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The Next Skin (2016)
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Industry Report: Produce - Coproduce...

Case study: A French-Belgian co-production


- Characteristics of the film

The case study is a French-Belgian project directed by a French newcomer director with a successful background in short film. The French production company has already produced a couple of his shorts and the director will himself be in charge of the script, an adaptation of a French novel. The story is set up in the present time in Paris, as well as partly in the forest. No star is casted for the main characters, while a well-know consolidated figure is attached to the project in a supporting role. Each national co-producer will keep for himself the rights of all windows in their territories and will share proportionally (pari passu pro rata) the revenues in the rest of the world, including other French-speaking territories. The estimated budget is Euro 2,1 million.

(The article continues below - Commercial information)
Budget of the film
Artistic Rights20.000 20.000
Social Charges119.00021.000140.000
Set and costume56.00020.00076.000
Location expenses152.00088.000240.000
Raw stock and Labs  192.000192.000
Insurance and financing cost104.000 104.000

Co-production requirements

The film was produced under the French-Belgian Co-production Agreement, and therefore was treated as a Belgian audiovisual work by the CCA (Centre du Cinéma et de l’Audiovisuel of the French Community in Belgium) and as a French one by the CNC (Centre National de la Cinématographie).

In order to generate CNC automatic support for future films produced by the production company and to have access to the tax shelter, the film must fulfill the requirements of the CNC Agrément, which provides that the applicant producer has to be established in France and the film must qualify as a European work, obtaining at least 14 out of the 18 points conforming the European cultural test; as well as obtaining at least 25 points out of the 100-points’ financing support scale (Barème du Soutien Financier, BSF), linked to the Frenchness of the work. The final amount of granted support will be determined proportionally to the points obtained.

The film can also be granted the EOF label (French original expression) by the CSA (Conseil Supérieur de l’Audiovisuel), which gives the producer access to the CNC selective support (Avance sur recettes) and makes much easier to get a TV attached since broadcasters are obliged to respect quotas (40% of the films broadcasted by generalist channels) for such so labeled films. It basically requires that the film is a production in French language or one of the French local languages.

Financing the film

Each co-producer raised the money as follows:

In France:

The producer brought himself Euro 230k to the project in form of salary deferrals (Euro 80k) and Euro 150k generated by a previous film (CNC’s automatic support). Canal+ made an offer to purchase the national pay TV rights (Euro 350k), while CinéCinéma acquired the free TV rights for Euro 100k. The involvement of both TV companies in a same project is very common, since they are part of the same business conglomerate.

The producer made a pre-sale to a local distributor, getting a minimum guarantee of 115k in exchange of the national theatrical and home video rights. A 35% distribution fee of the theatrical revenues and a 60% distribution fee of the home entertainment were agreed upon between distributor and producer. The Sofica share amounted to Euro 68k, helping to close the French budget. The Credit d’Impot added Euro 200k to the financing pot.

According to CNC figures, a majority French-foreign co-production would be financed in average as follows:

Breakdown of the average financing of productions started by a French producer
Financing sourcePercentage
French producer’s share (including the tax shelter)26,7
CNC Automatic support5,5
CNC Selective support2,1
Regional support1,8
TV as co-producer3,2
TV Pre-buy 24,6
Theatrical distribution minimum guarantee12,1
Home entertainment minimum guarantee1,7
International distribution advance12,8
Foreign co-producers6,8
Source: CNC

In Belgium:

The producer put Euro 50k in place as salary deferral, while French-language television RTBF pre-buyed the free TV rights for Euro 135k. The producer did not find a buyer for the pay-TV rights before shooting but he was able to sell them once the film was completed. The regional support institution Wallimage granted Euro 60k, since part of the film was shot in Wallonia and a significant part of the post-production took place there.

Additional Euro 235k were raised thanks to the Belgian tax shelter scheme. This tax incentive can provide a producer established in Belgium with up to 50% of his budget. At least 60% of the amount invested by the tax shelter beneficiary must be a direct investment in rights’ acquisition, while up to 40% of the money can be granted as a recoupable loan. In this case Euro 90k were granted as a loan and Euro 145k was direct investment. There is a mandatory effect of at least 150% of the direct investment to be spent in Belgium. This requisite was easy for this production to fulfill since the expenditure in Belgium was much higher than that:

Minimum Mandatory Belgian effect= 150% of the direct investment=150% of Euro 145k= Euro 217,5k
Belgian share of the budget= Euro 571k

Rest of the world:

The world sales company paid an advance of Euro 130k for the world rights, excluding France and Belgium. Its sales fee was established in 25% of the foreign revenues from theatrical distribution. This advance was entered in the financing plan both as French and Belgian, in proportion to their respective budget’s share percentage.

The final overall financing plan looked like this:

Financing plan
SourcesKind of the sourceRecoupable / Non recoupableAmount
Producer’s fee Deferral R80k
CNC Automatic support (generated by the previous film)Soft moneyNR150k
CNC Selective supportSoft moneyR350k
Tax relief (Credit d’Impot)Soft money NR200k
MG French distributorAdvanceR115k
Canal +TV RightsNR350k
CinéCinemaTV RightsNR100k
International distributor (French share)AdvanceR97k
Total French share1.510k
Producer’s feeDeferral R50k
Tax reliefInvestmentR145k
WallimageSoft moneyNR60k
RTBFTV RightsNR135k
Belgian distributorAdvanceR58k
International distributor (Belgian share)AdvanceR33k
Total Belgian share571k


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