COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(94)523 final 
Brussels, 08.02.1995 
95/0026 (SYN) 
95/0027 (CNS) 
COMMUNICATION FROM THE COMMISSION 
AUDIOVISUAL POLICY 
STIMULATING DYNAMIC GROWTH 
IN THE EUROPEAN PROGRAMME INDUSTRY 
(MEDIA II- 1996-2000) 
Proposal for a 
COUNCIL DECISION 95/0026 (SYN) 
on the implementation of a training programme for professionals 
in the European audiovisual programme industry 
(MEDIA II - Training) 
(1996-2000) 
Proposal for a 
COUNCIL DECISION 
on a programme to promote the development and 
distribution of European audiovisual works 
(MEDIA II - Development and Distribution) 
(1996-2000) 95/0027 (CNS) 
(presented by the Commission) 
AUDIOVISUAL POLICY 
STIMULATING DYNAMIC GROWTH 
IN THE EUROPEAN PROGRAMME INDUSTRY 
(MEDIA II - 1996-2000) 
Contents 
CHAPTER I 
New guidelines for Community support mechanisms 
I. Competitiveness in the programme industry 
II. The need to rethink support mechanisms 
III. Action: principles and methods 
III. 1 Training 
111.2 Project development or pre-production 
111.3 Production and distribution 
IV. From MEDIA (1991-1995) to the new Community mechanisms 
(1996-2000) 
IV. 1 Evaluation of MEDIA and experience gained from it 
IV.2 New terms of action 
CHAPTER H 
Training programme for professionals in the audiovisual programme industry 
I. Introduction 
1.1 Translating growth into jobs 
1.2 Shared responsibilities 
1.3 Grounds for Community action 
II. Current position 
1. Training infrastructure 
2. Levels of training 
3. Training content 
III. Guidelines for European action 
1. Objectives 
2. Priorities 
Proposal for a Council Decision 
Annex 
Financial Statement 
CHAPTER m 
Programme for encouraging the development and distribution of European 
audiovisual productions 
I. Introduction 
II. Current position 
1 Development: a neglected stage 
2 Structural weaknesses in distribution 
III. Guidelines for European action 
1 Development 
2 Distribution 
3 Financial instruments 
Proposal for a Council Decision 
Annex 
Financial Statement 
Annex: European audiovisual conference, session on support mechanisms 
STIMULATING DYNAMIC GROWTH 
IN THE EUROPEAN PROGRAMME INDUSTRY 
CHAPTER I: New guidelines for Community support mechanisms 
Introduction 
The structural shortcomings of the European programme industry are such that without 
a policy to safeguard its competitiveness in the medium term, the anticipated cultural and 
economic benefits of the information society will not materialize. 
The Green Paper adopted by the Commission in April 1994, entitled "Strategy options 
to strengthen the European programme industry", identified the following shortcomings: 
the industry is fragmented into national markets, which means that producers are 
too small to compete on European and world markets; 
the partitioning of national markets is compounded by a low rate of cross-border 
programme distribution and circulation; 
the industry is trapped in a spiral of chronic deficit; 
the industry is unable to attract the financial resources needed for its recovery. 
Consultations held on the basis of the Commission's Green Paper(1) with the 
Member States and people in the industry have revealed that there is widespread 
agreement on the seriousness of the state of the programme industry and its possible 
consequences. The current situation makes it particularly difficult for the European 
audiovisual industry to prepare itself for expected developments in the information society 
and the explosion of broadcasting capacity they will bring. There is an obvious risk of 
seeing an ever-widening gulf between the supply of European productions and the 
growing demands of broadcasters. This would dramatically limit the choice of 
programmes, leaving viewers with programmes made, for the most part, by producers 
outside Europe and potentially leading to a backlash. 
What is at risk, in the long term, is the ability of European producers, in whatever 
medium, to gain access to the communications vectors. The stakes are the radiation of 
the influence of national cultures, and, more immediately, the very return on infrastructure 
investments, given that programme failure would prevent investment paying off as 
planned. 
(i) "Strategy options to strengthen the European programme industry in the context 
of the audiovisual policy of the European Union - Green Paper": 
COM(94) 96 final, 6.4.1994. 
financial resources. In addition to regulations and general measures to attract 
investment, support mechanisms for the audiovisual industry must, first and 
foremost, encourage the mobilization of the resources necessary for achieving 
competitiveness and reestablish dynamic operation of the market. 
This will need to include public-sector measures for pre-market activities, such as 
research and training, and to take account of the diversity of national cultures and 
the need to help them flourish. However, it is obvious that the radiation of the 
influence of national cultures is itself dependent to a considerable extent on the 
industry's general competitiveness. 
This development strategy is intended to ensure that support mechanisms help the 
industry develop towards a more efficiently organized set-up. This will be best 
achieved by avoiding fragmentation of resources and seeking to concentrate 
resources on structural objectives as well as ensuring that the various regional, 
national and Community schemes, are clearly demarcated and complement each 
other through all stages in the audiovisual chain where action needs to be taken. 
The principle of complementary action is to be found in the Treaty on European 
Union which lays down new terms for action by the Community. The Treaty 
affirms the principle of subsidiarity and Article 3b of the EC Treaty, as inserted 
by the Union Treaty, states that "the Community shall take action, .., only if and 
in so far as the objectives of the proposed action cannot be sufficiently achieved 
by the Member States and can therefore, by reason of the scale or effects of the 
proposed action, be better achieved by the Community." Furthermore, the Treaty 
gives the Community new responsibilities in the areas of industrial policy (Article 
130), vocational training policy (Article 127) and cultural policy (Article 128), 
where Community action is to support and/or supplement the action of the 
Member States while fully respecting their own responsibilities. 
Pursuant to the new Article 130(2) of the EC Treaty regarding industrial policy, 
which reads "The Member States shall consult each other in liaison with the 
Commission and, where necessary, shall coordinate their action. The Commission 
may take any useful initiative to promote such coordination", the Commission is 
proposing to promote coordination by setting up a framework for exchanging 
views and discussion with representatives from all the relevant national 
authorities. This structure will be operated by the Commission and its principal 
aims will be: 
to compile a database on national support systems; 
to exchange experience as regards attracting investment, training and 
supporting production and distribution. 
Without anticipating the outcome of this coordination, the focus and thrust of the 
new support mechanisms may be summarized under the following headings: 
m.l Training 
The series of consultations highlighted the indispensability of public-sector 
intervention at the training stage. In accordance with Article 127 of the EC Treaty, 
as introduced by the Union Treaty, the Member States are responsible for 
implementing a vocational training policy that prepares people for jobs and adapts 
them to industrial changes, in this instance in the area of audiovisual programmes. 
The Community's role is to support and supplement action by the Member States, 
stimulate cooperation on training between educational or training establishments 
and firms, and develop exchanges of information and experience. 
This action must take account of "cultural aspects" (Article 128(4)) and respect 
national and regional diversity. 
In this area Community action must therefore aim to take account of the European 
angle in the various training courses in order to enable people who work or will 
be working in the industry to take on board the development opportunities offered 
by the European and world market, whether in management, marketing or new 
technologies. The Community must avoid interfering in Member States' cultural 
policies; training on writing audiovisual works, for example, is most definitely 
outside the Community's remit. 
Community action should also aim to create a network of training facilities. A 
scientific committee on training will be set up with representatives of the main 
public-sector or industry-based audiovisual training bodies to provide the 
Commission with the necessary expertise. 
IH.2 Project development or pre-production 
The series of consultations revealed that European works suffer from a lack of 
investment at the pre-production stage. Project development is primarily the 
responsibility of companies in the industry, possibly backed up by regional or 
national support mechanisms. 
Although the creation of audiovisual works is not an exact science, the direction 
in which a work will go is determined right from the design stage. If at that stage 
no thought is given to the European and international dimension, the work in 
question is unlikely to have any appeal outside the area where it was conceived 
and is therefore unlikely to break into additional markets which could help make 
the initial investment pay off. 
The extra investment needed for pre-production must be matched by broader 
distribution of films and transmission of television programmes. The Community 
will encourage this structural development by taking action in accordance with 
Article 130 to develop projects that take account of the European dimension in 
their distribution/transmission strategy. The Commission will invite regional and 
national authorities also to step up action in this direction. 
m«3 Production and distribution 
A key task for the future of the European programme industry will be organizing 
production and distribution structures more effectively so as to make the most of 
the size and cooperation potential of the single market as a way of breaking into 
the world market. 
Moreover, the extra human and financial resources needed will not be forthcoming 
unless we do have films and television programmes capable of circulating both 
in Europe and elsewhere and distribution and transmission networks that make 
investments pay off. 
Better organization of structures is primarily the financial responsibility of 
businesses themselves, but is also concerns the public authorities since the vast 
majority of support systems relate to production and distribution. When it comes 
to revising these mechanisms, it is clear that stepping up action to promote 
production would have little effect unless potential outlets were better organized. 
Likewise, stepping up action to promote, for example, trans-European distribution 
networks would be meaningless unless the productions in question had the 
editorial capacity and critical financial mass for them to reach different audiences. 
Without productions of this type, any distribution or transmission circuits set up 
at European level would be left handling predominantly non-European 
productions. 
As stressed by both the Green Paper and the Think Tank report, the aim is to 
have "a market for our products and products for the market". 
Businesses in the industry need to work on producing and distributing on the 
European market audiovisual works with high circulation potential. The design 
and finish of the works must be attractive enough to ensure a better return on 
investments and to enable programme catalogues to be compiled. 
To this end, after a period in which distributors have tended to stand back from 
pre-financing production, the role of the support mechanisms will be to stimulate 
a more dynamic relationship between producers and distributors on a European 
scale. The spin-off of increased cooperation would be further enhanced by the 
production and distribution in Europe of large-budget films, a market segment in 
which Europe is somewhat under-represented. This means that the audiovisual 
industry would no longer have to miss out on investment for this market niche. 
For experience has shown that the higher a film's budget the more likely it is to 
be successful in financial terms, and the European audiovisual conference 
(Brussels, 30 June to 2 July) concluded that 15 to 20 large-scale films a year 
should be produced and distributed throughout Europe. 
In this context, the Member States are responsible for seeing to it that their 
support mechanisms take account pf the accepted objectives and contribute to the 
introduction of structures that are appropriate for their own market and the 
European market. Action they take, with their commitment to cultural identity and 
creativity, should cover the whole range of activities involved in production and 
distribution, including the necessary upgrading of cinemas, which is also a matter 
for regional and local authorities. 
Article 130 of the EC Treaty, as inserted by the Union Treaty requires the 
Community to take steps aimed at "speeding up the adjustment of industry to 
structural changes" by deciding on "specific measures in support of action taken 
in the Member States" in order to ensure the conditions necessary for the 
competitiveness of the Community's industry. For both cinema and television, 
Community action should also encourage cooperation between producers and 
distributors/broadcasters with a view to producing works aimed at both the 
European and world markets and supporting the setting up of Europe-wide 
transmission and distribution networks. 
