Support systems for European cinema and audiovisual industries are living entities and as such are frequently modified. This is pêrhaps even more true at a time when signs of renewal can be seen in national audiovisual and cinematographic industries.

The whole landsacpe of public support systems for the cinema and audiovisual industries is depicted, portraying the great diversity of national and regional policies. This overview of the situation enables us not only to pinpoint the originality of cinema and audiovisual policies in each country, but also to identify their common elements. Through this study we gain an insight into the wealth of policies which have sprung up and the flexible way in which these are adapted to specific national situations, whilst appreciating the need for aid policies on a European level.

This work draws on an in-depth study carried out by the National Cinematographic Center in Paris and the European Audiovisual Observatory and provides information on the sums of money distributed.

1. Summary: The Main Characteristics of the Funds in Europe

Each year, more than 500 million ECU are allocated by the national and regional funding bodies of the European Union, of which 300 million ECU is allocated in France and 130 million ECU in Germany: the remaining 70 million being spread among the other countries. Among these is the United Kingdom where, since the establishment of the National Lottery in 1995, the financial involvement of the public authorities has grown very considerably. This increase has somewhat modified the general setting for public funding available to film and audiovisual production for the period 1996 à 1998. To this figure should also be added the 85 million ECU allocated annually by the European funding bodies such as Eurimages and the MEDIA II programme of the European Union.

While every European country funds its film and television industries, each country has its own way of organising its funding system to include different ingredients. Nevertheless, this diversity operates within the context of common objectives.

Two questions are central to the various approaches: the account taken of the two dimensions of the film and television funds- the cultural and the commercial- and the dialogue with the industry in framing the public funding bodies. In this respect, the analysis shows that, without exception, the approach of funding productions is more widespread than that of funding companies.

This both reflects the nature of film and television production activity as being centred on individual projects, and the somewhat overdue account taken of the production company as the key unit of this industry.

1.1 Common Objectives

1.1.1 Writing and Production are Central to all the National Funding Mechanisms

Public funding spread in Europe at the end of the 1960s, and mainly focused on the production sector. This still accounts for almost 90% of public funding, except in Germany and France, which nevertheless devotes more money to it than the other countries. However, only Belgium, Greece, Ireland and Luxembourg concentrate all their efforts onto it.

At the beginning of the 1990s, funds for the stages prior to production spread both at regional and national levels. Currently, they exist in all the countries studied, but in more or less well-developed forms. They account for between 16% (Luxembourg) and 1% (France, Norway, Italy) of the money available to the production sector. They are mainly funds for project development, rather than scriptwriting, with funds for pre-production being fairly unusual.

These funds for work prior to production are selective, and allocated on artistic criteria to feature films, and also to television productions where television is supported at the production stage. In Germany, France and Portugal, producers may use part of their automatic funding to finance work in advance of production. Furthermore, with the Centre national de la cinématographie in France, and certain of the German Länder funds, producers can receive funding to develop several projects in parallel.

A huge majority of the direct funds deal with individual productions, up to 100% in Luxembourg, Norway, the Netherlands and Portugal, with France being the country which devotes proportionately less resources to it (79% of funds allocated).

1.1.2 Productions as a Higher Priority than Companies

While it can be seen that the direct funding mechanisms, whether automatic or selective, tend to prioritise funding for, mainly film, productions, there are some specific mechanisms, especially regulatory measures, and banking and financial engineering, addressed directly at production companies.

Since film and television production is essentially an activity which is composed of a succession of individual projects, it is perfectly sensible that a significant proportion of the funds is primarily dedicated to these. Historically, and a little schematically, it can be seen that the public authorities' approach based on selective funding for projects coincided with a somewhat artisanal nature and vision of production activity (1960s to the beginning of 1980s). The development of funding mechanisms for production companies during the 1980s came at the same time as the growing argument for the economic sector. It is also interesting to note in this connection that it is at this very period that a precise definition of a producer as an economic entity is introduced into the national legislations dealing with film and television.

The creation of direct and indirect funds for small to medium enterprises in the media sector stems from a desire to bring about structural change, which only strong and durable companies can guarantee.

