03/07/2014 - The new communication on cinema was awaited with great trepidation by regional funds, but in the end, territorial effects prevailed over uncontrolled competition.

With the so-called Cinema Communication from 14 November 2013, the European Union Commission set up a new and more solid base for the financing of cinema productions. The communication was preceded by intense negotiations because Joaquín Almunia, the European Commissioner for Competition, wanted to undertake cuts to regional funds against the member states’ and the European Parliament’s will. A new regulation became necessary because the one created in 2001 only touched state subsidies for production funding: it needed to be extended towards all audio-visual products, from conception to screening, while also taking into account changes due to digital technologies.

The new regulations take all these aspects into account and leave member states greater room for manoeuvring and determining what might enter into the definition of “cultural activities”. Therefore, it is now possible to guarantee funding for a larger range of activities: for instance, the digitalisation of cinemas as well as transmedia and crossmedia projects. The extension of the Cinema Communication to include these aspects was never put into question. What was questioned was the loosening – wanted by the Competition Commission – of territorial spending obligations. The European Film Agency Directors group(EFAD), member states, all film funds including regional funds from the Cine-Regio network, and the European Parliament did not support this intended relaxation of territorial rules.

The territorial effect is to remain
There have always been limits to territorial restrictions of film funding, but with his proposed legislation, Joaquín Almunia had intentions to adapt rules for the audio-visual sector to general EU laws. This would have meant a drastic reduction of territorial spending requirements for funding recipients, with regions no longer able to impose funding criteria that are linked to a use of local resources like goods, services and employed crewmembers.

As a result, regional funds supported with public money as well as member states with their tax incentives would have had to subsidise projects not benefitting the local or national culture or economy. Under these conditions, most funders would no longer have been able to justify their use of fiscal resources and their very existence would have been put into doubt.

Cinema funding not only supports culture, it also supports the culture industry. This mission costs the approximately 250 European funders around €3 billion a year. Out of this amount, about two thirds are comprised of incentives and subsidised loans, with the last third consisting in tax reliefs. Regional funders, like national fiscal incentive models, tie their financial help to territorial spending obligations that will in turn support their own cinema industry.

Given the resistance Joaquín Almunia’s plans were met with, he had to consult industry representatives three times over the last three years in order to get to an agreement. Funders were able to impose their way in the end: obligations towards regional spending will not change. Just as before, film funds will be able to establish that at least 160% of the amount conceded will have to be spent in the region granting it.

In a press release, the EU explained the maintenance of the regional principle. “Such a restriction to the rules of the EU Single Market is justified by the promotion of cultural diversity which requires the preservation of the resources and know-how of the industry at national or local level.” Paradoxically, this has always been the consensus between politics and the industry, as well as the main argument for the fight against the cancelling out of regional spending obligations.

The regulation concerning funding amounts has not changed either: a maximum sum of 50% of a project’s production budget can be funded, and distribution and advertising costs may also be funded up to 50%. Unlike before, co-productions financed by different member states will now be able to be subsidised with up to 60% of production costs. There are no limits for funding of screenplays, film projects and “difficult audio-visual works” (a definition established by each individual member state according to subsidiarity principles).

The reactions
All European funders who had been awaiting the announcement with trepidation were relieved. “Our most important demands were met,” said Charlotte Appelgren, head of Cine-Regio, the network of 43 European regional film funds. “Namely, the reinforcing of the territorial effect and the right of individual regions to autonomously define their own cultural policy.”

Eberhard Junkersdorf, president of the German Federal Film Board FFA (which administers the German Federal Film Fund DFFF), was also pleased, especially with the definition of territorial spending obligations. “I am happy that the European Commission welcomed our proposals. In the long run, guaranteeing the strengthening of the cinema industry and the consolidation of cultural diversity will only be possible by maintaining sufficiently strong regional or national spending obligations for film funding.”

Davide Bracco, interim president of the Italian Film Commission and president of the Film Commission Torino Piemonte, announced a stronger collaboration between Italian regional funds. “From our perspective, all the while continuing to highlight individual local landscapes and cultures, we are open to coordinating more often with national groups, operating on common intentions and wave lengths.”

As one of the major regional Italian funders, BLS – South Tyrol's Film Fund and Commission – also reacted positively to the news. “We are very pleased with the new regulations, which create an adequate context for our financing programme and for the production-geared Italian national tax credit, thereby guaranteeing our on-going work,” said Christiana Wertz, Head of Film Fund & Commission at BLS.

Thomas Steiger – with grateful concession from the BLS Film Fund & Alto Adige Commission http://www.bls.info/it/newsroom/film-location/le-nostre-pubblicazioni

(Translated from Italian)