IV. From MEDIA (1991-95) to the new Community mechanisms (1996-2000) 
IV.l Evaluation of MEDIA and experience gained from it 
Set up by the Council (90/685/EEC) to run for five years (1991-95), the MEDIA 
programme to encourage the development of the European audiovisual industry 
was intended to take action on all aspects of the industry, except financing 
productions. Nineteen structures were set up, ranging from vocational training to 
distribution. From the outset the funding granted to the structures was to enable 
them to become self-financing as they gained financial momentum. 
The series of consultations showed that the results obtained from MEDIA were 
far from negligible, as had already been concluded by a mid-term assessment 
report drawn up by the Commission on the basis of an independent audit report 
and consultations with people in the business. In particular, MEDIA has been an 
important springboard: each ecu invested mobilized on average three ecus from 
other sources on the market. The ratio of MEDIA investment to turnover 
generated was between 1 and 26, if account is taken of receipts from distribution 
via the different media (cinemas, TV, video, etc.). By the end of 1994 support had 
been given to over 5 000 professional initiatives. In addition, MEDIA enabled the 
setting up of European-level networks of businesses and professionals, which are 
a resource for future development 
Despite these results, certain shortcomings were identified: the financial resources 
allocated to the programme proved insufficient for the job they were supposed to 
do. There was a feeling that resources were spread too thinly over the whole 
range of activities and that there was an inability to take any in-depth action on 
the structure of the European programme industry. 
The vast majority of those involved in the consultations (Member States and 
people in the industry) felt that it was essential to concentrate Community support 
on specific European objectives and large-scale activities in order to improve 
performance and make a real structural difference. 
10 
IV.2 New terms of action 
In the light of the Union Treaty and the outcome of consultations based on the 
Commission's Green Paper, Community action for the programme industry must: 
include measures with structural impact on the industry; 
take full advantage of the potential of Community-wide measures; 
encourage Community and national measures that complement each other 
as well as promoting joint financial responsibility on the part of the 
audiovisual industry; 
set up financial incentive mechanisms, by making greater use of returnable 
advances and soft loans rather than non-returnable grants; 
make greater use of automatic aid systems rather than selective aid 
systems. 
To put this into practice, two instruments are proposed, one for training and one 
for development and distribution. In addition, the Commission is planning to 
encourage the creation of financial engineering mechanisms to stimulate the 
mobilization of financial resources for audiovisual production (cinema and 
television). 
The Commission may "prepare draft legislation introducing a financial instrument 
and specifying how it is to be funded; any Community underwriting will be based 
on sound budget management and financial discipline so as to cover the risks 
associated with loans and loan guarantees granted by third parties for audiovisual 
production 
11 
CHAPTER H: TRAINING PROGRAMME FOR PROFESSIONALS IN THE 
AUDIO VISUAL PROGRAMME INDUSTRY 
I. INTRODUCTION 
1. Translating growth into jobs 
The rapid growth in the supply of audiovisual programmes as a result of the proliferation 
and diversification of production and transmission channels means that the industry has 
great potential for expansion. The European programme market has been among the 
fastest growing in the world with a growth rate of 6% a year in real terms. 
The rapid expansion of the programme industry and its translation into jobs will need a 
backbone of highly qualified professionals. This was the Commission's conclusion in its 
White Paper on growth, competitiveness, employment. 
2. Shared responsibilities 
Vocational training has nowadays come to be an issue outside its traditional school and 
university domain. Rapid changes in the economic and technological environment require 
not only high-quality initial training, but also regular continuing training throughout 
working life to preserve competitiveness. 
This is a matter for all those involved in the industry - firms, training centres, 
professional associations, the authorities - whatever their level of involvement. They must 
each play their part within an overall strategy. 
3. Grounds for Community action 
Support systems for the audiovisual industry, whether national or Community, will not 
be effective unless they are backed up by the right skills to meet the new challenges. 
This means that it is essential to match any investment in businesses with investment in 
the men and women who are responsible for developing them. It is the job of the 
authorities to promote and support vocational training as part of a medium and long-term 
programme. 
The importance of training policy in the European Union is now acknowledged as a 
Treaty objective (Article 127). 
Responding to calls heard, in particular, at the European Audiovisual Conference 
(Brussels, 30 June to 2 July 1994), the Commission feels it essential to include vocational 
training in its audiovisual policy m order to provide a future for our audiovisual industry. 
12 
In addition to steps taken by Member States, Community action is needed for the 
following purposes: 
to round off the vocational skills of those working at European level (basically as 
regards management and new technologies); 
to make existing vocational training centres aware of the European dimension in 
the audiovisual market and encouraging them to incorporate appropriate up-to-date 
teaching in their courses; 
to create a network on existing training in order to facilitate the transfer of 
know-how and cooperation between training centres; this cross-border approach 
is crucial nowadays, especially in the area of new technologies where equipment 
is costly and rapidly goes out of date. 
II. CURRENT POSITION 
1. Training infrastructure 
The countries of the European Union have an extremely large and varied training 
infrastructure for cinema and the audiovisual industry. There are more than four hundred 
establishments, which fall into four main categories: 
vocational colleges which are highly equipped and provide basically technical 
training; 
establishments where teaching is based on theory with very little on the practical 
side; 
establishments, mostly universities, providing general communications courses 
with the audiovisual industry as one component (this is the largest and most 
varied category); 
colleges teaching the techniques of computer graphics (the smallest category). 
There is very little crossover between these different types of establishment, since their 
courses focus either on theory or on practice. 
2. Levels of training 
Initial training 
For some 40 years Europe has had a network of colleges providing training for 
careers in cinema and television, often alongside technical colleges dealing with 
sound and image. The initial training they provide is generally held to be good, 
although they all suffer from the same shortcoming: lack of training on how the 
audiovisual market works. 
13 
Continuing training 
There is very little in the way of continuing training, except within certain 
broadcasting companies and professional associations. Rapid developments in 
technology and within the market itself mean that initiatives need to be set up in 
each Member State to ensure that writers, directors, producers and technicians 
maintain a high level of skill and productivity throughout their career. 
3. Training content 
The following shortcomings in existing training have been identified: 
Training for the career of producer (developing a production project, drawing up 
a financing plan and marketing strategy, etc.) is virtually non-existent on 
traditional courses. 
The same applies to distribution, transmission and operation, for which there is 
hardly any specific training in Europe. 
Vocational training on new film and television technologies (digital techniques, 
multimedia, interactive TV, etc.) is rather haphazard, since it is usually provided 
on a one-off basis by industry in the form of on-the-job training, workshops and 
seminars. 
IH. GUIDELINES FOR EUROPEAN ACTION 
Objectives 
1.1. The overall aim of action taken by the Union should be to keep pace with 
developments in the industry and bolster its competitiveness by contributing to the 
development of both initial and continuing training of audiovisual professionals, 
particularly in the following fields: 
European-level management of the audiovisual industry in order to provide 
those working in it with the right skills they need to take full advantage 
of the European dimension of the audiovisual programme market and in 
order to encourage them to develop programmes that meet the 
requirements of that market; 
utilization and development of advanced creative technologies for the 
production of programmes with high value added intended for the 
European and world market; 
Both types of training activity must take due account of European aspects; 
1.2 Action taken should be designed to step up cooperation between the various 
parties involved in training: training establishments, the industry, businesses. 
14 
1.3 Action should take account of structural objectives such as developing the 
independent production industry, in particular small and medium-sized businesses, 
and developing potential where audiovisual production capacity is low, such as 
in small countries or regions with less widely spoken languages. 
1.4 The Commission will see to it that the proposed operations are consistent with 
other Community training schemes, particularly under the Leonardo da Vinci 
programme and in line with the objectives of the European Structural Funds. 
2. Priorities 
2.1. Promoting the creation and updating of training modules or supplementary 
refresher courses on how the European and world audiovisual programme markets 
operate and the prospects thev offer. 
Various modulés for both initial and continuing training will be devised in 
conjunction with people involved in training (and in line with experience gained 
from MEDIA) in the course of 1995 so as to be operational by the start of the 
MEDIA II programme. 
The modules will cover: 
management training (European aspects) 
The principal objective will be to make people in the industry aware of the 
European and worldwide dimension of the audiovisual market and develop 
their ability to exploit this aspect to the full. This will involve mainly the 
development of production projects for the European market; means of 
financing; distribution in all its forms, market research and promotion; 
maximizing profit from audiovisual programmes; and legal aspects. 
training on new technologies 
The technologies in question are ones with direct impact on the production 
and distribution of audiovisual programmes that are essential for 
guaranteeing competitiveness. In this connection, it should be noted that 
virtually all audiovisual careers are affected by the advent of digital 
techniques. However, particular emphasis will be given to the new careers 
introduced by these techniques, such as virtual image designers, 
multimedia and interactive programme designers and new technology 
project leaders. 
Given the speed of developments in the audiovisual industry, the contents of 
training courses will have to be regularly updated. 
2.2. Uptake of modules by training centres 
The aim of Community action in this field is to see to it that both initial and 
continuing training centres in the Member States, such as universities, colleges 
15 
and vocational centres, incorporate the modules in their educational or training 
syllabuses. 
The Community will contribute financially to their doing so, by covering up to 
75% of the real cost of the operation up to a maximum of ECU 100 000 per year 
and per training centre. The aim is to ensure that the subjects covered by the 
modules get a permanent place on training courses. 
2.3. Networking of training bodies 
A good way of speeding up the impact of the proposed operations will be to 
foster cooperation and cross-border transfer of know-how between the various 
parties potentially involved, such as training centres, businesses and people 
working in the audiovisual industry, management and labour and the like. 
The Community could contribute financially to the following: 
2.3.1. Facilitating exchanges of teachers specializing in appropriate subjects and 
circulation of students and training specialists, by providing study grants 
(maximum grant ECU 5 000 a year); 
2.3.2. Organizing work-experience placements in companies in other Member 
States to supplement training in the classroom; 
2.3.3. Organizing teacher training seminars. 
The training programme could involve between 60 and 100 training establishments and 
400 or so grant-holding students each year. 
