations currently applying to the member states cause a fragmentation of the EU domestic market. It is, rather, the case that these measures promote the protection of the national film and of cultural diversity. Limited territorial spending obligations requirements cannot change the fact that European films shown outside their countries of origin are difficult to market. This is due to the lack of viewer interest. Territorialisation of expenditures The stipulation contained in the Communication of 2001 that up to 80% of the entire budget for film may be committed on a territorial basis took into account the requirements of the EU's domestic market. It also provided the scope for development required by the member states' cultural promotion policies. The stipulation served to secure the capabilities and professional expertise required to set forth in the member states the specialized activities involved in the creation of culture. Territorial stipulations impair neither competition nor conditions of business to an extent infringing upon the interests of Europe as a whole. The Commission's maintenance of this position was to be seen in the past's extensions of the Communication. The Commission has always viewed such systems of support as conforming to the Contract of Union, and has fostered confidence in a setting forth of the extant system in the period after The proposal contained in the draft foreseeing being able to commit only 100% of the support to a territory poses a challenge to the existence of national and regional film support systems in many member states. Assuming a 50% intensity of support leads to a reduced percentage of budget, as had previously been the case, from 80%. Assuming an automatic provision of support that, at the least, covers no more than 10% to 25%, leads to a much smaller territorial commitment. Automatic model-based systems of support deriving their intensity of support from a percentage of the national-level costs of production would therefore be those primarily experiencing difficulties. This is due to such intensity's being valuated as a territorial commitment. The political dimension of the state provision of support to film arising from this new stipulation should not fail to be recognised. The leverage effect issuing from the funding would stop. A further probable outcome would be a reduction in the amount of taxes-derived funds being made available to film support systems. An establishment of automatic support systems would, for all practical purposes, hardly be any longer possible, since these systems always are entitled to provide only portions of the respective national production costs. Such systems are, however, justified by their being modern instruments of support whose intensity of support is relatively low. They offer a high degree of security to producers, thereby triggering large-sized investments in the film industry and improving the global-level ability to compete. They constitute an accountable way of financing, one upon which plans can be based, and one not requiring subjective considerations arising from a selective choice. Automatically-provided funds of support are nowadays an immensely important of the financing provided to film projects. This does not solely apply to large-sized projects on the international scale. 2

3 Regional support Territorial commitments are a very important instrument for regional support. They are especially suitable to fostering the further and much in demand development of a variety of regions, as they do provide real and sustainable impulse to the development of the respective region and to the strengthening of the local film industry. This, in turn, is a proponent by the local cultural identity. This support constitutes the basis for the retention and anchoring of creative people and expertise in the region. The regional-level film culture out of it constitutes an important contribution to cultural diversity in Europe. Should there be no territorial commitments, this diversity would be seriously endangered by the concentration of the process of film production. Flexible and clear territorial stipulations are obviously requisite for co-productions. Countries with the largest rates of territoriality have the greatest number of co-productions. The increased business risks associated with such co-productions mean that they would less often be created should there be no public, territorial-committed financing. Extant territorial commitments do not therefore have in this area any negative consequences upon culture or economy. The new stipulation would no doubt lead to an increase in implicit territorial commitments. These are those that are not expressly required by the legal code on support, but which are viewed in daily operation as being unwritten preconditions for support. The disadvantages resulting from this including a lack of transparency vis-à-vis applicants or the favouring of national productions are obvious. The importance of co-productions In this regard EUFCN would like to refer to a special characteristic of Europe's audiovisual sector: there is no single market in the area of the distribution of audiovisual works. Their special cultural and regional features lead to audiovisual works' hardly being distributed outside their countries of origin. A common market would multiply the opportunities for marketing. This is in the interest of each member state. EUFCN believes that the place to start is by strengthening the national-level systems of support. This would lead to the production of films with the potential for distribution on the transnational level. The national-level provision of support to co-productions always means a step towards creating a common European market for the distribution of such co-productions. The chances that films will be successful in two or more European countries - those described by the term European works of art - is directly dependent upon the number of co-productions realized. The new draft of the territorial commitments represents a significant threat to the development of a common market for film. When producing their works, European companies would tend to commission lower-cost providers of services from non-eu countries, rather than those from other member states. As a rule, the venue for production of high-budget films is the place of the provision of funds available for them. The European elements contained in them make them eligible for aid according to the codes governing the supplying of such assistance. They thus constitute cultural works requiring protection. EUFCN takes the position that not only small and difficult films have cultural value. The threat to automatic systems of support would have negative impact upon jobs, upon the growth of the sub-sectors involved, and upon the development of Europe's audiovisual sector as a whole. The very existence of national systems of film support would be threatened. This would be a denial of the objectives formulated for the EU in other areas of policy. The strategy of the Creative Europe programme regarding the facilitation of the employment of the positive leverage ensuing from private investment on behalf of small and medium-sized enterprises would be undermined by the plans to limit the territoriality 3

