15/04/2014 - The European Audiovisual Observatory on the new Cinema Communication it its latest IRIS plus report

The adoption of a new Communication on State aid for films and audiovisual works was finally announced by the European Commission on 14 November 2013. In its 2014 Iris Plus report, the European Audiovisual Observatory publishes an in-depth analysis of the new Communication.

The first visible change is that the new 2013 Communication includes all the aspects of film creation, whereas the previous 2001 Communication only dealt with production. While aid granted to games is not yet covered, and will therefore continue to be addressed on a case-by-case basis, the film contents of transmedia projects are now at last included.

The other great innovation is about the territorial spending obligations. According to the rules of the 2001 Communication, member States granting aid could fix the territorial spending obligations at up to 80% of the film budget.

The Commission, wanting to maintain proportionality, decided to review this rule. The 2013 Communication sets the ceiling of territorial spending obligations at 160% of the aid provided (and not of the film budget). Therefore a member State can get 80% of the film budget spent on its territory only if it gives to the film the highest grant possible (the general maximum is still 50% of the production budget).

In practice, as the IRIS plus lead article points out, no member State required that 80% of the budget had to be spent on its territory and as a matter of fact some did not even have territorial spending obligations, so the change of regulation was not really necessary.

The draft Communication contained also special provisions on aid for non-European audiovisual works. The Commission showed concern about this aid, especially when granted to North American productions, and proposed to minimize the aid to less than 20% of the film budget.

Most of the stakeholders disagreed with this provision. They showed that the minimization of aid to big co-productions with non-European countries would  actually have had disastrous consequences: it would have lowered the quality of services and productions. Big-budget productions bring skills and know-how to Europe, so reducing the aid would mean making Europe less attractive. High-budget productions would then turn to other continents, leaving Europe lagging behind. This would also have severe repercussions on the European film industry capacity, and would probably lead to the loss of numerous jobs.

Even if those rules were dropped in the final Communication, the Commission will keep on monitoring the aid schemes for non-European movies and would eventually tackle the issue with a further Communication, should a distortion of competition arise.

Member States have two years to get their grant schemes to comply with the new rules.

You can buy the full report here.