16 
Proposal for a 
COUNCIL DECISION 
on the implementation of a training programme for professionals in the 
European audiovisual programme industry (MEDIA II - Training) 
(1996-2000) 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, and in particular 
Article 127(4) thereof, 
Having regard to the proposal from the Commission*1*, 
Having regard to the opinion of the Economic and Social Committee(2), 
Acting in accordance with the procedure laid down in Article 189c of the Treaty, 
Whereas the Heads of State or Government, meeting as the European Council in Brussels 
on 10 and 11 December 1993, adopted the White Paper on Growth, Competitiveness and 
Employment as the basis for action by the European Union and its Member States, 
supporting an industrial development approach based on global competitiveness as the key 
to growth and jobs; and whereas the White Paper, and Chapter 7 thereof in particular, 
states the need to adapt vocational skills in line with industrial and technological 
developments; 
Whereas the Heads of State or Government, meeting as the European Council in Corfu 
on 24 and 25 June 1994, took note of the report by the Bangemann Group entitled 
"Europe and the Global Information "Society - Recommendations to the European 
Council", in particular acknowledging the strategic importance of the audiovisual 
programme industry in terms of content; 
Whereas Article 128(4) of the Treaty requires the Community to take cultural aspects into 
account in its action under other provisions of the Treaty; whereas participation in the 
Programme should reflect European cultural diversity; 
Whereas the Council, at its joint industry/telecommunications meeting of 
28 September 1994, issued a favourable opinion on the Commission communication of 
19 July 1994 entitled "Europe's way to the information society: an action plan"(3) and 
emphasized the need to improve the competitiveness of the European audiovisual 
industry; 
(1) OJNoL 
® _ OJ No L 
(3) COM(94) 347 final, 19.7.1994. 
17 
Whereas the Council took formal note of the Commission communication of 
1 September 1994 entitled "An industrial competitiveness policy for the 
European Union"(4) which identified "the close correlation between the development 
prospects of individual technologies and products ... of the programs (... audio-visual 
programmes, etc.) and of the associated services and networks" and the need to raise 
training standards in order to make European industry competitive; 
Whereas the Council took formal note on 17 June 1994 of the Green Paper "Strategy 
options to strengthen the European programme industry in the context of the audiovisual 
policy of the European Union"(5); 
Whereas the Commission consulted the people in the industry on the options put forward 
in the Green Paper, in particular by holding the "European Audiovisual Conference" in 
Brussels from 30 June to 2 July 1994; 
Whereas the European Parliament, in its Resolution of 6 May 1994(6), examined the 
problems of the audiovisual industry, following Council Directive 89/552/EEC(7) (the 
"Television Without Frontiers" directive), in preparation for the European audiovisual 
conference, and took the view that the priorities established inter alia during the 
discussions on amendments to the MEDIA programme, namely the financing mechanisms, 
pre-production, distribution and training, were the best means of establishing coherent, 
stable European networks; 
Whereas the Economic and Social Committee issued its opinion(8) on the Green Paper on 
strategic options to strengthen the European programme industry, stating that European-
level programmes such as MEDIA could have a positive influence on the development 
of programme structures and means of production in Europe; 
Whereas the Commission implemented the programme of measures to encourage the 
development of the European audiovisual industry (MEDIA 1991-95), adopted by 
Council Decision 90/685/EEC(9), including training measures to upgrade the vocational 
skills of people working in the audiovisual programme industry; 
Whereas the Council, at its meeting of 5 November 1993, after taking note of the 
Commission communication of 23 July 1993 on the MEDIA programme mid-term 
evaluation report, felt that it would be appropriate to examine suitable measures for 
launching a MEDIA II programme after 1995; 
Whereas the European Council in Essen on 9 and 10 December 1994 called on the 
Commission to present proposals for a new MEDIA programme; 
(4) COM(94) 319 final, 14.9.1994. 
(5) COM(94) 96 final, 6.4.1994. 
OJNo C 205, 25.7.1994, p. 561. (6) 
(7) OJ No L 298, 17.10.1989, p. 23. 
(8) ESC 1000/94, 14.9.1994, p. 6. 
I?) OJ No L 380, 31.12.1990, p. 37. 
18 
Whereas the Council, at its meeting of 6 December 1994, adopted Decision 94/819/EC(I0) 
setting up the Leonardo da Vinci Programme for implementation of a vocational training 
policy in the European Community, of which Article 8(1) requires the Commission to see 
to it that the Leonardo da Vinci Programme is coordinated with all the other Community 
training schemes; 
Whereas there should be proper coordination with vocational training operations 
undertaken pursuant to the objectives of the structural Funds; 
Whereas the emergence of a European audiovisual market requires vocational skills 
adapted to the new dimension of the market, particularly as regards economic and 
commercial management of the industry and the utilization of new technology at all 
stages of programme design, development, production and transmission; 
Whereas people in the industry must be provided with vocational skills that enable them 
to take full advantage of the European and world-wide dimension of the audiovisual 
programme market; whereas they should be encouraged to devise projects that meet the 
demands of that market; 
Whereas the initial training of future audiovisual professionals should incorporate the 
right economic and technological components; whereas the speed of change in these areas 
necessitates continuous training; 
Whereas networking between vocational training centres should be encouraged so as to 
facilitate the transfer of know-how and the development of training modules at European 
level; 
Whereas support for vocational training should take account of structural objectives such 
as developing the independent production industry, in particular small and medium-sized 
businesses, and developing potential where audiovisual production capacity is low, such 
as in small countries or regions with less widely spoken languages; 
Whereas operations in this Programme are all aimed at cross-border cooperation which 
will enhance the value of action taken in the Member States or by those responsible for 
training, in accordance with the principle of subsidiarity, 
HAS DECIDED AS FOLLOWS: 
Article 1 
A training programme (hereinafter referred to as "the Programme") is hereby established 
to run for five years from 1 January 1996, with the aim of supplementing the action taken 
by Member States and thereby providing professionals in the European audiovisual 
industry with the skills they need, particularly as regards economic and commercial 
management and use of new technologies, to exploit the European dimension of the 
market to the full. 
(10> OJ No L 340, 29.12.1994, p. 8. 
19 
Article 2 
The aims of the Programme are: 
(1) to meet the needs of the industry and bolster its competitiveness by contributing 
to the development of initial and continuous training of audiovisual professionals 
on the know-how and skills they need in order to take account of the European 
market in developing businesses and projects, in particular in the fields of: 
economic and commercial management, including legal aspects; 
utilization and development of new technologies for the production of 
programmes with high value added; 
(2) to encourage cooperation and exchange of know-how between the parties involved 
in training, namely training establishments, the industry and businesses. 
Article 3 
The measures described in the Annex shall be put into effect in order to achieve the 
objectives laid down in Article 2. They shall be implemented in accordance with the 
procedure set out in Article 6. 
Article 4 
As a rule, recipients of Community support working on implementation of the measures 
laid down in Article 3 must provide a proportion of the funding. Community funding 
shall not exceed 75% of the cost of operations. 
Article 5 
(1) The Commission shall be responsible for implementation of the Programme. 
The Commission shall also be assisted by the Advisory Committee set up by 
Council Decision 95/.. ./EC of 1995 a programme to promote the development 
and distribution of European audiovisual works (MEDIA II - Development and 
Distribution) (1996-2000)(11). 
(2) The draft measures taken by the Commission and the procedure for consulting the 
Committee on that draft shall be the same as those laid down in Article 6(2) 
and (3) of the Decision referred to in paragraph 1. 
w OJNo 
20 
Article 6 
Within the six months following the first three years of the Programme's implementation, 
the Commission shall submit to the European Parliament, the Council and the 
Economic and Social Committee an evaluation report on the results achieved, with 
proposals if appropriate. 
When the Programme has run its full term, the Commission shall submit a report on the 
implementation and results of the Programme to the European Parliament and the 
Economic and Social Committee. 
Done at Brussels, For the Council 
The President 
21 
ANNEX 
1. ACTION TO BE TAKEN 
The programme is intended to help people in the industry adapt to the European 
and worldwide dimension of the market by promoting training on economic and 
commercial management, legal aspects and new technologies. 
The operations will cover both initial and continuing training. 
1.1 Training on economic and commercial management 
This aims to develop the ability of people in the industry to conceptualize and 
exploit the European dimension in development, production, distribution and 
broadcasting of audiovisual programmes. 
The operations will cover the following: 
Promoting the definition and updating of training modules on management 
to supplement national and regional initiatives by giving them a European 
angle (initial and continuing training); 
Encouraging incorporation of the modules into existing syllabuses; 
Networking of training programmes; facilitating exchanges of teachers and 
students/professionals by providing grants and organizing work-experience 
placements in companies in other Member States and contributing to 
teacher training. 
1.2 Training on new technologies 
This aims to develop the ability of people in the industry to use advanced creative 
techniques, such as computer graphics, multimedia and interactive technologies. 
The operations will cover the following: 
Promoting the definition and updating of training modules on new 
audiovisual technologies, to complement national and regional operations; 
Encouraging incorporation of the modules into existing syllabuses; 
Networking of training programmes; facilitating exchanges of teachers and 
students/professionals by providing grants and organizing work-experience 
placements in companies in other Member States and contributing to 
teacher training (initial and continuing training). 
22 
2. IMPLEMENTATION PROCEDURE 
2.1 Approach 
In implementing the programme the Commission will work closely with all parties 
concerned, such as training centres, professional associations and businesses. The 
Commission will see to it that there is a good geographical spread among the 
professionals participating in the programme and that Europe's cultural diversity 
is reflected. 
2.2. Funding 
Community funds are intended to encourage the national/regional parties 
concerned to supplement existing training courses with modules on management 
and new technologies. 
Community outlay shall not exceed 75% of the training costs. The remainder will 
be provided by the national/regional parties concerned, who will be selected by 
tender. 
How much is allocated to management training and how much to training on new 
technologies will depend on the proposals submitted following the invitation to 
tender. 
2.3 Implementation 
In implementing the training programme the Commission will be assisted by a 
contractor capable of coordinating the performance of the tasks laid down in the 
action plan. 
The contractor will be selected by invitation to tender. 
r -' 
The Commission will draw up terms and conditions for the contractor specifying 
how the tasks laid down in the action plan are to be implemented. 
The contractor must be a general-interest non-profit-making body. 
Selection will be based largely on the following criteria: 
professional experience in the training business, particularly economic and 
commercial management training and training on new technologies; 
contacts with the relevant parties at national, regional and European level; 
depth of familiarity with the European audiovisual industry and the 
Union's policy on it; 
experience of cross-border or European management; 
calibre of staff and soundness of management infrastructure. 
23 
FINANCIAL STATEMENT 
1. TITLE OF OPERATION 
Training programme for professionals in the audiovisual programme industry 
2. BUDGET HEADING INVOLVED 
B3-2010 
3. LEGAL BASIS 
Article 127 of the EC Treaty, as introduced by the Treaty on European 
Union 
Council and Parliament Decision of.... on the implementation of a training 
programme for professionals in the audiovisual programme industry 
4. DESCRIPTION OF OPERATION 
4.1 General objective 
The rapid growth in the supply of audiovisual programmes makes the industry a 
field with considerable potential for expansion. 
The anticipated developments in the programme industry will not be able to be 
translated into jobs unless people working in the industry receive high-quality 
vocational training, as concluded in the White Paper on Growth, Competitiveness 
and Employment. In the same way, the support mechanisms for the audiovisual 
industry will not be fully effective unless they are backed up by the skills needed 
to meet the new challenges. 
Vocational training is no longer the preserve of traditional schools and 
universities. Rapid changes in the economic environment and technology require 
not only extremely solid initial training, but also continuing training throughout 
working life. 
