EUROPEAN COMMISSION 
Brussels, 23.11.2011 
SEC(2011) 1399 final 
  
COMMISSION STAFF WORKING PAPER 
IMPACT ASSESSMENT 
Accompanying the document 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
establishing a Creative Europe Framework Programme 
{COM(2011) 785 final} 
{SEC(2011) 1400 final}  
 
EN 1   EN PART I: CULTURE STRAND  
Lead Service:  DG Education and Culture supported by the Education, Audiovisual and 
Culture Executive Agency (EACEA) 
Other involved services: DG COMM, DG DEVCO, DG ELARG, DG MARKT, DG RTD, 
DG SJ, DG TRADE, SG.  
WP reference:  CWP/2011/EAC/006 
Disclaimer:  This report commits only the Commission' s services involved in its preparation 
and does not prejudge the final form of any decision to be taken by the Commission
 
EN 2   EN TABLE OF CONTENTS 
1. Procedural issues and consulta tion of interested parties.............................................. 4 
1.1. Purpose of the impact  assessment report ..................................................................... 4 
1.2. Procedural issues, organisation and timing, and consultation of in terested parties..... 4 
1.3. External expertise........................................................................................................ .5  
1.4. Consultation .............................................................................................................. ... 5 
2. Context and Problem definition ................................................................................... 7 2.1. Historical and Policy context ....................................................................................... 7 2.2. Sector context............................................................................................................ ... 9 
2.3. Baseline description: The Culture Programme .......................................................... 10 2.4. Identification of problems a nd their underlying drivers ............................................ 13 
2.4.1. Problem 1: A highly fragmented market fo r cultural works resu lting in sub-optimal 
circulation of cultural works and limited choice for consumers................................ 13 
2.4.2. Problem 2: the impact of globalisation and the digital shift on th e cultural sector and 
the need for the sector to develop its cap acity to adjust to these challenges ............. 17 
2.4.3. Problem 3: the lack of data for evidence-based policy-making to optimise the 
effectiveness of cultura l policies at European and national level .............................. 19 
2.4.4. Problem 4: difficulties for the CCS in accessing finance .......................................... 19 2.5. Who is affected?......................................................................................................... 2 0 
2.6. Baseline trends: how would the problem  evolve, all things being equal? ................. 21 
2.7. Justification for EU intervention................................................................................ 22 2.7.1. Does the EU have the right to act?............................................................................. 22 2.7.2. European added value / necessity test of the new EU initiative ................................ 22 
2.7.3. Complementarity to other EU  policies and instruments ............................................ 23 
3. Objectives.................................................................................................................. . 25 
4. Policy options............................................................................................................. 2 8 
4.1. Criteria applied for pre-selection of options to undergo further analysis .................. 28 
4.2. Discarded options....................................................................................................... 29  
4.3. Option 1 "No Change" ............................................................................................... 30 4.4. Option 2 "Revised Programme"................................................................................. 30 4.5. Option 3 "Synergies and new framework programme" ............................................. 32 
 
EN 3   EN 5. Analysis of impacts.................................................................................................... 33 
5.1. Option 1 "No change" (the baseline) ......................................................................... 35 5.2. Option 2 "Revised programme" ................................................................................. 36 5.3. Option 3 "Synergies and new framework programme" ............................................. 38 6. Comparing the Options .............................................................................................. 39 6.1. Effectiveness ............................................................................................................. . 39 
6.2. Efficiency ................................................................................................................ ... 40 
6.3. Cost-effectiveness ...................................................................................................... 40  
6.4. Coherence................................................................................................................. .. 46 
6.5. Scoring of options ...................................................................................................... 46  
6.6. Preferred option.......................................................................................................... 48 
7. Monitoring and Evaluation ........................................................................................ 48 7.1. Indicators................................................................................................................ .... 49 
8. Annexes..................................................................................................................... . 50 
8.1. Annex 1: Studies ........................................................................................................ 50  
8.2. Annex 2: Indicative indictors..................................................................................... 51 8.3. Annex 3: Results of the public consultation .............................................................. 51 
8.4. Annex 4: Interim Evaluation of the Culture Programme 2007-2013......................... 52 
8.5. Annex 5: Annex to the Ecorys Final repor t – Consultancy servi ces for the impact 
assessment of the future programme on Culture........................................................ 52 
 
EN 4   EN 1. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
1.1. Purpose of the impact assessment report 
DG EAC will propose a single “Creative Europe” framework programme bringing together 
the current Culture, MEDIA and MEDIA Mundus  programmes. The proposal for a Creative 
Europe framework programme will include separate strands for Culture, MEDIA, a cross-sectoral strand (the latter will include a financial instrument for the cultural and creative sectors (CCS)).
1 The Creative Europe package includes separate impact assessments for 
MEDIA/MEDIA Mundus and the CCS financial inst rument. This document contributes to the 
overall exercise by presenting exclusively the impact assessment of the future strand aimed at the cultural sector, including th e cross-sectoral strand, but ex cluding the audiovisual industry. 
The proposal is in line with the Communi cation of the Commission on the Multiannual 
Financial Framework adopted on 29 June 2011 (''A Budget for Europe 2020''), which 
proposes to attribute a sum of € 1.6 billion to  the programme for the seven year duration. 
1.2. Procedural issues, organisation and timi ng, and consultation of interested 
parties 
The impact assessment for the future programme was prepared between mid-2010 
(establishing the Roadmap) and June 2011. The impact assessment was followed by an inter-
service group for Culture which is compos ed of DG EAC, DG COMM, DG DEVCO, DG 
ELARG, DG MARKT, DG RTD, DG SJ, DG TRADE, SG, although all Directorates-General 
were invited. The group met in Septembe r 2010 and July 2011 in order to provide 
contributions during the impact assessment pr eparation. During the meeting in July 2011 the 
draft Commission Staff Work ing Paper on the Impact Assessment accompanying the 
document Decision of the European Parliament  and of the Council establishing a European 
Union action for Culture was discussed.  
The IA was submitted to the Impact Assessment Board on 7 September 2011. The Impact 
Assessment Board delivered its opinion on 7 October 2011. Recommendations provided by 
the Board in its opinion have been taken into account in this IA. The IAB´s opinion focused 
on three elements: 
                                                
 
1 Concerning the definition of cultural and creative industries (CCI), "cultural industries" are those 
industries producing and distributing goods or services which at the time they are developed are 
considered to have a specific attribute, use or purpose which embodies or conveys cultural expressions, 
irrespective of the commercial value they may have . Besides the traditional arts sectors (performing 
arts, visual arts, cultural heritage – including the public sector), they include film, DVD and video, 
television and radio, video games, new media, music, books and press. This concept is defined in 
relation to cultural expressions in the context of the 2005 UNESCO Convention on the protection and promotion of the diversity of cultural expressions. "Creative industries" are those industries which use 
culture as an input and have a cultural dimension, although their outputs are mainly functional. They 
include architecture and design, which integrate crea tive elements into wider processes, as well as 
subsectors such as graphic design, fashion design or advertising. At a more peripheral level, many other 
industries rely on content production for their own development and are therefore to some extent interdependent with CCIs. They include among others tourism and the new technologies sector. These 
industries are not explicitly covered by the concept of CCIs used here. The term CCI is used 
interchangeably in this report with “cultural and creative sectors”. 
 
EN 5   EN (1) The problem definition in relation to the ev aluation results of th e current programme 
and the stakeholder input, and the intervention logic; 
(2) The budget distribution between the framewor k programme´s different policy strands 
and the assessment of the available alternatives; 
(3) The assessment of the expected impacts and the structuring and systemic impacts the 
programme aims to achieve. 
This revised version of the IA ta kes account of the IAB´s opinion:  
– Further clarity is provided in section 2 on the logic leading to the identification of the 
problems the sectors are facing and on the mate rial contributing to this analysis. In 
section 3 a diagram depicts the inter-lin kages between the identified needs, the 
specific objectives, and provide s indications of some exp ected results and examples 
of possible actions. The vari ous value chains are developed more in the problem 
definition and option 2 in section 4.1, the problem definition has been clarified, 
references to studies have been incorporate and an analysis of problems per sector is 
provided in annex 5; 
– The division of funds is pres ented in section 4 (option 3)  and the various considered 
policy options are explained; 
– In sections 4 and 5 the policy options and assessment of impacts have been 
strengthened, including the scale and struct uring effects of the new programme, and 
the various discarded options  are explained. This analysis also includes clearer 
indications of input from the evaluati on of the previous programme, studies, 
consultations and external consultation serv ices provided for the development of this 
IA.  
1.3. External expertise  
The Commission's impact assessment builds on consultancy services provided to the 
Commission by Ecorys UK Limited for ''The impact assessment of the future 
programme on Culture ''. The contractor collected data and compiled a report 
containing relevant information on devel opments within the cultural and creative 
sectors. This report contri buted to establishing the problem definition, to the 
formulation of the objectives for future action in this field, and the analysis and comparison of options. The Commissi on's impact assessment also draws 
significantly on the findings of the inte rim evaluation of th e current Culture 
Programme
2 and the studies outlined in annex 1. 
1.4. Consultation  
A public consultation on the future of th e Culture Programme took place between 15 
September and 15 December 2010.  
                                                 
2 Interim Evaluation of the Culture Programme 2007-2013; ECORYS UK, on behalf of the European 
Commission , 2010, 
http://ec.europa.eu/dgs/education_culture/evalreports/culture/2010/progreport_en.pdf   
 
EN 6   EN The consultation was fully in line with the Ge neral principles and minimum standards for 
consultation of interested parties by the Commission.3 Adequate time was provided for 
preparation and planning of re sponses, with the online consu ltation running for 3 months. The 
questionnaire posed both closed as well as open questions. A considerable number of 
organisations also sent in separate positio n papers. With almost 1,000 responses (589 from 
individuals, and 376 from organisations and public authorities), th is represented a good 
sample for the future analysis. 
The public online consultation  was designed to build on the findings of the interim 
evaluation, which highlighted many positive benefits  of the programme and its unique role in 
fostering transnational cultural cooperation, but recommended certain improvements. The 
consultation's main aim was to identify the real n eeds of the sector to assist in formulating the 
aims and priorities of the programme and to identify areas of improvement in programme 
implementation. The consultation revealed strong  support for the contin uation of a specific 
EU programme for culture, with 93% support am ong respondents, but also indicated the need 
for a realignment of the objec tives with the goals of Euro pe 2020 (also among most public 
authorities) and the contributi on of the programme to safeguarding and promoting cultural 
and linguistic diversity. The results confirmed support for priorities contributing to the 
strengthening of the cultural sector through professional development and capacity-building 
of artists/cultural operators in an internationa l context (supported with  a score to 'a great 
extent' by 70% of the respondents); and promoti ng the trans-national circulation of cultural 
works and products, including the mobility of arti sts, performers and cultural professionals 
(supported with a score to 'a great extent' by 72% of respondents). Prioriti es of a more social 
nature were also endorsed, incl uding widening access to culture a nd participation in culture of 
disadvantaged groups (social inclus ion) (supported with a score to 'a great extent' by 72 % of 
respondents).4 
Some public authorities underlined the impor tance of the integration of support for 
cultural and creative micro-businesses into the formulation of a successor of the current culture programme. There were also calls for support for projects addressing 
the adaptation to the digital shift, however, there wa s consensus that it should not 
focus on mass digitisation, which many f ound should be covered by other funding 
programmes. There was some support for sm all grants that would facilitate the 
access of creative individuals and very small operators into the programme. 
However, others emphasized the need to minimise the management costs of a new programme. 
The consultation illustrated the diversity of  the cultural sub-sectors covered by the 
Programme as well as the fluidity between  different art forms and the need for the 
programme to continue to accommodate su fficient flexibility as a consequence. 
With regard to management of the programme one of the main issues highlighted was the 
complexity of degressivity for beneficiaries of operating grants.  
                                                
 
3 “Towards a reinforced culture of consultation and dialogue – General principles and minimum 
standards for consultation of interested parties by the Commission”, COM(2002) 704 final. 
4 The report of the public consultation and a summary of the public consultation meeting are in annex 3 
(see also http://ec.europa.eu/culture/our-programmes-an d-actions/consultation-on-the-future-culture-
programme_en.htm ). 
 
EN 7   EN The volume of responses received and the wide range of stakeholders participating are proof 
of the success of this consultation and the effectiveness of  the approach chosen. The proposals 
were thoroughly considered by the Commission and used for th e preparation of both this 
impact assessment report and the future programme design. 
The public online consultation  was followed by a public consultation meeting  on 16 
February 2011 in Brussels, which was attended  by more than 550 people, many on behalf of 
representative European cultura l organisations. Amongst other th ings this meeting underlined 
the need to realign the objectives of a futu re programme with the Europe 2020 strategy, it 
highlighted the role the programme can play in  strengthening the sectors' capacity to work 
across borders and it was emphasized that the digital shift is havi ng strong impacts on the 
cultural and creative forcing the sector to adapt and requiring the sector to get greater access 
to funding.5 
2. CONTEXT AND PROBLEM DEFINITION  
2.1. Historical and Policy context 
With regard to the historical context , since the adoption of the Maastricht Treaty in 1992, the 
form of support for culture has evolved betw een 1996 and 2011 and its scale has increased. A 
sequence of specific actions has been taken at European level to address issues concerning 
cross-border circulation, trans-national mob ility and the emergence of European citizenship. 
Four separate programmes were adopted with a focus on cultural creation through 
cooperation, support for the book and reading sector and cultu ral heritage, and support for 
European cultural organisations. The Culture 2000 brought most of these actions together 
within one single programme. The Culture 2007-2013 has followed a more transversal 
approach. The history of the subsequent supp ort programmes is summarised in the table 
below. 
Table 1: EU programme s supporting culture 
Year Programme(s) Budget Key areas of support 
1996-1999 Kaleidoscope € 36,7 million Support for cultural creation in Europe 
through cooperation 
1997-1999 Ariane € 11,1 million Support for the book and reading sector 
1997-1999 Raphael € 30 million Cultural heritage 
2000-2006 Culture 2000 € 236,5 million Cultural cooperation in all artistic and 
cultural fields, except audiovisual 
2004-2006 Bodies active at 
European level in the field of culture € 19 million Support for European organisations in the 
field of culture (culture, remembrance, minority languages) 
2007-2013 Culture 2007-2013 € 400 million Cross-border cultural cooperation in view 
of encouraging the emergence of European 
                                                 
5 Result of the public consultation meeting, ibid.  
 
EN 8   EN citizenship 
In recent years there have been important developments concerning the policy context  for 
culture. In 2007 the Commission adopted its firs t real strategy for culture, "The European 
Agenda for Culture"6 which was recognised at the highest  level by the European Council in 
its conclusions of December 2007. The Agenda has three strategic objectives: to promote 
cultural diversity and inte rcultural dialogue, to fost er culture as a catalyst for jobs and growth, 
and promotion of the vital role of culture in international relations.  
As culture is an area of strong subsidiarity, the Agenda introduced new partnership methods 
of working with Member States through a new Open Method of Coordination (OMC) and 
with stakeholders thro ugh a structured dialogue. An as sessment of the first three years 
implementation of the agenda was published in  July 2010 with examples of progress by 
Member State and the European Commission in  relation to each of the three strategic 
objectives and proposals to improve working methods.7 The Council has recently adopted its 
second work plan for the period 2011-2014 to contribute to implementation of the Agenda, 
with the following priority areas: cultural dive rsity, intercultural dial ogue and accessible and 
inclusive culture; cultural and creative industr ies; skills and mobility, cultural heritage, 
including mobility of collections; culture in external relations; and culture statistics. 
Furthermore, in accordance with the UNESC O Convention on the Prot ection and Promotion 
of the Diversity of Cultural E xpressions, which is part of the acquis communautaire , the EU 
has a moral and legal obligation to take ac tion to promote and safeguard cultural and 
linguistic diversity. 
Europe 2020, the ten year growth strategy for the EU adopted in 2010, emphasises the 
importance of "creativity, innovati on, and entrepreneurship" which are central to the cultural 
sector. The EU needs to provide more attrac tive framework conditions for innovation and 
creativity, including through incentives for the gr owth of knowledge-based firms. Access to 
credit is a particular problem, not only in th e aftermath of the crisis but because some new 
sources of growth such as th e cultural and creative industries need new types of financing 
adapted to their business models.8  
The Culture Programme contributes to the aims of the flagships on Innovation Union (the role 
of culture in fostering social innovation9), A Digital Agenda for Europe (promotion of 
attractive online content and services and its fr ee circulation), An Age nda for New Skills and 
Jobs (contribution to the employment head line target), An Industrial Policy for the 
Globalisation Era (importance of the CCI as drivers of economic and social innovation, 
supporting new business models), and the European Platform against Povert y (the potential of 
                                                 
6 Communication from the Commission to the European Parliament, the Council, the European 
Economic and Social Committee and the Committee of th e Regions on a European agenda for culture in 
a globalizing world (COM(2007) 242 final), 10.05.2007. 
7 Commission Report to the European Parliament, the Council, the European Economic and Social 
Committee and the Committee of the Regions on a European agenda for culture in a globalizing world 
(COM200)390 final, 19.7.2010  
8 "Europe 2020 Strategy: A European strategy for smart, sustainable and inclusive growth", p. 11, 
http://europa.eu/press_room/pdf/complet_en_ba rroso___007_-_europe_2020_-_en_version.pdf. 
9 For example, the contribution of architecture to better designed hospitals and schools, which can 
contribute to patient recovery and pupil behaviour  and performance, and w ith spill-overs also for 
construction and urban planning. 
 
EN 9   EN culture to reach out to the socially excluded) . However, this can be greatly optimised by a 
more targeted approach in a future programme. 
2.2. Sector context 
Beyond the intrinsic value of culture, the cultural sector is important for economic, 
educational and social reasons an d the EU would wish to see al l Member States with thriving 
and vibrant cultural sectors, optimising the transf ormative economic and social power of 
culture. This potential is demonstrated by the fact that the cultural and creative sectors (CCS) account for 4.5% of the Union's GDP in 2008  and employ some 3.8% of its workforce.
10 
Beyond their direct contribution to GDP, these s ectors trigger spill-overs in other economic 
areas such as tourism, fuelling content for ICT,  benefits for educati on, social inclusion and 
social innovation. Despite witne ssing higher than average growth  rates in many countries in 
recent years, their contribution could be  far greater as explained below.  
As indicated in this IA, studies and consultati ons carried out concerning Europe´s cultural and 
creative sectors, there is consider able difficulty in assessing the sectors´ current state, due to 
variance between Member States and lack of co mparable information on the sectors´ turnover, 
sales and employment. The Eur opean Competiveness Report 201011 indicates that while a 
number of studies and policy doc uments indicate the growing importance of trade in creative 
products, and the sound export perf ormance of the cultural and creative sectors, this issue 
until now has almost never been studied in a thorough way (mainly due to the lack of statistical data, also noted in the context of this IA). The report how ever does recognise the 
sectors dynamic nature and emphasizes that a number of sub-sectors have increased their 
competitive advantage in the period 2000-2005 (for  example antiques and publishing), but it 
also points out sectors where the position has deteriorated (such as interior design, arts and crafts, visual arts (except antiques)). It c oncludes that although the EU mostly retains its 
power to compete in for example design goods, its competitiveness there has eroded.  
The detailed sector analyses in annex 5 give an  overview of the differe nt problems the various 
sub-sectors are currently facing, namely cu ltural heritage and museums, visual arts, 
performing arts (opera, dance, drama, street performance, or chestras), music, literature, 
design, applied arts and architecture. Under th e programme there are also a growing number 
of multimedia projects and a large number of in terdisciplinary projects. The sectors are highly 
diverse in terms of business models, organisati onal modes, cooperation structures, levels of 
public funding and economic performance, some thing that is confirmed by the European 
Competitiveness Report 2010
12 and responses to the Commission's Green Paper on 
“Unlocking the potential of cu ltural and creative industries”13. However, in most cultural sub-
                                                 
10 Building a Digital Economy: The importance of saving jobs in the EU’s creative industries, TERA 
Consultants, March 2010. According to the Federation of European Publishers, book publishing 
employs 135,000 people full time and contributes approximately € 24 billion to EU GDP. According to 
IFPI, the total value of the EU recorded music market is around € 6 billion. The recorded music market presents around a fifth of the total music market which is worth close to € 30 billion. The audiovisual 
industry in Europe produces more than 1,100 films per year and employs over 1 million people. 
(Source: Multi-Territory Licensing of Audiovisual Wo rks in the European Union, KEA study, October 
2010.)  
11 European Competitiveness Report 2010, Commission staff working document, SEC(2010) 1276 
12 European Competiven ess report, op.cit. 
13 Green Paper “Unlocking the potential of cultural and creative industries”, COM(2010) 183 final 
27.04.2010; Commission Staff Working Document, “Analysis of the consultation launched by the 
 
EN 10   EN sectors the value chains are more interconnected  than in the audiovisu al industry, with the 
main exceptions being the publishing and book  retail chain and popular music production, 
distribution and retail chains, si nce the development, production, distribution, sales of a work 
and the related customer/audience relations are no rmally the responsibilit y of the producer of 
the work. This is why – in contrast to the ME DIA Programme for the audiovisual sector - the 
Culture Programme has had a more flexible and interdisciplinary approach, with the exception of the support for literary translation to publishing houses.  
2.3. Baseline description: The Culture Programme  
The current Culture Programme is based on Decision N° 1855/2006/EC of the European 
Parliament and of the Council of 12 Decem ber 2006 establishing the Culture Programme 
(2007 to 2013). The current allocated budget is € 400 million for the 7 year period for the 27 
EU Member States. 9 further European countries  take part in the programme, contributing an 
entry fee. These are the EEA (Iceland, Norwa y, Liechtenstein) Turke y, Serbia, Croatia, 
Montenegro, Bosnia-Herzegovina, and the Fo rmer Yugoslav Republic of Macedonia. The 
programme also supports coopera tion with certain third countri es through an annual call.  
The programme is open to operators (including cultural enterprises) from all cultural sectors, 
except the audiovisual industry for which the MEDIA programme exists. Projects are co-
funded, with the vast majority (the cooperation projects) at a maximum rate of 50%, and some 
other possibilities at 60% and 80%.  
The general and specific objectives of the curr ent Culture Programme are indicated in the 
table below (table 2). 
Table 2: Culture Programme 2007-2013:  general and specific objectives 
General objective To enhance the cultural area shared by Europeans, based on a common cultural 
heritage through the development of cultural cooperation between creators, cultural players and cultural institutions taking part in the programme, with a 
view to encouraging the emerge nce of European citizenship.  
Specific objectives14 Promote the transnational mobility of cultural players 
Encourage the transnationa l circulation of works and cultural and artistic 
products 
Encourage intercultural dialogue 
With an average € 57 million per annum budget15 throughout the lifetim e of the programme 
the EU spending on transnationa l cultural cooperation is – in  comparison - highly cost 
effective in view of the fact that every year  this small sum of money helps thousands of 
cultural works – including some 500 translated  books – to circulate across borders, reaches 
over 1000 cultural organisations, an estimate d 20,000 artists/cultural professionals, and 
millions of people directly and indire ctly through the supported activities. 
                                                                                                                                                         
Green Paper on “Unlocking the potential of cultural and creative industries”, SEC(2011) 399 final, 
24.03.2011. 
14 Projects must meet at least two of the specific objectives. 
15 To put this into perspective, this is equivalent to the annual running and production costs of many single 
national opera houses/companies and far below the level of the national public funding of arts and 
culture in the UK, FR, DE (respectively ₤ 590 million, € 7.5 billion, € 8.5 billion).  
 
EN 11   EN The interim evaluation concludes that the demand for support from the Programme far 
exceeds the resources available. This is for example demonstrated by the average acceptance rates for projects. Across the programme as a whole, for the period 2007-2010, across all 
strands these were low at 31.5% and even lower for the transna tional cooperation projects, for 
which it was 25%, and well belo w 20% for the larger  category of projec ts. The evaluation 
stresses that the financial crisis will raise new challenges for international cultural co-operation and those cultural operators who wish  to apply for support from the Programme. 
This requires consideration of the advantages and disadvantages of the current co-financing 
rates in relation to access to the Programme.  
Beyond the specific objectives the programme does not specify any further priorities, leaving 
freedom to cultural operators to adopt tailored a pproaches suited to their needs. In addition to 
the explicit objectives of the programme, projects tend to pursue various other aims, 
including: the development of sectors/art forms; the career development (professionalization) of artists/cultural operators; artists in residence/touring; exploring artistic themes; creating new works, performances and events of high qu ality; promoting access and participation in 
culture, especially the disadva ntaged; education, training and research; and information, 
advice and practical support. 
Two broad types of activities ar e typically undertaken: cultural activities (a rtistic exchanges, 
joint cultural creation, co-producti ons, tours and festivals, and exchanges of artefacts); and 
support activities (exchanges of experience an d networking, provision of information and 
practical support for operators, education, training and resear ch). The interim evaluation 
recommends greater clarity in  the future on priorities. 
The spending on the programme is currently subd ivided by types of instruments, rather than 
its objectives. The indications in the legal base, which are followed as far as possible, are:  
• Support for cultural actions, cooperation projec ts, special actions, including literary 
translation (approximately 77% of the annual budget of which approximately 60% 
for cooperation projects, 4% for literar y translation, 13% for special actions 
(including cooperation w ith third countries)); 
• Support for bodies active at Eu ropean level in the field of culture/operating grants 
(approximately 10% of the a nnual budget of which approxi mately 55% allocated to 
Ambassadors, 40% to Networks and 5% to Platforms); 
• Support for analysis, collection and dissemi nation of information (approximately 5% 
of the annual budget); 
• Programme management (approximately 8% of the annual budget). 
The interim evaluation, public c onsultations and reporting within the framework of the OMC 
clearly recognise the Culture Programme's unique character in stimulating transnational artist 
mobility, promotion and circulation of cultural works. Evidence based on the "Mobility Matters"
16 study and the interim evaluation shows th at building networks  and increasing co-
operation are important prerequisites for mobility in the culture sector and that three-quarters 
                                                 
16 Mobility Matters: Programmes and Schemes to Support the Mobility of Artists and Cultural 
Professionals in Europe", an ERICarts Institute  Study for the European Commission, October 2008. 
 
EN 12   EN of partnerships supported by the Programme are sustained in the long run. However, a more 
targeted approach to this subject within  the programme could increase the impact on 
circulation and building the sector's capacity  to operate at an international level. 
Regarding the sectoral dist ribution of projects under the current programme , with the 
exception of literary translation which is specifically targeted at publishing houses, all projects are assessed on the basis of quality irresp ective of the different sub-sectors. Literature 
projects are most numerous because of the la rge number of small projects under the literary 
translation strand. However otherwise, performing arts projects have been most numerous, but 
with high rates also for cultural heritage, the visual arts, and growing numbers of multimedia 
projects. If literature is excluded, interdis ciplinary projects were continuously the most 
numerous after the performing arts in 2008, 2009 and 2010.
 The interim evaluation 
recommends maintaining the interdisciplinary ap proach due to the fluidity between different 
sectors, and the fact that boundaries are becomi ng even more blurred w ith the dig ital shift. 
Furthermore, an interdisciplinary approach is in line with the European Agenda for Culture and the line followed in the OMC and stakeholde r platforms, which are organised around key 
challenges, rather than sub-sectors.  
The vast majority of grants under the progr amme are managed through the Executive Agency 
for Education, Audiovisual and Culture (EACEA) through annual calls for proposals 
published in a stable Programme Guide. As conf irmed by various evaluations this has proved 
to be a cost-effective management mode for th e cross-border projects  the programme supports 
(no individual mobility funding). A network of Cultural Contact Points (CCP), one for each 
country taking part in the pr ogramme, provides information on the programme and assistance 
to applicants (they do not distribute). The CC P are co-funded at a rate of 50% from the 
programme with Member States co-funding the rest. 
Currently the EACEA manages 9 calls for pr oposals for funding app lications under the 
Programme: multi-annual cooperation projects, two year cooperation projects, literary 
translation projects, cooperation projects with specified Third Countries, support to European 
cultural festivals, operating grants for organisati ons active at European level in the field of 
culture (Ambassadors, Advocacy networks, Pl atforms), and cooperation projects between 
organisations involved in cultur al policy analysis). Whilst th e interim evalua tion indicated 
that the simplifications under the current programme  had been appreciated  by beneficiaries, 
it recommended ensuring the future programme is as streamlined as possible, including 
suggestions to discontinue or m odify certain categories with a view to prioritising measures 
with greater long-term potential and critical mass. Furthermore,  the CCPs, who are in direct 
contact with operators, have on numerous occas ions indicated that the large number of 
different actions generates complexity and c onfusion both for themse lves and applicants. 
More general feedback on the programme has rep eatedly highlighted that operating grants are 
complex and problematic for applicants and beneficiaries as an instrument.  
Another relevant initiative is the European Capitals of Culture (ECOC)  based on Decision 
N° 1622/2006/EC of the European Parliament and of the Council of  24 October 2006. This 
has a separate legal base, but each city curr ently receives a grant of € 1.5 million from the 
Culture Programme and will, in principle, contin ue to receive this amount for the duration of 
the current legal base. At the time of writing a new European Heritage Label  is in the final 
stages of negotiations. It will also have a separate legal base – a European Parliament and 
 
EN 13   EN Council Decision – with a small amount of funding – some €700,000 annually - from the 
future programme to cover its running costs. 17 
2.4. Identification of problems and their underlying drivers 
The Commission has identified four common challenges facing the cultural and creative 
sectors needing to be addressed in a futu re funding programme for these sectors: the 
fragmented market context, the impact of globalisation and the digital shift, the shortage of 
comparable data, and difficulties in accessing fi nance. These problems are of a trans-national 
nature and require a targeted Eu ropean approach. In all four cases, tackling these problems at 
a European level – in addition to actions ta ken at a national and regional level - would 
contribute to cultural and linguis tic diversity and optimise the potential of the sector to 
contribute to jobs, growth  and social inclusion.  
The Commission has reached this conclusion after caref ul consideration, having analysed the 
findings of the interim evaluation of the current programme , its own research and 
experience of the programme, independent studies commissioned specifically for policy 
purposes (Annex 1), other independent researc h, some of which is referenced in this 
document, and support services by an external cont ractor to assist with  the impact assessment 
including an analysis of the challenges facing  the different cultural  sub-sectors (Annex 5). 
Stakeholder views have also be en closely assessed, including the public consultation exercises 
specifically for the preparation of the future  EU funding programmes, the feedback to the 
Commission’s Green Paper on the potential of the cultural a nd creative industries which 
received 350 responses, as well as the recommendations made by experts in the context of the culture OMC and structured dialogue with the sector over the pe riod 2008-2010. It should 
also be noted that most of the studies ca rried out for the Commission included extensive 
surveys of relevant stakeholders. 
It needs to be stressed, however,  that there are many other variab les and causal factors at work 
than just a future EU support programme, such as national and regional policy priorities and 
funding support. The programme cannot address problems stemming from the regulatory and 
fiscal environment, which must be tackled through other means. 
2.4.1.  Problem 1: A highly fragmented market for cultural works resulting in sub-optimal 
circulation of cultural works and limited choice for consumers  
The first challenge relates to the highly fragmented market for cultural works stemming 
largely from Europe's cultural and linguistic di versity, which results in  these sectors being 
essentially fragmented along national and linguis tic lines and lacking critical mass. On the 
one hand this fragmentation is a challenge, but on the other hand, to the extent that it is an 
inevitable consequence of cultura l and linguistic diversity, it is also something that the EU is 
committed to safeguarding and promoting.  
                                                
 
17 Although the funding for the Capitals currently comes from the Culture Programme, they have a 
separate legal base due to the different logic and time span involved. More sp ecifically, as they are a 
major international cultural event, they need long-term forward planning (in the same way as the Olympics) and the selection process begins six years before the event. As th ere are two Capitals from 
two different Member States per y ear, the current rotation period among  Member States is 14 years. 
Similarly, the European Heritage Label is being set up for an unlimited duration. 
 
