Strasbourg, 9 April 2002
The Imbalance of Trade in Films and Television Programmes between North America and Europe Continues to Deteriorate
For the publication of the first volume of the eighth edition of its Yearbook, the European Audiovisual Observatory is publishing its estimates of audiovisual trade between the European Union and North America. For the year 2000 the European Union/United States deficit is estimated at 8.2 billion dollars, or an increase of more than 14% from 1999.
The estimate arrived at by the Observatory is derived from a comparison of data from two American professional organisations (the MPA for the Hollywood Majors and the AFMA for the independent distributors) and the data published by various national sources based on enquiries to companies about European exports. This compilation raises various methodological problems but appears to produce more viable results than the traditional method of analysing banking flows, classically utilised in estimating the balance of payments.
Graph 1: Estimates of the trade of audiovisual programmes between European Union and North America (1988-2000) - USD Millions
Source : European Audiovisual Observatory
The Growth in Receipts for TV Transmission Rights
The growth in the deficit in 2000 is due basically to the growth in television rights receipts achieved by the Majors. These grew by 21%, rising from 2 124 million dollars to 2 570 million. The TV rights receipts of the independent distributors (members of the AFMA) have for their part diminished by 5.7% between 1999 and 2000, going down from 831 million dollars to 784 million dollars. Overall the cumulative receipts of the members of these two organisations have increased by 15.9%, rising from 3.8 billion dollars to 4.4 billion.
This growth contrasts with the statistics on the volume of transmission of imported fiction (cinema films and television fiction) by 101 Western European television networks. These statistics, also published by the Observatory, are drawn up each year by the British firm Essential Television Statistics (ETS). ETS's figures actually show, for the first time since the start of these studies (begun in the year 1994), that the volume of American fiction transmitted by the European networks has diminished: It fell from 222 884 hours in 1999 to 213 928 in 2000, its lowest level since 1994. Account should, however, be taken of the constant growth in market share of mixed co-productions between Europe and third party countries (that is to say, normally, co-production between a European country and the United States or Canada) which has risen from 1.8% in 1994 to 4.5% in 2000.
This striking contrast between the growth in American companies' TV rights income and the marked reduction in their presence on the screen is not necessarily a contradiction. The first point is that the networks whose programming is analysed by the ETS are the classical networks (public service networks, major networks financed by advertising and major "premium" film networks). Therefore account is not taken of theme channels, small pay-per-view channels, nor regional channels. However, all the indications are that the channels in these three categories, all developing, have fairly massive recourse to American programmes. On the other hand it might be considered that the growth in competition created by the multiplicity of channels allows the American distributors to increase their rental prices. This hypothesis is, however, difficult to demonstrate because there are very few statistics available on the "micro-economy" of contracts.
Graph 2: Origin of Imported Fiction Programmes (Film + TV Fiction) Transmitted by 101 European Union Networks in 2000
Source : ETS for the European Audiovisual Observatory
The Growth of Video Rights Income
The second growth area for American receipts in Europe is that of video rights. The receipts obtained by the Majors rose by 21% in 2000 compared with 1999, rising from 2 124 million dollars to 2 570 million. On the other hand, the video receipts of the distributor members of AFMA declined by 21.2%, falling from 416 million to 328 million. Overall the receipts of the American distributors therefore rose by 14.1%. This rise is easily explained by the strong growth of the video market in 2000, the year in which DVD took off. Although there are no precise figures on market share based on the origin of video products in the European market, it is clear that the Majors hold the lead position in this market, and it is likely that this position has been strengthened by the launch of DVD.The Weak Growth of Film Distribution Receipts
The receipts of American distributors from European cinema owners increased less significantly: they rose from 1 721 million dollars in 1999 to 1 750 million in 2000, or an increase of 1.7%. The Majors' receipts fell by 2.4% while the independents' receipts rose by 13%. This weak growth of American receipts is somewhat curious. Admittedly Gladiator did not achieve in 2000 this success of Star Wars in 1999, but according to the Observatory's estimates, the gross European theatrical receipts rose by 5.9% between 1999 and 2000 and the market share of American films rose from 69.3% in 1999 to 73.7% in 2000. Perhaps the Majors' increasing use of European national distributors may explain this difference between the considerable growth in gross box office revenues and the weak growth in net rentals. The difference may also be explained by the weakness of European currencies in relation to the dollar. It is likely that American distribution receipts from European theatres in 2001 will stagnate or even decrease, since, according to the first estimates published by the Observatory, the market share of American films has fallen to some 66% in 2001.European Exports to North America are in Decline
It is not easy to establish in a precise manner the level of receipts for the export of European films and television programmes to North America. This is because no regular measures are available except for German, French and British exports, but these measures are based on different methodologies and indicators. The receipts for European exports to North America were estimated at 827 million dollars in 2000, against 853 in 1999, or a fall of 3%. British companies take the lion's share, with 691 million dollars in 2000, against 705 in 1999 (-2%). The exports (including co-production receipts) of the French television programme producers increased by 9.6%, while the receipts of French exporters of films fell off very considerably in 2000.The Growth of Foreign Investment in Europe
For the first time the European Audiovisual Observatory provides an evaluation of foreign investment in the European Union's audiovisual sector. The Observatory has identified 264 audiovisual companies (not including cable distribution companies), registered in the Union which, in 1999 were under the majority control of investors from outside the community, against 234 in 1998 and 162 in 1995. This represented in 1999 total assets of 15.3 billion EUR, against 5.5 billion in 1995. The operating revenue of these companies rose from 5.9 billion EUR in 1995 to 12.8 billion in 1999. Of the 264 companies identified in 1999, 239 were controlled by United States' investors, representing 13.3 billion EUR of assets, or 87.2% of foreign assets, and with an operating revenue of 11.9 billion dollars, or 93.2% of the revenue of companies controlled from outside the community. This investment is taking place at every level of the audiovisual sector (production, distribution and exhibition, publishing distribution and retail of video, television theme channels).
Table 1: Deficit estimate of audiovisual exchange programmes between the European Union and North America (1995-2000) - in millions USD
Figures in italics represent estimates from the European Audiovisual Observatory
_______________________________________________________EUROPEAN AUDIOVISUAL OBSERVATORY, Strasbourg, France
Yearbook 2002 - Film, Television, Video and Multimedia in Europe, 2002 Edition,
Vol. 1, "Economy of the European Audiovisual Industry",
European Audiovisual Observatory, Strasbourg, 2002.
Contact: Dr. André Lange - tel.: +33 (0) 388 14 44 00 - Andre.LANGE@coe.int
Set up in December 1992, the European Audiovisual Observatory's goal is to gather and distribute information on the audiovisual industry in Europe. The Observatory is a European public service body comprised of 35 member states and the European Community. It operates within the legal framework of the Council of Europe and it works alongside a number of partner organisations, professional organisations from within the industry and a network of correspondents. In addition to its contribution in conferences other major activities are the publication of statistics and newsletters, compilation of databases and information readily available on the web portal.