The media enterprise is the main objective of the new English National Lottery scheme, introduced in 1995 for a period of five years. It focuses on the structuring effect of funding on a well-co-ordinated industry by means of commercial franchises, consortia of independent producers with a central unit responsible for editorial policy and a common distribution policy.

Finally, fiscal incentive measures, such as Section 35 in Ireland, aim at an economic and employment impact by implicitly strengthening small and medium-sized production companies.

The size of budgets and the difficult balance in time and amounts of finance between the different elements - producers' own investments or their equivalents, sales and distribution advances (theatrical, television, video, merchandising etc.), short term bank loans; vital for cash flow, and suppliers credits - demonstrate the extent to which film and television production has become a more industrialised activity in the countries of Western Europe. This is, however, not yet true of Central and Eastern European countries, still undergoing the effects of privatisation and restructuring.

1.1.3. Funds for Television Productions in the Majority of the Countries

The development of television, prompted by the appearance of new companies, particularly commercial ones, led to the introduction, during the 1980s, of a number of funds for television production, when, until that point, it had been only the film sector which was supported by public funds. However, in most countries where television projects are not excluded from public funding, there is not always a clear distinction made between film and television projects which have been supported.

Almost all European countries have introduced specific funds for television writing and production. However, the levels of funding vary.

In France, television production receives the larger proportion of financial resources (66%, compared with 33% for film production). ). It is also the country in which the contributions of the television companies are the highest, and where there is a very clear distinction made by the CNC between the budgets for film and those for television. Furthermore, a special automatic fund for television production has been established at regional level, and only Rhône-Alpes Cinéma has decided to exclude television productions from its funding.

In Germany, no Federal funding is given to television production, although the Filmförderungsanstalt (FFA) receives financial contributions from television companies. At Länder level, only three funds give no funding to television productions. However, while 30% of Länder production funds are for film production, 11% are specifically directed at television, and 59% to either type of production without distinction.

The situation in Spain is similar to that in Germany. At national level, the Institute of Film and Television Arts (ICAA) only supports film production, while all the funds established by the autonomous communities support both kinds of production. In this country, the television companies do not contribute directly either at national nor at the autonomous community level to public support.

In the United Kingdom, all the funds of British Screen Finance (BSF) and the National Lottery are devoted to feature films, and this is also the case with the Glasgow Film Fund. The other regional agencies fund film and television projects without distinction, and the BFI accordant jusqu’en 1998 certain funds available to one or the other. In this country 92% of production funding is devoted to film production.

Looking at the sums given solely to feature films, it is Italy which contributes the greatest amount (91 million ECU), and it does not support television production at all. France is in second place with 59.36 million ECU, Germany only contributing 34.42 million ECU strictly to feature film production, and the United Kingdom giving it almost 26 million ECU. However, if we add the resources allocated to feature films to those which could be available to them (but could equally be given to television productions), then the resources in Germany grow to 66.78 million ECU, while the French resources represent 59.56 million ECU.

Today only a small number of countries provide no funding for television productions (Greece, Iceland, Italy and Sweden). But certainly some agencies have limited their funding solely to film productions: the ICAA in Spain, the FFA in Germany, and the BSF in the United Kingdom are the larger of them. As for the regional agencies, on the other hand, there are few that do not fund television productions.

1.1.4. Finding a Balance Between Economic Considerations and Cultural Aims in the Selective Funds

Whether at national, regional, European, or international level, the challenge and the problems in constructing public film and television funding agencies lie in the subtle balance between cultural aims and economic considerations, particularly with selective funds, where the link between a production and its market is not directly established.

Since selective funds are generally created to correct the functioning of the market and to act as a nursery for new work (through funds for short films and first and second films) and for artistic experiment, the cultural aspect is predominant. Nevertheless, the need to take account of the financial viability of a project, the track record of the director and producer, as well as the requirement for the assessment of having minimum guarantees and/or television pre-sales in place, will guarantee the necessary attention to market realities.

These dual objectives and the economic and cultural preoccupations, like the objectives of the MEDIA II programme, are a sign of a certain maturity in the system. MEDIA's overall objective is to promote and strengthen the European film and television industry by improving its competitive capabilities, particularly at the level of small to medium enterprises, and taking account of the cultural dimension of the sector. In most of the Western European countries these two kinds of objectives are met by the co-existence of economic funding mechanisms and mechanisms aimed at culture, such as funding for new directors and short films.