Training policy in the European Union is recognized as a Treaty objective 
(Article 172). In addition to steps taken by Member States, Community action 
would: 
round off the skills of professionals operating in a European context; 
make vocational training centres aware of the European dimension and 
encourage them to include appropriate up-to-date courses on their 
syllabuses; 
network existing training facilities. 
24 
Action by the European Union should proceed on three fronts: 
(1) Development and updating of supplementary training modules or refresher 
courses on how the European and international audiovisual programmes 
market operates and the prospects it offers. 
These modules will cover: 
management training with a European dimension; 
training on new technologies. 
(2) Uptake of modules by training centres in their syllabuses. 
(3) Networking of training centres by: 
circulating teachers and students/experts on training (by providing 
grants): 
organizing work experience placements in companies; 
organizing teacher training seminars. 
The Commission will be assisted by a contractor capable of coordinating the 
performance of the tasks laid down in the action plan. The contractor will be 
selected by invitation to tender. 
The Commission will see to it that the proposed operations are consistent with 
other Community training schemes, particularly under the Leonardo da Vinci 
programme and in line with Objective 4 of the European Structural Funds. 
4.2 Period covered and arrangements for renewal or extension 
Five years (1996-2000) 
Possible renewal" following assessment 
Council Decision required for renewal 
5. CLASSIFICATION OF EXPENDITURE OR REVENUE 
5.1 Non-compulsory expenditure 
5.2 Differentiated appropriations 
5.3 Type of revenue involved: N/A 
6. TYPE OF EXPENDITURE OR REVENUE 
Subsidy for joint financing with other sources in the public and/or private 
sector. 
There are no provisions for reimbursement or changes in the level of 
revenue. 
25 
Where modules are incorporated into training syllabuses, the Community will 
contribute financially by covering up to 75% of the real cost up to a maximum 
of ECU 100 000 per year and per training centre. 
As regards networking of training centres, the Community's contribution will take 
the form of grants of up to ECU 5 000 a year or financial support for traineeship 
contracts between centres and contracts for work experience placements with 
companies (up to 75% of the real cost of operations up to a maximum of 
ECU 100 000 per year and per training centre). 
Seminars on teacher training will be subsidized by joint financing from the public 
or private sectors. 
The figures given on this financial statement show the total cost of Community 
funding, which represents up to 75% of the real cost of the operations. 
7. FINANCIAL IMPACT 
7.1 Method of calculating total cost of operation (definition of unit costs) 
For the implementation of the plan over the 5 years, funding should be gradually 
increased over the first two years and then kept at the same level for the last three 
years. 
Two exceptions are teacher training and the development/updating of training 
modules which will require more funding in the first two years. 
How much is allocated to management training and how much to training on new 
technologies for each item of expenditure will depend on the proposals submitted 
following the invitation to tender. 
Average annual costs (tentative): 
The development and updating of supplementary training and refresher 
modules will entail an average annual cost of ECU 1 million, or 
one-twelfth of the average annual budget. This amount was estimated on 
the basis of information supplied by training centres in the audiovisual 
field. A large proportion of the expenditure will have to be allocated to 
research, meetings, travel expenses and translation. 
Uptake of at least 60 training modules will entail an average annual 
contribution of ECU 6 million, or 60 contributions of ECU 100 000. The 
latter amount (and the maximum percentage of Community subsidy) 
was based on the maximum amount permitted under the 
Framework Programme on Training. The estimated number of modules 
was based on the number 6f centres likely to participate in the scheme 
(60 out of the 400 centres in the European Union) in order to reach a 
significant volume of training courses. 
26 
N.B. As regards networking of training centres. 320 separate grants will be 
provided at an annual average cost of ECU 1.6 million. Of the 400 
establishments in the Union providing training in the audiovisual field 
approximately 80 are likely to be involved in the network. 
Allocation of four grants to each training centre gives the average figure 
of 320 grants of ECU 5 000 a year. The amount was based on the grants 
provided under ERASMUS, suitably adapted for training for careers in the 
audiovisual industry. No centre may be allocated more than ECU 100 000 
in grants in any year. 
The Community's contribution for contracts on work experience 
placements will entail an average ECU 3 million a year to cover at least 
30 such placements. 
The unit cost of organizing teacher training seminars is estimated at 
ECU 25 000 per seminar. A larger number of seminars should be 
organized in the first two years of the scheme. The costs to be met involve 
subsistence expenses, travel expenses, organization, translation, 
publications and fees. 
The Commission will be assisted by a contractor selected by tender. The 
cost of this is included in the amounts for the various operations and 
represents 5% of the total. 
The figures in this financial statement show the total cost of Community 
funding, which is up to 75% of the real cost of the operations. 
7.2 Itemized breakdown of cost 
Amounts are given at constant prices in ECU (1994 base) 
in ECU millions 1994 
Breakdown 
Development and 
updating of 
modules 
Incorporation of 
modules 
Networking: 
- grants 
- work experience 
- teacher training 
TOTAL 1996 
budget 
1.255 
2.500 
0.680 
1.250 
0.500 
6.185 1997 
1.255 
5.000 
1.320 
2.000 
0.500 
10.075 1998 
0.830 
7.500 
2.000 
3.250 
0.334 
13.914 1999 
0.830 
7.500 
2.000 
3.250 
0.333 
13.913 2000 
0.830 
7.500 
2.000 
3.250 
0.333 
13.913 TOTAL 
5.000 
30.000 
8.000 
13.000 
2.000 
58.000 
27 
7.3 Indicative schedule of appropriations 
7.3.1 Schedule for proposed new operation 
in ECU millions 1994 
Commitment 
appropriations 
1996 payment 
appropriations 
1997 
1998 
1999 
2000 
2001 
TOTAL 1996 
6.185 
3 
3.185 
-
-
-
-
6.185 1997 
10.075 
5 
5.075 
-
-
-
10.075 1998 
13.914 
-
-
6.750 
7.164 
-
-
13.914 1999 
13.913 
-
-
-
6.750 
7.163 
-
13.913 2000 
13.913 
-
-
-
-
6.750 
7.163 
13.913 TOTAL 
58.000 
3 
8.185 
11.825 
13.914 
13.913 
7.163 
58.000 
7.3.2 Schedule for the preliminary draft budget for multiannual operations whose basic 
instrument contains an "amount deemed necessary" 
in ECU millions 1994 
Situation 
by end 
1994 
-1995 
budge 
t 
-1996 
draft 
budget 
6.185 TENTATIVE SCHEDULE 
1997 
10.075 1998 
13.914 1999 
13.913 2000 
13.913 TOTAL 
58.000 
8. FRAUD PREVENTION MEASURES; RESULTS OF MEASURES TAKEN 
Payment of financial contributions shall be subject to presentation of itemized 
supporting documents prior to payment and progress reports. There will also be 
on-the-spot inspections and central monitoring. 
In addition, the various control bodies (Court of Auditors, -Financial Control, 
Authorizing Officer) shall carry out checks on the agencies managing the 
operations and on the recipients. 
28 
ELEMENTS OF COST-EFFECTIVENESS ANALYSIS 
9.1 Specific and quantifiable objectives: target population 
Specific objectives 
To remedy the shortcomings in training for the career of producer: this type of 
training is either non-existent in traditional courses or deals only in passing with 
certain aspects which should be developed and tackled in the context of market 
realities and the European dimension: pre-production, drawing up of business 
plans, financial arrangements and marketing strategies etc. 
To meet the challenge of new technologies. Developments anticipated in this area 
owing to the advent of the Information Society will require well-targeted training 
operations that hit the mark. Initiatives will need to be systematic and well 
coordinated, focusing on digital techniques, multimedia and interactivity. 
People working in the industry will need to be equipped with the right skills to 
take full advantage of the European dimension of the audiovisual industry and to 
develop projects that meet market requirements and have circulation potential 
outside a single national market. 
Continuing training should upgrade the skills of people already working in the 
industry so that they can operate more effectively in both economic and 
technological terms. 
Initial training for future careers in the industry must incorporate as early as 
possible a teaching component relating to the European dimension and 
technological challenges. 
The operations will upgrade economic and commercial management skills in the 
areas of development, production, distribution/transmission, commercial 
exploitation and marketing. They are also intended to upgrade vocational skills in 
using new technologies for the production, distribution/transmission and 
commercial exploitation of programmes. 
29 
Target population 
The target population is mixed comprising: higher education establishments that 
provide training for careers in cinema and television, colleges specializing in 
training on computer graphics, universities, people working in the industry, 
teachers and businesses. The operations are to cover training on management and 
new technologies. The aim is to translate this into highly skilled jobs at European 
level (the White Paper on Growth, Competitiveness and Employment predicts an 
extra 2 million jobs by the year 2000), maintain a high-performance business 
set-up at European level and systematically incorporate a European dimension into 
initial training syllabuses. 
9.2 Grounds for the operation 
Need for Community financial aid 
The proposed support scheme forms part of the Union's audiovisual policy. 
It is to operate on the principle of subsidiarity to support and supplement existing 
national-level operations. It satisfies the objectives set out in the Treaty, and in 
particular Article 127 thereof by: 
facilitating adaptation to industrial changes; 
improving initial and continuing vocational training; 
stimulating cooperation on training between training centres or 
between vocational training centres and companies. 
Choice of ways and means 
The aid provided by the Community in the form of grants covering up to 75% of 
the costs of operations is intended to encourage the parties involved at national 
and regional level to improve existing training. 
A considerable number of new high-level jobs are expected to be created as a 
knock-on effect. 
9.3 Monitoring and evaluation of the operation 
An evaluation report will be compiled after the operation has been running three 
years and a final report will be drawn up once the scheme has run its full course. 
9.4 Coherence with financial programming 
The expenditure is included in DG X's annual financial planning. 
10. ADMINISTRATIVE EXPENDITURE (part A of the budget) 
Six extra posts (2 A, 2 B and 2 C) will need to be made available for managing 
and implementing the programme. 
30 
CHAPTER m: PROGRAMME FOR ENCOURAGING THE 
DEVELOPMENT AND DISTRIBUTION OF EUROPEAN 
AUDIOVISUAL PRODUCTIONS 
I. INTRODUCTION 
Among the difficulties currently facing the European programme industry the problem 
of the low circulation of programmes and films made in Europe is the one cited by 
people working in the industry as being the most urgent. The European market continues 
to be dominated by works produced for the most part in the United States, whereas only 
15% of works produced in the European Union are ever seen outside their country of 
origin. 
This imbalance, which initially affected film distribution, is now being seen to an 
increasing extent in other media - video and television - as well. 
Two factors are generally blamed for the low circulation of European productions: the 
lack of cross-border distribution networks and the lack of works designed with the 
European market in mind right from the development stage. 
