The European Commission and the European Investment Bank Group (EIB Group) have joined forces to offer the European film and audiovisual industry a range of financial products and budgetary aid instruments enabling it to take up the cultural and technological challenges it faces in a globalised economy.
The initiatives of the two institutions were presented on 17 May 2001 in Cannes by Ms Viviane REDING, European Commissioner responsible for cultural and audiovisual issues, and Mr Philippe MAYSTADT, EIB Group President, at a meeting of financiers and representatives from the European film and audiovisual sector. These round table discussions underlined the well-tailored and complementary nature of the facilities proposed by the EIB Group and the financial assistance provided under the European Union's Media Plus programme aimed at:
- Enhancing the competitiveness of the European film and audiovisual industry by fostering development of transnational ventures allowing operators to benefit fully from the size of the European Single Market;
- Promoting the creation of European cinematographic, television and educational works;
- Acting as a catalyst for support from the financial and banking sector for schemes undertaken by European audiovisual firms, large groups and SMEs;
- Assisting the European audiovisual industry to adapt to new technologies and the digitalisation of production, distribution and archives.
"I cannot accept the fact that American films account for 75% of box-office takings in Europe while the EU produces more films than the United States. I will not sit back and watch our young artistic talents and audiovisual entrepreneurs disappear across the Atlantic", Viviane Reding declared. "Philippe Maystadt and I have decided to take concerted action in the form of practical measures. Today, in Cannes, we have presented these measures and discussed them with financiers and professionals working in the audiovisual industry. We will now put them into effect", the European Commissioner added.
The EIB Group and the Commission have identified the following four areas where they will join forces to maximise the impact of their respective operations and make best use of available European resources:
Training: allowing banking sector staff and SME financial consultants to participate in Media Plus-supported training programmes in order to increase their knowledge of the various branches of the audiovisual industry; the main objective is to enhance the financial and banking community's understanding of the particularities of financing audiovisual schemes and building teams of specialist venture capital fund managers;
Development: allowing the EIB Group to finance, as a priority, projects with a pan-European dimension emerging from cooperation between companies receiving Media Plus financial assistance;
Distribution: simplifying eligibility rules for Media Plus assistance for transnational distribution of films or other works where these have been produced by one or more enterprises financed, directly or indirectly, by the EIB Group;
Finance: offering the Commission scope to encourage access to the counter-guarantee facilities made available to the banking sector by the EIB Group (through the EIF, its specialist subsidiary) with a view to covering portfolios of loans to SMEs in the European audiovisual sector.
THE EIB GROUP: MORE THAN EUR 500 MILLION IN MEDIUM TO LONG-TERM LOANS AND VENTURE CAPITAL
The EIB Group's financing activity will take two forms: lending by the European Investment Bank for financing medium and long-term investment, and operations involving its specialist subsidiary, the European Investment Fund (EIF), for strengthening SME equity and providing guarantees. Deploying a variety of financial engineering techniques in partnership with the European banking community, the EIB Group aims to increase the volume of funds available and improve the financial terms offered to those operating in the European film and audiovisual industry.
Initially scheduled to last for three years, the EIB Group's "Audiovisual i2i" will bring together substantial financial resources: estimates based on initial operations currently under appraisal suggest that the EIB Group's lending at the outset will exceed EUR 500 million.
This commitment by the EIB Group is being taken forward on three complementary fronts:
- EIB medium to long-term financing, in partnership with the banking sector, for large private or public- sector television and audiovisual production and film distribution groups to cover their infrastructure investment needs (studios, digitalisation facilities, broadcasting stations, etc.), creative enterprises (production of film "packages") and distribution companies (digitalisation of catalogues). Such operations, which could take the form of structured finance with lending terms tailored to the characteristics of projects financed, will focus on the medium to long-term segment (5-10 years). They are designed to compensate for certain weaknesses inherent in the industry compared with its global competitors and support establishment of activities benefiting the numerous SMEs to which work is subcontracted by such groups.
- Opening of EIB credit lines ("global loans") to banks specialising in finance for small audiovisual production companies, enterprises creating or using audiovisual technologies and subcontracted firms. Some of these global loans could be supplemented by State aid for film and television production, while others could include a profit/risk-sharing element and benefit from external guarantee facilities.
- Financing of dedicated audiovisual venture capital funds through EIF equity participations. Acting as a "fund of funds", the EIF will thereby extend its activity into a highly specialised sector in which the lack of financial resources and pan-European players is hampering establishment of an effective venture capital market. Its operations will not only consist of financing venture capital funds (VCF) targeting the audiovisual sector, but also multi-sectoral VCFs with interests in new technologies and audiovisual media.
THE EUROPEAN COMMISSION: EUR 400 MILLION UNDER THE "MEDIA PLUS" PROGRAMME
The EIB Group's "Audiovisual i2i" is to be implemented in close cooperation with the European Commission's Media Plus programme. With an aid budget of EUR 400 million over 5 years (2001-2005), up 30% on the previous programme (1996-2000), Media Plus comes into play both downstream and upstream of production, by supporting the distribution and promotion of audiovisual products (films, television films, documentaries, animated films and multimedia) as well as by co-financing project development and further training of professionals.
- EUR 50 million to support training of audiovisual professionals in the fields of: audiovisual programme production and distribution management (finance, copyright law, marketing); the deployment of new technologies in creating and disseminating audiovisual content; and scriptwriting.
- EUR 350 million to foster development, distribution and promotion of European cinematographic and audiovisual works. The Media Plus programme helps independent audiovisual companies in Europe, often SMEs, to invest in development of television or cinematographic works for both the European and worldwide audiovisual markets. Media Plus also encourages the use of digital technologies in the development and distribution of audiovisual products. Efficient marketing of these works, essential for the European audiovisual industry, is a priority of the Media Plus programme. Under the previous Media programme (1996 to 2000), the proportion of European films seen outside their country of origin grew from less than 14% to over 22%. The objective of the new programme is to enable even more Europeans to discover cinematographic works produced in other EU countries by supporting the creation of cinema networks, cooperation between operators and distributors and promotion of European works at professional events and international festivals.