Cinema Communication: European Audiovisual Observatory publishes new 'IRIS plus' report

The European Commission adopted its much disputed new-look Cinema Communication in November 2013. This re-vamped legal instrument lays down the rules by which the EU judges whether or not European film funds comply with EU state aid rules. It finally saw the light of day following an uphill consultation process with the industry and decision-makers, many of whom feared that new rules on territorial spending and the so-called subsidy race would scupper public film funding schemes. In its brand new IRIS plus report, the European Audiovisual Observatory, part of the Council of Europe in Strasbourg, examines the contents of this new 2013 Cinema Communication.

The Observatory's Legal Analysts, Francisco Javier Cabrera Blázquez and Amélie Lépinard, open with a useful overview of general EU rules concerning culture and state aid. They explain that market distortion by state aid is not permitted by EU legislation, exceptions to this being a.o. "aid to promote culture and heritage conservation". It is this cultural exception which allows European film funds to provide money for European film productions, according to their various and often complex rules.

Moving on to the original 2001 Cinema Communication, Cabrera & Lépinard explain that the initial rules stipulated the "cultural" nature of the project, 80% of the production budget being spent in the country providing the aid, the level of aid intensity (i.e. percentage of the total budget) at 50% maximum, and the prohibition of aid for specific film making activities such as post-production. Given that the validity of this document was extended three times, its final expiry date fell on 31st of December 2012.

Following a public consultation in June 2011, a draft communication was published in March 2012 subject to a further three month consultation period on this new document. Cabrera & Lépinard analyse this 2012 Draft Communication at length in terms of its scope of activities as well as various selected responses made by public authorities, film institutions and professional organisations. A revised 2012 Draft Communication was published in April 2013 followed by a public consultation ending in May 2013.

The final 2013 Communication was adopted in November 2013 and the report explains its differences with the original 2001 document. For example, the 2013 text allows aid "covering all aspects of film creation, from story concept to delivery to the audience". One of the most controversial of all topics during the whole process was the territorial spending obligations. The new Communication frees up the producer's spending obligations by potentially considerably reducing the amount of funding to be spent in the country providing the aid. The so –called "subsidy race" problem (countries vying with each other to offer the most attractive funding systems for foreign investment) has been solved by considering that "foreign production on a member state's territory may have a positive effect on the national audiovisual sector".

Cabrera concludes his lead article by emphasising the "relief and satisfaction" which welcomed the final document. It globally received a "thumbs up" from decision makers and industry representatives alike. The next two years will see the various member states bringing their aid schemes in line with the Communication. It will be interesting to see how the Commission monitors the so-called "subsidy race" or indeed how the compatibility of the 2013 Communication with the existing EU Treaties can be checked. The Observatory is clearly "watching this space"…

The Related Reporting section of this new report provides the Observatory's latest articles on recent developments on film policy in Europe, focusing on topics such as Germanys' recently amended film act or the increased VAT in Spain on cinemas, concerts and theatres.

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The final Zoom section written by the Observatory's' Film Analysts Martin Kanzler and Julio Talavera Milla provides a digest of the latest facts and figures on the European cinema industry drawn from recent Observatory publications. This includes statistics on European theatrical markets, the relative success of European and US films in the European Union, the total number of theatrical feature films produced in Europe, and the roll-out of digital projection in Europe's cinemas and assistance for cinemas in difficulty.

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