EN 14   EN However, one of the consequences of fragmenta tion which needs addressi ng at EU level is the 
fact that it leads to limited and sub-optimal transnat ional circulation of works and 
mobility of artists and geographical imbalances . Cultural operators (both non-profit-
making organisations and enterprises) need ther efore to operate trans-nationally to establish 
new contacts to improve their professional skill s and career possibilities , reach new or wider 
audiences and markets, and exte nd the lifespan of t ours, performances and exhibitions in 
order to help recoup costs. Similarly, mobility is  often essential to artis ts' careers, as many are 
involved in relatively short-term project based work, which is re flected in the high levels of 
atypical employment in the sector.18 For some professionals it is literally a permanent feature 
of their work (circus, or street artists, classical music and opera performers); for others it is a 
frequent feature of their work (such as freelance professionals, particularly in fields such as 
dance, experimental art or pop music).19  
The interim evaluation and Green Paper consultation indicate that the greatest obstacle to 
mobility was financial. The feasibility study on  "Information systems to support the mobility 
of artists and other professi onals in the culture field"20 highlights also the 
administrative/regulatory difficulties faced by artists, which were reported to be particularly acute for third country particip ants in the case of the interi m evaluation. Studies and advocacy 
by the cultural sector, including the pilot project on artist mobility voted by the European 
Parliament for 2008 and which financed the above study, have repeatedly stressed the 
administrative/regulatory obstacles. Whilst a futu re programme can assist with the financial 
obstacles and may be able to help with capacit y-building to help the sector deal with the 
regulatory obstacles, it cannot address the ad ministrative or regulatory obstacles as such 
themselves, which must be tackled through othe r means. However as the interim evaluation 
indicated that most proj ect participants found cost , rather than administrative obstacles, to be 
the main difficulty, this suggests that the progra mme has benefits in this regard for individual 
artists/cultural professionals as the projects ar e run by organisations with some experience in 
dealing with these matters.  
The low level of circulation of non-national European works also limits consumer choice 
and access to European music, literature, fine art, and heritage . Recent research provides 
evidence on the consumption of popular culture in European count ries which shows that there 
is a limited circulation of non-national and non- British European works within Europe and the 
strong preference for domestic and Anglo-American popular culture.
21 For example, the 2011 
                                                 
18 Cultural statistics, Eurostat pocketbooks, 2011 edition, for example, 25% of cultural workers have 
temporary jobs compared with 19% in total employment,  at EU 27 level, the share of people working at 
home was twice as high in cultural sectors (26%) than in total employment. Holding multiple jobs was also more frequent in the cultural sector s (6%), than in total employment (4%). 
19 Mobility Matters, op.cit. 
20 Study undertaken for the European Commission by ECOTEC consulting in 2009 to implement a 
European Parliament pilot project on artist mobility voted for 2008, http://ec.europa.eu/culture/key-
documents/information-system-for-artist-mobility_en.htm. 
21 Fligstein N. (2008), "Euroclash: the European Union, European identity, and the future of Europe", 
Oxford University Press: For example, an analysis of sales of the top songs in 10 European countries 
(AT, BE, DE, ES, FR, IE, IT, NL, SE, UK) shows that in all countries except Austria and Sweden, 
national and Anglo-American music account for at least 8 of the top ten songs. In Europe’s largest 
countries (BE, FR, DE, IT, ES, UK) national songs are the most popular, followed by US songs, while 
in smaller countries (AT, IE, NL, SE), US songs are even more widely sold than national ones. 
Similarly, Frédéric Martel confirms the tendency for European audiences to favour either national 
cultural works or mainstream, primarily Anglo-Saxo n, works ("Mainstream: Enquête sur cette culture 
qui plait à tout le monde", Flammarion, 2020). 
 
EN 15   EN edition of The Recording Industry in Numb ers, the International Federation of the 
Phonographic Industry (IFPI)22 stresses the importance of local  repertoire for many important 
markets worldwide. It demonstrates that musi c from local artists accounts for 81% of the 
industry's physical format revenues in Japan, 74% in India, 72% in South Korea, 59% in 
Brazil, 43% in Mexico and 52% in Italy. Howe ver, as Fligstein points out, under the right 
conditions European popular music does cross borders and can lead to Europe-wide and 
international success. 
There is further evidence concerning this phenomenon in relation to the publication of 
translated works in Europe23, where the spread is uneven between countries, source languages 
and target languages. Translation is very much a ‘one way stre et’ with translations mainly 
taking place from dominant languages, such as English, French and German into less 
dominant ones.24 Together English, French and German  represented the source languages for 
78.14% of all translations over the 1979-2006 period. This trend is confirmed by the 
experience of the literary translation strand of the current programme , in which 52% of all 
translations are made from works originally pu blished in English, French and German. It is 
worth noting that none of the ot her source languages was repres ented in a significantly high 
proportion. In terms of target languages, three – Bulgarian, Hungarian and Slovene – stand 
out. 32.5% of all translations in the programme  were made into these three languages.  
This low level of knowledge of other European cultures and lack of av ailability of foreign 
works is reflected in the Eurobarometer survey on cultural values within Europe, published in 
2007, which shows that only a minority of Eur opean people access foreign cultural products, 
with only 19% of European people watching fo reign language TV/movies and 7% reading 
foreign language books.25 
This is a problem in terms of cultural diversity because people are unable to fully benefit from 
the cultural and social value that European cult ural works convey, especially with regard to 
building social cohesion and inter-cultural understanding. It also has negative economic 
consequences since it redu ces potential revenues. 
The recommendations of the civil society platform "Access to culture" highlights the 
importance of access to culture for all. T hose of the OMC working group on developing 
synergies with education, stress a range of possible measures, in cluding the need to include 
artistic and cultural education in a transversal manner in EU programmes, the introduction of 
an obligation for heritage sites receiving public  funding to have education departments, the 
use of EU funding programmes to encourage cultural institutions to  expand their use of 
media, in particular online media, by provi ding access to complementary cultural and 
educational resources and to s upport the exchange of practices. The input from stakeholders 
shows that many address the question of access to  culture from an essentially rights based 
                                                 
22 Recording Industry in Numbers 2011, IFPI 
23 UNESCO Index Translation. 
24 Research by the European Council of Literary Translators Associati ons (CEATL) demonstrates that, in 
general, the proportion of publications represented by translations is inversely correlated with the size 
of the country’s population and of its publishing sector. For example, the proportion of publications 
represented by translated books is highest in Denmark (60%), Croatia and Finland (both 50%) and 
lowest in the United Kingdom, the Germanophone countries collectively (Austria 5%, Germany 9%) 
and France (14%). The Diversity Report 2008 confirms the strong predominance of English as a source language for translations, which rose steadily from 40% to over 60% between 1979-2006, reaching a 
ceiling of around 60% in the mid-1990s at which level it has remained. 
25 http://ec.europa.eu/dgs/eucation.cu lture/pdf/culture/baometer.en.pdf . 
 
EN 16   EN perspective, while others consider it primarily  from the perspective of mainstreaming into 
education systems. More economically minded st akeholders talk in terms of new business 
models. The Commission feels th at all these dimensions are important, and that EU support 
can have a particularly interesting role to play in encouraging cultural organisations to develop "audience-building" strategies which encompass both a social outreach and 
educational role, as well as an economic di mension due to the fact that new and larger 
audiences can generate new reve nue streams and contribute to the emergence of new business 
models. 
The current programme  already helps to some extent to address this first problem, as the 
mobility of cultural professionals and the transn ational circulation of works are priorities. 
However, at present, the ultimate aim of cultu ral mobility and circulation in the programme is 
to foster a sense of citizenship. The interim evaluation has indicated that this is not the 
primary rationale of projects an d tends instead to be a by-pr oduct. This has the result of 
introducing a certain degree of ra ndomness in the focus of projec ts, which dilutes the impact 
of the programme.  
The experience of the current programme  also suggests that it ha s helped in addressing the 
problem of geographical imbalances in mob ility flows. On the one hand research on 344 
mobility schemes across 35 European c ountries in the "Mobility Matters" study,
26 indicates a 
significant imbalance in the number of schemes promoting nationals  to engage internationally 
compared with the smaller number of scheme s supporting inward visi ts of creative people 
from other countries. This gap in provision pe rpetuates East-West imbalances (in Europe) and 
North-South imbalances (globally ), which is confirmed by the fi nal report of the OMC expert 
group on the mobility of artists and cultural professionals. The main challenge identified in many countries is the lack of funds, programmes or  infrastructure to rece ive artists from other 
countries. The study recommends rectifying the balance of in coming-outgoing schemes in the 
spirit of commitments made by governme nts when ratifying the 2005 UNESCO Convention 
on the Protection and Promotion of th e Diversity of Cultural Expressions. 
On the other hand the interim evaluation indi cates that the programme has mostly met 
expectations in terms of geographical spread. In terms of application rates, the pattern 
generally shows a satisfactory co rrelation between participati on and country size, with the 
notable exception of literary tr anslations, where very few applications were received from 
publishing houses in most of the largest co untries. Similarly, lead ership of cooperation 
projects and advocacy networks is undertaken in greater proportion by organisations from the EU-15 Member States, reflectin g the greater experience of pr oject coordination and capacity 
available in those Member States, and the poten tial need for capacity-building in some other 
countries. However when overall participation – including co-organisers – is taken into 
account, the picture is far more  balanced, demonstrating the benefits of the solidarity 
mechanism inherent in the cooperation projects  and networks and s uggests that EU support 
can contribute to addressing the geographica l imbalances identified above. Concerning 
literary translation, the interim evaluation re commends considering ways in which more 
translations can be encouraged out of under-repr esented languages (particularly those in new 
Member States) into more dominant ones which often serve as pivot languages for further translations and would theref ore make a valuable contribu tion to promoting cultural and 
linguistic diversity. It also r ecommends giving consideration to  other initiatives to help 
stimulate the translation of literature. Overall, this highlights the valuable role of the 
                                                
 
26 Mobility Matters, op. cit. 
 
EN 17   EN programme in helping to address geographical im balances, even if they  continue to be a 
prominent reality. 
2.4.2.  Problem 2: the impact of globalisation and th e digital shift on the cultural sector and 
the need for the sector to develop its capacity to adjust to these challenges  
The second challenge relates to the impact of globalisatio n and the digital shift . In certain 
cultural and creative fields (such as music, literature and fine art) a trend is emerging showing 
that a limited number of major players a ccount for a large part of global sales27. Growing 
concentration of supply poses a th reat to cultural and linguist ic diversity as it limits the 
possibility of small independent  players to access the international market and reach the wider 
European public. This is due part ly to the costs of developing on-line platforms, but also the 
preference of ICT providers to negotiate with a limited number of large companies (e.g. in the 
music and publishing and book retail sectors). Howe ver in sectors such as  literature, music, 
theatre and fine art, it is often small, inde pendent operators that are the most committed to 
developing and promoting original talent , both nationally and internationally. 28  
Responses to the Green Paper highlight the ne ed to develop new business models and the 
potential for growth in taking advantage of digi tal technologies and peer learning to acquire 
the necessary new skills. The study on 'The en trepreneurial dimension of the cultural and 
creative industries' points out that the digital sh ift is not only affecting the business models 
companies need to develop in order to adapt to changing consumer demands, it also requires 
them to be sufficiently flexible and alert rega rding the newest changes and opportunities. This 
is especially challenging for small companie s. The study indicate s that 81% of these 
companies employ less than 10 people, with 60%  of the sector consisting of companies 
employing between 1-3 people. These micro-comp anies are strongly reliant on the sale of 
original works and on resale rights. However, the digital shift is making it increasingly difficult for these companies to control thei r rights and linked remuneration. Besides legal 
protection there is thus a need for easily accessible information on ways to ensure 
remuneration when protected works are used by ot hers in order to boost investment in artists 
and creation and stimulate employment. The study gives the example of the role international 
networks can play in providing advice and services to sma ll companies in order to protect 
their rights and stimulate their earning potential.  
Such networks can respond to many challenges stemming from the digital shift which is 
bringing about a change in paradigm, having a massive impact on how cultural goods are 
made, managed, disseminated, accessed, consumed and monetised, changing the value propositions which prevailed in  the analogue era. On the on e hand, it introduces  interesting 
new possibilities for considerab ly extending audience reach, new wa ys of interacting with the 
public and educational benefits so metimes at relatively low cost.
 On the other hand, it is 
requiring the sector to devise entirely new business models a nd revenue streams, in some 
cases as a matter of survival,29 in other cases to optimise opportunities.30 In short, the sector 
                                                 
27 Globally the five major record companies (EMI R ecords, Sony, Vivendi Universal, AOL Time Warner 
and BMG (all headquartered in the US )) account for up to 90% of sa les and 95% of radio airtime and 
the top 100 charts.  
28 For example, in the music sector, IMPALA (Indepe ndent Music Companies Association) estimates that 
80% of Europe's new releases  are accounted for by SMEs. 
29 IMPALA reports that thousands of cultural SMEs ar e in difficulty, as a result of the digital market, 
which is leading to a dramatic fall in their revenues and the loss of many jobs for companies, despite the 
 
EN 18   EN will need to alter its past mono-dimensional tendency to fo cus on the provision of access to an 
object/work/collection from the “provider’s” pe rspective, towards a more multi-dimensional, 
process-oriented focus on the audience/user/con sumer and the generation of authenticity and 
experience for them. This means that cultural production will need to pay more attention to 
demand side issues including by  being far more interactive in the future, with greater 
engagement with audiences and potential audi ences throughout the creative process, both 
upstream and downstream of it. 31 It also requires new initiatives  to build audiences through 
developing cultural and media literacy skills . Recent statistics on cultural participation 
demonstrate the considerable potential for growth  in this area, particularly among people with 
lower educational attainment and lower incomes.32 They also suggest that when people spend 
on culture their consumption patterns are fairly resilient, tending to make cuts in other areas 
first.33 
This change and the con tinually evolving technology requires a massive adjustment across 
Europe by much of the cultural and crea tive sectors and the acquisition of new 
knowhow  - which is currently very limited and di spersed - in terms of how to promote 
cultural works and engage with new audiences  in the digital age. It necessitates new 
competences, such as understanding of new busi ness models and revenue streams, including 
marketing and audience-building skills, up-t o-date ICT knowhow, and better knowledge of 
issues such as copyright. It also requires the sector to think in term s of developing new types 
of strategic partnerships with operators in di fferent sectors, for example, new public-private 
partnerships with ICT, retail, the media. Innova tive practices are of course emerging in some 
Member States but progress is slow and piecemeal, with knowhow across Europe being 
patchy and fragmented . The sector would therefore benefit from networking, exchange of 
practice and peer learning which would accelerat e progress as well as bringing economies of 
scale by pooling expertise across countries at a European level.  
The flexibility of the current programme  means that some projects may already tackle these 
challenges and there are certainly examples of projects fostering audien ce-building or dealing 
with media art and digital shift related issues. However at present the lack of focus in the 
                                                                                                                                                         
fact that music consumption has never been so high. The problem is that digital market revenues are too 
low due to illegal availability. 
30 For example, digitisation enables theatre plays and operas to be web-streamed and shown in cinemas 
and on large outdoor screens in other cities and abroad, similarly it enables museum collections to reach 
new, including foreign audiences, rather than only th e visitors they are able to physically accommodate 
within their buildings. On-line platforms for music and literature also have the potential to extend 
access to new repertoire and works. 
31 See for example the study, "Business Model Innovation Cultural Heritage", Den Foundation, 
Knowledgeland, the Netherlands Ministry of Ed ucation, Culture and Science (2010); “Digital 
audiences: Engagement with arts and culture on line”, MTM London for the Arts Council England, 
24.11.2010; “Arts Funding, Austerity and the Big Society: Remaking the case for the arts”, by John Knell and Matthew Taylor, Royal Society of Arts, Essay 4, February 2011. 
32 "Cultural statistics" op.cit. For example, see the figures on frequency of attending live performances in 
the last 12 months, whereby well over half the EU population did not attend a single performance, and the percentage of persons having attended a live performance at least once in the last 12 months by 
gender, age group and educational attainment as well as  by income level. Similarly, the statistics show a 
considerable growth in the potential for more visits to  cultural sites, in view of the fact that over 50% of 
the population have not visited a single site, and simila rly as reflected in the figures in relation to gender 
and educational attainment. There is also scope for growth in cinema attendance, as well as participation in cultural activities such as taking part in a public performance (singing, dancing, acting 
or music), or in artistic activities (painting, drawing, sculpture, computer graphics, etc). 
33 "Cultural statistics" op.cit. see figure 8.31. 
 
EN 19   EN objectives means that this is very random as no prioritisation is given to  this issue, with the 
result that there is no scale effect across the sectors.  
2.4.3.  Problem 3: the lack of data for evide nce-based policy-maki ng to optimise the 
effectiveness of cultural polic ies at European and national level 
The third challenge is the shortage of comparable data on the cultural sector at European 
and national levels. This is widely recognise d in the sector and flagged up by studies 
mentioned in annex 1. The need for more da ta on mobility flows was stressed by the OMC 
expert group on the mobility of artists and cultural professionals in its recommendations of 
2010. Similarly the OMC group on synergies with  education highlighted the need for 
comparative analysis in arts and education.  
The shortage of data has consequences for European policy coordination, which can be a 
useful driver for national policy developments and systemic change at low cost for the EU 
budget and in full respect of the principle of subsidiarity. Policy cooperation (for example 
through the OMC) is, however, most effectiv e when underpinned by a strong evidence base 
and responsive data collection tools. Common methodologies and definitions are currently 
lacking, as is a joint methodological framework fo r cultural statistics covering elements such 
as the CCS, public and private expenditure on culture, market data, cultural participation and 
the social impact of culture. As the need relate s to the comparability of  data across countries, 
this needs support from the European level.   
The current programme  does already enable studies to be funded which have fed into the 
work of the OMC and Commission policy-maki ng. In addition, a new category of support for 
"policy support groupings" was created for groupings working on exchange, comparison and 
consolidation of existing quantitative and qualitative data and evaluation methods, and proposals and recommendations for new evaluation methods linked to the priorities of the 
European Agenda for Culture, however these rely on a bottom-up approach from the sector and do not necessarily respond to the main identi fied needs of policy-makers. (The launching 
of new specific studies or data  collection is not covered.) Ho wever despite the small funds 
available for the above, the current programme  design does not clearly prioritise the need to 
address the lack of data, and ha ve a targeted approach, nor cap acity, to achieve real progress 
in establishing comparable data, as well as new reliable market data. 
2.4.4.  Problem 4: difficulties fo r the CCS in accessing finance 
The fourth challenge is related to the difficu lties encountered by small cultural and creative 
sectors, SMEs in accessing finance.
34 While this is a common challenge for SMEs in general, 
the situation is significantly more difficult for small cultural and creative companies. Firstly, 
this is due to the intangible nature of many of th eir assets, such as copyright, which are 
usually not reflected in accounts (unlike patent s). Secondly, unlike other industrial products 
CCS products are generally not mass-produced. Every book, opera, theatre play, film, and 
videogame can be seen as a unique prototype and the companies tend to be project-based, 
                                                 
34 The study on "The Entrepreneurial Dimension of th e Cultural and Creative Industries" op.cit, estimates 
that 80% of cultural and creative en terprises are SME with many sole  traders or micro SME employing 
only a handful of people. 
 
EN 20   EN whereas investment often needs to be longer-term to become profitable.35 Thirdly, 
investment-readiness in the sector is extrem ely low, meaning that cultural and creative 
entrepreneurs often lack the business skills to present their projects to financial institutions. This is confirmed by the study on "The entrepre neurial dimension of the cultural and creative 
industries"
36 which carried out two surveys with 670 respondents, the feedback to the Green 
Paper, the feedback of the stak eholder platform on the cultura l and creative i ndustries and the 
recommendations of the OMC group on the cultural and creative industries. As a consequence financial institutions often fail to understand the risk  profile associated with this sector and its 
specific characteristics and are not subsequently  ready to invest in building up the expertise 
required. There is therefore substantial difficult y for these small under-capitalized enterprises 
to finance their activities, grow and maintain  their competitiveness. The impact assessment 
for the CCS financial instrument estimates a funding gap for these SMEs of some €2.8 to €4.8 
billion. The problem is more acute in some Memb er States than in others as there are very 
strong imbalances in the expertise developed by  financial institutions with good practices only 
to be found in a very limited number of countries.  
The difficulties in accessing finance is a pr oblem which is not at all addressed by the current 
programme  and the interim evaluati on indicates that very fe w private companies have 
participated, other than under the literary transl ation strand which is specifically targeted at 
publishing houses. The reasons are not entirely clear, but are in all likelihood linked to the 
formulation of the objectives which may not have an immediate resonance for them, as well as the requirements of grants, which must not ge nerate a profit and the need in most instances 
to find foreign partners. The publishing and popul ar music sectors have been most vocal in 
calling for support which is better  adapted to their businesses. 
2.5. Who is affected? 
The groups affected by these pr oblems most directly are: 
• The users of cultural products (consumers, audience, the general public), who rely on 
supply of cultural and creative works from  either national ope rators or a limited 
number of dominant foreign countries; 
• The developers of creative and cultural works (authors, play writers, translators, 
choreographers, designers, architects, song writers, performers, actors, musicians, 
dancers, singers, theatre companies, opera  houses, ballets, orchestras, publishers, 
audiovisual and interdisciplinary orga nisations, etc), bot h non-profit-making 
organisations and SMEs, many of which do not have the capacity to operate on a 
transnational level and thereby optimise potential economies of scale and better recoup costs; 
• The providers of access to cu lture (exhibitors/disseminators  of creative and cultural 
works such as galleries, museums, thea tres, concert halls, festival, SMEs) and 
organisers of non-commercial  cultural events, who – because of the lack of 
                                                
 
35 For example, regarding the publishing sector, it is estimated that 1 out of 10 books is profitable, 2 or 3 
break even and the rest lose money at the time of first publication. In the theatre sector, it is also estimated that only 1 in 10 plays makes a proper recoupment of its costs.  
36 The study on "The Entrepreneurial Dimension of the Cultural and Creative Industries" op. cit., see the 
Executive Summary. 
 
EN 21   EN transnational networks and circulation - generally depe nd on national artists or 
operators for the supply of works; 
• Cities and regions across Europe, whose fo cus is on support for local activities and 
the international potential is often unta pped, or which may lack local cultural 
facilities and opportunities  for their citizens;  
• Cultural policy-makers, who at this moment lack sufficient information and data for 
evidence based policy development. 
Further groups are affected more indirectl y, including television an d radio broadcasters, 
newspapers, magazines, internet providers , and organisations and companies providing 
services in the field of tourism. 
2.6. Baseline trends: how would the proble m evolve, all things being equal? 
Naturally it is difficult to predict developments. However it is reasonable to assume that if the 
current programme  were maintained, the positive benefits identified in the interim 
evaluation would continue. In pa rticular the unique role it pl ays in stimulating cross-border 
cooperation, including strong and enduring partnerships and their capacity to engage in 
further transnational cooperation. It is also valuable in promoting peer learning and the 
professionalization of the sector and increasi ng the access of European citizens to European 
works from other countries. These all contribut e to sustainable growth and quality jobs. The 
report also underlines that the programme play s an important role in  respecting Europe's 
cultural and linguistic diversity.  
As indicated above, the interim evaluation indicated that projec t promoters currently pursue a 
range of parallel objectives to the formal ones in the programme due to the fact that the latter do not currently reflect the real reason why cultura l operators seek to work internationally. It 
concluded that the objectives should be revised in  the light of recent developments, the real 
challenges facing the sector and the new policy framework agreed afte r the adoption of the 
current programme , namely Europe 2020 and the European Agenda for Culture. On the 
basis of this evaluation and existing knowledge of the programme, it is reasonable to assume 
that regarding economic impacts, the Program me would continue to  provide funding to 
support artists to develop internat ional careers, to strengthen cu ltural organisations to operate 
trans-nationally and foster cultural and linguis tic diversity. However, the current challenges 
would not be addressed in a focused way, incl uding the problem of market fragmentation, and 
would not respond to the need to help the sector adjust to global developments and the digital 
shift by developing new audience-building stra tegies and new busines s models. This would 
not optimise the sector’s adaptation and have repercussions for its ability to develop more cultural and creative content for digital dist ribution and extend audience reach, negatively 
impacting on competitiveness. The programme would therefore fail to make use of the sector’s potential to contribute to smart, sust ainable and inclusive grow th and the aims of the 
Digital Agenda. Some projects might choose to address these challenges, but there would be 
no significant scale effect. Instead the programme  would continue to produce benefits for the 
participants in projects, but  no strategic effect on the sector. Although transnational 
circulation of works would be supported, the design of the support would not optimise the 
potential benefits, including the support for lit erary translation, where the interim evaluation 
indicates ways of improving its effectiveness.  The access to finance needs of the CCS would 
not be supported and major global, including non-European companies, would continue to 
gain an increasing advantage. 
 
EN 22   EN Regarding social impacts, the programme would be  expected to continue to have benefits. The 
interim evaluation indicates that  two out of three projects s ought to promote equality or 
equity, 51% reported that they had specifically promoted opport unities for the disadvantaged, 
some 31% had targeted people suffering socio-ec onomic disadvantage, 25 % ethnic minorities, 
and 25% people with a disability. Furthermore, the report indicated that participants in 
projects get personal benefits in terms of  professional development and many of the 
partnerships endure. However, the lack of focus of the programme would dissipate the 
potential social benefits in terms of the full contribution the prog ramme could make to 
cultural and linguistic diversit y, inter-cultural understanding, employment, and broader access 
to culture. 
Under the baseline, the policy process linked to the European Agenda for Culture would 
continue, but there would be no resources to prop erly tackle the data shortages confronting the 
sector. Regarding likely developments at nationa l level, the interim evaluation highlights that 
the impact of the crisis on international cultural cooperation cannot yet be fully understood, as 
there is a time lag before public funding cuts at  the national level, or reductions in private 
sponsorship, begin to affect the capacity of project promoters to find matching national 
funding. However the initial indications  are that budget cuts are taking place,37 which raises 
new challenges for cultural operators who wish  to engage in international cooperation and 
highlights the importance of EU support.  
2.7. Justification for EU intervention 
2.7.1.  Does the EU have the right to act? 
The EU clearly has the legal comp etence to act. Article 3(3) of  the Treaty on European Union 
recognises that the internal market and economic  growth must be accompanied by respect for 
the EU's cultural and linguistic diversity. Arti cle 167 of the Treaty on th e Functioning of the 
European Union specifies the EU's competences in  the cultural field in greater detail, whereby 
the EU can support and supplement Member St ate action. The EU Char ter for Fundamental 
Rights (Article 22) states that the Union shall re spect cultural and linguis tic diversity. Finally, 
the Union's mandate is recognised in intern ational law, in the UNESCO Convention on the 
Protection and Promotion of the Diversity of Cultural Expressions, which is part of the acquis 
communautaire . 
2.7.2.  European added value / necessity test of the new EU initiative 
There is clear European added value to the action proposed compared to Member States 
acting alone. In addition to the complement arities to other EU policies and programmes 
outlined in section 3.1, the new initiative would have the following transnational benefits. 
• First, the sector is facing similar challeng es regarding adaptation to the digital shift 
across Europe and EU support can incentiv ise and stimulate long-term systemic 
effects on the sector in order to adapt to global challenges more rapidly. This is 
because this is an area where knowledge and knowhow is patchy, fragmented and 
geographically dispersed, and internationa l cooperation can therefore bring great 
                                                 
37 See for example, "The economic crisis and the pros pects for art and culture in Europe", by SICA, Dutch 
Centre for International Activities, 
http://www.sica.nl/sites/default/file s/en_crisis_and_prospects_for_art_and_culture_in_europe_oct2010.
pdf 
 
EN 23   EN benefits by incentivising adjustment, facilitating th e pooling of knowledge and 
accelerated learning, at the same time as  achieving greater critical mass and 
economies of scale.  
• Second, with regard to the circulation of works and artists , there is a clear 
transnational dimension. EU support can fost er circulation in a more balanced way 
than national funding schemes which tend  to have national cultural diplomacy 
agendas. EU funding provides artists with professional pathways by giving them the 
opportunity to perform in inte rnational networks of nationa l concert halls, festivals, 
international orchestras, residences, tours and exhibitions, which enhance their skills, 
knowhow and employability (rath er similar to the role Er asmus plays for university 
students). Many of these European networ ks and their programmes have acquired a 
certain quality or brand value for the national operators. As proved by the current 
programme , EU funding also helps to address geographical imbalances in Europe 
by creating opportunities for artists and orga nisations in countries with weaker 
capacity to take part in projects (and ther eby foster their skills and careers) led by 
organisations in other countries. In this  way the programme serves an important 
solidarity function. 
• Third, the way it supports policy processes, including the implementation of the 
OMC, boosting progress towards common obj ectives and promoting exchange of 
knowledge and good practices among national policy-makers is important. This 
stimulates accelerated learni ng, thereby benefiting the fo rmulation of better national 
policies and contributing to systemic chan ge. There is also clear added value and 
economies of scale for policy support by enabli ng comparative European research in 
the cultural field. 
• Fourth, a shared CCS financial instrument  would have greater critical mass and 
economies of scale compared to a large num ber of dispersed schemes, which would 
enable more funds to be focused on fi nancial guarantees than administration, 
fostering valuable networking and peer learning and having a greater systemic 
impact on the capacity of financial institu tions across Europe to understand better 
CCS assets and risks. 
• Fifth, EU funding would bring added value in  terms of leverage effect on additional 
funds. With regard to grants, EU co-fundi ng brings in additional funds at national 
level (at present at least 50% for most of  the Culture Programme). It also ensures 
commitment and buy-in among beneficiaries. The European Capitals of Culture  
also have a strong leverage effect, with  the EU title and small amount of funding 
(€1.5 million per Capital) triggering nationa l investments in recent years of between 
between €15 and €100 million. Furthermore, an  estimated 10-15 fold leverage effect 
could be generated by a joint CCS financial instrument. 
2.7.3.  Complementarity to other EU policies and instruments 
The programme will be entirely complementary to other EU instruments. Along with MEDIA 
(which is targeted at a differe nt set of beneficiaries in the audiovisual industry), no other EU 
programme promotes the transnational mobility of artists/cultural professionals, nor the circulation of works. Similarl y regarding linguistic diversity, while Culture supports literary 
translation, MEDIA subtitling and dubbing of  foreign films, the Lifelong Learning 
Programme promotes language learning. Rega rding capacity-building, the programme does 
 
EN 24   EN not aim at formal or informal learning which is covered by the educa tion, training and youth 
programmes, but focuses on fostering peer  and accelerated learning among cultural 
organisations on topics where the sector faces key challenges.  
The programme will complement EU culture po licy by reaching cultural operators directly 
and thereby helping bring about systemic ch ange in terms of EU policy priorities.  
In contrast to other EU funding such as the ERDF, ESF, Competitiveness and Innovation 
Framework Programme (CIP), the programme will specifically target the needs of the cultural 
and creative sectors with a wish  to operate beyond national borde rs and with a strong link to 
the promotion of cultural and linguistic diversity. Indeed, th e current ERDF/ESF support is 
for preservation, rehabilitation and development of cultural heritage, de velopment of cultural 
infrastructure, urban regenerati on, support to tourism, promoti on of entrepreneurship, support 
to ICT based cultural services and the improv ement of human capital, with a very strong 
focus on innovation and regional or local deve lopment. Furthermore the support for policy 
development would have benefits for knowledg e sharing in the development of cohesion 
policies by Member States. 
The CIP provides access to funding for SMEs (through guarantee and equ ity) and the up-take 
of digital technologies and cont ents, but these are ge neric tools, without any dissemination of 
sector-specific expertise. The ne w financial instrument to strengt hen the financial capacity of 
Europe's cultural and creative se ctors would be focused on the sp ecific needs of these sectors, 
in order to foster greater und erstanding of assessi ng risks in these sectors by financial 
institutions and stimulating networking between them. A more  elaborated assessment is 
described in the impact assessment report for CCS financial instrument. 
Policy actions related to digiti sation and content aggregation around Europeana (the European 
Digital Library) are implemented with in the Digital Agenda for Europe.  
International funding under the culture strand will help the European cultu ral sector to operate 
internationally and be a projecti on of the objectives of the internal programme. In contrast to 
other EU instruments aimed at cultural coopera tion with third countries, it is a multilateral, 
not bilateral tool, and does not target development cooperation in third countries.38  
                                                 
38 For example, the cultural strand of "Investing in People"  (€50 million over 2007-2013) supports 
culture as a significant area of human and social development which contributes to identity-building 
and self-esteem, fosters economic growth and social cohesion, and helps to promote political 
participation and ownership. The Euromed Heritage IV  (€17 million for 2008-2012) aims to facilitate 
the appropriation by populations of  their cultural heritage, favouring  access to education and knowledge 
of cultural heritage. The Eastern Partnership Culture  programme (€12 million for 2010-2013) 
contributes to strengthening regional cultural links and dialogue within the ENP East region, and between the EU and ENP Eastern countries' cultural networks and actors. The EU-ACP Support 
Programme to cultural in dustries in ACP countries  (€2.3 million for 2008-2010) promotes an 
environment encouraging creation, exchanges, indepe ndence and viability of the cultural sector in the 
ACP States, while adding value to their cultural diversity. The EU Enlargement policy supports 
bilateral and multi-beneficiary activities in the field of culture, which make a fundamental contribution 
to the promotion of European values and intercu ltural dialogue. National and multi-beneficiary projects 
funded under the Instrument for Pr e-accession Assistance (IP A) in the field of culture, mainly cultural 
heritage, amounted to approximately €37 million fro m 2007-2011. Moreover, candidate and potential 
candidates are undertaking actions funded under IPA preparing them for participation in the Culture 
programme (after the signing of both the Framework Agreement and the Memorandum of 
Understanding with the EU). 
 