1.2. Some Distinctive Features

1.2.1. Public Funds Mainly Financed by Public Contributions...

The European public funding agencies are broadly based on four main sources of finance:: contributions from the public purse, income from special taxes on the sectors of cinema and television distribution ,  contributions from television companies and own income (reimbursements, etc.).. They still receive the majority of their financing from the public purse. This accounts for 100% of the financing of the funds of five countries, including Spain and Denmark, and more than 50% in six other countries, including Italy, Sweden and Switzerland. It accounts for between 30% and 10% in Norway, the Netherlands, France and Portugal. The regional funds are primarily financed by the regional authorities, often solely, as in Spain, Switzerland and France - the exceptions being Rhône-Alpes, Haute Normandie and Franche-Comté, which also receive contributions from the French government.

1.2.2. ... but with Significant Levies on the Resources of the Market in Several Countries

With the growth of new formats and markets for the exploitation of film and television productions, cinema exhibition is now relatively less significant for the receipts of a film. Competition with these new formats and the general drop in admissions in the 1980s have weakened the financial base of those public funding agencies solely based on a parafiscal tax on box-office receipts. This became alarmingly apparent in the period of transition and financial reform of the film and television economies in the Central and Eastern European countries. Indeed, in these countries, the budgets which financed the public funding agencies came mainly from receipts - in free fall - or a tax on admissions.

In seven countries a tax is raised at the point of exhibition and is paid into the budget of the national public funding agency. This income is significant in each of the countries, even if it is only in Norway that it is the main financial source for public funding, to which it contributes 70%. These taxes account for 37% of public funding in Sweden, 24% in Finland and in France, 21% in Germany, 10% in Greece and 8% in Italy, where this income is exclusively paid into the automatic fund for film production.

With the aim of developing and ensuring the stability of the financing of their public funds, France, the Netherlands and Portugal have created taxes on the advertising income and turnover of the television companies. In Portugal, 90% of the public funds administered by IPACA are financed through the income of a tax raised on television advertising. In the Netherlands, 69% of direct public funding comes from television income. On the one hand, the fund to promote cultural television (STIFO) receives 1/16th of the advertising income of the public service broadcasters, on the other the COBO-Fund receives the rights fees paid by the Belgian and German cable operators to the Dutch television companies to screen their programmes.

In France 59% of public funding (a sum of 217.43 million ECU in 1995, which is the largest contribution to a national public fund)comes from a tax raised at 5.5% on the turnover of the television companies (subscriptions, advertising, fees). Based on the model of this tax, a tax on video production was also created.

1.2.2.1. The Contribution of Television to Financing Public Funds

The production sector is being increasingly financed by the broadcasters, from between 30% to 74% depending on the country, and in the forms of direct contributions to the budgets of the funds, via a special tax or also in the form of co-production or a pre-sale agreement.

The television companies contribute to the budgets of public funds through direct contributions, or through tax in Germany, France, the Netherlands, Portugal, Norway, the United Kingdom and Sweden. They represent the main form of finance in Portugal (90%), the Netherlands (69%) and France (59%). While the television companies only finance the budgets of the national film and television public fund in France, Portugal and Sweden, they come indirectly in the United Kingdom to support specific schemes created by the BFI, the Arts Council of England, or funding agencies at regional level. In Germany, the national television companies ZDF and ARD contribute to the budget of the main public funding agency, the FFA, dans le cadre d’un accord while the third public service channel and some private channels support several funds established at the level of the Länder The first agreement between the FFA and the private television companies was abrogated in 1995, and a second agreement providing for an annual contribution of 30DM million was only arrived at for the 1996-1998 period, after long and difficult negotiations, especially around the issues of what the companies would receive in return. In the Netherlands, Norway and Denmark, funds specifically financed or co-financed by the television companies have been established to support productions intended for those television companies or which are being co-produced by them. .