H. CURRENT POSITION 
1. Development: a neglected stage 
The development of an audiovisual work is a key phase that precedes actual production 
as such. The three main components are: screenplay writing, financial arrangements and 
marketing. The quality of the preparation of these components determines not only the 
quality of the work produced, but also the chances of its success on the market. Well 
developed projects are more likely to appeal to distributors and encourage them to 
contribute towards financing production. 
The industry in Europe devotes far less attention and resources to development projects 
than the industry in the United States does. Broadly speaking, investment represents a 
mere 2 or 3 % of the production budget in Europe, whereas in the United States the 
figure is between 7 and 10%. 
For one thing there is little investment in the development of screenplay writing, which 
is indispensable for the quality of a film project and its attractiveness to the market. What 
actually happens is that the European system forces producers to start production as 
quickly as possible because of lack of financial resources. 
Furthermore, European producers also devote too little attention to drawing up a financing 
plan or devising promotion strategies right from the development stage. In budget terms, 
investment in marketing films produced in Europe is between 3% and 6% of the overall 
cost of the film, whereas for films produced by the big American studios it may be as 
much as 50% of the production budget. 
31 
2. Structural weaknesses in distribution 
Circulation of European audiovisual works has structural shortcomings that make it highly 
uncompetitive when face with the might of American distributors operating in Europe 
who rake in between 60 and 95% of box-office takings depending on the country. 
In the space of ten years, European films have lost two-thirds of cinema audiences in 
Europe. Revenue increasingly comes from a small number of mainly large-budget 
productions made for the most part outside the Community. 
Of the hundreds of distribution companies operating in the European Union very few 
have maintained the capacity for pre-distribution investment in the form of advance 
buying of transmission rights which helps to finance productions. Subsequently access to 
the most commercially promising European films is increasingly difficult for European 
distributors. This then means that they are unable to compile sufficiently attractive 
catalogues and therefore have difficulty finding cinema outlets (lack of available screens, 
inability to fix release dates). Since distribution companies are not involved with a film 
right from the pre-production stage, they are rarely in a position to plan promotion 
campaigns of any significant size. 
Poor distribution of European works is also due to a lack of coordination between the 
successive distribution stages of the same work via different media, i.e. between cinema 
release, availability on video and TV screening. The cinema distribution and video 
distribution of the same European film are often handled separately by totally different 
companies, which means that investment is spread too thinly and marketing strategies are 
not coherent. Screening of European works on television depends on national markets; 
foreign programmes from other European countries, especially drama and documentaries, 
hardly ever get shown (fewer than 10%). Having been made with the domestic audience 
in mind, the programmes have the further difficulty of the language barrier preventing 
them from appealing to other audiences. 
HI. GUIDELINES FOR EUROPEAN ACTION 
1. Development 
1.1. Objectives 
Given the requirements and characteristics of the market, it is essential to step up 
the resources invested by the audiovisual industry in the development stage of 
production by encouraging productions made with the European and world market 
in mind and offering the best chances of commercial success. 
At the same time action should be taken right from the development stage to 
consolidate the economic structures of production companies with growth potential 
on the European and world market. For this purpose, the companies should be 
encouraged to network so that they can work together on a set of Europe-wide 
projects. Experience from the MEDIA Programme has shown that this is the right 
approach to concentrate on. 
32 
Particular attention should be given to production projects using new creative 
technologies, given the advent of the information society, as well as to companies 
specializing in the development of projects of this type. 
Operations should take account of structural objectives such as developing the 
independent production industry, in particular small and medium-sized businesses, 
and developing potential where audiovisual production capacity is low, such as 
in small countries or regions with less widely spoken languages; 
1.2. Priorities 
Support mechanisms for the development of audiovisual productions (drama, 
documentary, animation films and series) should be introduced. 
The mechanisms will have to address the three main aspects of the development 
stage: 
screenplay writing (financial support and professional assistance on writing 
techniques); 
financial engineering for productions (networking potential partners); 
marketing strategy (market research, planning marketing campaigns for the 
European and world market). 
Action is planned on three fronts: 
1.2.1. Providing additional resources for screenplay writers and producers for developing 
projects aimed at the European and world market; 
1.2.2. Supporting the structures of companies, in particular independent production 
companies, that have European growth potential and long-term strategies for 
developing a series of works; 
1.2.3. Encouraging cooperation between companies that have joint development projects 
aimed at the European and world market. 
In implementing the three mechanisms particular attention will be paid to the 
development of innovative production projects using advanced creative techniques 
such as digital video, image synthesis, computer animation, virtual reality and 
dynamic cinema. Priority will be given to multimedia programmes and interactive 
television applications. 
As a rule, the financial support under these mechanisms will be granted mainly 
to independent European production companies in the form of advances to cover 
up to 50% of the costs of project development. The advances will be repayable 
from the first day of shooting. 
The implementation of the mechanisms will enable approximately a hundred 
projects with high circulation potential to be developed each year, including 
twenty or so involving new technologies. 
33 
2. Distribution 
2.1. Objectives 
For European audiovisual works to be competitive on their own market and on 
the world market, their circulation must be stepped up by strengthening 
production, distribution and transmission structures. 
For this to happen, catalogues of European works must be compiled that can 
be used for the whole range of audiovisual media: film distribution, television 
broadcasting and video and multimedia production and distribution. 
To this end, distributors and broadcasters should be encouraged to be involved 
in financing works right from the production stage by purchasing in advance 
all or part of the rights. Their involvement will improve the supply and quality 
of works by making more resources available for production and ensuring that 
distributors and broadcasters are better placed to make best use of catalogues. 
The economic structures of distribution companies will also need strengthening, 
particularly in the cinema and video fields, to make them more competitive. 
Priority will be given to companies with development potential on the European 
market and long-term commercial strategies. 
as Structural operations should extend to regrouping the companies into cross 
border cooperation networks working together to circulate European works a 
widely as possible on the European and world market. 
Experience from the MEDIA Programme has shown that this is the right 
approach to concentrate on. 
Production and distribution companies, particularly independent ones, should 
be encouraged to attend large European and international commercial events, 
such as fairs and festivals, to maintain the effectiveness of their promotion 
activities. 
Operations should take account of structural objectives such as developing the 
independent production industry, in particular small and medium-sized 
businesses, and developing potential where audiovisual production capacity is 
low, such as in small countries or regions with less widely spoken languages; 
2.2. Priorities 
2.2.1. Film and video distribution 
Two types of operations are envisaged: 
2.2.1.1. Encouraging distributors from several European countries to work together on 
financing film productions, since this is essential for the quality of films, their 
subsequent distribution and the compiling of catalogues for the European and 
world market. 
34 
2.2.1.2. Encouraging the networking of European distribution and production companies 
(film and video) on the basis of joint cross-border distribution strategies for a 
certain number of European works. 
Financial incentives will be granted to cover up to 50% either of the cost of 
advance purchasing of rights for works with high circulation potential 
(point 2.2.1.1.), or of cross-border distribution costs (point 2.2.1.2.) with upper 
limits to be set in each case. 
Support will take the form of advances repayable from the proceeds of 
exploitation of the rights on the European and world markets. 
2.2.2. Support mechanism for cross-border transmission of television programmes 
produced by independent companies (drama, documentaries, animation films 
and series) 
This mechanism will grant loans for joint European productions for the 
European and world market bringing together independent production 
companies and television companies that undertake to broadcast the 
programmes jointly in their countries. 
The programmes must be suitable for the secondary market. 
The mechanism will simultaneously benefit: 
the works: 
by encouraging the involvement of television companies in the production 
of proj ects put forward by independent producers and in broadcasting thèse 
works across Europe; 
by gaining access to the secondary market: video, cable, multimedia, 
interactive television; 
the companies: 
independent production companies will have a certain volume of 
production that is guaranteed to be broadcast across Europe; 
companies managing catalogues will have catalogues suitable for the 
secondary market: 
cooperation between companies: 
in particular between television companies, who will be encouraged to 
network to guarantee wider circulation of works. 
Financial incentives will be granted in the form of loans on the basis of 
production and distribution plans submitted jointly by independent producers 
and television companies. 
35 
The loans will be granted to television companies in at least two countries 
working together with independent producers on production projects aimed at the 
European and world market. The coproducing television companies will keep the 
rights for initial and secondary transmission (within a time limit of up to 5 years), 
and the other operating rights, such as for the secondary market, will be held by 
the independent coproducers who may, where appropriate, transfer them to 
companies that manage catalogues of rights. 
Loans will be repayable without interest as soon as production is completed (on 
completion of the first episode in the case of series). The repayment deadline may 
be extended by a year, at the request of the beneficiaries, in which case interest 
will be charged on the loan. 
Real costs relating to dubbing, subtitling or multilingual shooting will not have 
to be repaid. 
2.2.3. Alongside measures supporting circulation, there is a need for a set-up of services 
to help production and distribution companies get more involved in large 
commercial events organized at European and international level. (Particular 
attention should be given to small and medium-sized companies with development 
potential outside their own country). 
The services will help gain access to events, support companies' promotion 
operations, provide information on the type of commercial strategy needed at 
European level and put them in contact with potential partners. 
Particular attention will be given to services that provide more exposure for 
European companies and their production projects and products at world events, 
in particular by encouraging them to attend as groups and carry out joint 
promotion campaigns. 
The services will be provided for about ten events a year on the European market 
and at least two events for the world market. 
3. Financial instruments 
The Commission also intends to encourage the creation of financial instruments 
to mobilize funding for audiovisual production (film and TV). 
They will be funded in particular from the repayment of advances and loans 
granted under MEDIA I (1991-95) and under the proposed scheme for the 
development and distribution of European audiovisual works (MEDIA II). 
36 
Proposal for a 
COUNCIL DECISION 
on a programme to promote the development and distribution of 
European audiovisual works (MEDIA II - Development and Distribution) 
(1996-2000) 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, and in particular 
Article 130(3) thereof, 
Having regard to the proposal from the Commission(1), 
Having regard to the opinion of the European Parliament^, 
Having regard to the opinion of the Economic and Social Committee(3), 
Whereas the Heads of State or Government, meeting as the European Council in Brussels 
on 10 and 11 December 1993, adopted the White Paper on Growth, Competitiveness and 
Employment as the basis for action by the European Union and its Member States, 
supporting an industrial development approach based on global competitiveness as the key 
to growth and jobs; and whereas the White Paper, and Chapter 5-C thereof in particular, 
states the economic importance of the audiovisual industry; 
Whereas the Heads of State or Government, meeting as the European Council in Corfu 
on 24 and 25 June 1994, took note of the report by the Bangemann Group entitled 
"Europe and the Global Information Society - Recommendations to the European 
Council", in particular acknowledging the strategic importance of the audiovisual 
programme industry in terms of content; 
Whereas Article 128(4) of the Treaty requires the Community to take cultural aspects into 
account in its action under other provisions of the Treaty; whereas participation in the 
Programme should reflect European cultural diversity; 
Whereas the Council, at its joint industry/telecommunications meeting of 
28 September 1994, issued a favourable opinion on the Commission communication of 
19 July 1994 entitled "Europe's way to the information society: an action plan"(4) and 
emphasized the need to improve the competitiveness of the European audiovisual 
industry; 
(1) OJ No L 
(2) OJNoL 
(3) OJ No L 
(4) COM(94) 347 final, 19.7.1994. 
