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French Exhibitors Demand Netflix Release Its Cannes Movies in Theaters

PARIS — The selection of two movies backed by Netlix, Bong Joon-ho’s “Okja” and Noah Baumbach’s “The Meyerowitz Stories,” has triggered protests from France’s theatrical exhibitors guild, the FNCF.

A day after Cannes Film Festival’s topper Thierry Fremaux announced the lineup of the upcoming 70th edition, the French org issued a statement demanding Netflix to take steps to have both films released in theaters.

“While France’s exhibitors are neither questioning the independence of the programming of the world’s biggest film festival, nor the emerging of new international players such as Amazon which are contributing to the development and financing of films, we are contesting the festival’s choice (to select these movies acquired or produced by Netflix) which was made without consulting us,” said the FNCF.

According to industry sources, Netflix is already planning to unveil in Cannes an agreement with a French partner to release both movies theatrically in France, a market boasting Europe’s strictest regulations aimed first and foremost at preserving the interests of theatrical exhibitors. SVOD services have to wait 36 months after a film’s release in theaters to gain access to films in France.

The French guild also pointed out that Netflix is taking advantage of the French festival to promote its films in spite of the fact that it had shut down its Paris office in August.

“Netflix has been avoiding French regulation and fiscal obligations. These rules allow for the financing of our strong film industry and ecosystem which in turns allows for many French and foreign movies selected at Cannes to get made,” stated the org.

Although it closed its Paris office in August, Netflix continues to pay VAT in Paris due to a bill enacted in 2015 that obligates service providers to pay sales tax based on point of consumption/payment, rather than point of distribution. However, Netflix isn’t paying French corporate taxes, and it’s also not subjected to the investment quotas that applies to local subscription-based VOD services such as FilmoTV and Canalplay.

FilmoTV and Canalplay, for instance, must inject 15% of their revenues in European films and 12% in French movies since they have annual revenues exceeding €10 million ($10.6 million).

But Netflix, like Amazon, is facing new regulations in Europe. The European Parliament and Council of the European Union are examining a bill to get streaming services to contribute to financing of European works by having them allocate a percentage of their revenues to national film funds in the countries where they operate.

Separately, French authorities are also pushing to have these services subjected to the same investment obligations and programming quotas as local players. The competition services of the European Commission is also expected to vote on specific French draft measures aiming to impose operators like Netflix who distribute content in France but are not fiscally established there to pay a 2% tax (levied on revenues made in France) to the National Film Board (CNC).

The European Commission recently allowed Germany to impose a tax levy ranging from 1.8% to 2.3% of the turnover of Netflix and other SVOD services in Germany, even if those services don’t have a local outpost.

Netflix however pointed out back in March that it has invested $1.75 billion in European productions (either through acquisitions, original programming and co-productions). It has so far invested in 90 original productions outside of the U.S.

Netflix ordered last year a second season of “Marseille,” a political thriller series with Gerard Depardieu which marked its first original programming in France.

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