France and Portugal are the only two countries where taxes on the income of television companies go towards the budgets of national public funds, the CNC in France and IPACA in Portugal. In Sweden, the budget of the Swedish Film Institute, responsible for public funding, also receives money from the television companies, but this is as a result of an agreement signed between the State, the terrestrial television channels and the film industry. Under this same kind of renewable contract, the German public service television companies contribute to the German public fund, administered by the FFA, while in 1995, the private television companies, via their association the VPRT, refused to renew their contract with the FFA. In the negotiations
which followed, the private broadcasters made it a condition of signing a new agreement that the equivalent of 25% of funding should go to television drama, documentaries and films for children and young people.

Since 1989, the film and television economies in the Central European countries, especially in the production sector, have had to face dramatic changes: The privatisation of the state production entities, reduction of funds, galloping inflation and the lack of alternative sources of finance. In this situation, the contributions of Hungarian and Polish television have been, and remain, vital in maintaining and developing national production. In Hungary the public service broadcaster MTV has created a special fund, the Telefilm Foundation, in collaboration with the Hungarian Film Foundation, providing additional funding of some 350 million Forints (or 1.9 million ECU) per annum. In Poland the public service broadcaster, because of its excellent financial condition, has been able to finance up to 75% of film production, thereby offsetting the weaknesses of public funding in the period of transition. The creation of the Pay-TV channel, Canal+Polska, with the obligation to support and invest in local film production, has made it possible to add a further 1.6 million ECU per annum to Polish film and television production.

Finally, the public service or mixed economy television companies like Channel Four in the United Kingdom, TV2 in Denmark and in Norway, the Franco-German channel ARTE, acting as commissioning companies, make a structural contribution to the development of independent production through their on-going commissioning of independent producers and the resources which they invest in national and European productions.

It should also be mentioned that, in several countries, television companies are involved through co-productions or pre-sales under general agreements or investment requirements.

1.2.3. The Modest Presence of Automatic Funding which Fulfils a Wide Variety of Functions

Automatic funds, generally based either on actual receipts or estimated ones, create a strong link between a production and its market. Eleven countries have established automatic funds (in Switzerland the fund was set up in 1997 on a pilot basis). In the United Kingdom it was abolished in the 1980s. . They account for 48% of funding to the production sector in Spain, 71% in France, 10% in Germany and 8% in Italy. Looking only at the production funds at national level, they account for 59% of the production funding allocated by the ICAA in Spain, 47% of the funds of the FFA in Germany, 72% of the funds of the CNC in France and also 8% of the funds allocated by the FUS in Italy. France allocates 131.37 million ECU to the production sector as automatic funding,, while only 10.38 million ECU are allocated in this way in Spain, 7.31 million ECU in Italy and 7.28 million ECU in Germany. The French automatic funds may be given to film or television productions, while, in the three other countries, they are available only to film production.

Basically these funds only exist at national level, although the Catalan Community in Spain and the Fondation vaudoise du cinéma in Switzerland have also adopted automatic funding schemes. Furthermore, similar systems in the form of compulsory savings have been created by the German Länder funds of North Rhine Westphalia, Hamburg and Berlin-Brandenburg.

1.2.3.1. Terms and Conditions

Where they exist, the automatic funds operate under very varied terms and conditions:

they are not necessarily funded through a levy on box-office income; this is not the case in Austria, Belgium, Denmark, Spain or Switzerland;
allocation is not always in proportion to a film's receipts. In Belgium, Sweden and Norway it takes the form of a bonus to the completed film; in Spain a film's budget level is taken into account; it is based on estimated admissions in Denmark and is repayable beyond a certain success threshold;
there is not always the requirement to reinvest in production; this requirement only exists in Germany, Austria, France, Italy and Portugal;

Several countries have set up automatic aid systems for other sectors than production (exhibition, distribution). However, France remains the only country to extend this type of mechanism to all other sectors: exhibition, distribution, video publishing and audiovisual production.

1.2.4. Funding Other Sectors

Taking the example of France, where television makes a direct contribution to film financing at a level of 40%, and the CNC at a level of 15%, it is evident that direct funding mechanisms cannot entirely resolve the question of funding for development, production as such and post-production, since pre-purchases by the television companies are normally paid after a film has been released. This realisation has led to the creation of a number of special arrangements aimed at facilitating and guaranteeing short term bank loans, thanks to which cash flow can be handled at a reasonable cost.

