Europe Moving to Support Entertainment Industry Hit by Coronavirus Crisis

Spain Subway Coronavirus - H - 2020
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Germany, France, Spain and Italy have pledged tax relief and other support for cinemas, independent businesses and freelance workers hit by the COVID-19 lockdown, with calls for the U.K. to follow suit.

As Europe struggles to deal with the ongoing coronavirus crisis, governments across the continent are pushing for bailout and stimulus packages aimed at helping sectors including the entertainment industry that are suffering because of the pandemic.

Italy, Spain and France, the three European countries hardest hit by the outbreak, have all proposed measures, from tax relief to direct government bailouts, to keep struggling companies afloat. Germany, Europe's largest economy, last week pledged unlimited cash to businesses hit by the coronavirus, in what finance minister Olaf Scholz described as a financial "bazooka" aimed at averting an economic crisis.

In Italy, Prime Minister Giuseppe Conte’s government has said it is ready to spend as much as $28 billion (€25 billion) on stimulus measures to shield the country's economy from collapse. Provisions under discussion include help for workers facing temporary layoffs, boosting a guarantee fund for loans to small- and medium-size companies, and compensation for firms whose revenue has dropped more than 25 percent since the start of the outbreak. The Italian government has also reportedly proposed some form of moratorium for business and personal mortgage repayments.

Italy has, after China, the world’s second-highest number of diagnosed cases of coronavirus, with close to 25,000 known infections and more than 1,800 deaths to date, according to figures from the John Hopkins coronavirus resource center.

In France, which over the weekend introduced a near-total public lockdown in a bid to stem the spread of the virus, the government has announced several measures aimed at supporting hard-hit companies, including direct state support, mobilization of bank credits, and loosening of labor laws to allow firms to put employees on temporary part-time contracts.

France's national cinema center, the CNC, last week outlined a series of programs directly aimed at assisting exhibitors, distributors and producers hit by the public shutdown. These include deferral of France's movie ticket tax and fast-tracking government subsidies to allow firms to bring forward payments to help cover current losses.

Spanish Prime Minister Pedro Sánchez has said his government will inject more than $15 billion (€14 billion) into the national economy, including though new credit lines for hard-hit industries. Spain has seen some 7,800 coronavirus cases and nearly 300 deaths.

In Germany — with more than over 5,800 cases and 13 confirmed deaths to date — the country's economic and finance ministers on Friday said they would make unlimited financing available through the national development bank KfW in a bid to immunize the German economy from the impact of the coronavirus. Calling the move “a bazooka,” German finance minister Olaf Scholz said there would be no upper limit to the total aid that could be provided to affected companies.

"No healthy company should go bankrupt because of corona, no job should be lost," said economy and energy minister Peter Altmaier.

“We have the financial strength to deal with this crisis," said Scholz. "There is enough money, and we will use it." The package unveiled on Friday envisages a massive expansion of loans provided by the state development bank to affected companies. Firms will also be allowed to defer billions in tax payments.

The cultural ministers representing Germany's state governments have called on direct assistance for independent cultural institutions and freelance creatives who might not be covered under other proposals. Bavarian culture minister Bernd Sibler said there was a mood of “panic and despair” among those in the independent arts scene and that the government had to act. Federal culture minister Monika Grütters noted that Germany's arts industry generates more than $111 billion (€100 billion) in revenue annually, making it more valuable than the country's chemicals, energy or financial services industries. Culture, Silber said, is not a luxury but “ systemically relevant” for the entire German economy.

Germany's production alliance, an association of film and television production companies, held an emergency meeting Monday to draw up a series of proposals to counter what the association's chair, Alexander Thies, called the “existential threat” to the industry posed by the coronavirus crisis. Among their proposals was a call for solidarity between all parts of the industry, including distribution, exhibition, festivals and broadcasters, so that no one group was left to bear the brunt of the downturn.

With many European countries in near or total lockdown amid the crisis, the cinema industry has been particularly hard hit. Small and midsize film companies are facing weeks, and potentially months, of lost revenue.

“We are already seeing, with cancelled releases, the wide-ranging impact for German cinemas,” noted Christine Berg of German exhibitors association HDF Kino, who says a national cinema shutdown — as is de-facto the case now — will cost Germany's film industry $19 million (€17 million) a week in lost revenue. "We need urgent emergency aid and will have to quickly access the numerous funds that the federal government is now beginning to provide. This is the only way we can prevent bankruptcies and sustained damage to German cinemas."

The Polish Ministry of Culture and National Heritage on Monday announced plans for a support package to help filmmakers and artists who have suffered losses due to the cancellation of artistic and entertainment events resulting from the coronavirus pandemic. One element of the package will be additional support for institutions to deliver their content to audiences online.

U.K. authorities, who haven’t yet followed many major economies across the rest of Europe in demanding cinemas close to prevent the spread of coronavirus, have yet to announce programs specifically aimed at helping an entertainment industry potentially staring disaster in the face. 

That said, a number of new measures introduced in the recently announced budget were focused on assisting small to medium enterprises dealing with the crisis, including scrapping the interest rate on deferred tax payments, underwriting risky loans and offering to finance up to 14 days of sick pay per employee.

Another initiative included in the budget announcement was a new COVID-19 helpline, giving businesses the chance to discuss deferring tax bills, which The Hollywood Reporter understands has had a positive response.

But several industry sources said that a proposed pause on rental rates would only benefit smaller businesses, with any company with rent above £100,000 ($122,000) per year — which would probably include any cinema with more than 5 screens — unlikely to qualify.

Smaller cinema owners are already speaking to landlords about deferring rent and to their banks about pausing loan repayments, and talking to their staff about potentially enforced holiday pay rather than redundancies. One area where there is hope the government might step in is over insurance, with The Hollywood Reporter understanding that several businesses have been told COVID-19 isn't included in their business interruption insurance, which covers loss of income after a disaster. “That is something we really need government to insist they do,” said one insider.

But whatever is put in place could well end up being irrelevant should the coronavirus virus continue beyond summer, with new reports suggesting the U.K. could be battling the crisis until the spring of 2021.

"You could replace cinema with food and beverage, education, accountancy firms, everybody," said one source at a small cinema chain. "We’re all just standing open-mouthed and staring at the burning building wondering why nobody built a sprinkler system earlier."

Late on Monday, just hours after U.K. prime minister Boris Johnson had made the unprecedented move of urging people to stay home and avoid public venues such as pubs and theaters, a message of support came from the British Film Institute. 

In a statement, CEO Ben Roberts said the organization was in discussion with key partners, stakeholders and government to urgently assess the scale of the short- and longer-term impact of the coronavirus crisis on business, adding that a Screen Sector Taskforce had been set up coordinate its conversation with authorities and discuss the potential mitigations.

"As a funder, we will be as supportive and flexible as possible across existing funding arrangements, including the ability of those organizations and projects to meet contractual requirements," he said.

"As a production financier, we are obviously supporting our filmmakers with advice on a case-by-case basis. They are all different projects, each case is different and complex with completely different variables, so there isn’t one-size-fits all guidance, and we are advising them through these very particular challenges as best we can."