EN 25   EN 3. OBJECTIVES  
As recommended by the interim evaluation, res ponses to the public consultation and the 
Green Paper, the new objectives of the culture strand will be aligned with the aims of Europe 2020 and the European Agenda for Culture a nd there will be more precision about the 
programme’s priorities to supplement the specif ic objectives, something which does not exist 
at present. Clearer guidance than at present will also be provided in the future calls for proposals in order to prioritise  projects which address the pr oblems identified in chapter 2. 
The specific objective to support the capacity of the European cultural an d creative sectors to 
operate transnationally addresses the challenge  of globalisation and th e adaptation of the 
sector to the digital shift. Promotion of the transnational circulation of cultural and creative 
works and operators and reaching new audiences  addresses the problem of fragmentation, 
which results in limited circulation of works and artists and limited choice for consumers. 
Both of these have consequences for cultural and linguistic diversity and the competitiveness 
of the sector, which are reflected in the general objectives. The third specific objective, the fostering of policy development, targets the shor tage of data. The four th specific objective – 
to improve the financial capacity of the sector  – will be addressed primarily through the new 
financial instrument covered by a separate imp act assessment. The three levels of objectives 
for the Culture strand are indicated in table 3. 
 
EN 26   EN  
Table 3: General and specific objectives and priorities 
General objective To foster the safeguarding and promotion of European cultural and linguistic diversity, and strengthen the 
competitiveness of the cultural and creative sectors, with a view to promoting smart, sustainable and 
inclusive growth, in line with  the Europe 2020 strategy. 
Specific objectives 1. Support the capacity of the European cultural and creative sectors to operate transnationally; 
2. Promote the transnational circulation of cultu ral and creative works and operators and reach new 
audiences both within Europe and beyond; 
3. Foster policy development, innovation, audience buil ding and new business models through transnational 
policy cooperation  
4. Strengthen the financial capacity of  the cultural and creative sectors39 
Priorities Specific objective 1: Su pport the capacity of th e European cultural and 
creative sectors to operate transnationally: 
• Providing cultural operators with skills and knowhow to facilitate adjustment to the digital shift 
(audience-building strategies, new business models) through mutual peer learning; 
• Support artists/cultural professionals to internationalise their careers; 
• Strengthened European and intern ational networks of cultural pr ofessionals to facilitate access 
to new opportunities and markets. 
Specific objective 2: Promote the tran snational circulation of cultural 
and creative works and operators and reach new audiences in Europe and beyond: 
• Support international touring,  events and exhibitions;  
• Support literary translation, including promotion packages; 
• Support for audience-building as a means of raisi ng curiosity of the public and particularly 
young people and building a long-term audience for European cultural works. 
Specific objective 3: Foster policy development, innovation, audience 
building and new business models through transnational policy cooperation 
• Support for studies, evaluations, policy analysis and statistical surveys; 
• Support transnational exchange of good prac tices and knowhow, peer-learning activities and 
networking related to polic y development, including cultural and media literacy; 
• Support the testing of new and cross-sectoral approaches to funding, distributing, and 
monetising creation; 
• Support conferences, seminars and policy dialogue; 
• Support a network of Creative Europe Desks. 
                                                 
39 This objective will be addressed through a new financial instrument that will facilitate access to 
financing for the CCSs. A full analysis is provided in the separate IA on Cultural and Creative Sector 
Financial Instrument. 
 
EN 27   EN Problem 4 (see section 2.2.4) – the difficulties of  access to finance – will also need to be 
addressed through a future EU pr ogramme for culture. This problem is considered within the 
options assessed in this impact assessment. One of the options (option 3, Creative Europe 
framework programme) foresees the possibilit y of developing a cr oss-sectoral strand 
including a financial facility, which would faci litate access to privat e sources of finance, 
technical assistance and specifi c training, improved investment readiness and capacity to 
assess cultural and creative projects. However, a separate impact assessment has been carried 
out for this aspect of the future programme , so it is only dealt with briefly here.  
To help to clarify the intervention logic, the following diagram depi cts the inter-linkages 
between the identified needs, the specific objec tives, and gives some expected results and 
examples of possible action. 
 
1. Market 
fragmentation 
2. Impact of 
Globalisation and 
Digitalisation 3. Financial 
capacity Needs and 
challenges to 
address Specific 
objectives Some Expected 
results 
Increased capacity to 
operate internationally Stronger transnational networks and platforms Greater economies of scale Increased share GDP and 
employment/systemic 
effect  
Improved access to culture Increased international performance/adaption to digital shift/new sources of revenues for cultural sectors.  
Improved trans-national 
cooperation, mobility and 
circulation  Examples of 
Possible Actions 
Support to improve skills 
and knowhow to adapt to  digital technologies, test new approaches to 
audience building and 
business models, etc 
 
Support for international 
touring, events, 
exhibitions Translation 
and promotional support  Audience building actions Support to operators and international networks facilitating access to 
markets New financial instruments 
Specific Business and 
Mgt  -and Finance Training Synergies with SME 
policy 1. Support the 
capacity of 
operators to work 
internationally  
2. Promote 
circulation and 
reach new 
audiences 
4. Data availability 
Comparable data for 
monitoring and evaluation Increased effectiveness and efficiency of public policies and actions/Evaluation and 
impact assessment Procure context, sector, 
output and impact data 
from internal and 
external sources (EAO, 
Eurostat, EACEA etc) 3. Policy support 
and evidence based 
policy making Stronger financial 
structure More private sources of finance Improved investment readiness Possible concentration and vertical integration 
 
 
EN 28   EN 4. POLICY OPTIONS  
This impact assessment considered 3 options in  order to tackle the identified problems and 
objectives. The options considered are summarised below. 
Table 4: Policy options  
Option Summary 
“No change” (baseline) The “no change” option. Continuation of the Culture 
Programme. 
“Revised programme”  Redesigning the programme to take account of the 
recommendations in the interim evaluation and expected 
needs in the cultural and creative sectors. 
“Synergies and new 
framework programme” This involves both redesigning the programme as described 
under option 2 and changing it so that synergies between the 
MEDIA and Culture programmes are exploited. 
 
4.1. Criteria applied for pre-selection of  options to undergo further analysis 
All options raised by stakeholders, external expe rts, institutions etc have been collected to 
undergo a first screening. Some have been dis carded without further analysis; others are 
examined in the context of this exercise. 
Before examining those options, it is important  to note that some complementary initiatives 
need to be put in place in view of optimising the effectiveness and the efficiency of the new 
programme in its endeavour to achieve the objectives, whatever  option is selected. Indeed, 
evaluation results of the Cultu re Programme have systematically identified the need to 
simplify some elements of the Programme and options have been assessed also in the light 
of the simplification and streamlining opportunities they offer . In particular, structuring 
actions and systemic impact have been gi ven higher priority. Also some policy support 
measures need to be introduced. 
A number of simplification opportunities  have been identified both on a strategic and 
operational level. While operational simplifications described in the efficiency section below will be implemented in all cases, the following strategic simplifications opportunities have 
been used to select those options to  be retained for further analysis. 
• Focus on structuring actions with a maxi mum systemic impact. For example, by 
discontinuing or modifying those elements in the current programme  that do not 
sufficiently contribute to scale effects.  This would bring a strong focus on aim 
achievement into the programme and also  allow for a reduction in the number of 
calls for proposals. (For example larger funding packages for publishing houses to 
incorporate promotional support, would produce a longer term impact on the company robustness and viability rather than just on one of its projects.); 
 
EN 29   EN • Create a financial instrument to progressive ly increase access to private funding (for 
some categories of players / some types of projects) and improve the systemic impact 
on the sector (see previous point); 
• Increase the leverage of EU budget, with  such tools as the Cultural and Creative 
Sector Financial Instrument; 
• Streamlining of the international dimension pr eviously in a separate action line in the 
programme within the Culture strand; 
• Cross-cutting value chains approach by supporting projects with high impact 
throughout the value chains, from building capacity to mobility and circulation; 
• Transversal projects covering several segmen ts and players of different sectors to 
achieve a knock-on effect a nd have a broader impact  
• Support measures that can incr ease sector and market r each through a transnational 
approach 
• Coordinated approach on all sources of content (music, audiovisual, cross-media, 
publishing etc). (A common approach to cr eative and cultural sectors is proposed 
under option 3.) 
4.2. Discarded options  
All options raised by stakeholde rs, external experts, institutions, etc. were collected and 
screened. The option proposing the ''Merg ing the Culture, MEDIA and MEDIA Mundus 
Programmes'' into a single tran sversal programme to cover the cultural and crea tive sectors as 
a whole with common calls for proposals was di scarded. This is because although the sectors 
face similar problems due to the particular charac teristics of the cultural and creative sectors 
and seek common goals, the various sub-sectors and players are too heterogeneous to permit 
homogenised instruments. This heterogeneity is explained in section 2.2. This means that 
generic calls and actions for the entire programme  would not be adapted to the needs of the 
different actors and would lack cl arity and generate confusion. 
In considering the revised programme option, a sub-option with different windows for each of 
the different cultural sub-sectors was discarded. The original approach to cultural funding by 
the EU was partially sectoral, with the Aria ne programme for the boo k and reading sector 
(1997-1999) and Raphael for cultu ral heritage (1997-1999). In contrast, the Culture 2000 
programme adopted an interdisciplinary approach which was continued with the current 
programme . As mentioned in section 2.2 the interim evaluation confirms the benefits of an 
interdisciplinary approach due to the reality of  developments in the cultural sector, including 
the impact of digitisation, in which boundaries  between sectors are be coming more fluid and 
cross-sectoral experimentation is common. The European Competitiveness Report also 
confirms that interdisciplinarity will play a key role in pushing forward research and 
policymaking in the area of the creative industries. The annual activity reports on the 
programme40 confirm a good balance between sub-se ctors suggesting that the current 
approach works well. It should also be adde d that the limited budget would not permit the 
sub-sectoral approach to work effectively. 
Another discarded sub-option was to focus eith er exclusively on capacity-building or on the 
circulation of artists/cultural operators and thei r works. This is due to experience of the 
                                                 
40 The annual Culture Programme Activity Reports can be found at: http://ec.europa.eu/culture/our-
programmes-and-actions/library-of-programme-documents_en.htm 
 
EN 30   EN current programme  in which both elements are highly im portant components of projects, as 
confirmed by the interim evaluation. 
Finally, the discontinuation of EU  funding was not considered as  an option, due to the fact 
that the Commission's proposal for the Mult i-annual Financial Framework for 2014-2020 has 
taken the clear decision to continue EU s upport for the cultural and creative sectors. 
4.3. Option 1 "No Change"  
Option 1: "No change" (baseline):  The new Programme follows the same objectives and includes the same action lines as the 
current Culture Programme (see section 2.3).  
4.4. Option 2 "Revised Programme"  
Option 2: "Revised programme": A revised programme would address the weakne sses of the existing on e drawing on direct 
experience of managing the programme, th e findings of the interim evaluation and 
stakeholder feedback, including the recommendati ons of the stakeholder platforms, studies 
and research, and the Cultural C ontact Points who are in direct contact with applicants. 
Naturally, however, the Commission has had to a ssess these numerous sources critically, in 
order to strike the appropriate balance between  the needs of the sector, Europe 2020 goals and 
activities with the most European added value. The aim of the new Culture strand would be to 
achieve a more targeted impact on a limited num ber of clear priorities and a greater scale 
effect as a consequence. This would be done through more relevant and better focused 
objectives and cleare r indication in the calls for proposals of our prio rities (see chapter 3). The 
number of calls for proposals, in struments, and small grants woul d also be reduced in order to 
prioritise projects with a greater structuring ef fect. This would include the introduction of a 
new instrument – European platforms - to s timulate a scale effect with regard to the 
circulation objective of the programme. 
The measures which would be disconti nued or modified are the following: 
• International cooperation under the programme would be redesigned. The separate 
call for proposals with a different country  focus each year - which is virtually 
identical to the two year cooperation projects - would be discontinued as this 
approach lacks critical mass due to the sh ifting focus and is not able to adapt to 
newly emerging priorities. In addition, from  a practical perspect ive, building solid 
international partnerships takes time, whic h is made difficult by the changing focus. 
In a new programme the participation of third country operators would instead be 
mainstreamed within the other cooperation projects, thereby reducing the number of 
calls and reflecting the natural interna tional preference of the sector more 
appropriately.
41 The current ceiling for third countr y participants (15%) would need 
to be raised. 
• The dedicated strand for festivals would be discontinued as it has proved confusing 
for the sector and has proved to be over-subscr ibed over the last two years, partly at 
                                                 
41 Interim Evaluation of the Culture Programme 2007-2013, op.cit. 
 
EN 31   EN least due to the absence of an obligati on to have European partners. However 
festivals are clearly important cultural ev ents, with a massive public outreach and 
would continue to be eligib le under cooperation projects.  
• The current advocacy networks  would be open simply to  networks fostering the 
goals of the programme rather th an to support their advocacy work. 
• The support for literary translation  which has very small grants (€2,000 to €60,000) 
would continue under a new programme, but  the programme would allow larger 
funding packages for publishing houses to  make the support more effective on the 
one hand, and more administrati vely efficient on the other. Priority would be given to 
publishing houses with a clear medium- long-term strategy for promoting European literature and the support would be broade ned beyond simply funding translations, to 
include the translation of readers' reports to assist the selling of rights to foreign 
publishers (an upstream part of the book chain), some promotional support and international exchanges of editors. This woul d be expected to result in more larger 
grants. In addition, at the moment the flow of  translations is predominantly into small 
languages and very little into the dominant , pivot languages (esp ecially EN, FR and 
DE). A stronger signal would be given to encourage more translation out of small 
languages into pivot languages, as this ca n have an exponential impact on further 
translations and therefore be bene ficial for cultural diversity. 
• The operating grants would be  discontinued in favour of project funding as they are 
complex to manage due to the annual cy cle, degressivity rules, and are not 
sufficiently result-oriented as an instrument.  
As already mentioned these measures should al low a reduction in the number of calls for 
proposals managed by the EACEA to be reduced fr om 9 to 4 and priority would be given in 
the criteria to projects with a structuring and systemic effect
42 to avoid the previous 
fragmentation which diluted th e impact of the programme: 
• Cooperation projects (with one lot for multi- annual projects and another for 2 year 
projects); 
• European networks; 
• European platforms; 
• Literary translation. 
The new category of European platforms would be aimed at  activities by organisations 
providing a promotional European platform for the development of emerging talent and 
stimulating the circulation of artists and works, with a systemic and large scale effect. 
Previous organisations applyi ng under the "Ambassadors" and "Festivals" categories could 
potentially qualify here. 
                                                 
42 "Structuring effect" refers to creating "structure" to a sub-sector where actors are currently fragmented 
and dispersed and unconnected. For example, a network bringing together dispersed actors from a sub-
sector across Europe for peer learning which ca n foster accelerated learning. This can generate 
economies of scale by bringing toge ther fragmented expertise and knowhow . "Systemic effect" refers to 
system level changes, for example, a change of na tional policy, or a permanent change in the activities 
and priorities of a sector. 
 
EN 32   EN The cooperation projects, networks and platform s could address more than one specific and 
operational objective, reflecting the desi re of operators – as seen in the current programme  – 
to undertake a range of activities wi thin a single project.  This is due to the fact that in many of 
these sub-sectors the value chain is relatively fluid, for example, concert halls, theatres, operas 
or festivals which produce wo rks, exhibit them, develop ne w talent, and run educational 
programmes, etc. This means that when these sectors engage internat ionally, they wish to 
undertake a range of activities at various points of the value chain within a single project (co-
production, development of talent , touring, peer learning among ar tists and professionals (eg 
managers)), which contrasts with  the audiovisual industry, wher e script-writers, developers, 
distributors, exhibito rs, etc need to be targeted separatel y. A flexible and flui d approach to the 
value chain in most of the cultural sub-sectors,  would - in addition to being more appropriate 
for them - be simpler and less bureaucratic, co mpared to requiring different calls targeted 
separately on capacity-b uilding and circulation, which would result in the n eed for promoters 
to make more than one application (for smalle r amounts) whereas in the past they could cover 
the same activities within a single project. This approach would also re duce the administrative 
burden on the EACEA by having fewer,  larger grants to deal with. 
Due to the more segmented natu re of the book chain, the literary  translation strand would be 
more targeted, focusing on circulation, and wo uld remain aimed at pu blishing houses even 
though the boundaries between publishing and selling may blur in the longer-term with the 
digital shift.  
Whilst it is too early to spell out the award criteria at this stage, the emphasis will be on 
projects with a clear focus on the programme’s priorities, European ad ded value, with long-
term structuring and systemic impact, and a ddressing geographical imbalances. In order to 
increase the impact of projects, audience-b uilding strategies would be included as a 
requirement of circulation proj ects to improve the current cr iteria on communication which do 
not include this element. 
In addition to the greater structuring effect sought through grants for cultural operators, the 
new programme will seek to achieve a greate r systemic effect through improved support for 
policy by means of the OMC for culture, which can  influence policy priori ties at the national 
(system) level. This would include bett er support through studies , support for expert 
networks, work with Eurostat to improve th e comparability and reliability of data, and 
membership of the European Audiovisual Obse rvatory, which would enable better collection 
of market data. 
The geographical scope of the programme would be similar as at present, and would allow 
participation by third countries in accordance with the necessary  principles and agreements, 
including EFTA countries whic h are members of EEA; the Sw iss Confederation; candidate 
countries benefiting from a strategy of pre- accession to the EU; count ries of the Western 
Balkans and the countries of the European  neighbourhood area. The pr ogramme would also 
be open for bilateral or  multilateral cooperation ac tions targeted at se lected countries or 
regions on the basis of additional appropriations. 
4.5. Option 3 "Synergies and new framework programme"  
Option 3: "Synergies and new framework programme" This option assesses the possibility of merging the Culture, MEDIA and MEDIA Mundus 
Programmes under a common fram ework, “Creative Europe” Pr ogramme. Such a framework 
 
EN 33   EN programme could build on synergies from the f act that the different sectors face similar 
challenges, while at the same time keeping distinct strands for Culture and MEDIA. The Culture strand would be virtua lly identical to the above “Revised programme” option. 
However, it would be part of a framewor k with three strands: one for MEDIA for the 
audiovisual sector, one for culture for the other cultural and creative sectors, and an 
innovative cross-sectoral strand for all the cultu ral and creative sectors which would include a 
financial instrument. Under this scenario, one part of the thir d cross-sectoral strand would 
address the third identified problem (shortage of data) and the priorities objectives linked to it 
in table 3. This would include act ivities such as transnational exchange of experiences on new 
business models, peer-learning activities and networking among and between industries, 
operators and policy-makers; data collection,  including membership of the European 
Audiovisual Observatory; and the testing of ne w and cross-sectoral business approaches to 
funding, distributing and monetis ing creation. The other part – the Culture and Creative 
Sector Financial Facility – w ould address the fourth problem (the sector's difficulty in 
accessing finance). 
In practical terms this means that the general and specific objectives (see chapter 3) would be 
common to all three strands , but there would be variations in the priorities, and separate calls 
for proposals. This approach would have the ad vantage of accommodating the value chains in 
the different cultural sub-sect ors appropriately, which, as me ntioned in section 4.1, are too 
heterogeneous to permit homogenised instruments and calls. 
As this is the option which has been identi fied in the Commission's Multi-Annual Financial 
Framework, the foreseen breakdown is  only explained for this option. 
The indicative budget split between the progra mmes would be 30% for the culture strand, 
55% for MEDIA and 15% for the innovative cross- sectoral strand. This reflects previous 
spending patterns for Culture and MEDIA and hi gh level political commitments which have 
been made to maintain current levels and to  provide space for the entirely new Financial 
Instrument.  
Within the Culture strand the di vision of funds would be by th e four measures indicated in 
option 2, as well the special actions which are mostly mana ged by the European Commission. 
The sub-division would draw  on the experience of the current programme  with some 
modifications in the light of experience of de mand rates, so that the cooperation measures 
would continue to receive the largest portion of funds. Approximate indicative amounts would 
67% for cooperation projects, 7% each to networks and platfo rms (previously the European 
cultural bodies category), 9% to literary translations (previously included within the 
cooperation projects) and 10%  to the special actions. 
5. A
NALYSIS OF IMPACTS  
The analysis of impacts is based on the prop osed options which were compared to the 
baseline.  
There are uncertainties in relation to the possi ble development of the problem and it needs to 
be recalled that there are many other causa l factors at work beyond the scope of the 
programme which could impact either positivel y or negatively on developments. In addition, 
the pace of change occurring due to the digital shift is extremely rapid and unpredictable. This 
requires the future programme to be flexible enough to accommodate the sectors' needs over 
 
EN 34   EN time. The expectation is, however, that audience  demand will continue to have greater impact 
on developments and the new programme will la y emphasis on this. In addition, other causal 
factors will impact on growth and jobs in the cultural and creative sectors which are 
independent of an EU funding programme, su ch as national polic y and national funding 
support. While EU policy coordination may have so me impact on national priorities, as this is 
an area of strong subsidiarity, many eff ects will also depend on national choices. 
Quantitative estimates are also impossible at this stage due to the widely recognised lack of 
data to underpin European policy development in  this area, which cont ributes to uncertainty 
about the current state of the se ctor and about the e volution of current problems. The stronger 
emphasis on systematic data collection in the fu ture should help over the longer term to 
alleviate this shortcoming. Due to these reasons  the impact assessment adopts an essentially 
qualitative approach to analyse the exp ected impacts of the identified options.  
The analysis assesses the impact of each opti on against the economic, social, environmental 
and fundamental rights impacts. The impacts l ooked at the possible impact of support aimed 
at the circulation of European cultural works,  the cultural and creative sector's capacity to 
operate on an international level and at knowle dge sharing aimed at evidence based policy 
development. These are the areas where th e programme can help address the problems 
described in section 2.2. Table 5 summarise s the main areas of economic, social and 
environmental impact. 
Table 5: Summary of the main areas of economic, social and environmental impact  
 Areas of economic impact Area s of social impact Areas of 
environmental impact 
The cultural and creative sector's 
capacity to operate 
on an international level 
 Better economic 
performance of the cultural and creative sectors in terms of new revenue streams and greater profitability 
Improved capacity of 
European cultural 
organisations to work 
internationally 
Reduced cost of business for 
cultural and creative SMEs More employment in 
the cultural and creative 
sectors 
Better job quality in the 
cultural and creative 
sectors 
Greater mutual 
understanding and 
social cohesion due to 
exposure to more culturally diverse 
artistic work 
 
Circulation of 
European works Greater choice of European 
cultural content for consumers 
New economic opportunities 
and revenue streams for the 
cultural sector 
Better functioning of the 
internal market  Greater cultural and 
linguistic diversity 
Access to culture 
(digital access/stronger 
circulation networks) 
for new audiences and also the disadvantaged 
(social inclusion) Transport requirements 
(passenger and freight) 
Energy consumption 
Use of new digital 
distribution methods can 
help reduce the current 
reliance on physical circulation and mobility 
Indirect benefits due to 
the sector's natural role as a communication 
vector on pressing 
societal issues  
 
EN 35   EN Knowledge sharing 
aimed at evidence 
based policy development  More comparable data 
Improved economic 
performance through better designed national cultural 
policies 
 Increased employment, 
greater mutual 
understanding and social cohesion through 
better designed cultural 
policies at national level 
 
None of the options has direct impacts on e qual opportunities, technological developments, 
developing countries or public h ealth. However, artists and cultu ral operators generally have a 
natural empathy for equal opportunities concerns, so  there could be indirect benefits in this 
regard. Indeed, the interim evaluation shows that  without it being explicitly targeted in the 
programme, a certain number of pr ojects touch upon this theme.  
It should be pointed out that the impacts in terms of the e nvironment and fundamental rights 
should not be overplayed, notwithstandi ng this they have been assessed.  
Through promoting the mobility of cultural operators all options would have an 
environmental effect, for example due to transp ort and production proces ses, but the effects 
would not be greater than at present. Additi onally, this would be c ounter-balanced under the 
revised and framework programme by the emphasis on helping the cultural sector adapt to the 
digital shift, which can enable far greater a udiences to be reached without physical travel. 
Furthermore, the revised and framework progra mme would continue to have some indirect 
benefits due to the sector's natural role as a communication vector on pr essing societal issues, 
however this would depend on th e projects selected. A certain number of projects already 
address climate change issues. 
Fundamental rights are not e xplicitly targeted by the current programme , but transnational 
cooperation and exchange in this field can cont ribute to a greater awar eness of and empathy 
for fundamental rights. As the revised and framework programme opt ions would directly 
target cultural and linguistic diversity they woul d have effects in this regard, which can be 
greater than under the base line. The overall impact in this re gard would be marginally greater 
under the framework programme (becau se of transversal elements).  
5.1. Option 1 "No change" (the baseline) 
Economic impacts In this scenario, the Program me would continue to provide  funding to support artists to 
develop international careers, to  strengthen cultural organisati ons to operate trans-nationally 
and foster cultural and linguisti c diversity. However, the current challenges identified in 
section 2.2 would not be addressed in a focuse d way, and would not sufficiently respond to 
the need to help the sector adjust to globa l developments and the digital shift as the 
programme would not send a clear  signal regarding the need to  address demand side issues. 
This would slow down the sector’s adaptation and have repercussions for its ability to 
improve audience/consumer demand and devel op more cultural and creative content for 
digital distribution, negatively impacting on comp etitiveness. The progr amme would therefore 
fail to make use of the sector’s potential to contribute to smart, su stainable and inclusive 
growth and the aims of the Digital Agenda. Some projects might choose to address these 
 
EN 36   EN challenges, but it would be ra ndom and there would be no signifi cant scale effect . Instead the 
programme would be supply orientated, woul d continue to produce benefits for the 
participants in projects, but th e strategic structuring effect on the sector would be limited. 
Although transnational circulati on of works would be suppor ted, the design of the support 
would not optimise the potential of new economic  opportunities, includi ng those regarding the 
support for literary translation, where the interim ev aluation indicates ways of improving its 
effectiveness. The access to finance needs of  the CCS would not be supported and major 
global, including non-European companies, would continue to gain an increasing advantage. 
Knowledge sharing to foster transnational pol icy development and bring about step changes 
in policies for the sectors acr oss Europe would be limited. 
Social impacts 
The positive effects identified in  the findings of the interim evaluation (see sections 2.3 and 
2.6) would in principle continue, although th e results would be random, depending on the 
bottom up submission of applica tions. The lack of focus of the programme would dissipate 
the potential social benefits in terms of the full contribution the programme could make to 
cultural and linguistic diversity, inter-cultural understanding, employment, and broader access 
to culture. 
Simplification 
Even with no change in programme design, further simplifications  would be introduced, 
building on those brought in under the current programme . That would include a greater use 
of flat rates, grant decisions, framework partnership agreements , electronic applications and 
reporting and an electronic portal to reduce th e burden for applicants and beneficiaries. 
However, there would continue to be separa te information points, management committees 
and less use of trans-disciplinary cross-borde r policy coordination processes, including 
exchanges of experiences and new, cross-sect oral testing of new business approaches to 
funding, distributing a nd monetising creation. 
5.2. Option 2 "Revised programme" 
The effect of option 2 would be an overall gr eater focus of the programme's support towards 
reaching clear objectives linked to the real needs of the sector and the policy priorities set out 
in the Europe 2020 Strategy, its flagships, the European Agenda for Culture and new 
strategies for the cultural and creative sect ors in many Member States. Compared to the 
baseline, this option would send a clear signal regarding demand si de issues. This would lead 
to an increased and more diverse offer of Eur opean cultural works within the Single Market, 
resulting in more choice for consumers, and pluralism of content for distribution (both 
physical and digital), with greater  economic and social benefits. 
Economic impacts 
The programme would strengthen th e adaptation of the cultural sector to globalisation and the 
digital shift and increase transnational trade of cultural works and touring by artists, thereby improving its capacity to operate  internationally and contri bute to economic growth and 
employment. This would be done by targeting projects which can promote the knowhow and 
skills to make full use of the potential the digital shift offers to reach larger audiences, develop new business models and to tap into new revenue streams (the reby also helping to 
reduce reliance on public funding). By targetin g multipliers, an exponential effect will be 
 
EN 37   EN sought. More targeted support for the transnati onal circulation of wo rks should help to 
generate economies of scale by fostering ph ysical networks for artists and works (e.g. 
theatres, operas, concert halls, festivals) or wider digital distribution outside of traditional 
venues (e.g. opera and theatre beamed to cine mas, open air screens or other venues) and 
thereby facilitating the recoupmen t of costs through more extende d runs and larger audiences.  
More effective funding for lite rary translation would reduce th e financial risk small- or 
medium-sized publishing houses face  in translating foreign works.43 The interim evaluation of 
the Programme shows that translation alone does not guarantee works being promoted by 
book retailers so that they can reach readers. Therefore additional measures are required in 
order to raise the chances of translated work s reaching readers and the average print-run of 
books translated with support by the programme to  increase. Support for strategic translation 
packages, readers’ reports to promote the sell ing of foreign rights, and promotion could be 
expected to increase both the numbers of translated works and the numbers of readers 
reached. In addition, a stronger focus on correc ting the current imbalance between source and 
target languages could be important in order to  help translation into  pivot languages, which 
could have an exponential impact on further tran slation and thereby increa se the circulation of 
European literature, and could impact on cons umers' choice and open opportunities for greater 
revenue streams.  
Compared to the baseline this option would ge nerate greater trans-national trade in cultural 
works within the Single Market thereby reduci ng the negative effect of fragmentation and 
offering European consumers a greater choice of culturally diverse works. 
There would be benefits for policy-makers at  European and national level through policy 
coordination processes which could help to foster  more effective policies at the national level, 
contribute to the development of new business m odels and foster the collection of comparable 
data at a European level which could also ha ve economic benefits at the national and sub-
national level.  
Social impacts 
The programme would create employment bene fits, through strengthening the commercial 
capacity of cultural organisations  and SMEs and their adaptation to the digital shift and their 
capacity to operate internationally, and enco uraging transnational mobility of cultural 
workers, providing transnationa l opportunities for learning and career development. This will 
create professional pathways and jobs. 
The activities should increase acc ess to culture through new mean s, helping the sector on the 
one hand to create new audien ces (including young people), but also to engage innovatively 
with them in order to increase educational bene fits, and reach out to the socially excluded. 
Greater exposure to foreign wo rks would also foster greater pluralism, and increase inter-
cultural understanding through the empathy ge nerated by exposure to culturally diverse 
works. 
The programme would have a positive impact on (the EU’s relations with) 3rd countries, 
through creating opportunities fo r dialogue and co-operation be tween operators in those 
                                                 
43 For example, the interim evaluati on of the current programme indicates  that translation costs account 
for some 23% of revenues. Other estimates by the sect or indicate that the cost burden is even higher. 
 