While Greece and Ireland are the only countries to concentrate all their public funding on the production sector, the resources dedicated to distribution and exhibition in Europe are very modest. The funds provided for both the sectors of distribution and exhibition account for less than 15% of public funding, except for France (26%) and Germany (20%). Finland provides 14% (4% for distribution and 10% for exhibition), Spain 8% (4% for distribution and 4% for exhibition), Norway 6%, Denmark 4%, while Sweden and Italy only provide 1%.

Funding for these sectors is still rare in the regional funds, except in Germany where films which have received
production support, may receive a subsidy for the distribution, dubbing/sub-titeling or production of copies.

1.2.5. The Importance of the Regions

It was from the end of the 1980s that independent agencies responsible for public funding were established in the regions, whether in federal states (Germany, Switzerland, Austria and Belgium) or centralised states moving (at that time) towards decentralisation (Spain, France, the United Kingdom). The financial levels of these agencies varies from country to country: 64% of total public funding in Germany, but only 16% in Switzerland, another federal state,while they account for 25% of public funding in Spain, where decentralisation is significant, and 2% in France, although regional funding agencies are on the increase there.

Basically, the regional funds take the form of support for the production sector, generally given in the form of a grant, on a selective basis. While the essential criterion is the residence of the applicant - director or producer - within the region, this is often replaced by criteria relating to regional interest. The regional interest in a production is assessed on the basis of a package of economic and cultural criteria. A supported production is expected to have effects in terms of employment and local economic activity, but also in terms of image, benefits to tourism and cultural reputation. The dynamic behind it is both economic and cultural which most of the regional authorities tend to promote by creating funds for film and television.

This being the case, most regional authorities aim to develop both an economic and cultural dynamic in their regions and to make it visible. This, for example, is the objective of the Wirtschaftseffekt (economic return), which obliges funded productions to spend the equivalent of 150% of the amount they are funded on suppliers and the local economy, and is a condition of the Filmstiftung Nordrhein-Westfalen and the Wiener Filmförderungsfond. These twin concerns, cultural and economic, are the basis of certain obligations and returns which the funding agencies, established by most of the regions of Europe, require: shooting in the region, employment for locally resident film workers and local technical services, and the creation of events around the shooting and release of a supported film..

In the case of Germany, the development of stable regional funding agencies with considerable resources is a key element of the Länder's policies of regional planning and developing centres of media production and activity (Medienstandortspolitik). More than being mere distributors of local funds, these agencies have become, as the slogan of the Filmboard Berlin-Brandenburg , "We give you more than money", emphasises, a centreof local production activity around which a basket of services and secondary activities develop (training, media desks, collaboration agreements with filmmakers and agencies in other regions, film commissions, etc.).

1.3. National Characteristics Asserted by the Main Countries

Through breaks or progressive changes, most European countries have integrated both the cultural and commercial dimensions into their methods of financing film and television. Nevertheless, certain differences can be established, without minimising the sometimes complex peculiarities of each country: the dominance of guaranteed low-interest loans in Italy, grants in Spain, the federal component in Germany, France's aim at national level to treat all the relevant sectors as a totality and to mark closely the changes in the film and television industries, both at the level of the introduction of new initiatives and of how public funds should be financed, and finally Britain's concern with commercial income and private resources.

The divisions between the national and regional initiatives show, perhaps most clearly, the disparities based on very different political and institutional procedures. In this, France and Germany are at two extremes, with Spain taking an intermediate position, while Italy is the only one of the five countries which still does not have regional funding agencies.

German, France, Spain, Italy and the United Kingdom are seen as the five European countries whose film and television industries are the most developed. In1995, almost 80% of the feature films produced in Europe were made in one of these countries. France, then Italy and Germany are the countries which, by far provide the greatest amount of public funding to these sectors in Europe, respectively 257.87 million ECU, 92.24 million ECU and 91.67 million ECU in 1995. From 1995, thanks to the new funds available from the National Lottery (19.13 million ECU added to the 11.38 million ECU of the previous year), the United Kingdom comes fourth. Spain, with 23.41million ECU in 1995, comes sixth after the Netherlands.