37 
Whereas the Council took formal note, on 17 June 1994 of the Green Paper on "Strategy 
options to strengthen the European programme industry in the context of the audiovisual 
policy of the European Union"(5); 
Whereas the Commission consulted the people in the industry on the options put forward 
in the Green Paper, in particular by holding the European Audiovisual Conference in 
Brussels from 30 June to 2 July 1994; 
Whereas the European Parliament, in its Resolution of 6 May 1994(6), examined the 
problems of the audiovisual industry, following Council Directive 89/552/EEC(7) (the 
"Television Without Frontiers" directive), in preparation for the European audiovisual 
conference and took the view that the priorities established inter alia during the 
discussions on amendments to the MEDIA programme, namely financing mechanisms, 
pre-production, distribution and training, were the best means of establishing coherent, 
stable European networks; 
Whereas the Economic and Social Committee issued its opinion(8) on the Green Paper, 
stating that European-level programmes such as MEDIA could have a positive influence 
on the development of programme structures and means of production in Europe; 
Whereas the Commission has implemented a programme of measures to encourage the 
development of the European audiovisual industry (MEDIA) (1991-95), adopted by 
Council Decision 90/68 5/EEC(9), including measures to support the development and 
distribution of European audiovisual works; 
Whereas the Council, at its meeting of 5 November 1993, after taking note of the 
Commission Communication of 23 July 1993 on the MEDIA programme mid-term 
evaluation report, felt that it would be appropriate to examine suitable measures for 
launching a MEDIA II programme after 1995; 
Whereas the European Council in Essen on 9 and 10 December 1994 called on the 
Commission to present proposals for a new MEDIA programme; 
Whereas experience from the MEDIA Programme has shown that action is needed both 
before and after production; whereas companies in the sector, in particular small and 
medium-sized businesses, should be strengthened and cooperation between 
distributors/broadcasters and producers should be encouraged; 
Whereas the emergence of a European audiovisual market requires the development of 
"European works", which means works from Member States of the European Union as 
defined in Article 6 of Directive 89/552/EEC; 
Whereas the competitiveness of the audiovisual programme industry requires utilization 
of new technologies at the programme development stage; 
(5) 
(6) 
(7) 
(8) 
(9) COM(94) 96 final, 6.4.1994. 
OJ No C 205, 25.7.1994, p. 561. 
OJ No L 298, 17.10.1989, p. 23. 
ESC 1000/94, 14.9.1994, p. 6. 
OJNo L 380, 31.12.1990, p. 37. 
38 
Whereas there is a need for improvement in the circulation prospects of European 
cinematographic works on the, European and world market; 
Whereas there is a need for improvement in the television broadcasting prospects of 
European works; 
Whereas European producers and distributors should be more numerous and more 
effective on programme markets; 
Whereas the development of the European audiovisual industry requires mechanisms 
capable of attracting public and private resources; 
Whereas'support for development and distribution should take account of structural 
objectives such as developing the independent production industry, in particular small and 
medium-sized businesses, and developing potential where audiovisual production capacity 
is low, as in small countries or regions with less widely spoken languages; 
Whereas, in accordance with the principle of subsidiarity, action taken by the Community 
should support and supplement action taken by the relevant authorities in the Member 
States, 
HAS DECIDED AS FOLLOWS: 
Article 1 
A programme to promote the development and distribution of European audiovisual 
works (hereinafter referred to as "the Programme"), to run for five years from 
1 January 1996, is hereby adopted for the purpose of strengthening the European 
audiovisual industry, particularly in the areas of development and distribution. 
Article 2 
The aims of the Programme are as follows: 
(1) As regards development: 
- to promote the development of production projects aimed at the European and 
world market and to support companies capable of developing such projects; 
- to develop production projects that make use of new creative techniques and to 
support companies capable of developing such projects; 
(2) As regards distribution: 
- to encourage European distributors to invest in cinema film production and to 
set up cross-border structures to distribute the films; 
- to encourage television companies to cooperate in investing in the production 
of works aimed at the European and world market and to set up cross-border 
structures to transmit those works: 
39 
- to support linguistic diversity of programmes; 
- to stimulate access to commercial events promoting European productions, in 
particular independent ones. 
Article 3 
The measures described in the Annex shall be put into effect in order to achieve the 
objectives laid down in Article 2. They shall be implemented in accordance with the 
procedure set out in Article 6. 
Article 4 
As a rule, beneficiaries of Community support working on the implementation of the 
measures laid down in Article 3 must provide a significant proportion of the funding; 
Community funding shall not exceed 50% of the cost of operations. 
Article 5 
Financial support under the Programme may be granted in the form of loans, repayable 
advances or subsidies. The repayments under the Programme, together with the 
repayments from operations under MEDIA (1991-95), will provide the funds for financial 
instruments to mobilize public and private financing for European audiovisual production. 
Article 6 
(1) The Commission shall be responsible for implementation of the programme. 
(2) The Commission shall be assisted by an committee of an adivosry nature 
composed of the • representatives of the Member States and chaired by the 
representative of the Commission. 
The representative of the Commission shall submit to the Committee a draft of 
the measures to be taken. The Committee shall deliver its opinion on the draft, 
within a time limit which the chairman may lay down according to the urgency 
of the matter, if necessary by taking a vote. 
The opinion shall be recorded in the minutes; in addition, each Member State 
shall have the right to ask to have its opinion recorded in the minutes. 
The Commission shall take the utmost account of the opinion delivered by the 
Committee. It shall inform the Committee of the manner in which its opinion has 
been taken into account. 
(3) The draft proposals for measures to be taken by the Commission, as referred to 
in paragraph 2, shall principally cover the following: 
- arrangements for budget implementation for the Programme; 
40 
- arrangements for implementation of the operations set out in the Annex; 
- arrangements for monitoring and evaluating the operations. 
Article 7 
Within the six months following the first three years of the Programme's implementation, 
the Commission shall present to the European Parliament, the Council and the Economic 
and Social Committee an evaluation report on the results achieved with suitable 
proposals, as appropriate. 
When the Programme has run its full term, the Commission shall submit a report on the 
implementation and results of the Programme to the European Parliament and the 
Economic and Social Committee. 
Done at Brussels, For the Council 
The President 
41 
ANNEX 
1. ACTION TO BE TAKEN 
The Programme is intended to enhance the competitiveness of the European audiovisual 
industry on the European and world market by supporting the development of works with 
genuine commercial potential and the creation and strengthening of cross-border 
distribution and transmission networks; 
The proposed operations shall cover the following: 
1.1 Development 
Improving development opportunities (preproduction) for drama, animation and 
documentaries with a view to access to the European and world market: 
- by supporting the development of drama, documentaries and animation (cinema 
and television) aimed at a European and world audience, in particular by 
promoting improvement in screenplay techniques; 
- by supporting companies that have development project packages with 
European and world market potential; 
- by encouraging networking of companies with j oint development proj ects aimed 
at the European and world market. 
1.2. Distribution and transmission 
Improving film and video distribution for European works with high circulation 
potential on the European and world market: 
- by supporting the introduction of European distribution mechanisms 
encouraging distributors to contribute to funding production of works with 
commercial potential on the European and world market; 
- by promoting networking of European distributors with joint commercial 
strategies on the European and world market; 
1.2.2. Television broadcasting 
Improving circulation opportunities for television programmes aimed at the 
European and world market: 
- by introducing a mechanism encouraging television companies to contribute to 
the financing of works with high circulation potential made by independent 
production companies and to distribute them on the European market. 
- by supporting linguistic diversity by means of dubbing, subtitling and 
multilingual production. 
42 
1.2.3. Promoting independent productions 
Improving access for independent producers and distributors to the European and 
world market by operating services and promotional activities at commercial 
events, such as markets, fairs and festivals, organized at European and 
international level 
2. IMPLEMENTATION PROCEDURE 
2.1. Approach 
In implementing the Programme, the Commission will work closely with the 
public authorities that handle support for the audiovisual industry in the Member 
States of the Union in order to ensure that the operations complement each other 
fully in accordance with the principle of subsidiarity. The Commission will see 
to it that there is a good geographical spread among the professionals participating 
in the programme and that Europe's cultural diversity is reflected. 
3. Funding 
Community funds are intended to improve market access opportunities for 
productions targeted on a European and world audience. They are also intended 
to strengthen production and distribution companies with growth potential on the 
European market and thereby help restructure the industry. 
In either instance. Community outlay shall not exceed 50% of the costs and shall 
be granted in the form of repayable advances. The remainder will be provided by 
the industry. 
Community support for linguistic diversity in production will be granted in the 
form of subsidies. 
2.3. Implementation 
In implementing the programme the Commission will be assisted by two 
contractors capable of coordinating the performance of the tasks laid down in the 
action plan. 
One contractor will handle development, the other distribution as follows: 
Development: 
- development of drama, animation films and series, and documentaries; and 
support to companies; 
- development of programmes using advanced creative technologies; 
Distribution: 
- film and video distribution on the European market; 
43 
- broadcasting of television programmes on the European market; 
- promotion of access for independent productions to the European and world 
market. 
The contractors will be selected by tender. 
The Commission will draw up terms and conditions for each of the contractors 
specifying how the tasks laid down in the action plan are to be implemented. 
The contractors will manage, on behalf of the Commission, the resources allocated 
to them for the purpose of stimulating development and distribution in the 
audiovisual industry. Resources will be conveyed to audiovisual project promoters 
in the form of repayable advance or of loans. 
The contractors must be general-interest non-profit-making bodies. 
Selection of contractors will be based on the following criteria: 
- their professional experience in development and distribution; 
- their contacts with the relevant parties in the industry at national, regional and 
European level; 
- the depth of their familiarity with the European audiovisual industry and the 
Union's policy on it; 
- their experience of cross-border or European management; 
- the calibre of their staff and the soundness of their management infrastructure. 
44 
FINANCIAL STATEMENT 
1. TITLE OF OPERATION 
Programme to promote the development and distribution of European audiovisual 
works 
2. BUDGET HEADING INVOLVED 
B 3 2010 
3. LEGAL BASIS 
- Article 130 of the EC Treaty, as introduced by the Treaty on European Union 
- Council Decision of on the implementation of a programme to promote the 
development and distribution of European audiovisual works 
4. DESCRIPTION OF OPERATION 
4.1 General objective 
Low circulation of European programmes and films is today one of the major 
handicaps of the European programme industry. The European market is still 
dominated by productions from outside Europe, mostly the United States. Works 
produced in the European Union are hardly distributed outside their country of 
origin; only 15% of them are distributed outside the country where they are 
produced. This imbalance is even more apparent when it comes to subsequent 
video or television release. The low circulation of European productions is largely 
due to the lack of cross-border distribution networks and the absence of 
productions that match market requirements. 
