EC flashes cash at Euro distribs

PARIS — The European Commission has unveiled a new system of cash incentives for distributors to encourage the release of European films within Europe.

The EC will pay European distribs a cash bonus for every ticket they sell to a Euro film produced outside their country. This will be worth up to $300,000 per film for each distrib, who will be required to plow the money back into buying and marketing more movies from other European countries.

U.S. companies distributing European product within Europe will not have access to the funds. In addition, if the plan works, it will squeeze U.S. indie pics trying to get into Europe as the distribs won’t have the same cash sweetener to release U.S. fare.

“The idea is to encourage local distributors to handle films that do not come from their own territory,” said Jacques Delmoly, head of the EC’s Media Program. “We have seen that one of the strengths of the Hollywood film is that it benefits from wide distribution. We need to continue to encourage European distributors to work with local pictures.”

According to Delmoly, the first funds will become available to distribs in September and will be calculated on ticket sales in 1996. Estimates are that distribs will tap into about $7 million this year.

How much distribution companies get per ticket will vary according to the nationality of the distributor and the origin of the film. Distribs in countries such as France and Spain, who already import a lot of European movies, will get less than their colleagues in, for example, the U.K. or the Netherlands. A Spanish film released in France will be worth 30¢ a ticket for a French distrib. The same pic will be worth 40¢ in the U.K.

That cash goes into an account to be reinvested in the form of co-production coin, minimum guarantees or P&A costs for future European pics. The reinvestment has to be made within two years.

Delmoly and his team have capped the maximum amount that any one film can generate in revenues for a single distrib. The limit is based on 600,000 admissions. If a British distributor has a smash with a French film and sells 1 million tickets, the extra 400,000 admissions won’t count.

“Part of the reason for the ceiling is that Media’s funds are not infinite,”

noted Anne Boillot, who has been instrumental in putting the initiative together. “You have years when a film like “Four Weddings and a Funeral” did massive business outside the United Kingdom, we estimate it sold 15 million tickets in Europe. If we didn’t have the 600,000 limit, it would mean that one film consumed a huge chunk of the Media budget which is allotted for the support of distribution.”

Although the latest Media Program initiative is designed to encourage the distribution of as many Euro pics as possible, Delmoly admitted there is a strong possibility that distributors will continue to target a small number of potential hits. “Obviously this scheme rewards people who have the films that perform strongly. It’s designed to reward success rather than necessarily push people to release films that do 350 admissions,” he said.

He was unrepentant on the issue that U.S. distributors will not get a dime from the new scheme. “It’s designed for Europeans,” he said. This means that while Warner Bros. is now starting to produce Gallic films, which could conceivably be released in Europe via Warner, the door to the EC cash will be closed to the U.S. giant.

Questions are expected to crop up over the nationality of individual films. The French consider Luc Besson’s English-lingo sci-fi pic “The Fifth Element” to be French, because it was majority-financed by Gaumont. That’s great news for London-based Guild, which is releasing the pic in the U.K. and can expect to earn the maximum amount of the incentive coin, providing the film does 600,000 admissions.

“I’d be interested to know what the nationality of a film would be if UGC financed a Jeremy Thomas project,” one industry insider said. “If the project is considered to be French, then presumably UGC doesn’t get any Media funding for the French release.”

Questioned on this problem, Boillot noted that “the country of origin will be the country which puts up the majority of the financing.”

Sales execs may also be tempted to look closely at the Media Program proposal, possibly increasing the asking price for pics which look sure to hit, armed with the knowledge that B.O. success will mean a new revenue stream for local distributors. At least one veteran sales exec, mulling over the price questions, told Daily Variety, “Yes, I could be tempted to push up prices given this new system, but I wouldn’t tell distributors that.”

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