While Italy has chosen to support production chiefly through loans with or without low interest (87% of funds allocated), the United Kingdom prefers investment in co-production as it method of intervention, and 73% of its production funds are allocated in this form. In Spain 94% of the support for this sector and 100% of that of the ICAA is allocated in the form of grants. In France, grants account for 89% of the funds allocated to production. But this figure includes the sums allocated to the automatic funds, which are seen as grants. Selective funds allocated as grants only account for 62% of selective funding awarded to production and some 19% of all the funding awarded to that sector.

Looking at the variations as to how public support is organised from one country to another, one finds greater similarities between the five countries than would appear at first glance: a national, central agency - the ICAA in Spain, the CNC in France - is responsible for public funding and the management of the national film and television industries, reporting to the Ministry of Culture. In Germany, while an agency, the FFA, administers federal public funding, reporting in this case to the Ministry of Trade, there are two other agencies at federal level which provide more modest support: the Ministry of the Interior (BMI) and the Foundation for Young German Film (Kuratorium Junger Deutscher Film). In the United Kingdom, two separate agencies, each with a different remit, operate at national level: BSF, with an economic remit, partly supported by the Department of Trade and Industry, provides the larger amount of funds, while the BFI, supported by the Department of Culture, has a cultural remit Following the review by the Film Policy Review Group which published its report 'A Bigger Picture' in March 1998, the issue is now to create a centralised structure along the lines of the Centre national de la Cinématographie in France, which will bring together all the funding mechanisms (National Lottery, BSF, etc.).

1.3.1. Germany Characterised by its Regional Structure

The German system of public funding for film and television is characterised by the existence of film and television funds in most of the Länder. These regional funds are, in terms of their financial resources, comparatively stronger than the federal agencies. The development of funds like the Filmstiftung Nordrhein-Westfalen, the FilmboardBerlin-Brandenburg, the Baden-Wurtemberg fund, FilmförderungHamburg and the FilmFernsehFond Bayern, which are involved in the regional planning and development of the media industry, has taken place almost in competition, as they try to attract productions into their regions. However, recognising the negative effects that such an escalation could have, the five biggest regional funds have created a co-ordinating body which meets two or three times a year.

The total amount of the budgets of these funds accounts for 64% of German public support: 94.425 million ECU, against 52.78 million ECU for the three agencies at federal level, the FFA, the BMI and the Kuratorium Junger Deutscher Film.

In terms of budget, the three largest are those which are constituted as private limited companies: the Filmstiftung Nordrhein-Westfalen , in the lead with a budget of 27.15 millions ECU (which also makes it the second largest fund on a national scale, behind the French CNC), the new FilmFernsehFond Bayern with 26 million ECU, and the Filmboard Berlin-Brandenburg with 20 million ECU. Then there is the Hamburg film fund with a budget of 9.7 million ECU and the fund created in Lower Saxony thanks to the contribution of the public service broadcaster NDR, whose annual budget in 1995 was 9.5 million ECU.

1.3.2. The Dominance of Investment in Co-production in the United Kingdom and its Unusual Funding Through the National Lottery

The case of the United Kingdom is particularly interesting, in part through the way in which its funding agencies are organised and operate, and in part through the decision to create a fund from the receipts of the National Lottery, which, by supporting groups of companies through franchises, has increased the level of public support to 173% above its level of 1994/5.

In the United Kingdom the public funding agencies such as British Screen Finance, BFI Production and the regional funds are mainly involved in investing in co-production and it is the only country to have recourse to funding via the National Lottery, while new fiscal arrangements to encourage private investment could also soon be introduced.

Apart from BFI Production and the Arts Council, the other agencies, both regional and national, which provide funding for the film industry are private limited companies. This characteristic also extends to the administration of the funding, chiefly in the form of loans, and to the requirement for complete openness for accounts and the receipts of supported films. Thus, films receiving loans from the fund administered by British Screen Finance (the European Production Fund, the Greenlight Fund of the National Lottery) are required to set up a collection account to enable control to be kept of accounts and receipts. This helps BSF to be in the lead in a little-known competition, that of the best level of return (some 70%, while many national or European funds fluctuate between 2% and 10%).

