Gaul or Nothing

As the global economy wreaks havoc on the international film scene, France is celebrating another great year at the local boxoffice

The economy is in shambles. Hollywood is fearing for its life. Projects across the globe are on standby as producers desperately attempt to recover capital. Yet, in a land far, far away, people are laughing and smiling and holding movie stubs in their hands. Things have never been better in this land of boxoffice glory where money from the government flows like water.

Despite the global financial crisis, the French film sector continues to enjoy "la vie en rose" with local comedies sending ticket sales soaring, Gallic titles abroad thriving at the boxoffice, government funding policy providing for a healthy production agenda and a new tax credit hoping to attract major Hollywood productions to France.

Dany Boon's fish-out-of-water comedy "Welcome to the Sticks" made history by breaking all-time French boxoffice records with more than 20 million tickets sold in the territory. Thanks to "Sticks," annual admissions in Gaul jumped 6.2% to 189 million. The film also managed to successfully export its very French humor abroad, selling 4 million tickets in foreign markets and getting set for a U.S. remake produced by Will Smith. It was also the most profitable release of the year with a €10.95 million ($14.46 million) budget for 20.5 million tickets sold, representing a 565.87% profit, according to figures from state film body the CNC. Boon himself made an estimated €26 million ($34.3 million) last year, the highest salary for an actor ever in Europe, and even more than Brad Pitt or Tom Cruise, according to daily newspaper Le Figaro.

Elsewhere, the big-budget comedy "Asterix at the Olympic Games" followed "Sticks" with 6.8 million tickets sold last year. Homegrown fare was more popular than ever, with a 45.7% market share at the boxoffice, compared to 36.5% in 2007. For instance, Isabelle Mergault's "Finally a Widow" sold 2.26 million tickets on just an €8.28 million budget, making it one of the top five most profitable films of the year, and Fabien Ontiente's "Disco" made it to the top 10 in terms of profitability with 2.43 tickets sold for an €18.73 million ($24.72 million) budget. "Asterix," the most expensive film made to date with its €78 million ($103 million) budget, proved cost-effective, selling 6.8 million tickets, a 26.44% financial gain. Comedies proved the most lucrative genre of the year as several titles, including "Mariage chez les Bodin's," "Vilaine," "Louise-Michel" and "Le Crime est Notre Affaire" all boasted more than a 30% gain in boxoffice receipts compared to budget.

On the eve of the 62nd edition of the Festival de Cannes, many in the beleagured global filim sector must be pondering how France has managed to beat the odds. Was the popularity of "Sticks" and other homemade comedies simply luck, or is the French film industry really immune to financial turmoil?

"French cinema hasn't been able to escape the financial crisis, but we may see the effects later than in other countries because we have a system of financing based on sources not immediately affected by the crisis," says Antoine de Clermont-Tonnerre, the new head of French film promotion organization Unifrance.

Indeed, French films are funded not by banks, but by the country's terrestrial TV networks, as well as distributors and production financing groups comprising SOFICA (Society for the Financing of Cinema and Audiovisual Industries). Then there are the public limited companies which act as investment funds to finance movies and audiovisual works approved of by the CNC.

In other words, French cinema isn't financed by equity as in the US. Instead of being based on capital, the Gallic film industry is based around a protective, government aid-based formula.

"French cinema is the best armed in the world to resist the financial crisis. Our boxoffice is strong because our production is strong," says Film France's deputy director Franck Priot. "We make a lot of movies. Why? Because we have funding from the boxoffice. That's the specificity of French cinema."

Aid from the CNC comes from a tax on movie tickets from theatrical distribution. Known as the TSA, the tax goes directly from the theaters to the CNC, with no government intervention in between. "Even in a period of crisis, the state can't use the money for anything but the cinema, so the money stays in the film sector," Priot explained.

A big part of the financing of French films comes from interior funding. Since French producers are less dependent on outside sources of funding, they don't need to constantly seek investors or worry about the economic health of their capital funds. Thus, French producers are less vulnerable to the fact that there is little capital available in the wake of the financial crisis.

"The French film industry will face the same difficulties everyone will face in the wake of the financial crisis, but maybe a bit less because our system is based on state aide, not bank aid," explains Clermont-Tonnerre. "Our banks that lend to cinema are mostly popular banks that are less affected by the crisis such as BNP Paribas for example."

More than half of the money invested in films, outside of the funds put up directly by the producers, comes from the country's main TV networks. Pay TV group Canal Plus is obliged by law to invest 9% of its annual revenue in the French film industry, and public networks France 2 and 3 and private channels TF1 and M6 3% of their annual profit.

"We have an automatic clientele -- the TV networks can't decide from one day to the next that they want to stop investing in movies, so that gives us an element of stability," Priot said.

However, producers may soon start to see the effects of changes in the public TV sector on film production. Public TV group France Televisions was forced to remove all advertising from its networks in January.

"What's happening at France Televisions will make it harder, or will at least change different parameters tied to TV," says Mon Voisin Productions' Michel Feller. "We have a lot of TV movies on standby now,"

In addition to state funds from boxoffice receipts and TV network quotas, two other "anti-crisis" funds protect Gallic films from the threat of financial meltdown, namely the IFCIC and the SOFICA funds. The SOFICAs are essentially small investment funds which can go towards cinema and subsequently pay less taxes. The funds need to invest a minimum of 90% in movies, and usually provide for around 5-10% of a film's budget. The IFCIC take half of the risk of funding cash flow to a film -- it doesn't co-finance projects, but instead guarantees that if promised funding for a film never comes, the IFCIC will pay half.

But even with these safeguards, some wonder whether the pre-crisis, "Sticks"-led boxoffice boom is merely a temporary buffer against the financial crisis.

"The film sector is less directly affected by the erosion of the advertising market, and plus we know that the economic crisis has always been beneficial for theatrical admissions. But we definitely need to remain attentive to the possible impacts of the financial crisis," CNC Director Veronique Cayla says.

While the "Sticks" was certainly the life of the French film industry party last year, it wasn't the only guest. Twenty French films crossed the 1 million ticket sales mark, twice the amount than in 2007.

So far, the 2009 Gallic boxoffice remains healthy. Nearly 15 million tickets were sold during the month of January, a 3.8% increase from the same period in 2008 and a 7.1% jump in ticket sales over the past 12 months to 189.4 million. French titles continue to dominate, even among the Oscar-nominated titles hitting theaters at the moment, taking a 36.1% market share, compared to 33.9% last year at the same time. While February and March boxoffice figures will most likely be lower than last year since "Sticks" was released on Feb. 27 in 2008, the overall annual boxoffice looks poised to survive the credit crunch.

"The market hasn't been as catastrophic as anticipated, Clermont-Tonnerre says. "There have still be sales of French titles. Distributors need films and the French always arrive with fresh titles of all genres. We have just as diverse an offer as we had last year and in years prior."

"It's a stable system -- French cinema is a buoy and our buoy is state aid, adds Priot. "We're very protected -- it's incredible. I don't know of another national cinema that's better armed to affront the crisis.

Cayla agrees: "In any case, this vitality attests to the efficiency of our financing system, the only one like it in the world."