EU filmmakers get subsidy lifeline

Commission extends rules governing grants through '09

European filmmakers can continue claiming government grants for their movies for another two-and-a-half years, through 2009, the European Commission has ruled.

The commission — the European Union's executive authority — made the decision just two weeks before the governance for state subsidies was due to expire.

EU information society and media commissioner Viviane Reding said the extension will give businesses and governments the legal certainty needed to keep investing in European films, TV series and other audiovisual works. "Today's decision gives all stakeholders the agenda for the definition of the future rules," she said.

Current EU subsidy rules allow national governments to fund up to half of a film's budget. Under the rules, first set up in 2001, governments must first prove that the movie in question is "a cultural product." They can spend more than 50% of a movie's cost if the film in question is considered "difficult" or has a low budget.

Government aid is restricted in the EU as it can distort the wider European market. But EU competition commissioner Neelie Kroes said the aid will be acceptable if it does not affect trade and competition in the EU's internal market. "Our aim is to ensure that state aid control continues to ensure optimal and equal conditions for artistic and cultural creation in the cinematographic and audiovisual sectors across the EU," she said.

Total government aid for EU filmmakers is estimated at €€1.2 billion ($1.6 billion) a year, more than half of which is provided by the French government. Filmmakers argue that they need the exemption from the usual EU state aid rules as cinema is a very specific sector and European films have a very low market share.

The rules say that minimum spend in national territories can be established up to a maximum of 80%. In other words, producers must be free to spend at least 20% of their budget outside the country providing the grant, without suffering any reduction in the aid.

Last year, 926 million cinema tickets were sold in the EU, 3.6% more than 2005. European films accounted for 28% of these, compared with 25% the previous year. The EU's MEDIA program of direct European aid to filmmakers provides an additional €755 million ($1 billion) in subsidies over a seven-year period.

But the EC warned that long-term solutions will have to be found between now and 2009 to settle questions about film aid. An extensive independent study on the economic and cultural impact of the existing aid rules already has been commissioned. In particular, it will look at their impact on co-productions.