The choices made on methods of intervention demonstrate the active partnership role which the English public funding agencies seek to achieve.

1.3.3. France Favours the Redistribution of Resources Raised from the Market and Adopts a Systematic Approach in its Interventions

The fact that public funding in France has the largest financial resources at its disposal (371.57 million ECU against 147.21 in Germany) is thanks to the taxes raised on the income of the television companies, which account for 59% of its budget against only 32% in Germany.

France is unusual compared to other European countries in the way it organises its funding system. In the first place, the core of its financial resources comes from money raised from the market: contributions from the public purse account for only 17% of its resources, while tax on cinema exhibition and video production accounts for 24%. The largest amount is raised on the income of the private and public service television companies: 59% of the total public funding budget in 1995, against 32% in Germany. This form of financing linked to market performance largely explains why France has the largest financial resources in Europe: 371.57 million ECU ahead of Germany with 147.21 million ECU. The size of these resources is also the result of a
strong funding initiative to benefit television productions, which receive 66% of total production funding in France.

The allocation of these resources is chiefly done through automatic mechanisms. Thus 71% of production funding is automatic. Furthermore, these automatic mechanisms, which only deal with production in other European countries, in France cover all sectors (exhibition, distribution and video). Additionally, the amounts allocated by the selective funds are also larger than in the other European countries. The basic administration for the distribution of this funding is carried out by the Centre national de la cinématographie, which has no real equivalent in Europe.

Finally, all these redistribution mechanisms and the area they cover provide the French authorities with the means on the one hand to ensure an effective balance between the sectors and, on the other, a dynamic link between industrial objectives and cultural aims. Indicators of the effectiveness of this policy are the maintenance of a high level of production (some 150 films produced each year) and the significant level of new entries (almost 30 first films per year). It should also be mentioned that the intervention of the authorities is not solely through direct funding, but is strengthened by a regulatory regime which also plays a decisive part in structuring the market, such as the obligations of the television companies to contribute directly to the financing
of film and television production.

1.3.4. Italy: a System Based on Mechanisms of Loans and Bank Guarantees

The Italian funding system has genuine peculiarities. While EnteCinema supports public cinema via Cinecitta and the Istituto Luce, the sector known as private production receives its state support via the FUS, the single fund for entertainment. The remit of the latter is to support all the arts and directly to administer the funds which are given in the form of grants. It delegates to the national bank, Banco Nationale del Lavoro (BNL), the administration of all grants allocated in the form of a credit. The state provides the largest amount of money from the public purse, 88.15 million ECU, which accounts for 92% of the finance of the Italian public funds.

1.3.5. Central and Eastern European Countries: a Complete Reform of the System due to the Transition to a Market Economy

While one can essentially speak of adaptation and evolution with regard to the funding systems in Western Europe, those of the Central and Eastern European countries have had to undergo a complete reform of their public funds over the short period of 5 to 6 years.

This reform was made necessary by:

the reorganisation and privatisation of the production sector;
the fall in cinema admissions, in itself creating a significant reduction in tax income on box-office receipts, often the sole source of finance for the mechanisms which could add to state provision which was stagnating;
the virtual absence of alternative finance;
the difficulty of attracting foreign investment;
the introduction of a new kind of player into the production system, i.e. the independent producer;
the creation of independent public agencies with the remit to organise the sector's activity.

Almost all these countries have at least reformed the operation of their funding bodies, even if not all underwent a complete overhaul of the funding systems, as was the case in Poland, Hungary and Russia, the countries whose production economies were the motors for the region. In the case of these three countries, the fundamental role of the public service and pay-TV television companies, making significant investments in film and television production should also be mentioned.

Access to European funding mechanisms, especially the Fonds ECO Cinéma of the CNC over the years 1989-96, and membership of the Council of Europe's pan-European co-production fund, Eurimages, was of assistance both to production and to the involvement of the producers of Central and Eastern Europe with production networks in the heart of Europe.

On the other hand, the nascent local production economies are not yet sufficiently mature to make effective use of fiscal mechanisms or bank guarantees and to attract a significant volume of foreign investment.

The French edition of this sudy is available from the Centre national de la cinématographie :