Project development is a crucial stage in the life cycle of a television programme 
or film not just in terms of market access, but also in terms of the availability of 
pre-production funding opportunities. The industry in Europe devotes far top few 
resources to the project development stage. Producers tend to neglect the 
development phase, which has three main components: screenplay writing, 
financial engineering for production and promotion strategy. 
Pursuant to the Treaty objectives (Article 130 in particular) and in the light of the 
consultations held by the Commission following publication of the Green Paper 
on the ELTs audiovisual policy, development and distribution in the audiovisual 
industry must be fostered. 
As regards development, the action proposed by the Commission will proceed as 
follows: ' 
45 
The audiovisual industry will be encouraged to step up the resources it invests in 
the development stage of production, with special emphasis on projects targeted 
on a European audience. 
Operations will be undertaken to consolidate the economic structures of 
production companies that have expansion potential on the European market. 
These companies will be encouraged to network. 
Particular attention will be given to production projects using new creative 
technologies, given the advent of the information society, and to companies 
specializing in developing such projects. 
A support mechanism will be introduced to develop audiovisual works in the 
fields of drama, documentary and animation films and series. It will cover the 
three main components of the development stage: screenplay writing, financial 
engineering for production and promotion strategy. 
The mechanism will simultaneously benefit: 
(1) the works; 
(2) the companies; 
(3) company regroupings. 
As regards distribution, the Commission's aim is: 
to make European works more competitive on their own market by stepping up 
circulation through improved production, distribution and transmission structures. 
* To improve film and video distribution opportunities it is essential to: 
- introduce European distribution mechanisms encouraging distributors to 
contribute to the funding of production of works with commercial potential on 
the European market (over the five years repayable loans will help involve 
distributors in the distribution of about 130 to 140 films); 
- encourage networking of European distributors with j oint commercial strategies 
on the European market to help compile distribution catalogues of European 
works aimed at the European and world market. This will help to restructure 
the economic set-up of distribution companies by regrouping them. 
* To improve circulation opportunities for television productions it is essential to: 
- introduce a support mechanism for Europe-wide broadcasting of television 
productions made by independent companies: drama, documentaries and 
animation films and series. 
* To improve prospects of access to the European and world market for 
production and distribution companies - in particular independent ones - it is 
essential to: 
46 
- encourage more numerous and more efficient promotion operations by 
producers and distributors at commercial and promotional events, such as 
markets, fairs, festivals and the like. 
4.2 Period covered and arrangements for renewal or extension 
- five years (1996-2000) 
- possible renewal following assessment 
- new Council decision required for renewal 
5. CLASSIFICATION OF EXPENDITURE OR REVENUE 
5.1 Non-compulsory expenditure 
5.2 Differentiated appropriations 
5.3 Type of revenue involved: N/A 
6. TYPE OF EXPENDITURE OR REVENUE 
* Support for development: 
Financial support for development will be granted to cover up to 50% of the costs 
of project development in the form of repayable advances. 
* Support for film and video distribution: 
Financial incentives will be granted to cover up to 50% of advance purchasing of 
the rights of works aimed at a European audience in the form of advances that are 
repayable from the proceeds of exploiting these rights on the European and world 
market. 
Financial incentives for networking of distributors will be granted in the form of 
repayable advances to cover up to 50% of costs. 
* Support for Europe-wide broadcasting of television productions: 
Loans will be granted for coproduction of works aimed at a European audience 
made by independent production companies working together with television 
companies which undertake to screen the programmes jointly in their respective 
countries. Loans will be repayable without interest as soon as production is 
completed. The repayment deadline may be extended by a year, at the request of 
the beneficiaries, in which case interest will be charged on the loan. In addition, 
a non-repayable premium for quality dubbing or subtitling may be paid to 
broadcasters/producers who buy the programmes. 
47 
All repayments of advances and loans will be collected by the two contractors 
selected by the Commission by tender. The funds will be used for financial 
engineering measures, which will be laid down in a future Council Decision, 
to fund audiovisual production. 
How much is allocated to the "new technologies" component for each operation 
will depend on the proposals following the invitation to tender. 
7. FINANCIAL IMPACT 
7.1 Method of calculating total cost of operation (definition of unit costs) 
* Development: 
Support for development has three components: 
- the works; 
- companies; 
- networking of companies. 
For companies and company networking the level of support should be gradually 
increased in the course of the five years of the implementation of the scheme. This 
would make it possible to consolidate the desired restructuring. 
For the support mechanisms for the works, the opposite approach should be adopted: 
Community contributions should be gradually decreased to help the overall aim of 
encouraging applications for restructuring operations. 
A tentative breakdown of costs based on this approach is shown in Table 7.2. below. 
The costs, which were calculated in the way set out in section 7.1, are shown as annual 
averages. The figures are tentative. 
Support for works: 
Judging by the support mechanisms for production development for documentaries, drama 
and animation under MEDIA I (1991-95), support of ECU 40 000 per work is on average 
adequate for significant results. Obviously development costs vary according to the type 
of production: documentary, drama, animation, and within each type there can be 
significant differences. Over the five years it is estimated that 625 works could receive 
development support, which means a total of ECU 25 million over 5 years, or an average 
of ECU 5 million a year. 
Support for companies 
Under the MEDIA programm (1991-95) various structures provided financial support for 
production companies developing various projects at the same time. Previous experience 
in the field of drama shows that this approach calls for average amount of between 
ECU 100 000 and ECU 150 000. To provide support for a reasonable number of 
48 
production companies over five years, ECU 37 million will be needed (ECU 7.4 million 
a year on average). 
Support for networking 
The MEDIA programme (1991-95) concentrated on networking in the field of animation. 
Extrapolating from results obtained in that field (10 groupings comprising 30 or so 
studios), the amount needed per company involved in a grouping is in the region of 
ECU 150 000. This will need to involve about a hundred production companies (in the 
different fields of drama, documentary, new technologies and animation) in order to 
achieve significant results. The amount needed for the five years is ECU 15 million 
(ECU 3 million a year on average). 
The total estimated cost for support for development is therefore ECU 77 million. 
The average annual cost of the operation is ECU 15.4 million. 
The Commission will be assisted by a contractor selected by tender. The cost of this is 
included in the amounts for the various operations and represents 5% of the total. 
* Distribution: 
The level of support for film and video distribution and improvement of production 
circulation should be gradually increased over the first two years of the scheme and then 
maintained level for the following three years. Support for company promotion should, 
however, be increased throughout the first four years. 
Distribution support comprises: 
* Support for film and video distribution: 
- Incentives for distributors to contribute to production funding; 
- Incentives for networking of distributors to compile catalogues. 
* Support for improving circulation prospects for television programmes. 
* Support for promoting companies on the European and world market. 
* Support for film and video distribution: 
- incentives for distributors to contribute to production funding: 
On the basis of experience of coordination under the MEDIA programme 
(1991-95) of structures responsible for distribution, and judging by the average 
number of films produced in the European Union (500), distributors should be 
encouraged to contribute to financing about 130 to 140 films. People in the 
industry consulted said that for a large-scale European film costing on average 
ECU 6 million, average support of about ECU 750 000 would be required to 
have the desired effect. The cost over the five years would therefore be ECU 102 
million (ECU 20.4 million a year on average). 
49 
- Incentives for networking 
On the basis of the results obtained from film and video distribution under the 
MEDIA programme (1991-95), regarding the amounts to be allocated, the number 
of films to be distributed and the number of distributors to include in successful 
networks, a sum of ECU 800 000 is needed for the coordinated distribution of at 
least 5 films by 4 distributors/ About 12 regroupings a year should be 
implemented on average. The cost over five years is estimated at 
ECU 48 million,or an annual average of ECU 9.6 million (see breakdown in 7.2.). 
Support for improving circulation prospects for European production: 
As indicated in particular by the number of hours of television a year produced 
in the European Union and estimated hourly costs and experience gained from the 
MEDIA programme (1991-95), the average unit cost per television production is 
estimated at ECU 500 000. 
About 210 or so works should receive support at a cost of ECU 105 million over 
the five years (average of ECU 21 million a year). 
Support for promoting companies: 
Experience under the MEDIA programme (1991-95) of markets and festivals 
organized in the European Union and international events (particularly activities 
to promote European films) suggest appropriate operations and average costs for 
improving the prospects of European production and distribution companies. 
Consideration should be given to specific operations for speeding up financial 
arrangements and coproductions at events specially for these purposes. Over the 
five years ECU 7.5 million will be needed for events in the European Union and 
ECU 2.5 million for international events to guarantee the effective presence of 
European companies. This comes to ECU 10 million over the five years (average 
of ECU 2 million a year). 
The Commission will be assisted by a contractor selected by tender. The cost of 
this is included in the amounts for the various operations and represents 5% of the 
total. 
The figures in this financial statement show the total cost of Community funding, 
which is up to 50% of the real cost of the operations. 
50 
7.2 Itemized breakdown of cost 
Breakdown 1996 
budget 1997 in ECU millions 1994 
1998 1999 2000 TOTAL 
Support for development 
- works 
- companies 
- networks 
Total 7 
6 
2. 
15 6 
7 
3 
16 5 
7 
3 
15 4 
8 
3 
15 3 
9 
4 
16 25 
37 
15 
77 
Support for film and video distribution 
* incentives for 
distributors to 
contribute to 
production 
* networking of 
distributors to 
compile catalogues 
Total 15 
7.815 
22.815 18 
9.925 
27.925 20 
9.086 
29.086 23 
10.087 
33.087 26 
11.087 
37.087 102 
48 
150 
Improving circulation prospects for television productions 
(including quality dubbing and subtitling) 
Loans 15 15 25 25 25 105 
Promotion: improvmg access prospects to commercial events, 
trade fairs, festivals and the like. 
European events 
World events 
Total 
GRAND 
TOTAL 0.5 
0.5 
1 
53.815 0.5 
0.5 
1 
59.925 1.5 
0.5 
2 
71.086 2.5 
0.5 
3 
76.087 2.5 
0.5 
3 
81.087 7.5 
2.5 
10 
342 
7.3 Indicative schedule of appropriations 
51 
7.3.1 Schedule for proposed new operation 
in ECU millions 1994 
Commitment 
appropriations 
1996 Payment 
appropriations 
1997 Payment 
appropriations 
1998 Payment 
appropriations 
1999 Payment 
appropriations 
2000 Payment 
appropriations 
2001 Payment 
appropriations 
TOTAL 1996 
53.815 
38 
15.815 
-
-
-
-
53.815 1997 
59.925 
-
42 
17.925 
-
-
-
59.925 1998 
71.086 
-
-
45 
26.086 
-
-
71.086 1999 
76.087 
-
-
-
46 
30.087 
-
76.087 2000 
81.087 
-
-
-
-
54 
27.087 
81.087 TOTAL 
342 
38 
57.815 
62.925 
72.086 
84.087 
27.087 
342 
7.3.2 Schedule for the preliminary draft budget for multiannual operations whose basic 
instrument contains an "amount deemed necessary" 
in ECU millions 1994 
Situation 
by end 
1994 
-1995 
budget 
-1996 
preliminary 
draft 
53.815 TENTATIVE SCHEDULE 
1997 
59.925 1998 
71.086 1999 
76.087 2000 
81.087 TOTAL 
342.000 
8. FRAUD PREVENTION MEASURES; RESULTS OF MEASURES TAKEN 
Payment of financial contributions shall be subject to presentation of itemized 
supporting documents prior to payment. 