EN 38   EN countries and in Member States, as well as th e two-way circulation of  artists and works, 
which would foster mutual understanding.  
Simplification 
Under this option, the same management simplifications  as those identified in section 5.1 
would apply. 
5.3. Option 3 "Synergies and new framework programme" 
The economic, social, environmental and fundament al rights impacts of this option would be 
greater than those for the “Rev ised programme” (see above section). In the same way as the 
revised programme, it would send a clear signal rega rding demand side issues. However, the 
programme may be expected to provide even more choice for consumers and to stimulate 
transnational demand for cultural works through easier knowledge transfer  and synergies that 
could be gained in relation to challenges such  as audience-building. In its decision on the 
future MFF the Commission proposes to attribut e a sum of €1.6 billion (prices 2011) to the 
programme for its seven year duration. 
Economic impacts 
As stated earlier, globalisation and the digital sh ift require all sectors to adapt their practices 
and business models to the changing environment and it is expected that this process can be 
better facilitated at a European level within one framework programme which could ensure a 
more fluid flow of information between s ectors and help increase knowledge sharing, for 
example in relation to policy development, and the testing of new and cross-sectoral business 
approaches to funding, distributing and mone tising creation. It could also accommodate 
networking, collaborations a nd strategic partnerships betw een operators, industries and 
policy-makers more easily and cost-effectively than would be the case with two separate 
programmes.  
In economic terms the inclusion of an access to finance instrument could help the CCS to get 
greater access to commercial lending enabling new growth markets to be reached, through 
digital distribution and sales, thereby reachi ng new and larger audiences and creating new 
revenue streams. This would provide greate r consumer choice, and would – over time – 
reduce the cost of business. It would also le ad to greater investment readiness among the 
CCS.  
Bringing together the audiovisual industry with  the other cultural and creative sectors would 
also bring policy synergies, as th eir separation is in some ways ar tificial. This is demonstrated 
by the fact that the denomina tion "cultural and cr eative industries" bo th outside the EU 
context as well as in EU texts tends to encomp ass all the creative sectors. Furthermore, the 
cultural, creative and audiovisual sectors are facing similar problems and have similar goals, 
and there are therefore valid reasons to ad dress these in a comm on framework funding 
programme. Further economies of scale could be gained by a transversal approach to policy 
support where it is often artifici al to separate the audiovisual industry from the other cultural 
and creative sectors analytically.  
Social impacts 
If the improved synergies and cross-fertilis ation under a framework programme help to 
increase audiences in particular through the greater use of new information and 
 
EN 39   EN communication technology, consumers would gain  greater access to non-national culture and 
this would contribute to a greater mutual understanding and intercultural dialogue.  
With regard to employment, numerous studi es and reports, demonstrate the important 
employment role of these sectors and that growth was above average in recent years. The European Competitiveness Report 2010 indicates that  there is an increa sing percentage of 
people employed in creative occupations and in  the EU-15 Member States employment in 
creative occupations grew at around 3% a y ear on average between 2002 and 2008 with the 
highest growth being recorded for artistic en tertainment occupations (5.7%). The relatively 
low cultural participation rates indicated by Eurostat's cultural statistics
44 suggest a 
considerable growth potential in these sectors,  which could have benefits for employment. 
Simplification 
In addition to the simplifications  mentioned under the 'Baseline', which would also apply 
here, this option would offer the possibility of  greater transparency for the users of the 
programme by establishing a singl e entry point for all cultural and creative sectors with 
simple and transparent access to support for transnational and international cooperation 
through merging the current individual inform ation points for Culture and MEDIA. This 
would also help to ensure the highest possible quality of service to the public due to easier 
knowledge transfer. This option would also enab le the respective Management Committees of 
the current programmes  to be brought together.  
In addition, a cross-sectoral strand encompa ssing a new financial instrument for the CCS, 
could be included. By facilita ting access to bank loans, which are a better adapted tool for 
SMEs compared to grants, this would also c onstitute a simplification and have economies of 
scale compared to a large number of  fragmented, national schemes.  
6. COMPARING THE OPTIONS  
The comparison of options presented in table 6 is based on a multi-criteria analysis, which 
includes the following criteria: effectiveness in terms of achieving objecti ves, efficiency, cost-
effectiveness (result per Euro spent), and cohe rence. Under coherence, both internal and 
external coherence have been assessed, i.e. both the coherence betw een the option and the 
objectives to be reached (internal) and the co herence with and relevance to the overall EU 
policy and strategies (external coherence).  
6.1. Effectiveness 
Section 5 describes the main effects and impa cts of the options. Table 6 summarises these 
impacts in relation to the specific objectives. In all cases the comparison is to the baseline, in which the Culture Programme is carried forward with no change. 
The new form of programme sub-options would lead to greater capacity, competitiveness and 
circulation. Option 3 would lead to the greatest benefits by enab ling better synergies with the 
audiovisual sector, a more comprehensive and st ructured collection of data, the sharing of 
information for policy development and the tes ting of new, cross-sectoral business models 
                                                
 
44 Eurostat statistics op. cit. 
 
EN 40   EN and cross-sectoral exchange of experience, which will have a greater Europe-wide systemic 
impact and greater access to finance through a potential financial in strument for the CCS. 
6.2. Efficiency 
With regard to the options foreseeing a future  programme, the main difference in regard to 
efficiency, for which there is data, is the ma nagement cost for the EU. However these costs 
are relatively low. The current management mode through the EACEA – which is recognised 
to be cost-efficient – would be continued. Assu ming that the main cost is labour, then the 
relative costs depend on the labour intensity of administering applications to the programme 
and awards. In general, costs as a proportion of  expenditure are highes t for action lines that 
are oversubscribed (high ratio of  applications to awards), ma ke a large number of small 
grants, or involve more complex selection criter ia and management. This means, for example, 
that at present the multi-annual projects are the mo st efficient, with the least efficient being 
the literary translation grants involving a large number of small contracts, and the festivals 
which are oversubscribed. 
Under all options involving a continuation of th e programme, further simp lifications will be 
made to the delivery mechanisms through the great er use of flat rates, more grant decisions 
and framework partnership agreements, electr onic applications an d reporting, and an 
electronic portal to reduce paperwork for applicants and beneficiaries.  
However, options 2 and 3 woul d introduce greater efficiency compared to the baseline by 
discontinuing some of the least efficient actions  and introducing more larger grants. In both 
cases, as in the baseline, a certain number of  simplifications would be introduced concerning 
the day-to-day management of the programme, so  this aspect is neutral between the three 
options. 
However option 3 would prove to be the most effi cient, as it would also have the advantage of 
further savings due to the shared transversal elements with MEDIA, including policy support. 
It would also cut the admini strative burden through a lower number of work programmes, 
committees and information points.  
Regarding the implementation costs in Member States , the administrative burden for them 
is quite small under all the continuation options as the progr amme is managed centrally by the 
EACEA. They would however continue to shar e the co-funding of the information points. 
Option 3 would be the most efficient for the Member States, as the information point will be merged and fewer committees will take place, what  will lead to some savings in the Member 
States.  
The administrative burden of the programme on the sector is entirely voluntary in nature for 
those organisations that choose to apply. Ther efore the burden in the baseline and other 
options is marginal. 
6.3. Cost-effectiveness 
With regard to cost-effectiveness, the result pe r euro spent, it is not possible to make a 
quantitative estimate. However, it can be assu med that option 3 would score best in this 
regard, followed by option 2. This is because bo th programmes would be clearer and more 
focused in terms of the targeted results, leading to greater systemic and structuring impact, including through a rationalisatio n of instruments (including over-subscribed ones) and more 
 
EN 41   EN larger projects, which would reduce the admi nistrative costs per euro significantly. Common 
information provision and entry points under  a framework programme would make the 
programme more easily comprehensible and ac cessible for the cultural and creative sectors 
and would lead to greater cost-effectiveness. Fu rthermore, the programme  would be explicitly 
seeking to prioritise projects capable of in creasing audiences and outreach, meaning that 
greater numbers of people would benefit from  the projects and each euro spent. The same 
amount of euros would therefore yield greater results than the current programme . Option 3 
would have greater benefits beca use of the already identified benefits and economies of scale 
which could be gained through better syne rgies with the MEDIA programme (e.g. policy 
support, audience-building strategies) as well as a CCS financial instrument. At relatively low 
cost option 3 would open up access to private funding for cultural and creative SMEs.  
The new Multiannual Financial Framework allocates a budget of €1.6 billion to the Creative 
Europe programme. The allocation of budget be tween the different strandss is based on the 
Commission's commitment not to  reduce the current budget a llocations for the MEDIA and 
Culture Programmes and also on the expectations of the sector's capacity to contribute to the 
objectives set out in the Creative Europe pr ogramme, also taking into account the minimum 
volume required for the new Cultu ral and Creative Sector Fina ncial Instrument. The proposed 
total budget required to implement actions with in the Culture strand in the next MFF will 
amount to approximately €487 million in cu rrent prices over the period 2014-2020. 
Budget breakdown in current prices over the period 2014-202045 
Strands € million 
MEDIA 905.5
Culture 487.2
Financial instrument 211
Cross-sectoral  75
Total 1,678
Cost of outputs in the Cultu re and the cross-sectoral strands 
OUTPUTS of the CULTURE strand  
Outputs Average cost 
of the output Total number 
of outputs  Total  
cost % in Culture 
strand 
SPECIFIC OBJECTIVE No 1:  Support the capacity of the European cultural and creative sectors to operate 
transnationally 
Cooperation measures, such as activities stimulating 
peer learning 0.360 356 128.1 26.2% 
European networks, such as those providing capacity 0.100 132 13.2 2.7% 
                                                 
45 These figures in current prices are based on the financial statemen t attached to the Creative Europe 
proposed decision. They differ from the Multi- annual Framework quoted in 2011 prices  
 
EN 42   EN building 
European platforms, su ch as those providing a 
structure for internationa l professional development 0.340 39 13.2 2.7% 
Special actions, such as Prizes, ECOC, European 
Heritage label, 0.406 48 19.4 4% 
Sub-total for specific objective N°1  575 173.9  
SPECIFIC OBJECTIVE No 2 : Promote the transnational circulation of cultural and creative works and operators and 
reach new audiences in Europe and beyond 
Cooperation measures, su ch as those supporting 
international touring 0.360 553 199.2 41% 
European networks, such  as those promoting 
audience building 0.100 205 20.5 4.2% 
European platforms, such as those fostering 
international careers 0.340 60 20.5 4.2% 
Literary translations and prom otional support 0.05 859 42.9 8.8% 
Special actions, such as Prizes, ECOC, European 
Heritage label,  0.406 74 30.2 
 6.2% 
Sub-total for specific objective N°2  1751 313.3  
Total cost of the CULTURE Strand  2326 487.2  
 
OUTPUTS of the innovative cross-sectoral Strand  
Outputs Average cost 
of the output Total number of 
outputs Total  
cost % in Cross-
sectoral 
strand 
SPECIFIC OBJECTIVE No 1:  Strengthen the financial capacity of  the cultural and creative sectors  
Establishment of a Cultural and Creative Sectors 
Financial Instrument [ outputs: number of loans 
provided by banks to operators over 7 years] 848 
(EIF fees plus 
expected loss) 14420 211.20 74% 
Sub-total for specific objective N°1   211.20  
SPECIFIC OBJECTIVE No 2 : Support transnational policy cooperation  
Network of Creative Europe desks 0.226 189 42.7 15% 
Studies, evaluations and pol icy analysis [NB: This 
also includes the European audiovisual observatory] 0.317 36 11,4 4% 
Transnational exchanges a nd networking 1.585 4 6.4 2% 
Testing new cross-sectoral approaches  1.132 4 4.5 1.5% 
 
EN 43   EN Conferences, seminars and po licy dialogue 0.232 42 9.8 3.5% 
Sub-total for specific objective N°2  275 74.8  
Total cost of the innovative cross-sectoral Strand    286  
The distribution of funds for the above-mentioned action line s is based on the evaluation 
results, which confirm the effectiveness while indicating a need to re align the programme's 
objectives. The table below makes an assessmen t of the major assumptions on the basis of 
which the cost of the programme46 has been calculated. The assumptions are based on 
experience with the current programme  and are related to expect ations about the results 
which could be achieved under the framework progr amme due to the clarity of its objectives.  
It justifies a minimum scale for th e main action lines in order to fulfill the needs of the sector 
and optimize their results and impacts taking into account the need of optimal cost-effectiveness and cost-efficiency of the proposed actions.  
Specific objective N° 1 Support the capacity  of the European cultural and creative 
sectors to operate transnationally  
Assumption Assessment 
Improvement of skills and competencies will 
contribute to the competitiveness of the European 
cultural and creative sectors through a greater 
match between the specialized skills required in order to work across national borders. This will help address market failure, currently limiting transnational activities. The Programme will fund 
approximately 575 projects over the full period. 
 The new programme is ba sed on an assessment 
of the sectors' needs, taking into account the 
current level of support and the sectors' current 
needs concerning the capacity needed in relation to emerging interdisciplinary trends, new technologies, new business models, a shift from supply to demand (audience and 
consumer preferences) and rights' management. 
Support for cooperation measures such as activities stimulating peer learning, European networks providing services to strengthen the sectors' capacity, support for European 
platforms, such as those providing a structure 
for international professional development. 
 
The weight given to this component of the programme reflects the reality of the sector and the cost of the projects. 
 
The supported projects will involve some 3000 
organisations permitting a sizable impact on the 
sector.  
Some 300.000 artists/cultural professionals will develop their careers.
 
 
 
                                                 
46 Actions under specific objective n°3 are analysed in  a separate Impact Assessment on the new financial 
instrument for CCS. 
 
EN 44   EN  
 
EN 45   EN Specific objective N° 2 Promote the transnat ional circulation of cultural and creative 
works and operators and reach new audiences in Europe and beyond 
Assumption Assessment 
Improving the transnational circulation of cultural 
and creative works and operators will help to reach new audiences in Europe and beyond and it will stimulate the sectors potential to contribute to 
growth and jobs. It will contribute to people's 
greater access to Europe's cultural and linguistic diversity. The programme will fund approximately 1751 projects over the full period.
 The interim evaluation of the Culture Programme 2007-2013 indicates that cost is a barrier to transnational circulation and mobility. This is also emphasized in other 
studies, some identifying the lack of 
programmes and infrastructure to receive artists from other countries. The interim evaluation indicates that there is a need to optimise the support for literary translation for example by 
including promotional support and targeting 
translation into pivot languages. A more targeted approach is required to support transnational circulation for example through support for touring a nd exhibitions and 
audience building initiatives. 
 
An estimated 9000 organisations will benefit from the projects. All organisations will be required to have an audience-building strategy which will have a massive systemic effect. 
 
The literary translation support will help over 
5.500 literary works to be translated, bringing a 
more diverse cultural offering to the market.  
An estimated 100 million citizens will be reached directly and indirectly over the full period of the programme. Special actions such 
as the European Capitals of Culture, the 
European Heritage Label and European Cultural Prizes will also reach many millions of citizens.
 
 
 
 
 
EN 46   EN Specific objective N° 3 Foster policy develo pment, innovation, audience building and 
new business models through tr ansnational policy cooperation 
Assumption  Assessment  
There is a lack of comparable data regarding 
Europe's cultural and creative sectors and policies and opportunities both within and outside of the 
single market. 
 
There is a need for experimentation with new 
business models and revenue streams and exchange of experience through international networking.
 
The programme will fund approximately 275 
projects over the full period.  
Access to funding is limited due to insufficient 
knowledge of financial institutions about the CCS and sparse investment readiness of the CCS. (See IA CCS FI) 
 Better data will help to underpin more effective 
evidence-based policy making.  
Piloting actions to permit experimentation with 
new revenue streams and peer learning will 
foster accelerated knowledge transfer which will have spill-over benefits for growth and jobs. 
 
 
The Cultural and Creative Sector Financial 
Instrument will gear up the sectors' access to 
private finance and help the sector to develop projects that are ready for investment (greater investment readiness).
 
6.4. Coherence 
While options 1, 2 and 3 are all consistent with  the Treaty on the Functioning of the European 
Union (TFEU), options 2 and 3 are more consis tent with Europe 2020, its flagships and the 
European Agenda for Culture. Option 3 is the strongest in this regard, by enabling synergies across the whole range of CCS and with  an innovative financial instrument. 
6.5. Scoring of options 
The options were scored and then ranked. The option with the most positive overall 
assessment is option 3, namely a Culture stra nd as part of a framework Creative Europe 
Programme. This option scored higher than all other options and was ranked as the preferred 
option. 
 
EN 47   EN  Option 1  
No change (the 
Baseline) Option 2 
Revised 
programme Option 3  
Synergies and new 
framework programme 
Providing cultural operators with skills and knowhow  to facilitate adjustment to the digital 
shift (audience-building strategies, new bus iness models) through mutual learning 0 ++ ++ 
Support artists/cultural professionals to  internationalise their careers 0 ++ ++ 
Strengthened European and international networ ks of cultural professionals to facilitate 
access to new opportunities and markets 0 ++ ++ 
Supporting international touring,  events, exhibitions 0 ++ ++ 
Supporting literary translation, in cluding promotion packages 0 ++ ++ 
Support for audience-building as a means of rais ing curiosity of the public and particularly 
young people and building a long-term audience for European cultural works 0 + ++ 
Stimulating access to funding 0 0 ++ 
Improving the capacity of financ ial institutions to assess cultural and creative projects 0 0 ++ 
Cost-effectiveness (result per € spent) 0 + ++ 
Implementation costs – EU 0 0 + 
Implementation costs – MS 0 0 + 
coherence  0 + ++ 
Overall assessment 0 + ++ 
Legend: 0 = no change, + = better than the baseline, ++= much bett er than the baseline, - = worse than the baseline, --= much w orse than the baseline.
 
EN 48   EN 6.6. Preferred option 
A single framework programme wo uld have several advantages  over all the other options: 
• The first is that it can bring greater policy synergies  as the different cultural sectors 
are generally considered collectively in th e context of broader policy discussions on 
the cultural and creative sectors, includi ng their contribution to the Europe 2020 
strategy.  
• The second is that a single programme would make it easier to achieve knowledge 
transfer and cross-fertilisation  between sectors.  
• The third advantage is that it can contribute to simplifying the management  of these 
programmes. It would, for example, permit the establishment of merged 
information/access points, thereby improving visibility, facilita ting the access of 
citizens to information on EU funding, and helping to ensure the best possible 
service to operators.  
• The fourth is that these simplifications  would also enable some reduction in the 
administrative burden  for both the Commission and Member States. 
Simplifications will be made to the deliv ery mechanisms through greater use of flat 
rates, grant decisions and framework partne rship agreements, electronic applications 
and reporting, and an electr onic portal to re duce paperwork for applicants and 
beneficiaries. Similarly, the tran sversal strand would enable some savings through 
economies of scale  in cross-cutting areas.  
• The fifth is that within this  single programme a transversal Cultural and Creative 
Sector Financial Instrument  could be included in orde r to increase access to 
(private) funding. 
This preferred option would also respond to the growing recognition at EU level of the 
importance of the cultural and creative sector s and offer the best basis for a common EU 
strategy to focus attentio n on the challenges currently facing th ese sectors. It would target EU 
support on those measures that provide most EU added value by helping the sectors to optimise their potential for economic grow th, job creation and social inclusion.  
The "Creative Europe" framework programme would be clearly linked to the Europe 2020 
strategy and seek to optimise the contribution of the cultural and creative sectors to its goals. 
The proposal is in line with the Communi cation of the Commission on the Multiannual 
Financial Framework adopted on 29 June 2011 ("A Budget for Europe 2020"), which 
indicated that synergies would be brought in to the culture related programmes of the 
European Union and that EU funding should be  concentrated on areas where it delivers high 
EU added value. It proposes to attribute a sum of €1.6 bil lion (constant prices) to the 
programme for the seven year duration. 
7. M
ONITORING AND EVALUATION  
Concerning monitoring , this will be stepped up under the new programme. Collection of 
information on progress in relation to the quantitative outputs  of the programme via its 
 
EN 49   EN dedicated IT system would continue. These output  indicators will be reported in the regular 
annual programme activity reports as at present.  
Further efforts will, however, be made to capture the effects of the programme. New 
indicators will be devised (see following secti on) which will be incorporated in electronic 
application forms and electronic final reports, permitting the automatic extraction of data which is not currently possible. This  could be supplemented by regular qualitative 
assessment  aimed at measuring impact on individu al beneficiaries, organisations and 
systems. Such assessments could take place through online surveys or other appropriate 
methods. 
New policy support actions should contribute to  improve market transparency and to the 
timely and regular evaluation of th e indicators, especially contex t/market indicators for which 
there is currently a lack of data. The new programme is expected  to include closer 
collaboration with the European Audiovisual Observatory, whose scope could be extended.  
With regard to evaluation , in the past it has been common practice for the Commission to 
conduct two evaluations of a programme: an in terim and final evaluation. For the round of 
multiannual programmes to be launched in 2014, th e Commission’s intention is to use a single 
interim evaluation, which would also serve as a final evaluation for th e previous programme. 
The successor of the Culture programme would fo llow the new procedure. In order to enable 
the results of the evaluation to  be taken into account for decisions on renewing, modifying or 
discontinuing the successor programme in the future, it should be ready no later than end 
2017.  
All external evaluations should be c onducted by independent, impartial bodies. The 
methodological approach taken to evaluation would need to be de termined at the time and in 
light of prevailing European Commission guidance.
47 
7.1. Indicators 
The procedures for monitoring and evaluating the Programme will make use of objectives and 
indicators which are specific, measurable, achie vable, relevant and timed (S.M.A.R.T.). For 
that reason, a number of indicators for the sp ecific objectives will be developed, which are 
intended to capture the essence of the obj ective respecting S.M.A.R.T. criteria and 
accompanied by performance result indicators, in some cases quantitative. These indicators may also merit incorporation into the criteria for selecting projects. The indicative indicators 
are described in the table in annex 2. 
                                                
 
47 For a fuller description of attribution analysis and contribution analysis, see: 
http://ec.europa.eu/europeaid/evaluation/methodology/methods/mth_att_en.htm . 
 
EN 50   EN 8. ANNEXES  
8.1. Annex 1: Studies 
In preparing this impact assessment the Commission has drawn on the following studies 
carried out for the Commission in recent years. These studies can be found at: 
http://ec.europa.e u/culture/key-documents/doc537_en.htm 
Title of the Study Publication  
Study on the entrepreneurial dimension of cu ltural and creative industries January 2011 
Study on the contribution of culture to regional development September 2010 
Study on the mapping and evaluating of existing platforms (websites) within the cultural 
sector aimed at stimulating debate and cross border exchange of matters concerning 
European culture March 2010 
Study on the impact of culture on creativity June 2009 
A feasibility study on European information systems supporting the mobility of artists and 
cultural workers March 2009 
Mobility Matters October 2008 
Quantitative Eurobarometer study on the Europeans, culture and cultural values September 2007 
Eurostat pocketbook on cultural statistics 2007 and 2011 
Study on the cultural economy 2006 
Study concerning an inventory of the best practices linking culture with education 2003 
Study on the exploitation and development of the job potential in the cultural sector in the 
age of digitalisation June 2001 
 
EN 51   EN 8.2. Annex 2: Indicative indictors  
Related objective Type of indica tor Indicator Source of data 
collection 
General objective:  
To foster the safeguarding and 
promotion of European cultural 
and linguistic diversity, and 
strengthen the competitiveness of the cultural and creative sectors, 
with a view to promoting smart, 
sustainable and inclusive growth  Impact 
  The sectors' share of 
employment and share of GDP  
 
% of people reporting 
that they access European 
cultural works 
 Studies and European 
Audiovisual Observatory data (the latter will take 
some time to put in place) 
 
Regular Eurobarometer 
surveys  
Specific objective 1:  
To support the capacity of the 
European cultural and creative 
sectors to operat e transnationally Result Internationalisation of 
cultural operators and the 
number of transnational 
partnerships created   
Number of learning 
experiences created for artists/cultural operators 
which have increased 
their skills and 
employability  Evaluation; self-
assessment monitoring 
survey  
Specific objective 2:  
To promote the transnational 
circulation of cultural and 
creative works and operators and 
reach new audiences both in Europe and beyond Result  Number of people 
directly or indirectly reached through projects  
 
 
 Evaluation; self-
assessment monitoring survey  
Specific objective 3:  
To strengthen transnational policy 
cooperation in order to foster policy development, innovation, 
audience building and new 
business models    Number of MS making 
use of the results of the 
OMC in their national policy development and 
number of new policy 
initiatives  OMC reports  
 
8.3. Annex 3: Results of the public consultation  
Summary of the Public Cons ultation Meeting (16 Februa ry 2011) regarding the new 
programme for culture: http://ec.europa.eu/culture/our-program mes-and-actions/c onsultation-on-
the-future-culture-programme_en.htm  
Summary of the results of the public consul tation regarding the programme for culture:  
http://ec.europa.eu/culture/our-p rogrammes-and-actions/consult ation-on-the-future-culture-
programme_en.htm  
 
EN 52   EN 8.4. Annex 4: Interim Evaluation of  the Culture Programme 2007-2013  
Interim Evaluation of the Culture Programm e 2007-2013, Final Report, Ecorys UK on behalf 
of the European Commission (2010): http://ec.europa.eu/dgs/edu cation_culture/evalreports/c ulture/2010/progreport_en.pdf
 
8.5. Annex 5: Annex to the Ecorys Final report – Consultancy services for the 
impact assessment of the fu ture programme on Culture 
 
EN 53   EN PART II: MEDIA STRAND  
Leading Service : DG Education and Culture (EAC) 
Other involved services : DGs BUDG, COMM, COMP, DEVCO, ECFIN, EEAS, ELARG, 
ENTR, INFSO, LS, MARKT, REGIO, RTD, SG and TRADE 
WP reference : 2011/EAC/014 of the CLWP 
Disclaimer : This report commits only the Commission's services involved in its preparation 
and does not prejudge the final form of any decision to be taken by the Commission. 
 
EN 54   EN TABLE OF CONTENTS 
1. Procedural issues and consulta tion of interested parties............................................ 56 
1.1. Purpose of the impact  assessment report ................................................................... 56 
1.2. Organisation and timing............................................................................................. 56 1.3. Consultation and expertise ......................................................................................... 57 1.3.1. Consultation ............................................................................................................ ... 57 
1.3.2. Evaluations and external expertise............................................................................. 58 2. Context and Problem definition ................................................................................. 59 2.1. The policy context...................................................................................................... 59  
2.2. Historical development and resu lts of the current programme .................................. 60 
2.2.1. Current EU Programme: MEDIA 2007 ..................................................................... 61 2.2.2. Current EU programme: MEDIA Mundus ................................................................ 65 2.3. Market context ........................................................................................................... 6 6 
2.4. Problem definition...................................................................................................... 67  
2.4.1. Problems to be addressed at EU level........................................................................ 67 2.4.2. Groups affected by the problems ............................................................................... 73 2.5. Baseline.................................................................................................................. .... 74 
2.5.1. Likely development of the problem all things being equal........................................ 74 2.6. EU – Right to act........................................................................................................ 7 6 
2.7. Subsidiarity and EU added value/ nece ssity test of the new EU initiative ................ 76 
3. Objectives.................................................................................................................. . 78 
4. Policy options............................................................................................................. 8 0 
4.1. Selecting the appropriate instrument.......................................................................... 80 4.2. Criteria applied for pre-selection of options to undergo further analysis .................. 81 
4.3. Discarded options....................................................................................................... 82  
4.4. Option 1: No change (the baseline)............................................................................ 83 4.5. Option 2: No action (the  “no programme” option) .................................................... 83 
4.6. Option 3: Integrated programme................................................................................ 83 4.7. Option 4 - Integrated MEDIA strand  within a framework programme ..................... 86 
5. Analysis of impacts.................................................................................................... 86 
 
EN 55   EN 5.1. Framework for analysing impacts.............................................................................. 87 
5.2. Analysis of impacts.................................................................................................... 88 5.2.1. Assumptions, risks and uncertainties ......................................................................... 88 5.2.1. Option 1 - The baseline.............................................................................................. 88 5.2.2. Option 2 - No action................................................................................................... 8 9 
5.2.3. Option 3 – Integrated programme.............................................................................. 89 5.2.4. Option 4 – Integrated MEDIA strand  within a framework programme..................... 91 
6. Comparing the options ............................................................................................... 91 6.1. Effectiveness in terms of achieving objectives .......................................................... 92 6.1.1. Comparing the options with regard to  the objectives of the programme................... 92 
6.2. Efficiency and cost-effectiveness............................................................................... 93 6.2.1. Efficiency of the EACEA management ..................................................................... 93 6.2.2. Operational simplifications to improve efficiency..................................................... 94 6.2.3. Strategic simplifications to improve efficiency ......................................................... 95 6.2.4. Cost-effectiveness analysis responding to  ex ante evaluation requirements ............. 95 
6.2.5. 97 6.2.6. Could the same results be achieved at lower costs?................................................... 97 
6.3. Coherence................................................................................................................. 101 
6.4. Feasibility............................................................................................................... .. 101 
6.5. Preferred option........................................................................................................ 10 1 
7. Monitoring and evaluation ....................................................................................... 102 8. Annex 1: Glossary.................................................................................................... 104 9. Annex 2: Evaluations and Impact As sessments of MEDIA and MEDIA Mundus . 107 
10. Annex 3: Causal Model............................................................................................ 108 11. Annex 4: Indicative indicators ................................................................................. 112 
 
EN 56   EN 1. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
1.1. Purpose of the impact assessment report 
DG EAC will propose a single “Creative Europe” framework programme bringing together 
the current Culture, MEDIA and MEDIA Mundus  programmes. The proposal for a Creative 
Europe framework programme will include separa te strands for Culture, MEDIA, transversal 
elements, as well as a financial instrument for the cultural and creative sectors (CCS).48 The 
current multi-annual financial framework attributed to the programme an amount of € 1,6 
billion for the period 2013-2020. This document contributes to the overall exercise by 
presenting exclusively the impact assessment of the future strand aimed at the audiovisual sector. The proposal for a Creative Europe framework programme w ill include separate 
strands for Culture, MEDIA, a transversal strand and a financial instrument for the cultural and creative sectors (CCS). 
1.2. Organisation and timing 
The renewal of the MEDIA Programme's legal basis after the expiration of MEDIA 2007 and 
MEDIA Mundus on 31 December 2013 is included  in the Commission's work programme 
under the reference 2011/EAC/014. The adoption of Commission's proposal for a Regulation 
of the European Parliament and of th e Council is foreseen at the end of 2011. 
The detailed work on the impact assessment (I A) started in September 2010. An IA Inter-
Service Steering Group (IA ISSG) was set up to monitor the work on the impact assessment 
and comment on the draft IA report. The firs t meeting of this ISSG was convened on 30 
September 2010. The following DGs participat ed in the group: INFSO, COMP, COMM, 
MARKT, ENTR, LS and SG. DGs DEVCO, TRADE, EEAS, ELARG, BUDG and ECFIN 
were also invited at a later stage, following the decision to have a joint impact assessment for MEDIA and MEDIA Mundus and a separate one on a financial instrument for the cultural and 
creative sectors (CCS). Two further meetings  were held on 16 November 2010 and 10 May 
2011. The final draft of this report was discussed on 29 August 2011. 
This IA is based on the assumption that th e future MEDIA and MEDIA Mundus programmes 
will be merged. These programmes are currently c overed by two separate legal bases. At the 
time of the adoption of MEDIA Mundus in  2009, the option of a merge of the two 
programmes was rejected, due to WTO co mpatibility questionsSince under the new 
                                                
 
48 Concerning the definition of cultural and creative industries (CCI), "cultural industries" are those 
industries producing and distributing goods or services which at the time they are developed are 
considered to have a specific attribute, use or purpose which embodies or conveys cultural expressions, 
irrespective of the commercial value they may have . Besides the traditional arts sectors (performing 
arts, visual arts, cultural heritage – including the public sector), they include film, DVD and video, 
television and radio, video games, new media, music, books and press. This concept is defined in 
relation to cultural expressions in the context of the 2005 UNESCO Convention on the protection and promotion of the diversity of cultural expressions. "Creative industries" are those industries which use 
culture as an input and have a cultural dimension, although their outputs are mainly functional. They 
include architecture and design, which integrate crea tive elements into wider processes, as well as 
subsectors such as graphic design, fashion design or advertising. At a more peripheral level, many other 
industries rely on content production for their own development and are therefore to some extent interdependent with CCIs. They include among others tourism and the new technologies sector. These 
industries are not explicitly covered by the concept of CCIs used here. The term CCI is used 
interchangeably in this report with “cultural and creative sectors”. 
 
EN 57   EN programme there will be equal access for prof essionals worldwide, without being based on 
the concept of membership, this prob lem is not an obstacle anymore.  
The MEDIA 2007 Programme is listed in th e GATS (General Agreement on Trade in 
Services), but is exempted from the general MFN (Most favoured nation49) treatment. The 
WTO rules mean that the guidelines for calls for proposals under the new Programme will have to respect certain conditi ons (in particular MFN) where international activities are 
concerned. Furthermore, the concerns expr essed about merging MEDIA and MEDIA Mundus 
when the latter was adopted ha ve in part already been dispelled by the 5 calls for proposals 
since 2008, meaning that the approach based on reciprocity for inte rnational cooperation 
activities is now understood by the stakeholders. 
As can be seen from the previous IAs of MEDIA 2007 and MEDIA Mundus, confirmed by 
the external study carried out in preparation of  the present IA and by the public consultations, 
both programmes address the same problems and have similar structures and objectives, the 
main difference lying in their geographica l scope. Merging the two programmes would 
therefore significantly improve coherence and efficiency, a nd reduce the administrative 
burden on both the Commission and the bene ficiaries (see details in section 6.2.2). 
Independently from the decisions taken unde r the new Multiannual Financial Framework, a 
first step towards the operational merger of the two programmes was already planned to be 
undertaken in 2012, when the MEDIA Mundus mana gement will be moved to the Executive 
Agency EACEA with related activities being in tegrated in the EACEA/P8 MEDIA Unit. The 
programmes will be fully merged in 2014, and until  then they will be run on the basis of 
different calls for proposals.  
The IA was submitted to the Impact Asse ssment Board on 7 September 2011, the IAB 
Opinion was issued on 7 October 2011. Reco mmendations provided by the Board in the 
Opinion have been taken into account in this IA. The most important changes relate to: the 
integration of the evaluation results in the problem definition; the clarification of the 
intervention logic; the strengthening of the ex planations related to the discarding of certain 
options; the breakdown of the budget of Crea tive Europe into the 3 strands, and the 
breakdown of the MEDIA budget into its different action lines; a cost-effectiveness analysis 
in order to fulfil the requirements of an ex-ant e impact assessment (Article 21(1) of the IR); a 
better reflection of the stakeh olders views; the rationale behind the merge of MEDIA and 
MEDIA Mundus. 
1.3. Consultation and expertise 
1.3.1.  Consultation 
The minimum consultation standards
50 have been complied with: the Commission undertook 
an online consultation on the future of th e MEDIA 2007 Programme from September through 
November 2010. 2,586 respondents responded to the Commission’s public online 
                                                 
49 The "Most favoured nation" is a status awarded by one nation to another in international trade: the 
receiving nation will be granted all trade advantages  (such as low tariffs) th at any other nation also 
receives and a nation with MFN status will not be tr eated worse than any othe r nation with MFN status. 
50 “Towards a reinforced culture of consultation and dialogue – General principles and minimum 
standards for consultation of interested parties by the Commission”, COM(2002) 704 final. 
 
