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10 Things We Learned About Multi-Billion-Dollar Soft Money in Europe

Funding broadly holds, fiscal incentives rise, but a question mark hangs over future broadcaster contributions

Julio Talavera
Courtesy of Julio Talavera

LOCARNO — Soft money may never have had such a decisive impact on filmmaking in Europe as this decade. On average, public-sector film funds spent an whopping average €2.29 billion ($2.5 billion) on movies every year over 2010-14.

And funds rep just one of the main public pillars – with fiscal incentives, and direct TV network investment obligations – on which Europe’s film industry rests, according to a new report, “Public Financing For Film and Television Content,” published by the European Audiovisual Observatory and presented Aug. 7 at Switzerland’s Locarno Festival.

Who grants these moneys, and how they are spent, seems crucial to the future of Europe’s tim industry. On a gloriously sunny Saturday morning, the report’s author, EAO’s Julio Talavera, drilled down on details. In some ways, the report’s findings are reassuring. But there are potential political storm clouds on a not-too-distant horizon.

10 points from Talavera’s report and presentation.

1.The good news. It is simply not true that there has been a shift from directing public funding to fiscal incentives in Europe, Talavera said. The total average yearly spend for film and audiovisual funds in Europe rose 13.4% over 2010-14. And the number of funds held steady.

2.That said, fiscal incentive finance may be growing even faster. Enrolling up-dated findings from a study commissioned by the EAO from Oldsberg SPI in 2014, Talavera suggested the number of fiscal incentive schemes operational in Europe spiked from 12 in 2005 to 26 in 2014. “Fiscal incentives … are regarded as delivering broad-based advantages, for example in terms of employment, heritage awareness, consumer interest, economic growth, exports, tourism and so-called national ‘soft power,’ the report reads.

3.Money from broadcasters obliged to invest in film has, however, taken a hit. Tabbed as a percentage of networks’ revenues, contributions by broadcasters to European funds plunged from €790 million ($876.9 million) in 2011 to €682 million ($757 million) in 2014, hammered most probably by financial crisis and the migration of advertising from traditional media to the Internet, Talavera ventured in his presentation at Locarno.

4.Euro producers will always have Paris. France accounted for a massive 42% of the incoming resources for film and audiovisual funds in Europe over 2010-14, mostly due not to direct subsidies – as is often fondly thought – but massive mandatory contributions from broadcasters to the CNC French film-TV agency.

5. In public fund spend rankings (not including fiscal incentives), France’s average annual spend (about €830 million: $921 million) more than doubled Germany’s (just under €400 million : $444 million). The U.K.’s (some €120 million : $133 million), Italy’s (€100 million : $111 million) and Spain (€85 million : $94 million) trailed far behind.

6.Public funding in Italy France and the U.K. grew over 20% during the period; Spain’s plummeted over 30%, Talavera’s EAO report noted.

7. Funds spent by far most money on theatrical film production, an average annual (€902.9 million : $1.002 million) over the period. Development (€45.4 million: $50.3 million), distribution (€123.9 million : $137.5 million) and promotion (€71.9 million : $79.8 million), arguably categories where national industries need funding most, paled in comparison. Theatrical film funding also rose in general during the first five years off the decade, most notably in Italy, Luxembourg, Austria and Switzerland.

8. Again, that said, most new schemes launched over the period have either been tax shelter, rebate or credit schemes, or a diversification of funding activities. “There is a trend towards concentrating the majority of new resources around straightforward automatic fiscal incentives,” the report concludes.

9. Another, and disquieting, conclusion: Given “the fragmentation of the market, which is mainly due to the launch of on-demand services,” there may come a time when it “proves unrealistic for broadcasters to continue to support the film and audiovisual industry to the same degree as they have until now.”

Obligations for on-demand services are only in place in six European territories in Europe: France, Germany, Spain, Portugal, Hungary and French-speaking Belgium.

10. The number of feature films produced in Europe hiked 7.5% over the period to an enormous 1,603. Meanwhile, however, average feature film budgets showed “a remarkable decrease in most countries,” Talavera noted. “Since public funding and fiscal incentives for theatrical production has increased between 2010 and 2014, both overall as well as in most relevant countries, this may indicate that most resources are concentrating around fewer films, therefore supporting the thesis that a gap is growing between high-end and low-budget productions,” the report concludes.

Talavera did not say this in Locarno, but if this scenario proves true, Europe’s political classes may come to question the audience results of a mass of semi-disenfranchised titles produced in Europe.

The mid-term future of public film funding in Europe, as is true of so many things about Europe thee days, remains shrouded in  a certain disquieting uncertainty.