4 commitments. Studies commissioned by the European Parliament have proven that tax incentives do give rise to private investments in the cultural area. Competition for important foreign productions EUFCN regards as being unfounded the Commission's concern that member states will increasingly use public funds to compete for foreign film productions. A single member state with this also applying to the large-sized ones does not have the capacities to secure all large-sized projects. This means that such projects are automatically apportioned among several countries. The need for regulation is therefore unnecessary. Quite the contrary, stricter regulations would lead to a lessening of the attractiveness of Europe as a base for the production of films, and to high-budget productions' increasingly heading towards other continents. On the appendix EUFCN suggests also incorporating the areas of VFX and post-production into the European elements segment of the point system set up to delimit European audiovisual works. This is because with this primarily applying to animation but also to films the share arises from VFX has been substantially growing, and because this also contains a proprietary creative potential. Vienna, 11 th of June 2012 Arie Bohrer Location Austria / The National Film Commission President Patrick Lamassoure Film France General Secretary Truls Kontny Film Commission Norway Treasurer Anja Metzger FFF Film Commission Bayern Board member Christiane Scholz Film Commission Hamburg Schleswig-Holstein Board member EUFCN Member Film Commissions: ACAP Picardie Film Commission Algarve Film Commission Andalucia Film Commission Apulia Film Commission Atlantic Pyrenees Film Commission Barcelona Catalunya Film Commission B.A.T.C.H. Hainaut Berlin Brandenburg Film Commission Bilbao Film Commission 4

5 BLS Südtirol Alto Adige Brussels Film Office Cine Tirol Film Commission Cinestyria Filmcommission & Fonds Ciudad de la Luz Comunitat Valenciana Film Commission Creative Scotland Croatian Audiovisual Centre Czech Film Commission Ecla - Aquitaine Tournage Extremadura De Cine Film Commission FFF Film Commission Bayern FifeScreen & TayScreen Film Commission Hessen Film Commission Metropolregion Rhein-Neckar Film Commission North Rhine-Westfalia Film Commission Norway Film Commission Region Stuttgart Film Commission Regione Campania Film Commission Torino-Piemonte Film France Film Location Switzerland Film London Film Region Stockholm Malardalen Film Commission Filmfund Luxembourg Filmkraft Rogaland Finnish Lapland Film Commission French Riviera Film Commission Friuli Venezia Giulia Film Commission Galicia Film Commission 5

6 Genova - Liguria Film Commission Gran Canaria Film Commission Hamburg Schleswig-Holstein Film Commission Hellenic Film Commission Hungarian Film Fund Ile De France Film Commission Italian Riviera Alpi del Mare Film Commission Kaunas Film Office Krakow Festival Office: Krakow Film Commission dept. Location Austria/The National Film Commission Lombardia Film Commission Malaga Film Office Mallorca Film Commission Malta Film Commission MDM Film Commission Navarra Film Commission nordmedia Film Commission Niedersachsen/Bremen North Finland Film Commission Oresund Film Commission Paris Film - Mission Cinéma Pecs Film Commission Riga Film Fund Roma Lazio Film Commission Rotterdam Media Commission Saarland Film Salamanca Film Commission Santiago de Compostella Film Commission Sardegna Film Commission Screen South 6

7 Sevilla Film Office (APPES Promoción Exterior de Sevilla) South of France Film Commission - Var Spain Film Commission St.Petersburg Film Commission Swedish Lapland Film Commission Tenerife Film Commission The Irish Film Board Ukrainian Film Commission VAF - Location Flanders Vienna Film Commission Vilnius Film Office Vitoria-Gasteiz Film Office Western Norway Film Commission Zinealdea Film Bureau 7