EN 58   EN consultation51. They represent a wide range of self se lected stakeholders within the European 
audiovisual sector, fr om many Member States and othe r European countries. 58% of 
respondents were from the so -called “Group A” countries52, and 39% of respondents were 
recipients of a grant under the programme. The online consultation revealed that the main priorities for the future programme as perc eived by respondents are mainly: new technologies, 
gaps in training, fragmentation, support rules, media literacy, and quotas of European works. 
A separate online consultation on the future  of the MEDIA Mundus Programme took place 
from March to end of May 2011. The Commi ssion received 367 replies from 51 countries
53. 
86% of the replies were submitted by professionals from Member States. Stakeholders participating in the MEDIA Mundus consultation prioritised actions to facilitate co-productions, i.e. the support of co–production markets and internati onal co-production funds. 
Continuous training also r eceived particularly high support from stakeholders. 
The Commission has also conducted a series of stakeholder focus groups to further explore 
attitudes toward the programme and has organi sed conferences and m eetings with various 
stakeholders in the context of the Rotterdam, Berlin and Cannes Film festivals 2011.  
A public hearing on MEDIA and MEDIA Mundus took place on 18 March 2011 in 
Brussels
54. The public hearing gathered together approximately 250 stakeholders such as 
filmmakers, producers, distributors,  film directors, exhibitors, f ilm funds etc., to  present their 
views and debate on the future of the pr ogrammes. A further 900 people followed via 
streamed transmission. The main outcomes of this  hearing were the follo wing: In it's 20 years 
of existence MEDIA helped to significantly chan ge the European audiovisual landscape; most 
European films would not be seen outside thei r home territories wit hout MEDIA support; the 
European animation industries now play a ve ry important role on the world markets and 
MEDIA has a major impact on the development of European co productions. However, the 
sector is now facing important challeng es and opportunities from digitisation and 
globalisation and support will be needed to en able the sector to develop new business models 
and to benefit from the changing market cond itions. It will be very important to support 
projects acting across the valu e chain and to focus more on audience building, branding and 
film literacy. 
1.3.2.  Evaluations and external expertise 
Annex 2 provides a specific list of vari ous evaluations of MEDIA and predecessor 
programmes carried out in r ecent years. On top of thos e, the Commission mandated a 
consortium led by WIK-Consult55 to carry out an "Impact assessment integrating ex ante 
evaluation requirements in view of the preparation of a proposal for the next MEDIA 
                                                 
51 A summary of the online consultation's results regarding the MEDIA Programme after 2013 is available 
at: http://ec.europa.eu/culture/media/programme/docs/overview/online_consultation_summary_en.pdf .  
52 Group A countries are those with the strongest audiovisual production capacity: France, Germany, Italy, 
Spain and the UK. 
53 A summary of the online consultation's results rega rding the MEDIA Mundus Programme after 2013 is 
available at:  
 http://ec.europa.eu/culture/media/mundus/docs/public-consultation-future-media-mundus_en.pdf .  
54 The conclusions of this pub lic hearing are available at:
 http://ec.europa.eu/culture/media/mundus/docs/Programme_public_hearing_The_future_of_th
e_MEDIAs_en.pdf .  
55 The study was conducted by a team led by WIK-Consult and comprising Plum, IDATE, TNO, and 
senior expert Prof. Dr James Kahan, under Framework Contract for the Provision of Impact Assessment 
and Evaluation-Related Services to DG INFSO (Contract number: 30-CE-0208155/00-08).  
 
EN 59   EN Programme after 2013." The contractor collected market data and compiled relevant 
information deriving from the various sources me ntioned above. Results of the contract were 
used mainly for describing problem definition, fine-tuning the objectives, analysing and comparing the options.  
The results of all studies, evaluations, focu s groups, public hearing an d public consultations 
have been reflected in this Impact Assessment report. These results have been taken into account in the definition and assessment of the options examined in the present document (see 
sections 4.1 and 6.2). 
2. C
ONTEXT AND PROBLEM DEFINITION  
2.1. The policy context 
In 2007 the Commission adopted its first real strategy for culture , "The European Agenda for 
Culture"56. The Agenda has three stra tegic objectives: to promote cultural diversity and 
intercultural dialogue, to foster culture as a ca talyst for jobs and grow th, and promotion of the 
vital role of culture in international relations.  
Furthermore, the European Union was a major player in the conception and adoption of the 
UNESCO Convention on the Protect ion and the Promotion of the Diversity of Cultural 
Expressions57, which entered into force on 18 March 2007. Its aim is to "strengthen 
international cooperation and solidarity so as to favour the cultural expressions of all 
countries". This convention e xplicitly mentions films and em phasises the specific and dual 
(cultural and economic) nature of  cultural goods and services. 
The importance of the cultural and creative sector s (which include audiovi sual industries) to 
create growth and jobs ha s been widely recognised58. MEDIA can help addressing some of 
the key challenges and thus contri bute to several of the Europe 2020 flagship initiatives, in 
particular the Agenda for New Skills for Jobs59 (by providing high level expertise to 
professionals), the Industrial policy for the globalisation era60 (by supporting new business 
models aiming at improving the business envi ronment – notably for the SMEs of the 
audiovisual sector), and the Innovation Union  (by supporting pilot projects and stimulating 
innovation). 
Furthermore, MEDIA is particularly important in the context of the Digital Agenda for 
Europe61. Indeed, some of is objectives are di rectly related to MEDIA objectives:  
The circulation and competitiven ess of European works (for in stance through act ions aimed at 
creating a vibrant digital market includi ng actions addressing c opyright and licensing)62. 
                                                 
56 Communication from the Commission to the European Parliament, the Council, the European 
Economic and Social Committee and the Committee of th e Regions on a European agenda for culture in 
a globalizing world (COM(2007) 242 final), 10.05.2007. 
57 http://portal.unesco.org/en/ev.php-
URL_ID=31038&URL_DO=DO_TOPIC&URL_SECTION=201.html . 
58 The economics of the sector is discussed in “Multi-territory licensing of Audiovisual works in the 
European Union”, Kea and Mines, October 2010. 
59 An Agenda for new skills and jobs: A European contribution towards full employment, COM(2010) 
682, 23 November 2010. 
60 An integrated industrial policy for the globalisation era, COM(2010) 614. 
61 A Digital Agenda for Europe, COM(2010)245, 19 May 2010. 
 
EN 60   EN Pluralism and linguistic and cultural diversit y (for instance through Actions aimed at 
delivering ICT-enabled benefits for EU societ y including financing th e EU digital library, 
digitising European cinema and implemen tation of relevant pr ovisions in the AVMS 
Directive)63. 
The Commission also issu ed a Green Paper on “ Unlocking the potentia l of cultural and 
creative industries ”64 seeking to develop a strategic appr oach to creative a nd cultural sectors 
so that Europe’s strong and at tractive cultural assets become  the basis of a creative economy 
and a cohesive society through the de velopment of the right enablers. 
2.2. Historical development and results of the current programme 
The first MEDIA programme was created in 19 91 on the basis of EU industrial policy. This 
action was part of the Commissi on overall approach to the a udiovisual and cinema sector 
which included a regulatory arm (" Television Without Frontiers Directive " – intended to 
realise a common market in broadcasting65, later replaced by the Audiovisual and Media 
Services (AVMS) Directive66) and a support programme for the European audiovisual 
industry (MEDIA I). Indeed, the EU audiovisual  policy has historically been implemented 
through 2 main types of instruments 
(1) Legislative instruments:  
• The Audiovisual and Media Services ( AVMS) Directive, aimed at building a 
single market for audiovisual works. It  includes amongst other measures quotas 
for broadcasters67. 
• Legal framework for Intellectual Property Rights 
• Competition and State aid rules 
(2) Expenditure programmes (MEDIA and MEDIA Mundus) 
Over the subsequent period, the form of suppor t has evolved and its scale has increased as 
illustrated in Table 1. 
                                                                                                                                                         
62 See Section 2.1 of the Digital Agenda. 
63 See Section 2.7 of the Digital Agenda. 
64 Green Paper, Unlocking the potential of cult ural and creative industries , COM (2010) 183. 
65 Directive 89/552/EEC - "Television Without Frontiers" . The Directive aimed to ensure the free 
movement of broadcasting services within the internal  market and at the same time to preserve certain 
public interest objectives, such as cultural divers ity, the right of reply, consumer protection and the 
protection of minors. It was also intended to promote the distribution and production of European 
audiovisual programmes, for example by ensuring that they are given a majority position in television channels' programme schedules. 
66 Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010 on the 
coordination of certain provisions laid down by law, regulation or administrative action in Member 
States concerning the provision of audiovisual media services (Audiovisual Media Services Directive). 
It amends and renames the Television without Frontiers Directive to adapt it to the new technological environment. 
67 For example, broadcasters must reserve a certain proportion of their transmission time, for European 
works, and for independent productions. 
 
EN 61   EN Table 1: History of European Union programmes in the audiovisual sector 
Period Programme(s) Budget Key areas of support 
1991-1995 MEDIA I €200m Transnational collaboration 
1996-2000 MEDIA II €310m Training, development and distribution 
MEDIA Plus €454m Development, distribution and promotion 2001-2006 
MEDIA Training €59m Networking between training partners 
2007-2013 MEDIA 2007 €755m Distribution, development, promotion and 
training 
2008-2010 MEDIA 
International € 8m Cooperation with third countries 
2011-2013 MEDIA Mundus € 15m Cooperation with third countries 
2.2.1.  Current EU Programme: MEDIA 2007 
The MEDIA 2007 programme68 focuses support on either end of  the value chain rather than 
on production, such that it is largely comple mentary to Member State support and to 
EURIMAGES. It has a budget of € 755 million over the period 2007 to 2013. The global objectives of the programme are: 
• Preserving and enhancing European cultura l diversity and its cinematographic and 
audiovisual heritage, guaranteeing its acc essibility to European citizens, and 
promoting intercultural dialogue. 
• Increasing the circulation of European a udiovisual works insi de and outside the 
European Union. 
• Strengthening the competitiveness of th e European audiovisual sector in the 
framework of an open and competitive market. 
The geographic scope of the programme is a ll EU Member States and Croatia, Iceland, 
Liechtenstein, Norway and Switzerland. 
The eligibility criteria of th e action lines focus support on Eu ropean independent producers 
and distributors and exhibitors: there is a bias  towards SMEs. The programme generally funds 
up to 50% of eligible costs for relevant act ivities rather than o ffering full funding. The 
programme provided funding via 5,515 contracts in the peri od 2007-2009 with an average 
funding of € 53.925 per contract. 
                                                
 
68 Established under Decision 1718/2006/EC which se ts out details of the programme objectives, actions, 
budget and implementation. 
 
EN 62   EN The operational management of the Programme has been entrusted to the Executive Agency 
for Education, Audiovisual and Culture (EACEA ), in charge of the implementation of 
European Commission programmes in the field of education, audiovisual and culture. The 
EACEA manages the publication of calls for pr oposals, the pre-selection of projects, the 
management of the contracts and th e grants payments (see section 6.2). 
The MEDIA Desks & Antennae constitute a network of local MEDIA representation offices 
that contribute to the implementation of th e Programme, by informin g professionals about 
support for the audiovisual  sector in Europe. 
In the context of its mission to contribute to the transparency and circulation of information 
on European audiovisual markets, the MEDIA Programme also provides for EU membership 
of the European Audiovisual Observatory69, a body that collects and analyses data on 
European and international audiovisual markets. 
MEDIA actions and evaluation results 
MEDIA focuses actions on the elements of the value chain where gaps have been identified 
with respect to national support schemes, where action at European level is needed and where 
it can have maximum leverage. Figure 2 lists the action lines alongsid e the value chain and 
shows how support is allocated between them. 
Figure 1: MEDIA 2007 action lines - funding along the value chain 
                                                 
69 Set up in December 1992, the European Audiovisual Observatory gathers and circulates information on 
the audiovisual industry in Europe. The Observatory is a European public serv ice body, created in the 
form of an enlarged partial agreement of the Co uncil of Europe, with 37 member States and the 
European Union, represented by the European Commission. The participation of the Commission is 
regulated by article 16 to 19 of Decision 1718/2006/CE establishing the MEDIA 2007 Programme. 
 
EN 63   EN 
 
A mid-term evaluation of MEDI A 2007 was carried out in 2009-201070. This evaluation 
confirmed the positive results of the programme on the European audiovisual sector and reaffirmed the relevance of its objectives and the effectiveness of its action lines, particularly as regards the competitiveness of the sector. These action lines are outlined below: 
• Training  – MEDIA 2007 and MEDIA Mundus pr ovide support for institutions 
and/or organisations offering training cour ses relevant to the objectives of the 
programme. About 1,800 professionals (producer s, distributors, scriptwriters) are 
trained annually acquiring relevant qualific ations and skills and benefitting from 
cross-border networking opportunities. Th is support to capacity building in the 
industry helps to professionalise the se ctor and improves company and project 
quality. Improving the quality of the projects developed by  the participants, their 
knowledge of the sector and management  skills, produces a direct impact on 
competitiveness. Creating meeting opportun ities, facilitates the conclusion of 
international co-productions, thus increasing circulation of European works. The 
mid-term evaluation concluded that this  action line is effective and offers a 
significant "quality label"  to its beneficiaries. 
• Development  – Support to audiovisual projects  enables production companies to 
develop their project further, improving th e script, finding international partners and 
consolidating budgets and financial plans. As a result, 400  quality European projects 
                                                
 
70 Evaluation carried out by a consortium of independent experts, composed of Euréval and MCG (Media 
Consulting Group). The final report is available on  
http://ec.europa.eu/culture/media/programme/overview/evaluation/reports/index_en.htm . 
 
EN 64   EN are brought to the market every year, with a positive impact on competitiveness. 
Slate funding – the support to a portfolio of  projects as opposed to pure single project 
support – provides a stronger fi nancial solidity and a long er term perspective to 
production companies (mainly small under- capitalised SMEs). The evaluation 
confirmed that this approach has an im portant structuring e ffect on the industry. 
• Additionally, within the development action line, i2i Audiovisual supports 
production companies by taking over the fina ncial costs related to the production of 
audiovisual works. It subsidises part of the costs related to bank credits, insurance 
and completion bonds of European indepe ndent audiovisual production companies. 
According to the evaluators this scheme, despite its utility, seems to be rather insufficient in terms of resources to fully respond to the needs of professionals. Its 
continuation will need to be reconsidered, es pecially in view of the creation in 2010 
of the MEDIA Production Guarantee Fund. Th e MPGF facilitates access to private 
sources of finance for producers via a guarant ee mechanism that encourages banks to 
grant them credits by sharing the risk incurred.
71 The Fund was opened to 
applications in May 2011 and has been accepted favourably by the film industry and banks, resulting in more th an a dozen guarantees with a loan value of around €18 
million in about ten different member states. 
• Television – support to independent producers to produce audiovisual works for 
international television distri bution. Support to specific genres such as documentaries 
and animations have proven to be critical gi ven the specific needs identified in these 
genres. There would however be a need to reconsider the form of intervention and 
selection criteria in view of improving the effectiveness and geographical coverage 
of this action. 
• Promotion  – MEDIA also supports producers and sales agents to conduct business-
to-business promotion of their projects, bot h works in progress and finished products. 
The evaluation confirmed that presence in  major festivals and markets provides 
business opportunities for professionals a nd improves the visibi lity of European 
works, both towards buyers and towards the public. 
Networking activities such as co-production forums, international market and 
training initiatives result in a significant increase of transnational co-productions 
(from 26% of European films in 1989 to  34% in 2009). These films have a 2.3 times  
higher circulation potential than national films
72. Networks such as EAVE, ACE, 
Cartoon, created under the impulsion of MEDIA support, constitute the backbone of the European cinema industry. 
• Theatrical distribution –  The MEDIA support to Distribution is the only support 
available in Europe, since national support mechanism focus quasi-exclusively on production.  The support is targeted at the cruc ial Theatrical release window which 
remains the principal “brand building” mechan ism for films and drives their value in 
the subsequent “video”, TV and other wi ndows. 50% of European films released 
outside of their national territory cross bor ders thanks to the MEDIA support. Since 
1989, the proportion of European films amongst all first time released films in European theatres was raised from 36% to  54% in 2009. During the same period, the 
                                                
 
71 Its total budget is € 8 million for a four year duration,  With this budget thanks to the leverage effect of 
the guarantee mechanism it is ex pected to generate over € 100 million in bank credits  
72 Source: European Audiovisual Observatory, 2008. 
 
EN 65   EN share of American films decreased from  47% to 44% despite a high increase in 
marketing spending from US majors in Eu rope. This improved market performance 
of European films in theatres  is at least part ly due to MEDIA support, as recognised 
also in the mid-term evaluation. 
• Exhibition  – Through the network Europa Cinema , MEDIA supports the 
programming of European films in Eur opean cinemas. The network includes over 
2,000 screens across the 32 countries that are members of the MEDIA Programme, 
representing 20% of first-run screens av ailable in Europe. Most are independent 
cinemas that provide a broad and diverse o ffer of films to the audience and thereby 
promote cultural diversity in 475 cities of  the EU. Their quality programming has 
attracted 59 million admissions (against 30 million in 2000) representing 5,6% of 
total admissions in Eu rope (2,8% in 2000).  The proportion of box office generated 
by non-national European films programmed in the network reaches 36%, against an average of 7-8% in Europe. European film s account for 57% of admissions to Europa 
Cinema screenings, against a European average of 27,7%. 
The above mentioned mid-term evaluation conf irmed the added value MEDIA 2007 brings to 
national interventions in this field. Some individual action lines have been identified as having low or no impact given for example th eir relative small size (e.g. i2i Audiovisual, 
interactive works, some aspects of TV). In the new Programme, they will be discontinued, fundamentally revised or integrated into ot her activities. Finally, th e evaluation recommends 
some innovations in the form of intervention of the programme, and so me specific action on 
the demand-side. 
2.2.2.  Current EU programme: MEDIA Mundus 
In order to further extend MEDIA activities beyond European borders, MEDIA International 
was launched in 2008 as a preparatory acti on of the European Parliament. The MEDIA 
Mundus  programme (2011-2013), the successor to the MEDIA International Preparatory 
action (2008-2010), is a broad inte rnational cooperati on programme to strengthen cultural and 
commercial relations between Europe's film indu stry and film-makers of third countries from 
all over the world. The EU provides €15 million of funding for projects submitted jointly by 
audiovisual professionals from Eu rope and from third countries.
 MEDIA Mundus supports 
projects with in principle at least three part ners, one being the team coordinator based in a 
MEDIA territory, and at least one pa rtner located outside of the EU. 
MEDIA Mundus actions and evaluation results  
The action lines under MEDIA Mundus broa dly correspond to those under MEDIA 2007: 
• Training : to strengthen the skills of Europ ean and third- country professionals:  
• Market Access : to promote access to international markets and partner search for 
audiovisual works. These projects con cern the development and/or pre-production 
phases (for example international co-produc tion markets) and activities downstream 
(events facilitating international sales of the works). 
• Distribution and circulation : encourage distribution, promotion, screening and 
diffusion of European works in third-country  markets and of audiovisual works from 
third countries in Europe  under optimum conditions. 
 
EN 66   EN • Cross-over activities : support projects of a cross-cutting nature, i.e. touching upon 
several priorities of this programme, e.g. training with  subsequent pitching events at 
co-production meetings. 
No ex post evaluation results are available so far for ME DIA Mundus. However, a first 
assessment of those projects indicates that the most successful are the transversal projects, 
while initial training initiatives have proved to be less successful and will be discontinued in the future. Also, more information will be provided by the result s of the ongoing final 
evaluation of its predecessor programme MEDI A International expect ed by the end of 2011. 
Prior to the adoption of MEDIA Mundus in 2009, the Commission carried out an "Extended 
Impact Assessment on the establishment of an audiovisual cooperation programme with third 
countries, MEDIA Mundus, integrating ex ante  requirements. This Impact assessment 
confirmed the needs of the European audiovisual industries to internationalise their activities, 
including international co productions.  
Furthermore, stakeholders provided overwhelm ingly positive feedback, for example in the 
public consultation, on the releva nce of the programme's object ives and the success of the 
supported projects under MEDIA International.  This success was further confirmed by the 
result of the first call for pr oposals under MEDIA Mundus. Indeed, in response to the first call 
in 2011, the Commission received 118 proposals seeking an overall of € 27 million, while the 
budget of the programme is only € 4.8 million. Du e to the budget restraints even excellent 
projects had to be rejected, indicating a hi gh level of extra absorption capacity of the 
programme
73. 
2.3. Market context 
Activities carried out through the above describe d programmes need to be seen in a broader 
context of the Europe’s Cultural and Creative Sectors. The CCS employ 3.8%  of the total 
European workforce, or approximately 8.5 million workers , and contribute 4.5%,  or 
approximately € 560 billion , to total European GDP74. The size of the European audiovisual 
market is estimated at € 107,4 billion and offers 1,2 million highly qualified jobs. Price 
Waterhouse Coopers expects the filmed entert ainment market to grow 3.4% on average per 
year in Western Europe and 6.9% in  Eastern Europe between 2009 and 201375. 
The EU cinema industry produced 1,203 feature f ilms in 2010 compared to 754 in the USA, 
1288 in India (2009) and 526 in China. In 2009, Eu rope was the third largest cinema market 
in the world with 966 million admissions; comp ared to 2917 million in India, 1341 million in 
North America and 264 million in China76. 
Feature film production capacity is  concentrated in France, Ge rmany, the UK, Italy and Spain 
(the so-called “Group A” count ries) representing 62% of f ilms produced in the EU in 200977, 
primarily because consumption in these mark ets is large enough to support national film 
production. EU 15 (without the “Group A” countries) countries accounted for 23% of films 
                                                 
73 For more on the merger between MEDIA and MEDIA Mundus see section 1.2.and 6.2.2. 
74 Building a Digital Economy: The importance of Saving Jobs in the Eu's creative industries" – TERA 
Consultants. 
75 Source: PwC Global Ente rtainment Outlook 2009. 
76 Source: European Audiovisual Observatory - Focus 2010. 
77 Source: European Audiovisual Observator y - Yearbook Online Pr emium Service 2010. 
 
EN 67   EN produced and EU 12 only for 15%. In EU 12 ma rkets, the audiovisual production sector is 
more focused on television as this is less costly  to produce and can be sustained in a smaller 
market. 
The video games sector is a dynamic componen t of the audiovisual sector. According to 
PricewaterhouseCoopers (2009), th e global video games market was estimated at some €45 – 
50 billion in 2009, and is expected to grow four times faster th an the media and entertainment 
market as a whole (70% versus  17%). Europe is one of the biggest markets for video games78 
and hosts a large population of developers' st udios, often the creators of major market 
successes79. 
2.4. Problem definition 
2.4.1.  Problems to be addressed at EU level 
Within the above described context, 4 specific problems have been identified, that will be the 
basis for EU action for the European audi ovisual industry after 2013. They have been 
identified on the basis of the result of the various studies and consultations mentioned in 
section 1.3. and take into account evaluatio n results and implementation experience as 
described in section 2.2. 
Problem n°1 – Fragmentation of  the market and industry  
European audiovisual markets are inherently fragmented along linguistic and cultural lines, 
in terms of production and of distribution, and the general framework in which they operate. 
On the one hand, fragmentation results in a culturally diverse and highly independent 
production industry, providing a voice for the differe nt cultural traditio ns that make up our 
European heritage diversity, which is somethi ng that the EU is committed to safeguard and 
promote. 
On the other hand, fragmentation limits in a structural manner to the transnational circulation  
of audiovisual works within and outside the European Union. Indeed, linguistic and cultural 
differences restrict the potential market of films given that audien ces have a (natural) 
preference for national productions in their own language. It therefore represents a risk for 
distributors to buy the rights on a non-nationa l film which in addition implies dubbing and 
subtitling costs. 
Although the European Union produces a large volume of films and television fiction, 
animation and documentary, the market share of these works is low compared to non-
European works. In particular, US films attract  a high share of audien ces and revenues on all 
audiovisual distribution channels . As illustrated in the table below, US films accounted for 
68% of cinema admissions within the EU in 201 0 (with less than 20% of the total number of 
films released), compared to 25,3% for Europe an films (though they re present over 60% of 
                                                 
78 In 2009, France, Germany, Italy, Spain and United Kingdom accounted for nearly 30% of the global 
videogames market. 
79 In 2008, among the world top 100 developers studios, 27 were European, 32 were American, 26 were 
Japanese, 11 were Canadian, 2 we re South Korean, 1 was Australian and 1 was Chinese (source: 
www.develop100.com  ).  
 
EN 68   EN the total number of f ilms released). Non-national European films only account for 7-8% of 
market share, leaving just 1-2% to  films from the rest of the world80. 
Table 2: Breakdown of admissions in the EU according to the country of origin81 
Region 2005 2006 2007 2008 2009 2010 
U.S. 62,5% 63,4% 62,6% 65,6% 67,1% 68,0% 
European films  24,6% 27,9% 28,1% 28,2% 26,7% 25,3% 
Europe / U.S. inc82 10,3% 5,6% 7,5% 4,4% 4,2% 7,9% 
Others 2,6% 3,2% 1,8% 1,8% 2,0% 1,3% 
On average, each European film is only releas ed in two countries including the country of 
origin, or 4.6 countries in the case of co-productions invol ving producers from several 
countries83. The proportion of European films that gain distribution in any EU market outside 
their national market ranges from 38% in the “Group A” countries  to 18% in EU12 
countries84. Although this proportion could be consider ed as a reasonable absolute number of 
films circulating abroad, Eur opean films do not benefit from  the same distribution and 
exhibition conditions as those distributed by US majors. Indeed, the latter tend to take up an 
important share of programming tim e on the main cinema screens. This is due to the fact that 
they are released on a much larger scale, and are in principle accompanied by important 
global marketing campaigns. On the contrary, European films usually have smaller budgets, 
and are often screened in smaller cinemas, bene fit from less weekly screenings over a shorter 
period of time, leading to a much lower total number of admissions per film released (see 
figures above). As a result, the market share of  US films is largely dominant in almost all 
European countries. 
Audiences therefore have limited opportunities to see the large nu mbers of films and 
television fiction, animation and documentaries produced in Europe, particularly non-national 
European works. Similarly, relatively very few films produced outside of Europe or the US 
are distributed in the EU. 
The European industry is also struggling with the problem of low market share of European 
films on foreign markets, as illustrated in the table below. In 2009, the market share of 
European films in 6 of the main third countries markets ranged between 2 and 4%. 
Table 3: Market share of Europe an films versus US films in 200985 
Region Market share of European films Market share of US films  
Mexico 4% 84% 
                                                 
80 US enterprises also have a strong position in television fiction, accounting for the majority of content on 
European television screens. Similarly, a 2007 survey found that transmission of non-domestic 
European works on respondents’ broadcast television services made up 8.2% of total qualifying 
transmission hours (7% in peak time), but only 4.3% of total qualifying viewer hours (2.9% in peak time). 
81 Source: European Audiovisual Observatory – Lumiere database. 
82 Films produced in Europe with incoming US investment. Example: Harry Potter 
83 Source: European Audiovisual Observatory, 2007. 
84 Source: European Audiovisual Observatory, 2008. 
85 Source: European Audiovisual Observatory (2010), Instituto Mexicano de Cinematografìa (IMCINE), 
Korean Film Council (KOFIC), Instituto Nacional de  Cine y Artes Audiovisuales, Argentina (INCAA), 
Unifrance, Motion Pictures A ssociation of America (MPAA). 
 
EN 69   EN Argentina 4% 73% 
Brazil 4% 78% 
South Korea 2% 43% 
India 2% 10-12% 
USA 3% 92.% 
Indeed, whilst diversity is indeed  a key driver for Europe's ri ch cinematographic production, it 
has a negative impact on the industry's compet itiveness, preventing the European industry 
from achieving a larger market share and limiting its economic impact. This lack of 
competitiveness  of European films with regard to US films is due to their different market 
structures and the type of film they produce, both in terms of budget86 and distribution 
structure. While US films can count on an im portant homogeneous domestic market to recoup 
the costs of production, this is not the case for EU films, where domestic markets are smaller 
and heterogeneous, they are generally distribut ed successively on a country by country basis, 
only after successful release on one te rritory. In addition, the US Majors87 are fully vertically 
integrated: in addition to their important fi nancial and production capacity, they own global 
distribution networks. On the contrary, due to th e fragmented market, EU films often have an 
insufficient national basis to make up for the co sts of production, especia lly in countries with 
a restricted linguistic or geographical area. 
As far as video games are concerned, they mi ght well represent a si gnificant opportunity for 
Europe in the coming years but they face sim ilar circulation and market share issues. If 
Europe boasts numerous independent success ful games development studios (see. 2.3), 
publishing activities, as for the film indus try, are mainly dominated by non European 
companies88. This absence of European publishers is  problematic. Actually, publishers occupy 
a position of strength in most types of games development, partly because the production of 
video games and all other digitised creative co ntent is characterised by high fixed and low 
marginal costs. This creates a need for invest ment in the early stages that affects power 
relations in the value chain, and leads to the em ergence of the publishers as the financing, and 
therefore dominant, actors. This situation prev ents European video games developers from 
achieving their full potential and thus di minishes their revenue base and their 
competitiveness89.  
In conclusion, the fragmentation of the Europ ean audiovisual markets and industry limits the 
circulation of European works and the revenues of the operators (produ cers, distributors and 
exhibitors) within the sector, with negative impact on its competitive position. This is a 
                                                 
86 The average US film budget is more than 10 times that of the average EU film budget of 5M€, and a US 
film will spend more than 20 % of its budget on marketing – more than twice the budget of an EU film. 
87 A major film studio is a movie production and distribution company that releases a substantial number 
of films annually and consistently commands a significant share of box-office revenues in a given 
market. In the North American, We stern, and global markets, the major film studios, often simply 
known as the majors, are commonly regarded as the six diversified media conglomerates whose various 
movie production and distribution subsidiaries command approximately 90 percent of the U.S. and 
Canadian box office (20th Century Fox, Paramount, Warner Bros, Walt Disney, Universal, Columbia). 
88 In 2009, among the world top 20 video games publishers, only two were European (Ubisoft and Atari, 
two French companies), against 10 American and 8 Japanese. Source: PricewaterhouseCoopers, 2009. 
89 This characteristic is further strengthened by the oligopolistic structure of the consoles market (Sony, 
Microsoft and Nintendo). The impact of this dominance is all the more damaging for European 
developers given that these consoles providers have their own development studio and play a major role as publishers. In this context, the small size, the quasi absence of ver tical integration and the 
undercapitalisation (see. Problem 2) of European developers may alter their ability to contest the market 
power of the consoles providers in the value chain. 
 
EN 70   EN problem at EU level, inasmuch as it prevents  the industry from fulf illing its potential for 
generating economic activity, growth and empl oyment. Furthermore, it reduces cultural 
diversity because people are unable to fully bene fit from the cultural and social value that 
European audiovisual works convey, especially with regard to building social cohesion, inter-
cultural understanding and a Eu ropean cultural identity. 
However, this fragmentation is inherent to th e nature of the European  market and cannot be 
changed. One of the main objectives of the MEDIA Programme over the last 20 years has 
therefore been to try to overc ome it, by encouraging transnati onal circulation of works and 
cross-border collaboration betw een professionals. Examples of  actions towards that purpose 
as well as an evaluation of the results and imp acts obtained so far are detailed in 2.2. They 
mainly relate to the support of transnational distribution of European films, their screening in a network of 2,000 cinema screen s and networking activities. 
Stakeholders have identified fragmentation as one of the priority problems to be tackled by 
EU action. The analysis of th e responses to the online consultation car ried out in 2010 
indicates that fragmentation was the 7
th top preoccupation (out of 60)  expressed by the market 
players.  
Problem n° 2 – Access to finance90 
Another historical structural weakness of the audiovisual sector in Europe is the chronic 
underinvestment and undercapitalisation91 of companies and the fact that the sector is 
mainly composed by micro-enterprises or SMEs with few tangible assets. 
While this is a common challenge for SMEs in  general, the situation is significantly more 
difficult for those operating in the audiovisual s ector. Firstly this is due to the intangible 
nature of many of their assets, such as copyr ight, which are usually not reflected in accounts 
(unlike patents). As a consequence financial institutions often fail to understand the risk 
profile associated with  this sector and its specific char acteristics. Secondly, unlike other 
industrial products, cinema and other audiovi sual works are generally not mass-produced. 
Every film or videogame can be seen as a un ique prototype and the companies tend to be 
project-based, whereas investment often needs to  be longer-term to become profitable. Also 
the banks' lack of expertise in  film project evaluation and the lack of SMEs investment 
readiness92 limit mutual understanding. Th ere is therefore substantia l difficulty for these small 
under-capitalized enterprise s to grow and maintain their compet itiveness. Shortage of reliable 
data, as mentioned in Problem n° 4, also limits the possibilities of SMEs in the sector to get 
credit funding as financial institutions often rely  on statistical evidence in their due diligence 
for loan applications.  
                                                 
90 This subject is discussed in details in the Impact Assessment of the new CCS Financial instrument 
91 Around 80% of enterprises in the CCS are sole traders or micro-SMEs employing only a handful of 
people. Within this majority of 'microenterprises' almost 60% consist of very small micro-businesses 
with only 1 to 3 employees. See Study on the Entrepreneurial dimension of CCIs (2011)  
http://ec.europa.eu/culture/key-documents/doc3124_en.htm . Also, the level of investment in film 
production per capita is relatively low in Europe: US – USD40; Japan – USD20; EU- USD13. 
92 Ability to understand investors' concerns, to unders tand the differences between the types of financiers, 
to fulfil specific financial requirements of banks and investors. 
 