In addition, the various control bodies (Court of Auditors, Financial Control, 
Authorizing Officer) shall carry out regular checks on the agencies managing the 
operations and on the recipients. 
52 
9. ELEMENTS OF COST-EFFECTIVENESS ANALYSIS 
9.1 Specific and quantifiable objectives: target population 
Specific objectives 
Development 
To remedy the industry's shortcomings as regards the project development stage 
(production project development, drawing up of financing plans, marketing and 
promotion strategies, financial arrangements etc.) and in particular the 
development of innovative programmes using new technologies. 
Distribution 
To overcome the economic handicaps due to low circulation of films and 
television programmes which deprives the industry of the benefits of a large-scale 
market. This will be achieved mainly by bringing the distribution and production 
industries closer together, particularly in the area of films. 
To promote transmission and cooperation agreements between producers and 
television broadcasters. 
To improve market access for European productions. 
Target population 
The target population comprises various parties, such as production companies, 
distribution companies, television companies and companies handling new 
technologies. 
9.2 Grounds for the operation 
Need for Community financial aid 
The proposed support scheme forms part of the Union's audiovisual policy. 
It is to operate on the principle of subsidiarity to support and supplement existing 
national-level operations. It satisfies the objectives set out in the Treaty, and in 
particular Article 130 thereof by: 
speeding up the adjustment of industry to structural changes; 
encouraging an environment favourable to initiative and to the 
development of undertakings throughout the Community, 
particularly small and medium-sized undertakings; 
encouraging an environment favourable to cooperation 
between undertakings; 
fostering better exploitation of the industrial potential of 
policies of innovation, research and technological 
development. 
53 
Choice of ways and means 
Financial incentives to mobilize additional investment from the industry and 
increase the volume of activities considerably. This approach is fully compatible 
with market realities, since it is designed to stimulate the market. 
The mobilization of capital under the first MEDIA programme (1991-95) meant 
that financial support from the Community had a multiplier effect of 4 on 
average. This time support will help restructuring and will step up the leverage 
of Community intervention. 
The main areas of uncertainty relate to the fact that the audiovisual industry is an 
intrinsically high-risk industry owing to its innovative nature. 
9.3 Monitoring and evaluation of the operation 
An evaluation report will be compiled after the operation has been running three 
years and a final report will be drawn up once the scheme has run its full course. 
Performance indicators: 
There will be a central monitoring system comprising two types of evaluation: 
statistical and financial information for evaluating management of the 
operations; 
statistical data will be collected and interpreted to evaluate the impact of 
the scheme as whole on the market (for example: how many companies 
are involved in networks; how many of the projects developed go into 
production; how much projects that are worked on after receiving 
development support under the scheme are worth; how many works are 
helped to go into circulation etc.). 
Details and frequency of planned evaluations: 
Questionnaires, statistical data collection; interpretation of replies and data; 
inspections carried out on the management structures. 
Assessment of the results obtained 
Reports are to be drawn up on a regular basis. 
9.4 Coherence with financial programming 
The expenditure is incorporated into DGX^ multiannual financial 
programming. 
54 
10. ADMINISTRATIVE EXPENDITURE (part A of the budget) 
Management and implementation of the scheme will require 25 extra posts to be made 
available: 
for development operations ( 2 A posts, 2 B posts and 2 C posts = 6 posts); 
for film and video distribution support operations, networking of distributors to 
compile catalogues; and improving circulation prospects of television works (6 
A posts, 4 B posts and 6 C posts = 16 posts); 
for promotion and improving access to commercial events: (1 A post, 1 B post 
and 1 C post = 3 posts). 
55 
ANNEX 
2 July 1994 
EUROPEAN AUDIOVISUAL CONFERENCE 
Group discussing Community support mechanisms 
Chaired by: Michael FLINT 
In its discussion of the issues raised by the Green Paper regarding Community support 
mechanisms, the group took account of the four basic conditions which will determine 
the future of the European programme industry: 
* it must be competitive in the context of an industry that is increasingly open and 
global; 
* it must be forward-looking and participate actively in the development of the 
information society; 
* it must reflect the creative talent and personality of the peoples of Europe; 
* it must be capable of translating growth into new jobs in Europe. 
The group acknowledged that these were the basic directions for the industry's future. 
The following points were also made: 
* the audiovisual industry is at the forefront of industries with strong growth 
potential, especially in terms of job creation; 
* the issue of preserving the diversity of national and regional cultures is now 
clearly linked to the development of a European programme industry of a decent 
size that can pay its way; 
* digital compression technology is seen as revolutionary and is likely to radically 
alter the economics of the industry, in particular as it pushes the strategic role of 
the programme industry to the fore; 
* If the European Union intends to step up its audiovisual policy, it should do so 
soon. 
Diagnosis 
The group accepted the diagnosis of the current state of the film industry as formulated 
in the Green Paper: 
* the fragmentation of the industry into national markets, which means that 
companies are too small to compete on European and world markets; 
56 
* the partitioning of national markets is compounded by a low rate of cross-border 
programme distribution and circulation; 
* the industry is trapped in a spiral of chronic deficit; 
* the industry is unable to attract the European capital, which is nonetheless 
available for investment in the programme industry outside Europç. 
The television industry is facing: 
* soaring demand and increasing production costs; 
* low rate of programme circulation within Europe; 
* poor production structures and programme catalogues that are not attractive to 
European audiences. 
Objectives 
The discussion group also agreed with the objectives set out in the Green Paper. The 
European Union should mobilize its human and financial resources to develop a 
programme industry that is competitive on both its own market and the world market to 
serve as a vehicle for its cultures, create jobs and generate wealth. It is a medium and 
long-term policy, the ultimate aim being to make the European programme industry a 
profit-making concern in an open and dynamic world market. 
the so-called "Europuddings" that come out of contrived co-productions should be 
avoided. 
Existing Community instruments 
The group agreed unanimously that the financial resources granted under the MEDIA 
programme were inadequate for the desired objectives. 
Potential solutions: 
* to keep the number of MEDIA projects at its present level, but to increase 
funding considerably; 
* to concentrate on a smaller number of projects and increase resources. 
There were no criticisms of the action plan, since it is generally viewed as a success, 
though it is still to early to make a full evaluation 
57 
Other European instruments 
The group felt that the overall results of Eurimages had been positive within its limited 
remit of encouraging European television drama and film co-productions. However, it 
needed additional funding, given the number of applications it receives, and it was 
suggested that the eligibility condition which requires three countries to be involved in 
the co-production should be changed to require producers from two countries plus a 
distributor in a third country. 
It was thought to soon to make any assessment of EUREKA Audiovisual. 
Priorities 
The group went on to discuss the suitability of the priorities set out in the Green Paper: 
* training (geared towards the market and new technologies); 
* preproduction and project development; 
* distribution and marketing, in particular high-quality dubbing and subtitling; 
* stimulating private investment. 
There was unanimous agreement that training should focus on: 
* writers; 
* producers; 
* commercial businesses and financial management; 
* interactive and multimedia technology. 
There was all-round support for prioritizing preproduction and project development. 
As regards distribution and marketing, there was a consensus on the basic need for high-
quality subtitling and doubling to improve the circulation rate of programmes in Europe. 
A distinction should be made between support mechanisms for television production and 
support mechanisms for film production. 
As regards television, a common position emerged between television broadcasters and 
producers that a system of incentives in the form of premiums should be introduced in 
order to encourage the screening of programmes from other European countries. 
Incentives would be necessary because programmes from other European countries work 
out much more expensive for broadcasters than non-European programmes. Since cheap 
non-European programmes get shown so often in Europe, the audiences have got used 
to them and are now more receptive to American programmes than to productions from 
other European countries. It has nonetheless been shown that foreign programmes can 
appeal to European audiences, if given enough exposure. 
The objective that emerged most clearly (and was agreed on by a large majority) was to 
produce and distribute between 15 and 20 large-scale film productions a year throughout 
Europe. 
58 
Incentives for distribution of full length films throughout the single market and 
encouragements given to production via distributors would help, but there was no 
agreement on what form they should take. 
• .• 
As regards the proposal to encourage private-sector investment, the group felt that soft 
loans financed from the resources mobilized by the EU plus national mechanisms would 
be an adequate support system. 
The question of whether priority should be given to companies or projects would have 
to be decided in accordance with the type of incentives. 
Geographical scope, timescale and financial implications of support mechanisms 
Notwithstanding the comments below on the Member States and regions with low 
production capacity, there was agreement that any EU support system should have 
genuinely European objectives. Although unanimity was nor reached on how to put this 
into practice, most of the group supported European (EU) mechanisms which would 
provide incentives only to projects with international potential. National mechanisms 
should also take European objectives into consideration. 
In any case, there was agreement that a system of recycling funds within the audiovisual 
industry would not be effective and new funds would be necessary. The incentives should 
take the form of soft loans or guarantees that could be repaid or recovered, once a project 
or a company started making a profit. However, the group felt mat certain incentives 
could not take the form of loans, but would have to be granted as direct aid, for example 
for training, restructuring of the industry (as was the case in the animation industry) and 
premiums to promote the circulation of programmes from other European countries. 
The group was unanimous in the view that the current level of financing, although 
concentrated in priority areas, was inadequate. Although there was no all-round agreement 
on exactly how much would be needed, certain parties floated the idea of 
ECU 1.5 billion. 
The group was of the opinion that if the EU saw the audiovisual industry as strategic for 
employment, the level of support granted to it should match the level of support given 
to other strategic priorities. 
As regards film distribution, the group's opinion was that distributor groupings should be 
encouraged. The group did not agree on concrete steps for achieving this, but it was 
suggested that the Commission should look into the matter in cooperation with a working 
party made up of financial backers and distributors. The support should be intended to 
create distribution systems covering the whole EU. 
If the Americans have set up systems of this type, it is hard to see why Europeans should 
not be able to undertake Europe-wide film distribution. 
Certain types of programme, for example documentaries, could be produced with the 
international market in mind, provided that the right type of incentives are introduced, 
which need not be costly. 
59 
Member States or regions with low production capacity 
On this matter the group reached the conclusion that maybe incentives should be 
introduced at EU level to help the audiovisual industries in small countries to gain access 
to the wider market and to the structures that should be set up to enable the 
EU programme industry to get the most out of the European market. 
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