Industry Report: Financing
Study on the Role of Banks in the European Film Industry
by Peacefulfish (Media Consulting Group)
- The aim of this study is to provide a current overview of the film banking landscape in Europe with a specific emphasis on making recommendations to the MEDIA Programme for actions that they can take to increase the access to bank loans for production companies.
In late 2008, the MEDIA Programme of the European Commission contracted peacefulfish to carry out a study on “The Role of Banks in the European Film Industry” as well as to organize a roundtable discussion focused on this subject.
The idea was to gather the perspectives of the key players in this sector both through interviews and through the roundtable discussions to better understand a specialized set of banking services that, among other factors, has been heavily impacted by the economic crisis.
To conduct a study on film banking at the height of the biggest recession since the Great Depression makes perfect sense. Banking is at the heart of the economic crisis and what better time than now to establish an overview of the sector and determine where best the MEDIA Programme can intervene to stimulate lending.
The European audiovisual sector in general—and film production in particular—is a growth industry that generates both cultural and economic benefits across many borders. But without the ability to borrow capital, production companies cannot grow. Liquidity is the key to evolving from a small to an established producer, which means the availlability of film banking services is vital to the growth of the film industry. Unfortuantely, for most film production companies, a traditional banker/small business relationship is out of the question.
With the prototype nature of filmmaking in mind, financial institutions that offer film banking services have had to develop special lending criteria and specialized lending products that both satisfy their credit committees and meet the needs of individual productions. The risks associated with such specialized lending are often quite high while the profit margins are usually quite low.
The three main objectives of the study outlined by the MEDIA Programme of the European Commission and peacefulfish were to:
1) provide the Commission with a current overview of the film banking landscape in
Europe with a particular emphasis on the role of banks, subsidiaries of banks, and
guarantee funds in the film industry value chain
2) assess the involvement of financial institutions in the film banking sector— including those not yet involved and those only slightly involved—to understand their potential future interest: what is the market for film banking? where are the growth opportunties? etc.
3) organize a roundtable discussion to bring key players from the film banking sector together with representatives from the MEDIA Programme and the European Investment Bank to inform the MEDIA Programme’s future actions with regard to stimulating access to loan capital for production companies.
In accordance with those objectives, the study was divided into three phases carried out
from November 2008 through April 2009:
1) data collection including a survey of the production output of each of the 32 MEDIA countries of the European Union as well as interviews with representatives from banks, subsidiaries of banks, and guarantee funds in order to define both the main financial services provided by these institutions and the range of lending models currently being used
2) the organization of the roundtable discussion, which took place in London on April 21st 2009 and was attended by approximately 25 people including representatives from banks, subsidiaries of banks, guarantee funds, the MEDIA Programme, the European Investment Bank, peacefulfish as well as several independent experts
3) revising the intermediate draft of the study submitted to the Commission prior to the Roundtable with specific emphasis on honing the study’s conclusions and refining its recommendations with respect to the range of ideas exchanged during the Roundtable
As a result, much can be derived from this study regarding the relationships between bankers and producers; however, an exploration of film banking from the producers’ point-of-view could also be undertaken as a supplement to this study in order to establish a broader picture of banking’s impact on the audiovisual industry as a whole.
See the study
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