EN 71   EN Additionally, the economic and fina ncial crisis has led banks to refocus their activities on core 
business and move away for what are perceived as higher risk s ectors such as the audiovisual 
industry, making access to finance  for SMEs of the sector even more difficult. 
Also, presales of audiovisual works to televisi on channels or co-production deals which have 
traditionally constituted a key resource for the production of audiovisual works are getting scarcer. Indeed, the economic crisis, the multiplication of the number of channels and the changed viewing habits in part icular of young audiences has led to a drastic reduction of their 
advertising revenues. Buying fewer programmes fo r lower prices, televisi on channels and film 
distributors have reduced their contribution to the sector, with  important consequences on the 
economic models of audiovisual production, as  well as those of sa les and distribution. 
Other consequences of the difficult economic  situation are the re duction of public support 
within a certain number of Member states and the tendency for each territory to focus their 
efforts on their own national cinematography ra ther than opening up to other European 
countries. 
As far as the video games industry is concerned,  it has been identified as a potential growth 
opportunity for Europe but it is subject to challenges that are pa rtly different from than those 
associated with the film industr y. However, in terms of access to  finance, most players in the 
gaming industry are SMEs, face the same cha llenges as traditional audiovisual firms. 
Stakeholders have identified Access to Finance as one of the priority problems to be tackled 
by EU action. Firstly, 54% of the respondents to the online consultation launched in 2010 
strongly agree with the facts that " assisting independent produc tion companies to access 
private funding"  and " establishing a European Guarantee Fund " improve the competitiveness 
of the European Audiovisu al sector. Secondly, the Potential Cultural an d Creative Industries 
Platform
93 also mentions Access to Finance as  a key recommendation. Amongst others, it 
suggests the development of fina ncial tools adapted to the need s of the cultural and creative 
industries such as loan guarant ee schemes or cultural and creative SME-friendly growth loan 
finance. 
The current MEDIA Programme has so far responde d to that need in a relatively limited way. 
The i2i action, representing 2% of the annual MEDIA budget, suppo rts the financial costs of 
film producers such as financial interests related to bank loans or insurance costs. Following the results of the stakeholder consultations ca rried out in 2004 in preparation of MEDIA 2007, 
a MEDIA Production Guarantee Fund, also repres enting 2% of the budget has been launched 
as pilot action in order to facilitate access to bank credit for film producers. The Fund was 
opened to applications in May 2011 and has been accepted favourably by the film industry 
and banks, resulting in more than a dozen gua rantees with a loan value of around €18 million 
in about ten differe nt member states. 
Problem n°3 – Impact of global isation and the digital shift 
                                                
 
93 The Potential Cultural and Creative Industries Platform was set up by the Commission in the context of 
the implementation of the European Cultural Agenda. It is composed of stakeholders of the Cultural 
Industries (nearly 40 European organisations representing hundreds of thousands of cultural and creative actors from different fields). In 2009, it presented a set of recommendations to EU policy 
makers, aiming to unlock the potential of the European cultural and creative industries in particular 
SMEs.  
 
EN 72   EN The consequences of these structural weakne sses have been furt her emphasised by rapid 
changes related to the globalisation  of the market, the booming of new digital services  and 
new ways of producing and consuming audiovisual content, as well as by a difficult economic 
context. 
The digital revolution  means profound changes for the ci nema economy, equivalent in 10 
years to a century of previous changes, bringing about mutations in the production, 
distribution and exhibition of films. The booming number of global distribution channels 
(digital TV, internet, IPTV, Video-On-Dema nd) exposes theatrical exhibition to higher 
competition and has changed the power balance of the audiovisual markets94. The digital shift 
is having a massive impact on how audiovisual  works are made, disseminated, accessed, 
consumed and monetised. 
These changes could mean significant opportuniti es for European audiovisual works, which 
have little space in the traditional model, base d on mainstream theatrica l distribution circuits 
and traditional broadcasting. Lower distributio n costs, new distribution channels and new 
opportunities for niche products can indeed facilita te their circulation wo rldwide. In order to 
seize these opportunities and adap t to the new context, the sect or needs important investments 
to upgrade equipment, develop new means of  production and distri bution, adapt business 
models and structure the market. The economic situation and structur al weaknesses of the 
sector however make it difficult to meet these co sts, while in some foreign markets the digital 
revolution has created strong financial growth and promising investments and, consequently, 
a growing demand for more audi ovisual content reinforcing th eir competitive advantage.  
There is consequently a need for structural industrial support to th e European audiovisual 
sector. The key challenge for the European a udiovisual policy is therefore to address the 
needs of the audiovisual industry in order to adapt to the new c ontext, and to help it find new 
ways of creating value and driving revenues. 
So far the current MEDIA Programme has suppor ted a series of inn ovative pilot projects 
based on innovative technology and aimed at de veloping new distribution platforms or 
innovative business models. Some of these actions  have been streamlined  in a specific action 
line in support of Video-On-Demand and Dig ital Cinema Distributi on. It also supports 
different training programmes focused on technol ogical innovations such as 3D for example. 
However, the interim evaluation of MEDIA 2007, the stakeholders cons ultations as well as 
studies carried out by EAC or othe r organisations have all pointed out that this strategic aspect 
of the audiovisual market is not sufficiently taken into account by EU action in favour of the 
sector and should be tackled in a broader and more structured way. 
Stakeholders have identified digitisation as one  of the priority problems to be tackled by EU 
action. The analysis of the responses to the on line consultation carried  out in 2010 indicates 
that digitisation was the 2nd top preoccupation (out of 60) e xpressed by the market players. 
Indeed, the need to adap t to take advantage of digital t echnologies stood up as  a key challenge 
(more specifically digital mast ers, digital cinema and VOD). 
                                                 
94 This can be compared to the appe arance of TV in the 50s and the multiplication of TV channels in the 
80s. 
 
EN 73   EN Problem n° 4 – Shortage of reliable data 
The shortage of reliable data at European, gl obal and national level has consequences for 
European policy coordination, which can be a us eful driver for national policy developments 
and systemic change. Policy coordination is most effective when underpinned by a strong 
evidence base. There are serious problems concer ning the availability of  data, notably that 
from private companies. 
Currently, the Commission services dealing with the audiovisual industr ies can only rely on 
the statistics provided by the European Audiovisu al Observatory or the EACEA, which do not 
constitute sufficient basis in terms of consiste ncy and scope for informed policy development. 
There is therefore a need to strengt hen this aspect of policy support. 
This was confirmed by the final evaluation of  MEDIA Plus and MEDIA Training carried out 
in 2007 found that some of the data required to measure the impact of the programme could 
not be collected, either because the data is  not collected within the framework of the 
monitoring of the programme, or when it is collected, it is  not input systematically or 
aggregated in a common database. This pr oblem was again confirmed in the interim 
evaluation of MEDIA 2007. Regard ing context and market data, the different definitions and 
methods used by the various sour ces of information undermine the consistency of the data and 
hence their comparability. It is particularly the case between the statistics resulting from the 
executive Agency, the European Audiovisual  Observatory sector and national bodies. 
The evaluation of the effectiveness of th e programme was hindered by weaknesses in 
monitoring and context data. In conclusion, eval uators recommended to "Continue the effort 
of adaptation to the market, which involves bei ng able to anticipate the developments of the 
sector, and developing a system of monitoring and context parameters"95. 
2.4.2.  Groups affected by the problems 
The symptoms of the problems are experienced by the same stakeholders that are linked to its 
causes: consumers and participants at every le vel of the value chain. In summary, the groups 
affected include the following European entities: 
• Consumers and in particular new audiences 
• Audiovisual producers and production companies 
• Distributors and sales agents 
• Cinema exhibitors 
• Television broadcasters 
• Providers of video-on-demand services 
• Organisers of audiovisual festivals and events 
                                                 
95 Source: Interim Evaluation of MEDIA 2007, Final Report, Euréval – 2009. 
 
EN 74   EN • Video games developers and distributors 
• Institutions offering educa tion and professional training 
• Professionals working in the audiovisual sector 
• Marketing and promotional bodies 
• Banks and financial institutions 
• Policy makers 
2.5. Baseline 
2.5.1.  Likely development of the problem all things being equal 
Current EU Programmes MEDIA 2007 and MEDI A Mundus are extensively described in 
sections 2.2.1. and 2.2.2. The baseline case for this impact assessment assumes their 
continuation as well as continuation of the comp lementary initiatives identified in section 2.7 
in roughly their current form. This section ex amines the likely development of the problem 
over the peri od 2011-2020. 
On the basis of the previous evaluations it can be  assumed that the pos itive benefits would 
continue. 
Problem n° 1 – Fragmentation  
The scale of the problem in terms of measurab le metrics such as the share of EU cinema 
admissions of European films and NNE films has been relatively stable in recent years. This 
situation would be likel y to continue should the features and dynamics of the sector remain 
the same over the period; however, there are a nu mber of areas of potential change that could 
affect the scale of the problem a nd/or introduce new aspects to it. 
With regard to distribution channels, cinema a udiences have remained relatively stable over 
recent years, and are likely to remain so over the next few years. DVD consumption is 
decreasing, audiences for VOD servi ces are increasing but there is uncertainty  over the future 
scale of audiences on these new distribution ch annels and the performance of new business 
models. On international mark ets new digital technologies cr eate a strong demand for new 
audiovisual content. MEDIA Mundus enables Eur opean professionals to acquire the necessary 
skills and networks to benefit from thes e new global opportunities and facilitates the 
international sales of films. With the lim ited resources of MEDIA Mundus, the European 
audiovisual sector would miss an opportunity to access world markets. Linear television 
audiences are likely to remain relatively stable  or decrease slightl y, with a proportion of 
audience time migrating to new di stribution channels. Overall, this will increase the weight of 
aspects of the problem relating to  new distribution channels, in pa rticular in the global context 
with regards to traditional ones. These trends, and other factors, will have an influence on the funding available for the production of audiovisu al works. Financial pr essure on television 
broadcasters and the decreasi ng DVD market are likely to nega tively affect the funding 
available for film. 
 
EN 75   EN Overall, these effects are likely to increase the scale of the fragmentation problem and lead to 
a slightly lower competitiveness of the European audiovisual sector in Europe and on global markets. 
Problem n°2 – Access to finance
96 
The MEDIA Production Guarantee Fund (MPGF) wa s launched in 2010 with € 8 million for a 
duration of 4 years. Should this mechanism be c ontinued with the same scope and size and in 
the absence of innovative initiatives  to encourage financial institutions to further engage with 
the sector and provide financial instruments su ch as debt funding, the problem of access to 
finance will remain for many CCS, notably for those not covered by the MPGF at all97. It 
would most probably become more acute in th e coming years given the new market context 
and challenges faced by SMEs of the sector, as exposed above. 
It is estimated that the financial gap for SM Es in the cultural and creative sectors (CCS) 
ranges from € 2.8 to 4.8 billion98. This amount is based on an estimation of the proportion of 
SMEs bank loans requests rejected on the basis of informational asymmetries, comparatively 
high transaction costs and their la ck of tangible collateral. It represents the amount of debt 
funding missing in CCS due to thei r specificities. In spite of its high le verage effect, the 
current budget allocated to the MPGF is largely insufficient to have a real impact on the 
problem. This question of insufficient impact on the problem is developed further in the 
chapter on the creation of a larger  financial instrument for CCS. 
Problem n°3 – Impact of global isation and the digital shift 
As explained in section 2, the digital shift implies fundamental changes in the way that 
audiences consume audiovisual content. The In ternet has developed a significant role in 
providing content and information on what is av ailable and where, contributing also to the 
globalisation of the market. It is probable that this trend will continue in future. 
Unless innovations are brought to EU action in favour of the CCS to address the new 
challenges described in section 2.4.1, there is a risk that the sector will fail to benefit from the 
opportunities of the digital shif t and the new marketing, distribution and showing techniques 
it provides. This would be partic ularly the case for global markets where there is an increasing 
demand for audiovisual works. Such a decrease in the competitiveness of the European audiovisual sector would affect the global circulation of European works and access to 
finance for operators of the sector. 
Problem n° 4 – Shortage of reliable data 
Data collection and analysis is  already problematic. In additi on the new forms of marketing 
and indeed new distribution practices will be vital in the future. Not adapting the current 
statistics policy would mean that operators co uld lack the information necessary to make 
investments in the globalised a nd digitised future landscape. 
                                                
 
96 This issue is discussed in depth in the IA on Cultural and Creative Sector Financial Instrument.  
97 The current MPGF only covers independent film pr oducers to cash flow the pr oduction phase of feature 
films, animations or documentaries. It doesn't cover other phases of the audiovisual value chain, other 
professionals of the audiovisual industry (such as distributors), or other sub-sectors of the CCS 
98 See detailed calculations in the Impact Assessment for the CCS Financial Instrument 
 
EN 76   EN In conclusion, continuing MEDIA in its current form would enable suppo rt to the audiovisual 
sector to be pursued and to partially tackle  the issue of fragment ation and circulation. 
However, it would fail to support the sector  in addressing the ne w challenges raised by 
digitisation and globalisa tion, and to seize the opportunity of  adopting measures with greater 
structuring effects such as  a financial instrument. 
2.6. EU – Right to act  
Article 3(3) of the Treaty on European Unio n recognises that the internal market and 
economic growth must be accompanied by re spect for the EU's cultural and linguistic 
diversity. In this context, EU  action towards the audiovisual sector is based on articles 167 
and 173 of the Treaty on the Functioning of the European Union (TFEU) on respectively 
culture and industrial competitiveness.  
Additionally, the EU Char ter for Fundamental Rights (Article 22) states that the Union shall 
respect cultural and li nguistic diversity. Fina lly, the Union's mandate  is recognised in 
international law, in the UNESCO Convention on the Protec tion and Promotion of the 
Diversity of Cultural Expressi ons, which is part of the acquis communautaire . 
2.7. Subsidiarity and EU added value/ necessi ty test of the new EU initiative 
(1) Complementarities with national  actions and EU initiatives 
The programme will continue to be an essential complement to initiatives undertaken  at 
national level , as national funding schemes tend to fo cus on national production activities or 
the promotion of purely national interests. A broader European approach will continue to complement these initiatives by strengthenin g the cross border and/or trans-European 
dimension, for example through supporting circ ulation of non-nationa l European works, 
international cooperation and networking within  Europe and with third countries, thereby 
contributing to capacity building and mutual  learning and establishing new market 
opportunities. It’s also essent ial given that individual Me mber States support quasi-
exclusively the production phase, while MEDIA c ontinues to concentrat e on actions upstream 
(training, development) and downstream (distr ibution, promotion, exhibition) of the value 
chain. 
European structural funds  are administrated by the Member  States and may regionally or 
nationally support audiovisual indu stries like, for example, mode rnisation and digitisation of 
cinemas and film studios. They might compleme nt MEDIA in some instances, but would not 
cover the whole EU since it de pends on regional initiatives or many of the activities supported 
currently by the MEDIA Programme.  
The European Competiveness and I nnovation Framework Programme (CIP) targets 
small and medium-sized enterprises (SMEs), s upports innovation activities, provides better 
access to finance and delivers business suppor t services in the regions. SMEs in the 
audiovisual sector are eligible  for the SME Guarantee Facility, offering transversal support to 
all SMEs but which has mostly consisted of increasing the volume of loans through traditional bank credit lines. It is complementary to MEDIA in terms of the form of intervention (financial instrument vs. direct grants). Howeve r, due to this transver sal approach, the CIP has 
a very limited impact on extending activities in  sectors in which intermediaries (financial 
institutions) have little activity (such as in the audiovisual sector). Therefore very few companies in the audiovisual sector have  been able to benefit from the CIP. 
 
EN 77   EN In the context of the development policy, the EU has set up a series of instruments in support 
of the audiovisual industry in third c ountries. The objectives of MEDIA Mundus are 
complementary to those of ACP Films , ACP Culture , the  Euromed Audiovisual 
programme  and Mercosur Audiovisual . MEDIA Mundus is intended to support 
international cooperation and pa rtnership building rather than  development of the local 
industries (production, promotion, distribution, training, profe ssional development) in the 
regions targeted by the other developing policy's programmes99. 
Eurimages  is the European cinema support fund set up by the Council of Europe. The fund 
had a budget of € 21.3 m in 2010. It pursues  both cultural and eco nomic objectives. As 
MEDIA 2007 focuses on upstream (training, development) and downstream activities 
(distribution, promotion, exhibition), the fund is largely complementary to the programme. The fund aims to promote the European film industry, thus supports mainly the production 
stage of co-production (90% of spending in 2010). 
In addition, there are several European  funding bodies supporti ng international co- 
productions. These funds
100 cover all geographic zones of the world and all parts of the value 
chain. However, their budgetary allocations are ve ry limited (a total of less than € 10 million 
in 2010).  
(2) Added value and leverage effect 
European markets need to collaborate and ac t collectively in view of reaching sufficient 
critical mass to access international markets. In that context, MEDIA supported projects 
generate strong added value  by creating a critical mass and economies of scale, especially 
in newly emerging cultural fields (e.g. influe nced by technological developments), and 
markets (MEDIA Mundus) and wher e expertise is geographically  dispersed and fragmented. 
European projects also bring added value wher e international exchange fosters accelerated 
learning and the promotion of excellence, for example in addressing new challenges faced by 
the sector as presented in section 2.4.1. 
The added value  of MEDIA is also significant in  so far as it introduces a strong  European 
dimension  into the supported projects. Co-production forums at international level lead to the 
development of European proj ects with stronger financial plans and better structured 
production partnerships. In the lo ng run, sustainable transnationa l partnerships have arisen 
between producers and between di stributors, thus strengthening the structure of the industry 
and helping to overcome the issue of frag mentation. These actions, also relating to 
international markets, can only be taken at European level. 
                                                 
99 ACP Films is a programme of the Group of African Caribbean and Pacific States (ACP) which is 
carried out within the framework of the EU-ACP Pa rtnership Agreement. It supports the production of 
cinema and audiovisual works, the promotion, distri bution, dissemination and networking of the cinema 
and audiovisual sector, and the development and traini ng of professionals in the cinema and audiovisual 
sector in the ACP States. The Euromed Audiovisual programme supports the training of professionals in the audiovisual sector, the building of distribution capacity and the emergence of new distribution 
models and media in Southern Mediterranean coun tries, as well as the development of a Euro-
Mediterranean audience for audiovisual productions. It is implemented as part of the Euro-
Mediterranean Partnership. MERCOSUR Audiovisual, or  RECAM as it is officially called, was created 
by the MERCOSUR authorities in December 2003 to promote audiov isual cooperation within South 
America. 
100 Ibermedia, Balkan Fund, Produire au Sud, Fonds du Sud, Hubert Bals Fund, Jan Vryman Fund, World Cinema Fund, Göteborg Film Fund, Southern Vision, Visions Sud-Est and starting in 2012 SØRFOND 
 
EN 78   EN EU policy towards the audiovisual industry inspires national and regional authorities  in the 
design of support mechanisms. For example, new F ilm Institutes have been created in Croatia, 
Slovakia and Malta. In Austria, Cyprus and the Czech Republic the scope of activities supported and the budgetary means of such  institutes have been reinforced. 
MEDIA Mundus projects have generated important co financing from countries all around the 
world, for example from Canada, Argentina, Ma laysia, South Korea, Japan, Australia and 
Russia. 
Overall, a MEDIA quality label  has emerged over the years, at tracting additional sources of 
finance such as national or regional support or private in vestments and therefore MEDIA 
support has a significant added value for projects from all Member States.  
With this approach whose effectiveness has been demonstrated in the various independent 
evaluations carried out over the years, MEDIA produces a strong leverage effect  on the 
European audiovisual industry. In  the case of Europa Cinemas th eatres network for example, 
13 Euros revenue is generated for each Euro in vested in the European network, and 17 Euros 
in the international network
101. As far as the distribution sector  is concerned, distributors are 
subject to a reinvestment obligati on of the grants received, that need to be reinvested in the 
release of more non-national European films, producing a leverage eff ect on the economy of 
the sector, with a global benefit to the market  share of non-national European films at EU 
level. 
To sum up, in spite of a relatively small budge t of around € 100 million per year in a market 
worth 1000 times more, MEDIA has produced signi ficant results thanks to focused actions 
optimising the cost-benefit ratio and leverage of  the programme. Indeed, actions have focused 
on activities where there will be a positive impact on EU competitiveness and on needs that 
are not addressed at national level. They are par tly inspired by some of the success factors of 
the US film industry102. 
3. OBJECTIVES  
• Action towards the general objective will be taken via a set of specific and priorities. 
General objective • Foster the safeguarding a nd promotion of European 
cultural and linguistic dive rsity, and strengthen the 
competitiveness of the cultural and creative sectors, with a view to promoting smart, sustainable and inclusive growth, in line  with the Europe 2020 
                                                 
101 Source: Europa Cinemas.  
102 In particular, support to project development allows production companies to invest more time in 
scriptwriting and financial planning, thus improving the quality and market potential of the projects; inherent European market fragmentation is t ackled by specific networking activities between 
professionals at European level and support to international distribution; and skills gaps by specific 
training programmes. 
 
EN 79   EN strategy.  
Specific objectives • 1. Support the capacity of th e European cultural and 
creative sectors to operate transnationally; 
2. Promote the transnational circulatio n of cultural and creative works and 
professionals and reach new audiences in Europe and beyond; 
3. Strengthen the financial capacity of the cultural and creative sectors103; 
4. Support transnatio nal policy cooperation.  
Priorities  Specific objective 1: Support the capacity of the European cultural and 
creative sectors to op erate transnationally: 
- Providing audiovisual professionals w ith skills and know how relevant to 
the objectives of the programme. 
- Building up international networks of audiovisual professionals. - Developing audiovisual projects that have the potential for circulation 
within Europe and beyond. 
- Facilitating European/international co-productions. - Providing access to markets and business tools. 
- Stimulating the use of and developing competency relating to new business 
models, technologies, distribution platforms and forms of audiovisual work  
 Specific objective 2: Promote the transn ational circulation of cultural and 
creative works and professionals and reach new audiences in Europe and 
beyond: 
- Support the marketing, branding and distribution of audiovisual projects and 
works on all relevant platforms, including cinema, television, video-on-
demand, online platforms and festivals. 
- Improving the presence of audiovisual works on relevant services in order 
to increase their visibility. 
- Support for media literacy and audience building as a means of stimulating 
demand for European films, particularly amongst young people and build a 
long-term audience for audiovisual works. 
 Specific objective 3: Strengthen the fina ncial capacity of the cultural and 
creative sectors: 
- Provide expertise/capacity building to the financial institutions and 
encourage its geographical sp reading throughout the EU 
- Provide guarantees to banks dealing with cultural and creative SMEs thereby 
enabling them easier access to bank credits 
- Increase the number of financial ins titution which are willing to work with 
cultural and creative SMEs 
- Maximise the European geographical diversification of financial institutions 
willing to work with cultural and creative SMEs.  
 Specific objective 4: Support transnational policy cooperation in order to 
foster policy development, innovation, audience building and new business 
                                                 
103 This objective will be addressed through a new financial instrument that will facilitate access to 
financing for the CCSs. A full analysis is provided in the separate IA on Cultural and Creative Sector 
Guarantee Facility. 
 
EN 80   EN models 
- Studies on the market context an d the relevance and impact of the 
programme. 
- Market intelligence and data collecting tools via inter alia the European 
Audiovisual Observatory, Eurostat and other operators and other policy 
support measures.. 
 
Specific objective 3 will be addressed through a ne w financial instrument that will facilitate 
access to financing for the SMEs of the Cultura l and Creative Sectors. Given the technical 
complexity of this issue, it is addr essed by a separate Impact Assessment. 
4. POLICY OPTIONS  
4.1. Selecting the appropriate instrument 
As mentioned before, the current EU audi ovisual policy has been implemented trough 
legislative instruments and expenditure prog rammes. Different instruments have been 
considered during the preparation of the new programme. However, to address the problems 
described above, and to overcome the fragmentati on of markets the most effective instrument 
is an expenditure programme . It would be complementary to existing legislative instruments 
and other EU funding programmes, as described in section 2.7. 
In this section, there is an analysis of how  the current expenditure programmes (MEDIA and 
MEDIA Mundus) might be continued, ended or changed after 2013. The options under 
consideration are summarised below. 
 
EN 81   EN Table 4: Policy options  
Option Summary 
The baseline The “no change” option. Continuation of the MEDIA 2007 
and MEDIA Mundus programmes. 
No action  The “no programme” option. No  further renewal of the 
MEDIA 2007 and MEDIA Mundus programme at the end of 
2013. 
 Integrated programme Redesigning the programmes, possi bly radically, to take into 
account potential new developments and to respond to new 
needs in the audiovisual sector. Merging MEDIA and 
MEDIA Mundus Programmes. 
Integrated MEDIA strand 
within a framework 
programme This involves both redesigning the programmes as described 
under option 3 and changing them so that synergies between 
MEDIA and Culture programme are exploited. 
4.2. Criteria applied for pre-selection of  options to undergo further analysis 
All options raised by stakeholders  of the audiovisual sector, exte rnal experts, institutions etc 
have been collected to undergo a first screenin g. Some have been discarded without further 
analysis; others are examined in  the context of this exercise. 
Before examining those options, it is important  to note that some complementary initiatives 
need to be put in place in view of optimising the effectiveness and the efficiency of the new 
programme in its endeavour to achieve the objectives, whatever  option is selected. Indeed, 
evaluation results of the MEDI A Programme have systematically identified the need to 
simplify some elements of the Programme and options have been assessed also in the light 
of the simplification and streamlining opportunities they offer . In particular, structuring 
actions and systemic impact104 have been given higher priority. Also some policy support 
measures need to be introduced and the extens ion of the regional scope  of MEDIA could be 
facilitated by simplifying the access conditions  to the programme for non-EU countries. 
A number of simplification opportunities  have been identified both on a strategic and 
operational level. While operational simplificati ons described in the efficiency section 6.2 
below will be implemented in all cases, the following strategic simplifications opportunities 
have been used to select those options  to be retained for further analysis. 
• Focus on structuring actions with a maximu m systemic impact. For example, through 
a reduction of development support for individual projects and increase of 
development support to slate of projects, to produce a lo nger term impact on the 
whole production company robustness and viab ility rather than just on one of its 
projects) 
                                                 
104 A systemic impact is achieved when an action aimed at one element of a system has an impact on the 
whole system 
 
EN 82   EN • Create a financial instrument to progressively replace di rect grants where possible 
(for some categories of players / some t ypes of projects) and improve the systemic 
impact on the sector (see previous point) 
• Increase the leverage of EU budget, with such tools as the MEDIA Production 
Guarantee Fund 
• Streamlining of the international dimensi on previously in separate MEDIA Mundus 
Programme under a single legal basis 
• Cross-cutting value chain approach by suppor ting a limited number of film projects 
with high commercial and circulation potential ("champi ons") throughout the value 
chain, from training to distribution 
• Transversal projects covering several segm ents and players of the value chain to 
achieve a knock-on effect an  have a broader impact  
• Support Sales agents with broad market reach and global market approach 
• Coordinated approach on all sources of content (music, audiovisual, cross-media, 
publishing etc). (A common approach to cr eative and cultural sectors is proposed 
under option 4.) 
As regards the regional scope  of the MEDIA Programme Access to the MEDIA programme 
should be simplified and should open the possibili ty to participate to "the greater European 
audiovisual area", i.e. all ne ighbouring countries. Those countri es in return would pay a 
participation fee which reflects the importance of their respective audiovisual sectors, following the example of Switzerland and Croa tia who are currently members of MEDIA 
2007. 
4.3. Discarded options 
• On the basis of the budget proposed in the Multiannual Financial Framework for 
Creative Europe, and in order to satisfy  the political commitments made by the 
Commission not to reduce the current allocations of the MEDIA and Culture Programme on the one hand, and the minimu m size required for the new financial 
instrument for the Cultural and Creative sect ors on the other hand, it  is expected that 
the annual budget to implement MEDIA actions in the next MFF will be similar to the current one. Given the need s expressed by the market to meet the challenges and 
fulfil the needs identified in section 2 and consider ing the expected budgetary 
constraints, there is a lot of pressure on the MEDIA Programme to optimise cost-effectiveness, thereby reducing the number of realistic options for the implementation of a new expenditure programme.  
• A preliminary analysis of the needs to be addressed by the new programme had led 
to various proposals to reinforce some ex isting actions (e.g. increase support to 
distribution, extend the scale and scope of the financial instrument) or to implement 
new measures such as support to high- growth distribution channels, demand 
stimulation measures, support to co -productions and video games.  
• However, these individual options have b een discarded given their partial approach 
to the problem to be addresse d at EU level. Indeed, acti ng only on one element of the 
value chain would not be cost-effectiven ess, since it would not produce sufficient 
knock-on effects on other elements of the va lue chain and there fail to achieve the 
required systemic impact as mentioned in section 4.2 above. Each element of the value chain (traini ng, development, production, post-production, promotion, 
distribution, and exhibition) would then suffer disproportionately. Since EU action 
 
EN 83   EN has to be targeted and given the level of  integration of the value chain, a more 
comprehensive line of action is required. These individual options have therefore 
been discarded and did not undergo further analysis. 
• Other options have been discarded the basi s of a lack of critical mass of the budget 
proposed in the Multi-Annual Financial Framework 2011. For example, direct 
support to broadcasters for prime-time s howing of European content can not be 
envisaged due to insufficient budget and la ck of commitment from broadcasters. 
Similarly, the budget is too small to intr oduce a support to European production and 
have a significant impact. Additionally, it w ould not offer sufficient EU added-value, 
given that production is already supported at national and regional levels. These 
options been discarded and did not undergo further analysis. 
The current impact assessment therefore considers 4 options. 
4.4. Option 1: No change (the baseline) 
The baseline option entails a continuation of  the existing MEDIA 2007 and MEDIA Mundus 
Programmes. Thus, MEDIA 2014 under this opti on would be largely a carbon copy of both 
these programmes. Their main action lines w ould be maintained and there would be a 
common approach to their management by the MEDIA Unit of Executive Agency EACEA (which will already be the case as of 2012). 
The way in which the situation is likely to de velop under this option has been described in 
Section 2.5. 
4.5. Option 2: No action (the “no programme” option) 
Under this option, there would be no re newal of the MEDIA 2007 and MEDIA Mundus 
Programme at the end of 2013. In assessing the imp act of this option, it was assumed that all 
other relevant programmes (inc luding audiovisual support program mes of the Member States) 
remain in force, but that they do not take sp ecific actions to attempt to replace the MEDIA 
programmes. 
4.6. Option 3: Integrated programme 
The option would be  to take an integrated approach a ddressing the full set of problems 
and needs of the sector , as described above. It would also entail a into the MEDIA 
component of the programme as laid dow n in point 1.2 of the present document,.   
Actions that have demonstrated their effectiveness in the past (such as support to distribution 
would be and maintained as well as complement arities with national schemes, while focusing 
on structuring actions with a maximum systemic impact, for example, by increasing the use of 
financial instruments and having an integr ating approach acro ss the value chain.  
The links between the needs and objectives identifie d, the actions proposed and the expected 
impacts are illustrated in the figure below. 
 
EN 84   EN Figure 1 – Intervention logic of th e new MEDIA Integrated Programme 
 
 
 
EN 85   EN Increase resources for distribution on all distribution platforms: The limited level of 
circulation of European works on all distribution channels is a bottleneck that restricts their 
commercial potential. This optio n would refocus the resources  of the programme spent on 
distribution on areas where most impact is exp ected on circulation and market share. For 
example, selective distribution would be refocu sed on the basis of the priorities of the new 
programme (for example, specific focus on anim ation films with a high market potential). The 
current TV scheme would be maintained for documentaries and animation that benefit from very limited support at national level, but supp ort to fiction would be focused on a limited 
number of co-produced high-quality TV seri es with higher European-wide commercial 
potential than the currently supported fictions (inspired by the success of American TV series 
since 2000). Increased resources would be dedicate d to sales agents with a wide international 
reach, in order to benefit from their knowledge of the market and supp ort their international 
sales activities of European works. Specifi c funding would be provided to high-growth 
distribution channels to enable the sector to take a global optimum advantage of these growth 
opportunities. 
Expand and structure audience building measures: The wealth of consumer choice in an 
increasingly digitised and gl obalised environment makes stim ulation of audience demand 
increasingly important. The cu rrent MEDIA Programme is i ndirectly supporting demand for 
European films by supporting the marketing co sts of distributors releasing non-national 
European films. The new programme would in clude direct support to audience building 
measures (film literacy, marketing, events and branding of European films). 
Increase use of financial instruments: Given the leverage effect of  financial instruments and 
their structuring effect on the industry, direct support in the form of subsidies could be 
progressively shifted to financial instruments for some types of supports and beneficiaries. 
This would entail an increase in size and scope  of the existing guarantee fund or the creation 
of a new CCS financial instrument (subj ect to a separate Impact Assessment). 
Expand to include video games: Extending financial instruments (like the guarantee fund) to 
this sector would allow access to early-stage financing for promising European development 
studios. Capacity building and pr omotion actions in favour of ope rators of this sector should 
also be considered. 
Support co-productions: As underlined above, co-productions travel better than national 
works. To fulfil the need to support Eur opean companies coproducing also with third 
countries (outside of the Eurima ges scope), support could be ma de available to Europe-based 
international co-production funds  in order to encourage co-p roduction between European and 
non-European professionals and thereby further opening international markets. 
To address the problem of insufficient data collection , the new programme will support 
studies and development of data collecting to ols in order to provide clearer evidence for 
policy-making. Regarding external context data on European and international markets, closer 
cooperation will be established with partners su ch as the European Audiovisual Observatory 
and Eurostat. The analysis of internal data w ill require the constitution of an internal market 
intelligence capacity to collect and analyse co ntext and monitoring data. Other actions in 
favour of market transparency where the MEDI A programme could potentially intervene is 
the support to information tools such as European  wide databases, for example to collect all 
"licensing" agreements to enable the identification of right-holders. 
 
EN 86   EN 4.7. Option 4 - Integrated MEDIA strand within a framework programme 
There are similarities in overall goals of the MEDIA and Culture programmes: they both 
encourage cross-border cultural flows, and both seek to addre ss fragmentation and resultant 
diseconomies of scale in the cultu ral sector in Europe. There ar e potential synergies that can 
be considered, entailing the ex tension of some of the activities carried out under the MEDIA 
Programme to other sectors of th e cultural and creative sectors (CCSs), in particular regarding 
the financial instruments.  
This option would entail: Creating an common framework programme "Crea tive Europe" for successors to the MEDIA, 
MEDIA Mundus and Culture programmes, with a third strand common to both to support 
financial instruments, in order to build on those potential synergies; 
Policy support in a common transversal strand; Designing integrated programme acting at key poin ts in the value chain as proposed in option 
3. 
In practical terms this means that the general and specific objectives would be common to all 
strands, but there would be variations in the pr iorities, and separate ca lls for proposals. This 
approach would have the advantage of accomm odating the value chains in the different 
cultural sub-sectors appropriately
105. Also, a single framework programme would greatly 
contribute to the visibility of European support actions for the cultural and creative sectors in 
Europe and offer a simple single entry point. 
The transversal strand would include policy s upport measures such as data collection (see 
4.6), policy analysis, studies and evaluations about the Cultural and Creative Sectors (also 
covering the European Audiovisu al Observatory). It would al so encompass a network of 
Creative Europe Desks, representing the Creative Europe Programme in the Member states. Actions financed under this strand would al so include transna tional exchanges and 
networking activities, the testing of new cro ss-sectoral approaches as well as conferences, 
seminars and other forms of policy dialogue events. 
The transversal strand, as well as the financial instrument, building on the current MEDIA 
Production Guarantee Fund but cove ring all the cultural and cr eative sectors, would bring 
economies of scale. As mentioned earlier cult ural and creative companies and organisations 
would benefit from this instrument as it wo uld globally improve th eir access to private 
sources of finance
106.  
5. ANALYSIS OF IMPACTS  
To assess the impacts of the proposed options relative to the baseline , it is necessary to 
assume that other complementar y or related policy instrument s, such as national support, 
                                                 
105 Indeed, there is considerable variation between cultural sub-sectors compar ed to the audiovisual 
industry, where the value chain is more segmented and distributors have a very predominant role. This 
means that the beneficiaries have distinctive needs and harmonised calls would not be appropriate. 
106 The financial instrument is analysed in deta ils in a separate Impact Assessment exercice 
 
EN 87   EN other Commission programmes, a nd legislative measures would continue to apply in roughly 
their current form. 
The focus of the new integrated MEDIA progr amme and the other options is on achieving 
economic and social outcomes, and hence the la rgest impacts are like ly to be in these 
categories. As with most expenditure, there w ill be some environmental impacts; however, 
changes in environmental effects are likely to be marginal and won't be further discussed. 
5.1. Framework for analysing impacts 
The various options have been assessed in view  of their potential effectiveness in achieving 
the desired objectives. In the table below, economic, social and environmental impacts identified flow mainly from the intended effects of the options on the competitiveness of the sector and the circulatio n of audiovisual works. 
 
EN 88   EN Table 4: Main areas of economic, social and environmental impacts 
Areas of economic impact Areas of social impact Areas of environmental impact 
Functioning of the internal market and 
competition (trade level)  
Revenues and profits of the 
audiovisual sector  
Competitiveness of European 
audiovisual companies  
Cost of business for SMEs  Level of consumer choice of 
audiovisual content 
Cultural diversity 
Cultural identity 
Media pluralism (diversity of media)  
Employment in the audiovisual 
sector  
Job quality in the audiovisual sector Demand for transport (passenger 
and freight) 
Energy consumption 
As mentioned in section 4, the im pact of the options have also been assessed in view of their 
structuring effect and systemic  impact on the sector, as well as the simplification and 
streamlining opportunities they may offer. 
5.2. Analysis of impacts 
5.2.1.  Assumptions, risks and uncertainties 
The analysis of impacts and likely development of  the problem are sensitive to uncertainty in 
several areas. 
• Current situation uncertainties – there is limited availability of data in some areas107 
which creates uncertainty in the descript ion of the current state of the sector. 
• Causal uncertainties – the causal model posit ed in annex fits the available evidence, 
however, there may be alternative interpreta tions. The greatest uncertainty relates to 
new distribution channels such as VOD and demand stimulation, where robust 
evidence is scarce. 
• Exogenous uncertainties – there is uncerta inty over future market and technology 
developments and the actions of Member  States (e.g. con tinuation of present 
subsidies and policies). The way in which new audiovisual serv ices will develop, 
particularly the business models employed a nd the scale of new distribution channels 
compared to traditional ones, is an area of major uncertainty. 
5.2.1.1.  Option 1 - The baseline 
In the baseline scenario the scale of the prob lem is likely to increase and lead to a lower 
competitiveness of the European audiovisual s ector in Europe and on global markets, as 
described in section 2.5. above. 
Economic impacts 
Given the expected evolution of the market context, failing to harness the opportunities 
offered by the new technologies  and business models would  have a negative impact on the 
overall global competitiveness of the European audiovisual sector. This would affect the global circulation of European works as well as the revenues for opera tors of the sector.  
                                                
 
107 For example, with respect to VOD distribution (e.g. level of consumption of NNE works) and consumer 
demand (e.g. consumer awareness of NNE works). 
 
EN 89   EN Social impacts 
Similarly, and as explained in section 2, the digital shift implies fundamental changes in the 
way that audiences consume audiovisual conten t. There is a need to support European 
operators and works to be present on the new global platforms where a growing part of the 
consumption of content is taking place. Failing to do so would have a negative impact both on 
the offer of content, and therefore on cultura l diversity, on the global promotion of European 
cultural identity and on the leve l and quality of employment. 
5.2.1.2.  Option 2 - No action 
Economic impacts 
If the MEDIA programmes were to be discontinued, then their effects in relation to circulation 
of works and competitiveness would be lost. It  is unlikely that national governments would 
make up for this loss because they have limite d interest in the European and international 
dimension of the sector. There is  limited robust data to demonstr ate the scale of impact of the 
MEDIA programmes in quantitative terms. The main gaps are in understanding how 
beneficiaries would behave in  the absence of MEDIA support and in proving causal links 
between support and possible effects. However, th e direction of impact is clear: without a 
European support programme for the audiovisual industry, the diversity of choice on the 
market would be strongly reduced, correspondingl y affecting the global growth of the market, 
competitiveness and employment. 
Examples would be that fewer professionals with  skills less adapted to market conditions and 
technological developments would have an imp act on the number of co-productions and in the 
mid-term on the circulation of European film s. The lack of support to distribution could 
additionally reduce the circulati on by more than half (represen ting a loss of more than 100M€ 
p.a.) and result in the closure of  a high number of cinemas. 
The economic impact of these effects would be less trade within the internal market with 
respect to audiovisual works, lower competitiv eness of European audiovisual companies and 
probably the disappearance of those that focu s their activities on the distribution and 
exhibition of non-national European film. Failure  to support any of the key points identified 
would in fact be detrimental to the whole policy for example failure to support distribution 
would mean that many NNE films would not be di stributed. It would ha ve an overall negative 
impact on the scale of the audiovisual industry in the European Union. 
Social impacts 
The negative economic impacts and the di scontinuation of training programmes for 
professionals would have an overall ne gative impact on the le vel of employment  and job 
quality  within the sector. There would also be  less choice of audiovisual content for 
consumers, and lower cultural diversity and pluralism108.  
5.2.1.3.  Option 3 – Integrated programme 
Economic impacts 
                                                 
108 In this regard, the interim evaluation of MEDIA 2007 (ibid.) concluded that the programme preserves 
cultural diversity. 
 
EN 90   EN Overall, the new integrated  approach would lead to higher le vel of circulation of audiovisual 
works and of global competitiveness of the European audiovisual sector. The impact relative to the baseline would be more trade within the internal market, and more international trade. 
Due to the additional measures there would likely also be higher competitiveness of European 
audiovisual companies, and an overall positive imp act on the scale of the audiovisual industry 
in the European Union. An increase in consumer demand for NNE works could also be expected, though the scale of this effect is uncertain as effect s relating to audience building 
actions may act over longer timescales. The independent video games  developers will benefit 
from new growth markets through facilitated access to promotion and development funding. 
The result would be increased competitiven ess of European video games developers, 
especially SMEs, increased revenues, bigger market share, and widening the audience. 
Increased resources for distribution would intensify the circulati on of European audiovisual 
works, though the scale of impact of incrementa l spending relative to the initial spending is 
uncertain. It is expected that it would improve revenues for the sector, lead to a higher level of 
market integration at European and intern ational level and a strengthening of the 
competitiveness of European audiovisual operators. Increased and more focused funding for sales agents would allow for the emergence of  stronger sales agents with higher buying and 
selling power on the international market, with direct benefits in terms of competitiveness, 
market share and revenues at all levels of th e value chain. Specific support to a number of 
high-growth distribution  channels  would strengthen the competitiveness of the European 
audiovisual sector in new distri bution channels where competition from US and Asia is harsh, 
in relation to new markets, technologies and business models. This would globally increase 
circulation of European audiovisual works, especially on new dist ribution channels and 
improve the offer of content, with positive im pact on cultural diversity and promotion of 
European cultural identity. Di rect and focused support to audience building  measures is 
expected to increase consumer demand for works, though the scale of this effect is uncertain. 
The benefits of increased demand would flow through the value chain to stimulate increased 
circulation of works and to improve the compe titiveness of the European audiovisual sector. 
Strengthening the support to Europe-based international co-production  companies will boost 
co-production between European and non-European  professionals and thereby contributing to 
further opening international markets. It is e xpected that it would increase number and 
improve quality of co-productions involving European producers and their works would 
furthermore circulate on third country markets. 
The use of financial instruments
109 would improve access to finance for operators of the 
audiovisual sector to a larg er degree than the current ME DIA Production Guarantee Fund, 
leading to the strengthening of their financ ial capacity and potentially of the commercial 
potential of works. Consequently the circul ation of works would in crease and the sector 
would become more competitive relative to th e baseline, particularly with respect to 
audiovisual production. A significant increase of the size of the financial instrument would 
also have a stronger stru cturing effect, increasing  the capacity of the indus try to attract private 
sources of finance and thereby lessen their de pendence on public subsidies. Given the high 
leverage on public money that such a financial instrument could provide and its structuring 
effect on the industry, direct support in the form of subsidies could be progressively shifted to 
financial instruments for some type s of supports and beneficiaries. 
                                                 
109 Further analysis is provided in the separate Im pact Assessment for a new CCS financial instrument. 
 
EN 91   EN Moreover, the scope of financial instruments wi ll be extended to cove r the needs in working 
capital for distributors, early stage financing for new distribu tion platforms and video game 
developers or long term credit for exhibito rs in the transition to digital cinema.  
Data collection will increase transparency and dissemination of information concerning 
audiovisual markets. This woul d be beneficial for policy-make rs at European and national 
level. Ensuring that companies involved in the sector have access to financial and legal 
statistics on the markets, can also work as an  efficient decision-making  tool. It would thus 
facilitate the implementation of successful  strategies, making European firms more 
competitive. This could also encourage private investors' confidence by improving understanding of the industry's potential. Other policy tools could facilitate for example the 
licensing or rating of films and would therefore have a benefici al effect on the transnational 
circulation of films. 
 
Social Impacts 
Thanks to the increased circulation of Eu ropean works and their increase presence on 
traditional and new distribution channels, the impact relative to the baseline would be more choice of audiovisual works for consumers, resulting in higher cultural diversity and 
pluralism. The focus on selected structuring an d capacity building is measures expected to 
improve competitiveness of European audiovisual companies, improve know-how, 
networking and professionalism in the sector , resulting in an overall positive impact on 
employment, in particular in terms of job quality level. 
5.2.1.4.  Option 4 – Integrated MEDIA strand  within a framework programme 
In this option, the positive eff ect of the new form of a programme reinforcing EU action 
across the whole value chain would be combined with those of th e integration of cultural and 
creative sectors. 
The main effect of this option relative to the baseline would be to free up additional resources 
for the programme by exploiting synergies with the Culture programme. It seeks to improve 
the efficiency of a future programme th rough simplification and through reduction of 
administrative costs. The scale of any additiona l resources would tend to be small relative to 
the total programme budget, but would nonethele ss enable the programme  to have slightly 
larger effect. 
A concrete example would be the positive imp act of data collection for both culture and 
MEDIA, since extension of activities could lead to synergies and better data across the different creative sectors as a whole, facilitating investment. 
The availability (at low incremental administrative cost) of instruments that currently exist in 
the MEDIA programme, but not in the Culture programme, would likely generate additional 
benefits relative to certain current and future  participants in Culture programme activities; 
however, due to the lack of data, this gain ca nnot be evaluated quantit atively a this stage. 
6. C
OMPARING THE OPTIONS  
This section compares the options on the basis of effectiveness in terms of achieving 
objectives, efficiency, coherence and feasibility. The options ar e then ranked on this basis. 
 
EN 92   EN Apart from the no-programme option, all options  provide European added value, with the 
extent depending on each option’s effectiveness. The added value emanates from the focus on the cross-border circulation of  works and the overall competitiveness of the sector with 
respect to international markets, as well as  complementarities with national policies as 
explained in depth in section 2.7. 
6.1. Effectiveness in terms of  achieving objectives 
6.1.1.  Comparing the options with regard to  the objectives of the programme 
Section 5 describes the main effects and impa cts of the options. Table 6 summarises these 
impacts in relation to the effectiveness of the options in meeting the objectives of the 
programme (as defined in section 3). In order to assess the eff ectiveness of the options, their 
results and impacts have been assessed for a seri es of key drivers deri ved from the specific 
objectives. These drivers are those that have been  identified as most relevant to achieve the 
objectives, on the basis of the analysis carried out to identify the problems and define the 
objectives of future EU action (see points 2. an d 3. above). For example,  increasing support to 
the distribution of European works on high-growth  platforms as proposed in options 3 and 4 is 
expected to have a direct positive impact on their transnational circulation, thereby improving 
the competitiveness and financial capacity of the CCS.  
Data is not available to measure the results an d effectiveness of each option in quantitative 
terms. Their expected effectiveness  is therefore assessed in qual itative terms in comparison to 
the baseline, in which the MEDIA programme is  carried forward with  little or no change. 
The No action  option would tend to lead to lower competitiveness and financial capacity, and 
to lower circulation of works,  as explained in section 5. 
The New integrated programme option would lead to greater competitiveness, to greater 
financial capacity, and to gr eater circulation of works. 
In addition to the benefits brought by a new integrated programme, the Integrated MEDIA 
strand within a framework programme option would also lead to improved efficiency and 
overall coherence of the EU approach  to cultural and creative sectors. 
 
EN 93   EN Table 6: Comparing the options   
 1 
Baseline 2 
No action 3 
Integrated 
programme 4 
Integrated MEDIA 
strand within a 
framework 
programme  
 Effectiveness     
Improving competitiveness 0 ▬ ▬ ­ ­ 
Stimulating access to funding 0 ▬ ▬ ­­ ­­ 
Improving Circulation 0 ▬ ▬ ­­ ­­ 
Stimulating demand 0 ▬  ­­ ­­ 
Competency in new models 0 ▬  ­­ ­­ 
Diversity 0 ▬ ­ ­  
 
K
E
Y 
 
D
R
I
V
E
R
S 
Leverage and structuring 
effect  0 ▬ ­ ­ 
Direct costs 0 ­­ ▬ ▬ ▬ ▬ 
Efficiency  Management costs  0 0 ­ ­ 
Feasibility 0 0 0 + 
Coherence 0 0 ­ ­­ 
 Overall assessment 0 ▬ ▬ ­ ­­ 
 
6.2. Efficiency and cost-effectiveness 
6.2.1.  Efficiency of the EACEA management 
Table 1 also compares the options in terms of efficiency. The programmes will continue to be 
managed centrally through the EACEA as is cu rrently the case for both Culture and MEDIA, 
and will be as of 2012 for MEDIA Mundus. An inte rim evaluation and a cost-benefit analysis 
of the EACEA were carried out in 2009110. The analysis concludes that the Agency in general 
terms accomplishes it mission in an effective manner and has managed to adapt to the 
changing requirements of programme manageme nt and additional programme strands. It 
offers high quality services to th e beneficiaries, and conforms to the internal procedures of the 
Commission and sound financial management. It ach ieves its objectives e fficiently, thanks to 
such elements as simplification and harmonisati on of internal procedur es, a flat organisation 
and experienced staff. 
                                                 
110 Source: Interim Evaluation of the EACEA, Final Report, COWI 2009. 
 
EN 94   EN The main difference between the options with re gard to efficiency, for which there are data111, 
is the management cost for the European Union. These costs are relatively low. Assuming that 
the main cost is labour (EACEA employed 70 pe ople in 2009), then the relative costs depend 
on the labour intensity of administering applicati ons to the programme an d awards. In general, 
costs as a proportion of expenditu re are highest for action lines that are oversubscribed (high 
ratio of applications to awards), make a la rge number of small aw ards, or involve more 
complex selection criteria and management. For example, television broadcasting is the most 
efficient as it involves a relati vely small number of large cont racts, while development has 
low efficiency as it involves a large numbe r of small contracts and has a high ratio of 
applications against awards, as illustrated in the table below where various actions lines are ranked from the most efficient to the least efficient in terms of the number of staff required to 
distribute a certain amount of money. 
Table 7: Proportion of budg et against headcount, 2007-2009
112 
Action line % amount of grants % number of contracts % EACEA headcount  
TV broadcasting 11% 4% 6% 
VOD & DCD 6% 1% 3% 
Distribution  47% 62% 38% 
Promotion 11% 8% 14% 
Training 7% 3% 10% 
Development  23% 23% 30% 
The relative management costs of new acti on lines (guarantee fund, audience building, co 
production funds etc) are not ye t known. It is assumed that mo st would have equivalent 
management costs, while financial instrument s are more efficient since they are highly 
leveraged and managed by a third party. 
6.2.2.  Operational simplifications  to improve efficiency 
Further administrative and management savings will come through various operational 
simplifications  to be implemented by the EACEA. The simplifications in the existing 
programme will be continued and further use made of multiannual framework partnership 
agreements (which according th e interim evaluation of MEDIA 2007 "reduce the 
administrative burden and management costs, and strengthen the projects" ), flat rates and 
lump sums, e-application forms, grand de cisions, removing comitology on all selection 
results, setting up a beneficiar ies portal, electronic applica tion forms for all strands, and 
electronic final report forms which would improve efficiency, as well as monitoring and 
measurement of results and reduce the admi nistrative burden on applicants. Electronic 
application and final report forms will permit proper monitoring of project results with 
minimal administrative cost fo r the EACEA. Additionally, savi ngs in management costs will 
                                                 
111 Without data to show the scale of the effect of different actions it is difficult to estimate the relative 
efficiency in terms of results per Euro spent. 
112 Source: Interim evaluation of MEDIA 2007, Euréval, 2009. 
 
EN 95   EN be made thanks to a reduction in the number of instruments and the potential merging of 
information points for the cu lture and MEDIA programmes. 
Furthermore, the merger of MEDIA and MEDI A Mundus is expected to bring additional 
benefits related to the reduction of manage ment costs (within the Commission and the 
EACEA); the publication of  single calls for propos als for some of the actions rather than 2 
parallel calls under MEDIA and MEDIA Mundus113; the adoption of a single annual work 
programme; a simplified decision process (ex. comitology, programme implementation 
networks) 
6.2.3.  Strategic simplifications to improve efficiency 
Additional savings will come from the strategic simplifications  as listed in point 4.2. 
Overall, this ongoing simplifica tion process is expected to improve administrative and 
management efficiency for the European Co mmission, and also reduce the administrative 
burden on applicants. In other respects, the options are equa lly efficient. There would be no 
extra implementation costs for Member States in  any of the options as the programme would 
be administered by the EACEA and, in some ca ses, other European bodies. In particular co-
funding for the MEDIA Desks and Antennae at 50% is expected to continue in the same way. 
It might even be reduced in th e case of option 4, thanks to the merger of the information 
points for the culture and MEDIA programmes. 
6.2.4.  Cost-effectiveness analysis respondin g to ex ante evaluation requirements 
• The new Multiannual Financial Framewor k allocates to the Creative Europe 
programme proposes a budget of €1.6 bn for the Creative Europe programme. In 
order to satisfy the political commitments  made by the Commission not to reduce the 
current allocations of the MEDIA and Cu lture Programmes on the one hand, and the 
minimum size required for the new financia l instrument for the Cultural and Creative 
sectors on the other hand, it is expected that the annual budget to implement MEDIA 
actions in the next MFF will be similar to the current one and is expected to amount 
to approximately €900 million in current prices over the period. 
• Budget breakdown in current prices over the period 2014-2020114 
Strands € million 
MEDIA 905.5
Culture 487.2Financial instrument 211Cross-sectoral  75
Total 1,678
                                                
 
113 For about 2/3 of MEDIA Mundus activities no separate calls and administration of projects would be 
necessary (ex. Training, markets, promotion, networks) 
114 These figures in current prices are based on the financial statemen t attached to the Creative Europe 
proposed decision. They differ from the Multi- annual Framework quoted in 2011 prices  
 
EN 96   EN Cost of outputs in the MEDIA and the cross-sectoral strands 
OUTPUTS of the MEDIA Strand  
Outputs Average cost  
of the output Total number of 
outputs  Total  
cost 
SPECIFIC OBJECTIVE No 1:  Support the capacity of the European cultural and creative sectors to operate transnationally 
New skills and networking [outputs: number of 
courses/workshops/events] 0.150 425 63.7 
Development of audiovisual projects (including TV 
production) 
[outputs: number of individual projects, slates, interactive 
works, pilots of TV series, TV productions of documentaries, 
fiction and animation] 0.110 2301 253.1 
Support to co-production funds [output: number of co-
production funds supported] 0.300 48 14.3 
Audiovisual markets, promotio n tools and strands [output: 
number of markets, market stands, online tools etc.] 0.1925 452 87.1 
Innovative projects in the fiel d of ICT applicable to AV 
industry  
[output: number of applications of ICT to the industry] 0.500 30 15.2 
Sub-total for specific objective N°1  3256 433.4 
SPECIFIC OBJECTIVE No 2 : Promote the transnational circulation of cultural and creative works and operators and reach 
new audiences in Europe and beyond 
Distribution campaigns of European Non National films 
[output: number of contracts for automatic support to film 
distributors, number of films in selective support scheme to 
film distributors, number of films in sales agents support 
scheme, number of VOD platforms etc.] 0.046 6932 318.9 
International grouping of sales ag ents, distributors and right 
holders [outputs: number of groupings ]  0.271 40 10.8 
Network of cinemas screening majority of European films 
[output: number of cinema networks] 13.893 7 97.2 
Film festivals and events [output: number of festivals and 
events] 0.040 645 26 
Film literacy initiatives [output: number of workshops, 
festivals with focus on film literacy, awards] 0.040 269 10.7 
New marketing and advertisin g tools [outputs: number of 
projects establishing e.g. film community platforms] 0.040 213 8.5 
Sub-total for specific objective N°2  8106 472.1 
Total cost of the MEDIA Strand  11362 905.5 
 
 
EN 97   EN OUTPUTS of the innovative cross-sectoral Strand  
Outputs Average cost  
of the output Total number of 
outputs  Total  
cost 
SPECIFIC OBJECTIVE No 1:  Strengthen the financial capacity of  the cultural and creative sectors  
Establishment of a Cultural and Creative Sectors Financial 
Instrument [outputs: number of  loans provided by banks to 
operators over 7 years] 848 
(EIF fees plus 
expected loss) 14420 211.20 
Sub-total for specific objective N°1   211.20 
SPECIFIC OBJECTIVE No 2 : Support transnational policy cooperation  
Network of Creative Europe desks 0.226 189 42.7 
Studies, evaluations and policy analysis [NB: This also 
includes the European audiovisual observatory] 0.317 36 11,4 
Transnational exchanges and networking 1.585 4 6.4 
Testing new cross-sectoral approaches  1.132 4 4.5 
Conferences, seminars a nd policy dialogue 0.232 42 9.8 
Sub-total for specific objective N°2  275 74.8 
Total cost of the innovative cross-sectoral Strand    286 
6.2.5.  Could the same results be achieved at lower costs? 
To answer this question the table below makes an assessment of the major assumptions on the 
basis of which the cost of the programme115 has been calculated. It justifies a minimum scale 
for the main action lines in order to fulfill the needs of the market and optimize their results 
and impacts. Additionally, it proposes new implem entation options with respect to the current 
MEDIA Programme that are expected to optimi ze the cost-effectiveness and cost-efficiency 
of the proposed actions.  
Specific objective N° 1. - Capacity building 
Scope of the action Costs 
The development of skills and 
competencies will improve the competitiveness of the European audiovisual sector. The Programme will fund approximately 425 projects over the period a year. 
7% of total MEDIA budget The new programme is based on an assessment of the 
needs of the market, taking into account the current level of support and the new needs related to management and finance, new technologies, new business models and marketing, video games and writing for TV. The weight given to this component of the programme reflects the reality of the sector and the current average costs of training projects (€150,000).  
                                                 
115 Actions under specific objective n°3 are analysed in  a separate Impact Assessment on the new financial 
instrument for CCS. 
 
EN 98   EN The support to project development 
intended for theatrical release continues to cover single projects and slates of projects. 
  
12% of total MEDIA budget  The support to single projects will be partially phased 
out for countries of high production capacity, to be targeted at players that most need it (especially in smaller countries, wher e evaluations have 
demonstrated that MEDIA support has bigger impact 
on the market). It will be partially replaced in bigger countries by more slate funding, intended to have a 
stronger structuring effect, by the financial instrument 
bringing higher cost-effec tiveness and by prizes 
awarded by partner traini ng organisations or co-
production markets, to imp rove cost-efficiency.  
The support to TV programmes will 
be refocused on documentaries and animation with hi gh circulation 
potential, while support to fiction will be refocused on high-quality TV series with international circulation potential. 
     
12% of total MEDIA budget  Experience and market data shows that an average of € 
110.000 grant is required to support animation and documentary projects.  
Based on market data, the development of and 
production pilots of high-quality  TV series is expected 
to have more impact on the market and thereby higher cost-effectiveness than the support to the type of 
fiction projects currently supported. The new programme intends to grant € 1m for 5 pilots every year (out of a total cost of  € 3m), and € 2m to cover 
20% for the development of the production costs of 5 TV series per year towards the end of the period. The 
total TV series support w ould gradually reach €15m 
per year) and is expected to bring to the market a couple of successful TV  programmes with high 
circulation potential every year, that could compete 
with the US series that currently enjoy very high viewing time on European channels 
The support to the development of interactive works that did not prove to have much impact so far will be integrated to a new video games action line, that will cover the development of both self-standing video games, and those related to audiovisual works. 
2% of total MEDIA budget  A minimum budget of € 2 million will be dedicated to 
this action line in order to  support the development of 
around 25 projects per year, mainly focused on mobile and online platforms. 25 is a minimum in order to ensure that some of the projects will make its way to the market and be profitable. Indeed, European products have greater oppor tunities there than on 
mainstream platforms such as PC or console, thanks to 
lower production costs and eas ier access to consumers. 
A new action line will be opened to 
international co-production funds  
 
1% of total MEDIA budget  There are only a few of these funds in Europe today, 
with very low budgets in comparison to national funds. Even small grants of € 300.000 to some of them are expected to increase co-p roduction between European 
and non-European professionals and thereby contributing to further opening international markets.  
 
EN 99   EN Actions in favour of the promotion 
of European works on international markets have proved their effectiveness in the current MEDIA 2007 programme 
     
10% of total MEDIA budget  A comparable budget will continue to be allocated to 
business to business markets and co-production forums and other promotiona l activities. Their average 
cost for the programme is estimated at € 145.000. The list of beneficiaries has been rationalised in the course of the last few years, keeping only events with a broad European dimension that have demonstrated their impact on the market. Add itionally, the geographical 
and sectorial scope of the action has been optimized, 
in order to keep only one event per region and per type of markets (documentaries/TV/fiction/animation, work-in progress / finished films). 
This action also integrates  those currently covered by 
MEDIA Mundus for the promotion of European works abroad and non-European works in Europe. 
Specific objective N° 2. Transnational circulation  
Scope of the action Costs 
On the 2 key pillars of the MEDIA 
Programme with regard to circulation of works is the support to theatrical distribution.  
     
27% of total MEDIA budget  Evaluations have proven that  50% of European films 
released outside of their national territory cross borders thanks to the MEDIA. MEDIA support to 
distribution will continue to be based on an automatic scheme supporting the di stribution of non-national 
European works in cinemas, together with a selective scheme encouraging th e grouping of European 
distributors to distribute a specific selection of middle-
range budget films with hi gh circulation potential. 
Automatic distribution is expected to support the 
transnational distributio n of around 100 European 
films per year in an average of 5 different territories at 
a cost of € 40.000 per film a nd per territory. Selective 
distribution could support up to 30 films in an average 
of 7 territories at a similar cost.  
The other key pillar of the MEDIA Programme with regard to circulation of works is the support to a cinema network 
   
11% of total MEDIA budget  The support to Europa Ci nema under MEDIA 2007 
has so far proven to have a high multiplier effect on EU investment. Indeed, 3 Euros revenue is generated for each Euro invested in the European network, and 
17 Euros in the international network. 
In order to have sufficien t geographical coverage and 
encourage the screening of European films in the major European cities, provide a broad offer to European citizens and produce an impact on the exhibition sector and on Eu ropean cultural diversity, 
the level of support needs to be maintained at a 
 
EN 100   EN minimum level of €13 million per year. It will cover 
the non-European cinemas currently financed under MEDIA Mundus. 
Given the importance of new distribution platforms for the circulation of European works, the support to online or mobile innovative platforms with an appropriate editorial line and offering a broad selection of European works will need to be reinforced.  
6% of total MEDIA budget  Based on the current experience, a minimum of 
€350.000 per unit annually is required to allow those platforms to develop their t echnological infrastructure, 
catalogue and business model. 
The support to festivals showing a minimum proportion of European films will be pursued. 
  
3% of total MEDIA budget  In order to maintain the geographical coverage and 
offer access to these works to the largest number of European citizens, the current catalogue of around 100 festivals across Europe will be maintained. Based on current experience, the minimum average support is €30.000 per year per festival. 
Sales agents or film exporters are the only actors on the European market with a transnational reach. Their importance in the successful distribution of European films in other territories, including North America or Asia has been demonstrated in evaluations and consultation process. 
       
4.5% of total MEDIA budget  Support to this key element of the value chain should 
be reinforced in order to help Sales Agents exporting 
valuable catalogues of Eu ropean works with high 
circulation potential at gl obal level. Support will be 
concentrated on the few key players of the market with sufficient global reach and will be granted  
1) In the form of automatic support (ex-post 
generation of grants allowa nce on the basis of sales 
performance). There is currently a deficit in the MEDIA budget of €1.6 million with regards to the current automatic support scheme, demonstrating an extra absorption capacity. Taking into account the current MEDIA Mundus budget for international sales of European catalogues, th e estimated budget required 
is €40.000 per film and per territory. The required 
budget is therefore estimated at €5.000.000 for automatic support.  
2) Sales support: support to costs related to and the 
presence of Sales Agents presence on international markets (both inside and out side Europe) and to the 
global promotion of European films. Based on the current experience, the annual budget required for sales support actions is €1.000.000. 
 
EN 101   EN In conclusion, the cost-effectiveness of the programme is optimised. The only way in which 
the cost of the programme could be signifi cantly reduced would be by cutting down the 
number of supported projects or the number of action lines. This would endanger the viability 
and effectiveness of the program me. The programme’s multiplier e ffect would be seriously at 
risk and so would be its e xpected results and impacts. 
6.3. Coherence 
Evaluations (the interim eval uation of MEDIA 2007 and the final evaluation of the MEDIA 
Plus and MEDIA Training Programmes) concluded that the programme was internally  
coherent. " The general architecture of the programme was gradually improved over the years 
and has now attained a high level of sophistic ation. The various tools and the conditions of 
their implementation have been adju sted many times to in relati on to three constraints: their 
appropriateness for meeting the sector’s needs,  their effectiveness,  and their management 
‘cost’. The MEDIA 2007 Programme has been re vised accordingly several times since its 
inception." 116 
Overall option 3 would lead to  improved internal coherence of the MEDIA Programmes, for 
example thanks to a refocusing on structuring acti ons and an integrated approach to the value 
chain, and option 4 would contribu te to go one step further th anks to a common approach to 
cultural and creative s ectors under the Creative Europe framework. 
As far as external  coherence is concerned, all of the options  appear to be similar in that they 
are broadly consistent with the Treaty on th e Functioning of the European Union (TFEU), 
Europe 2020, and the Digital Agenda, as explained in section 2. 
6.4. Feasibility 
Almost all actions included in the various opt ions have been used under the MEDIA and 
MEDIA Mundus programme, some only since recently, others fo r almost 20 years. Therefore, 
these actions are known to be feasible as fr om the implementation point of view. Demand 
stimulation measures, co production funds, and video games could be considered as new 
actions. However, demand stimulation in the form of media and film literacy programmes are in place in some countries (e .g. the 21st Century Literacy pr oject in the UK), co production 
funds are operating in several Member States and some forms of film marketing are already 
supported under the distribution action line. Sim ilarly, national support for the games sector 
and TV series exist in Norway and France. 
From a political point of vi ew, the MEDIA Programme has al ways benefited from support on 
the part of the Member States and national publ ic film institutes. The Programme has high 
visibility on the political scene and an excellent reputation in  terms of relevance, performance 
and complementarities with national measures. It is expected that this support will be 
maintained. 
6.5. Preferred option 
On the basis of the analysis a bove, the preferred option would be option 4  where the MEDIA 
strand (covering both MEDIA an d MEDIA Mundus) would be inte grated within a larger 
Creative Europe framework programme. 
                                                
 
116 Source: Interim evaluation of MEDIA 2007, Euréval, 2009. 
 
EN 102   EN A single framework programme wo uld have several advantages  over all the other options: 
• The first is that it can bring greater policy synergies  as the different cultural sectors 
are generally considered collectively in th e context of broader policy discussions on 
the cultural and creative sectors, includi ng their contribution to the Europe 2020 
strategy.  
• The second is that a single programme would make it easier to achieve knowledge 
transfer and cross-fertilisation  between sectors.  
• The third advantage is that it can contribute to simplifying the management  of these 
programmes. It would, for example, permit the establishment of single information/access points, thereby improving visibility, facilita ting the access of 
citizens to information on EU funding, and helping to ensure the best possible 
service to operators.  
• The fourth is that these simplifications  would also enable some reduction in the 
administrative burden  for both the Commission and Member States. 
Simplifications will be made to the deliv ery mechanisms through greater use of flat 
rates, grant decisions and framework partne rship agreements, electronic applications 
and reporting, and an electr onic portal to re duce paperwork for applicants and 
beneficiaries. Similarly, the tran sversal strand would enable some savings through 
economies of scale  in cross-cutting areas.  
• The fifth is that within this  single programme a transversal Cultural and Creative 
Sector Financial Instrument  could be included in orde r to increase access to 
(private) funding. 
This preferred option would also respond to the growing recognition at EU level of the 
importance of the cultural and creative sector s and offer the best basis for a common EU 
strategy to focus attentio n on the challenges currently facing th ese sectors. It would target EU 
support on those measures that provide most EU added value by helping the sectors to optimise their potential for economic grow th, job creation and social inclusion.  
The "Creative Europe" framework programme would be clearly linked to the Europe 2020 
strategy and seek to optimise the contribution of the cultural and creative sectors to its goals. 
The proposal is in line with the Communi cation of the Commission on the Multiannual 
Financial Framework adopted on 29 June 2011 ("A Budget for Europe 2020"), which 
indicated that synergies would be brought in to the culture related programmes of the 
European Union and that EU funding should be  concentrated on areas where it delivers high 
EU added value. It proposes to  attribute a sum of €1.6 billion to the programme for the seven 
year duration. 
7. M
ONITORING AND EVALUATION  
Evaluation 
Historically, it has been common practice for th e Commission to conduct two evaluations of a 
programme: an interim evaluation and a fina l evaluation. For th e round of multiannual 
programmes to be launched in 2014, the Commissi on’s intention is to use a single interim 
 
EN 103   EN evaluation. Going forward, the in terim evaluation would also se rve as a final evaluation for 
the previous incarnation of the programme. The successor MEDIA programme could follow 
the new procedure. 
In order to enable the results of the interim evaluation to be taken into account for decisions 
on renewing, modifying or disc ontinuing the successor programme in the future, it should be 
conducted roughly four years prior to the expi ration of the successor programme, currently 
envisioned for 2020. If it were co nducted too early, there would be  too little ex perience to 
evaluate; if too late, the result s could not be fully factored into the next multiannual cycle. 
This implies that the interim evaluation of the successor MEDIA programme should be 
conducted in 2016, assuming no change in the pl anned year of expiration. The European 
Commission will be responsible for this evaluation that will be  carried out by  a team of 
external and independent experts. 
Monitoring 
The current list of main indicato rs (see annex 4) to be collecte d and monitored will be revised 
once the shape of a successor programme has been finalised. 
To fulfil objective n°4, new policy support acti ons (see 4.6) should contribute to improve 
market transparency and to measure the indica tors on a regular basis, in particular through 
improved collection and analysis of to measure on context and market indicators. The new 
programme is expected to include closer collaboration with the European Audiovisual 
Observatory, whose scope could be extended. 
The use of a typology per type of country (A/B /C) will be maintained, after a review of the 
list of countries to include in each category on the basis of the individual evolution of each 
market. Similarly, given the different operation al modes and objectives of each action line, 
they should continue to be evaluated indivi dually. The indicators should be updated on a 
regular basis, maintained as a time series, and mo dified as little as pos sible over the life of the 
programme, so as to enable trends to be monitored. 
Also specific indicators should be developed to measure the circul ation of European films; to 
evaluate the financial instruments; and th e international dimens ion of the programme. 
 
EN 104   EN Annex 1: Glossary  
3D: A film, television programme or game with  images having three dimensional form or 
appearance. 
Audiovisual industry: For the purposes of EU audiovisual policy, the audiovisual sector is 
defined as comprising or includi ng all of the activities associ ated with the development, 
production and distribution, using any technology, of linear and non-linear audiovisual works. 
The focus of EU has tended to be on certain ki nds of audiovisual works, including drama, 
animation, and documentaries, rather than on form s such as newscasts, sports, or game shows 
for several reasons. First, drama and documentaries  fall more clearly within the provisions of 
the Treaty. Second, newscasts and sports are inherently more lo cal. Third, the challenges that 
these works face are clearly different, and probably less severe. 
Back catalogue: All the works of a specific artist,  or all the books, records etc. of a specific 
publisher, including works that  are no longer available. 
Catch-up TV: Catch up TV or Replay TV is a type of service that allows users to view 
programmes on-demand for a period of da ys after the original broadcast. 
Cultural and Creative Industries (CCI): indus tries producing and distributing goods or 
services which at the time they are developed ar e considered to have a specific attribute, use 
or purpose which embodies or c onveys cultural expressions, ir respective of the commercial 
value they may have. Besides the traditional arts  sectors, they include film, DVD and video, 
television and radio, video game s, new media, music, books a nd press. This concept is 
defined in relation to cultural expressions in  the context of the 2005 UNESCO Convention on 
the protection and promotion of the diversity of cultural expre ssions. "Creative industries" are 
those industries which use culture as an input  and have a cultural dimension, although their 
outputs are mainly functional. They include ar chitecture and design, which integrate creative 
elements into wider processes, as well as subs ectors such as graphic design, fashion design or 
advertising. At a more peripheral level, many other industries rely on content production for 
their own development and are therefore to so me extent interdependent with CCIs. They 
include among others tourism and the new t echnologies sector. These industries are not 
explicitly covered by the concept of CCIs used here. The term CCI  is used interchangeably in 
this report with “cultural and creative sectors” (CCS). 
Digital cinema: Digital cinema re fers to the use of digital te chnology to distribute and project 
films. 
Digital master: A digital version of a film suitable for projection in digital cinemas. 
Digital Terrestrial Television (D TT): Television channels using digital signals delivered to 
homes through a conventional aeria l, and converted through a set top box or integrated digital 
television set (IDTV). 
Dubbing: Dubbing is the post-production proc ess of recording and replacing voices on 
a film or television soundtrack subs equent to the or iginal production. 
EAO: European Audiovisual Observatory 
 
EN 105   EN Game Console: A video game console is an in teractive entertainment computer or modified 
computer system that produces a video display si gnal which can be used with a display device 
(a television, monitor) to  display a video game. 
GATS: General Agreement on Trade in Services Group A countries: France, Germany, the UK, Italy and Spain i2i Audiovisual" is a fund, designed to facilita te access to financing from banks and other 
financial institutions by subsidising part of the cost of the guarantees required by these institutions and/or part of th e financing itself. i2i covers th ree types of cost: insurance, 
completion guarantee, financing costs. 
Internet Protocol Television (IP TV): Delivery of television cont ent using Internet protocol 
within a “walled garden” network (as opposed to "online TV" on open internet), over a 
broadband network. IPTV has been widely used by telecoms operators to offer television over 
their DSL networks. IPTV can also be used  by cable companies both within their own 
network infrastructure and as a means of expand ing their service reach outside their areas of 
operation over unbundled thir d-party DSL-networks. 
MFN: Most favoured nation Multiplex: A cinema that has several different auditoriums in the same building. 
NNE works: Non-National European works 
Online TV: Online television (otherwise known as Internet TV, iTV or Online TV) is a 
television service distributed via the Internet. 
Pay-TV: Pay television, premium television, or  premium channels refers to subscription-
based television services, usua lly provided by both analogue a nd digital cable and satellite, 
but also by digital terrestrial methods. 
Prime Time: Prime time is the block of progr amming on television during the middle of the 
evening. 
Set-top Box: A set-top box (STB ) or set-top unit (STU) is a device that connects to a 
television and an external source of signal, tu rning the signal into content which is then 
displayed on the television screen. 
Smart Phone: A Smartphone is a mobile phone o ffering advanced capabili ties, often with PC-
like functionality (PC-mob ile handset convergence). 
Social networks: A social network service is an online service, platform, or site that focuses 
on building and reflecting of social networks or  social relations among people, e.g., who share 
interests and/or activities. 
Streaming content: Audio or video files sent  in compressed form over the internet and 
consumed by the user as they arrived. Stream ing is different to downl oading, where content is 
saved on the user's hard disk before the user accesses it. 
 
EN 106   EN Subtitling: Subtitles are textual versions of the dialogue in films a nd television programmes, 
usually displayed at the bottom of the screen. 
VoD: Video-on-demand - VOD systems allow user s to select and watch video content over a 
network as part of an intera ctive television system. VOD systems either “stream” content, 
allowing viewing while the video is being downloaded, or “download” in which the 
programme is delivered in its entirety to a set-top box before viewing starts. 
“Pure play” VOD services: services that offer f ilm and television content separately form any 
linear TV service  
 
EN 107   EN Annex 2: Evaluations and Impact A ssessments of MEDIA and MEDIA Mundus  
– Extended IA integrating ex  ante evaluation requirements for the Commission's 
Proposal on MEDIA 2007 Programme (2004); 
– Final evaluation of the MEDIA Plus  and MEDIA Training Programmes 
(2007); 
– Extended IA integrating ex  ante evaluation requirements for the Commission's 
Proposal on MEDIA Mundus  Programme (2008); 
– Interim evaluation of MEDIA 2007 after its first three years of  implementation 
(2010); 
– IA integrating ex ante evaluation require ments in view of the preparation of a 
proposal for the next MEDI A programme after 2013 (2011); 
– Ex post evaluation of the Preparator y action MEDIA International (2008-10) 
including some input for the ex an te evaluation of the MEDIA Mundus 
Programme in view of its renewal af ter the year 2013 (started in May 2011, 
mandated to a consortium by PPMI, Eureval/MCG). 
Reports are available on 
http://ec.europa.eu/ culture/media/progr amme/overview/evaluation/index_en.htm  
 
EN 108   EN Annex 3: Causal Model  
The European audiovisual industr y is subject to a large number  of problems and challenges. 
The figure below posits a causal model showing the interdependence of these problems and 
explaining the relationship between  the situation of th e audiovisual indust ry, and the problems 
requiring EU action as listed in the present doc ument. The model distinguishes among causes 
based on their location in the value chain: production, distribution, or consumer. 
 
EN 109   EN Causal model for the problem 
 
(3) Demand-side causes 
Demand is limited by low consumer demand for NNE works caused often by low awareness 
and appreciation of NNE works. Consumers tend to prefer works in their own language and 
stories related to their own cultu re with stars they know, the specific case of the mainstream 
productions from the US majors set aside. Th e low level of investment by the sector in 
 
EN 110   EN marketing NNE works, a low level of media c overage of NNE works, and a low level of 
visibility of NNE works on the internet may c ontribute to this. It is  also possible that 
producers and distributors lack skil ls in digital marketing that would allow them to make full 
use of the opportunities of marketing on the Internet. 
(4) Finance-related causes 
For many audiovisual production companies, especi ally SMEs, there is li mited access to and / 
or a high cost of finance117. The perceived high risk of lending to single audiovisual 
productions118 and a lack of risk shari ng instruments or guarantee f unds to offset this risk 
make banks reluctant to finance audiovisual companies and projects. In addition, lending 
against copyright assets (the assets resulting from audiovisual  production) requires a specialist 
approach. There has been limited development of specialist expertise within financial 
institutions, with only the “A  countries” having a ‘developed market for film banking’119. 
Indeed, the relative small size of the market limits the profitability for banks, who have 
difficulties covering specific back-office and expertise costs related to such specific activities.  
Likewise, few banks have developed expertise re lating to small-scale vi deo game financing. 
Finance is also difficult to obt ain at the distribution and exhibi tion levels of the value chain 
because typically companies ar e small and margins are low  
(5) Production-related causes 
A primary cause of the problem of  lack of circulation of works,  and low competiveness of the 
European sector, is the fragmented nature of the production sector, which consists of a large 
number of SMEs120. These small companies have difficulty  raising private fi nance, and often 
rely on national subsidies. As these subsidie s fund mostly production, there is a lack of 
investment by producers in other activities, including development and staff skills, and a 
typically short-term investment view. 
This also limits the producer’s ability to invest  in building their capacity to work on emerging 
formats or new business mode ls (e.g. 3D, interactive). 
(6) Distribution-related causes 
Television distribution 
The budgets of broadcasters, especially adve rtising funded commercial broadcasters and 
public service broadcasters, are under pressure  following the multiplication of TV and online 
channels and the consequent dilution of adve rtising revenues. This pressure leads to 
broadcasters having scarce resources for film and other relevant audi ovisual works (fiction, 
                                                 
117 Including working capital / corporate finance, interim financing, gap financing and tax incentive 
financing. 
118 Audiovisual production is a hit-driven business in which only a small proportion of works generate 
strong revenues. 
119 Study on the role of banks in the Euro pean film industry, PeacefulFish, May 2009. 
120 In 2007, there were over 600 film production companies in France, 400 in the UK, and 200 in Germany. 
This implies that the median company size is small. 
 
EN 111   EN animation and creative documentaries). Broadcas ters also have weak incentives to transmit 
NNE works. 
Cinema distribution Cinema exhibition is important to generate re venue. In a market where success relies to a 
large degree on "word of mouth", theatrical re lease remains an important building block for 
marketing and publicity in order to drive cons umption in other distribution channels. Low 
audience demand for NNE film provides a weak incentive for distribut ors to take on NNE 
films. Furthermore, European di stributors that tend to work with European films are typically 
national and small in scale (i.e. fragmented)
121 and cannot afford impor tant investment in 
NNE works (e.g. distribution costs such as s ubtitling, marketing and minimum guarantees). 
VOD services The industry is in a period of transition during which consumption of film and television 
content on VOD services
122 is growing, and the DVD market is  declining. Duri ng this period, 
VOD may remain relatively small in scale, gene rating little or no pre- sales investment in 
European content, which may in turn make acce ss to finance even more difficult. Challenges 
for distributors include tr ansient issues linked to high transaction cost of  widely participating 
in the market, and lack of know-how, particul arly with regard to  technology and rights. 
Structural causes may include  low commercial incentives for VOD service providers to give 
NNE works prominence, low investment by dist ributors in VOD distribu tion of NNE works, 
and the small scale of any European VOD aggreg ators and service prov iders such that the 
European sector may not have sufficient nego tiating power to obtain favourable distribution 
deals with global internet-based VOD se rvices (e.g. Apple iTunes, YouTube). 
                                                 
121 Cinema distribution in Europe is dominated by major US-owned distributors that are tied to major US 
studios. There were 646 active theat rical distributors in the EU 25 in 2005. 14 of the leading 20 
distributors in Europe are subsidiaries of US film companies, and non-US distributors had a market share of 35%. 
122 75  VOD services include those th at offer on-demand access to audi ovisual content on TVs, PCs 
and other devices in the catch-up TV, premium VOD or other rights windows. 
 
EN 112   EN Annex 4: Indicative indicators  
Objective Type of 
indicator Indicator Source of data 
collection Baseline  
General objective:  
To foster the 
safeguarding and 
promotion of 
European cultural and linguistic 
diversity, and 
strengthen the competitiveness of 
the cultural and 
creative sector, with a view to promoting 
smart, sustainable 
and inclusive growth, in line with the 
Europe 2020 
strategy. Impact 
 The sector's share of 
employment and share of GDP 
 Evaluation  
Annual EU 
competitiveness 
report Europe's creative 
sectors represents 3.8% of the total 
European 
workforce and 4.5% of total 
European GDP  
Specific objective 1:  
Support the capacity 
of the European cultural and creative 
sectors to operate 
transnationally  Result % of participants 
indicating that 
participation has strengthened the 
capacity of their 
organisation to work across borders 
% of artists/cultural 
operators who have increased skills 
relevant to their 
employability 
 Evaluation, 
self-
assessment, monitoring, 
survey   
 
EN 113   EN Specific objective 2:  
Promote the 
transnational circulation of 
cultural and creative 
works and professionals and 
reach new audiences 
in Europe and beyond  Result  % of Europeans 
audiovisual works in 
cinemas (Europe and 10 of the most 
important non-
European markets), TVs (Europe) and 
digital platforms 
(Europe)  
Number of 
admissions for 
European films in Europe and 
worldwide (10 of the 
most important non European markets) 
 For cinemas: 
- European 
Audiovisual Observatory 
(European 
markets) 
- Rentrak (for 
non European 
markets: data available for 
the following 
countries: USA/Canada, 
Argentina, 
Brazil, Chili, Colombia, 
Mexico, 
Venezuela, Australia, New 
Zeland, South 
Korea)  
For TVs and 
digital platforms: 
- "Studies on 
the implementation 
of the 
provisions of the Audiovisual 
Media Services 
Directive concerning the 
promotion of 
European works in 
audiovisual 
media services ”, DG 
INFSO 
  
Europeans films 
account for 59% of European 
cinemas' supply 
(2009, number of titles) 
European films = 
23% of non European 
cinemas' supply 
(2009, number of titles) 
European 
Audiovisual works = 66,4% of 
qualifying 
programmes offered by 
European 
channels (2010, 
estimation based 
on a representative 
sample of 54 
European channels) 
European works 
= 48,2% of titles available on 
European VOD 
services (2010, estimation based 
on a 
representative sample of 31 
European VOD 
services)  
 
European films = 
296 millions of 
admissions in 
European cinemas (2009) 
European films = 
117 millions of admissions 
(Worlwide: 10 of 
the most important non 
European 
markets, 2009) 
 
EN 114   EN Specific objective 3: 
Strengthen the 
financial capacity of the cultural and 
creative sectors Result The volume of loans 
granted to 
audiovisual companies 
Number and 
geographical diversification of 
financial institutions 
involved in the financing of the 
sector  Evaluation, 
reporting from 
financial intermediaries New action 
Specific objective 4: 
Support 
transnational policy 
cooperation  Result % of Member States 
and stakeholders indicating an 
increase in available 
data 
N° of new policy 
initiatives and 
practices in the Member states and 
partner countries 
inspired by the 
activities of policy 
dialogue and cooperation  OMC reports, 
evaluation, assessment 
monitoring 
survey and yearly report 
published by 
the European Audiovisual 
Observatory  
 
 
EN 115   EN PART III: FINANCIAL INSTRUMENT  
Leading Service : DG Education and Culture (EAC) 
Other involved services : DGs BUDG, COMM, COMP, DEVCO, ECFIN, EEAS, 
ELARG, ENTR, INFSO, LS, MARKT, REGIO, RTD. SG and TRADE 
WP reference : 2011/EAC/014 of the CLWP 
Disclaimer : This report commits only the Commission's services involved in its 
preparation and does not prejudge the final form of any decision to be taken by the 
Commission. 
Date : 7 September 2011
 
EN 116   EN TABLE OF CONTENTS 
1. Procedural issues and consulta tion of interested parties.......................................... 118 
1.1. Background .............................................................................................................. 11 8 
1.2. Consultation and expertise ....................................................................................... 119 1.2.1. Consultations........................................................................................................... . 119 
1.2.2. External expertise..................................................................................................... 1 20 
2. Context and problem definition ............................................................................... 121 2.1. The policy context.................................................................................................... 121 2.2. The historical context............................................................................................... 122 2.3. The European CCS market....................................................................................... 123 2.4. Identification of problems for the CCS and their underlying factors....................... 125 
2.4.1. The structural weaknesses of Cultural and Creative Sectors ................................... 125 
2.4.2. Access to finance for SMEs ..................................................................................... 128 2.4.3. A new market challenge for Cu ltural and Creative Sectors..................................... 130 
2.4.4. Two problems to be addressed by Financial Instrument.......................................... 131 2.5. The baseline ............................................................................................................. 1 32 
2.5.1. Actions in favour of access to finance in the MEDIA Programme.......................... 132 
2.5.2. Other Actions in favour of access to finance ........................................................... 134 2.5.3. Likely development of the problem all things being equal...................................... 135 2.6. EU – Right to act...................................................................................................... 136  
2.7. Subsidiarity and EU added value/ nece ssity test of the new EU initiative .............. 136 
2.7.1. Complementarities with national actions and EU initiatives ................................... 136 
2.7.2. EU Added value ....................................................................................................... 138  
3. Objectives................................................................................................................. 1 40 
4. Policy options........................................................................................................... 140  
4.1. Discarded options..................................................................................................... 140 4.2. Option 1 – No change (the baseline)........................................................................ 142 4.3. Option 2 – No action (the "no financial instrument" option)................................... 142 
4.4. Option 3 – Setting up a Cultural and Creativ e Sector Guarantee Facility within the 
framework of a larger financial instrument.............................................................. 142 
 
EN 117   EN 4.4.1. Sub-options ............................................................................................................. . 143 
4.4.2. Eligibility criteria applicab le to both sub-options.................................................... 146 
4.4.3. Loan characteristics applicable to both sub-options ................................................ 146 4.4.4. Duration of guarantees appli cable to both sub-options............................................ 147 
4.4.5. Loss cover Mechanism applicable to both sub-options ........................................... 147 4.4.6. Geographical coverage appli cable to both sub-options ........................................... 147 
4.4.7. Capacity building (CB) app licable to both sub-options........................................... 147 
5. Impact of the options................................................................................................ 148 5.1. Framework for analysing impacts............................................................................ 148 5.2. Analysis of impacts.................................................................................................. 149 6. Comparing the options ............................................................................................. 154 6.1. Comparison of options ............................................................................................. 154 6.2. Preliminary modalities for implementation of the CCS GF..................................... 160 6.3. Possible frameworks for the implementation of a CCS Guarantee Facility ............ 161 7. Monitoring and evaluation ....................................................................................... 163 8. Annexes.................................................................................................................... 1 66 
8.1. Annex 1 - List of consultations and studies ............................................................. 166 
8.2. Annex 2 - Commission guidelines on Financial Instruments .................................. 168 
8.3. Annex 3 – Eligibility criteria for SM Es to have access to the CCS GF................... 169 
 
EN 118   EN 1. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
1.1. Background 
DG EAC will propose a single “Creative Europe” framework programme bringing together 
the current Culture, MEDIA and MEDIA Mundus  programmes. The proposal for a Creative 
Europe framework programme will include separate strands for Culture, MEDIA, a 
transversal strand and a financia l instrument for the cultural and creative sectors (CCS). The 
current multi-annual financial framework attributed to the programme an amount of € 1,6 
billion for the period 2014-2020, out of which € 180 million are currently foreseen for the financial instrument. This document contribut es to the overall exercise by presenting 
exclusively the impact assessment of the future cultural and creative sectors financial instrument. 
Organisation and timing 
The renewal of the MEDIA Programme's lega l basis after the expiration of MEDIA 2007, 
MEDIA Mundus and Culture on 31 December 2013 is included in the Commission's work 
programme under the reference 2011/EAC/014. Th e adoption of Commission's proposal for a 
Decision of the European Parliament and of th e Council is foreseen at  the end of the year 
2011. 
As the current MEDIA Production Guarantee F und creates a part of  MEDIA framework, it 
was initially planned to include the financial instrument in the Impact Assessment for the 
MEDIA Programme but due to the complexity of the issue it was decided that a separate IA 
was necessary. Due to their expertise in the se tting up and managing of financial instruments, 
DGs ECFIN, RTD and REGIO were all consu lted in the preparation for this Impact 
Assessment both individually and collectivel y through various inte r-DG working groups. 
Concerning the IA Inter-Service Steering Group  (IA ISSG) of the MEDIA strand of Creative 
Europe, its first meeting was convened on the 30  September 2010 with the participation of the 
following DGs: COMM, COMP, ENTR, INFSO, LS, MARKT and SG. DGs BUDG, ECFIN, 
EEAS, ELARG, DEVCO and TRADE, were also invited at a later stage, following the 
decision to have a joint impact assessment for MEDIA and MEDIA Mundus and a separate 
one on a financial instrument for the cultural and creative sectors. During the first meeting the financial instrument was discussed as part of  the IA for the MEDIA Programme. Two further 
meetings were held on 16 November 2010 and 10 May 2011. The final draft of this report was discussed on 29 August 2011 where the IA for the financial instrument was discussed. 
This impact assessment will also serve as an ex-ante assessment for the Cultural and Creative 
Sector Financial Instrument comp lying with Art. X of the IR. 
The document was submitted to the IAB on 7 September 2011. The IAB Opinion was issued 
on 7 October 2011. 
Considerable improvements have been made to address the recommendations of the IAB. The 
main issues addressed are the following: market data of different CCS sub-sectors have been 
added and their profitability asse ssed, clarifications have been ma de with regards to the cross-
border aspects of the instrument, to its European added-value and to the target beneficiaries 
and eligibility criteria, the reasons for discardi ng some options have been strengthened, sub-
 
EN 119   EN options have been introduced, described, anal ysed and compared both in qualitative and 
quantitative terms (using different parameters  and including a sensitivity test). Smaller 
improvements have also been made across the document. 
1.2. Consultation and expertise 
1.2.1.  Consultations 
As the financial instrument was initially meant to be covered by the MEDIA IA, a 
consultation process described in  the MEDIA IA is highly releva nt to this IA. This section 
however reflects only the consultations having pa rticular effect on the financial instrument. 
Due to the diverse nature of the cultural and creative sectors which in cludes numerous groups 
of stakeholders such as from the audiovisu al, music, publishing and videogame industries, 
minimum consultation standard s have been complied with123 in recent years, both internally 
and externally. The most important ones are the following: 124 
Public Consultation which was carried ou t by the Commission in preparation for 
MEDIA Programme after 2013125 identified specific needs concerning facilitating access to 
finance for SMEs in the audiovisual sect or by suggesting that the MEDIA Production 
Guarantee Fund should become larger and open to other stakeholders  in the audiovisual 
industry than just film producer s. Additionally it was mentione d that the fund should also 
focus on corporate financing rather  than just project financing.  
Public Consultation launched by the Commi ssion's Green Paper on "Unlocking the 
potential of cultural and creative industries"126: There was a high level of consensus across 
respondents that one of the most impo rtant – if not the most important – problem faced by 
cultural and creative SMEs is access to funding . Respondents shared th e view expressed in 
the Green Paper that due to th e financial recession, many banks had become even more risk-
adverse and, as a result, more  reluctant to support cultural an d creative businesses because of 
their high risk profile. In this connection, severa l respondents pointed to  the need to set up 
guarantee mechanisms to encourage investors a nd banking institutions to invest in creative 
enterprises. Many respondents hi ghlighted the crucial role of public finance (at both national 
and EU level) in this regard. As a good exam ple, several respondents mentioned the MEDIA 
Production Guarantee fund, " which will help the audiovisual sector to develop new working 
and assessing methods and which could be used also for the growing of SMEs ". 
EIB Group (European Investment Bank and European Investment Fund): During a 
meeting with EAC in February 2011 the EIF expr essed its interest in setting up a financial 
instrument which would be more focused to service the needs of the cultural and creative 
sectors than other previous instruments such  as the transversal SME support provided by DG 
ENTR Competitiveness and Innovation Programme  (CIP) (which is managed by the EIF). 
Since then EAC has been exploring this op tion with the EIF in cooperation with other 
                                                 
123 http://www.cc.cec/home/dgserv/sg/stakeholder/index.cfm?lang=en   
124 For more information on consultation and expertise see Annex 2 and the IA for MEDIA Programme, 
Chapter 1.3.  
125 A summary of the online consultation's results regarding the MEDIA Programme after 2013 is available 
at: http://ec.europa.eu/culture/media/programme/doc s/overview/online_consultation_summary_en.pdf , 
further details provided in IA MEDIA. 
126 http://ec.europa.eu/culture/our-policy-development/consultation-on-green-paper_en.htm 
 
EN 120   EN Commission services such as DG ECFIN and DG RTD, the European  Investment Bank, 
various financial institutions and representati ves from the cultural and creative sectors.  
Working Group on EU Equity an d Debt Platforms (DG ECFIN): The College agreed on 
21 January 2011 on the principle of a more syst ematic and standardis ed use of financial 
instruments based on the EU Equity and De bt Platforms to ensure a high degree of 
standardisation and efficiency in  the design and management of su ch instruments. In light of 
this, DG ECFIN organised a working group to  discuss and contribute to Communication 
Paper "Issues note on the EU Equity and Debt Platforms" to be used as guidelines for 
Commission services planning to set up such an  instrument. The main concerns for DG EAC 
were related to the proposed multi-policy/cross flagship and the minimum size requirements  
of future Commission FIs.  
Inter-Policy DGs Working Group on  Financial Instruments (DG RTD) : The group 
consisted of the following DGs CLIMA, CO MP, ECFIN, ENER, ENTR, ENV, INFSO, 
MOVE, and REGIO and met on several occasions  from the beginning of 2011 to discuss a 
common paper named "Financial instruments su pporting research and in novation in the next 
Multiannual Financial Framewor k: an integrated  approach". The document has been 
circulated to the Direct or Generals in June 2011.  
Seminar: Facilitating access to fundi ng for cultural and creative SMEs:  The half day 
seminar on "Facilitating access to funding for cultural and creative SMEs" was organised by the DG EAC on 3rd May 2011 and brought together representatives from European financial 
institutions which have been involved in f unding for SMEs operating in the cultural and 
creative sectors (CCS), companies from the CCS and experts who have been working on the topic of access to finance for CCS. Additionally, officials from different Directorate Generals 
of the European Commission were present. The main conclusions from the Seminar were that 
was necessary to develop expertise and knowledg e transfer, promote investment readiness for 
CCS, better communication towards retail banks about the existence of guarantee schemes, 
ensure sufficient flexibility within future financial instruments.  
1.2.2.  External expertise 
London Bank Expert Roundtable (2009): Following the Study on European Film Banking 
(2009)
127, the Commission carried out  roundtable discussions with European financial 
institutions on the conclusions of the study which stated that  following the crisis, banks were 
more reluctant to have an active role in the sector and that one way of encouraging them to make credits available to audiovi sual producers would be through a third-party  guarantee 
mechanism . The financial institutions agreed on that  such a mechanism would facilitate the 
access to bank credits for producers of audiovisual  content and create closer links between 
banks and SMEs in the audiovisual sector.  
The Commission mandated a c onsortium led by WIK-Consult
128 to carry out an "Impact 
assessment integrating ex ante evaluation requirements in view of the preparation of a 
proposal for the next MEDIA Programme after 2013."  The contractor collected market 
data and compiled relevant information derivi ng from the various sources mentioned above. 
                                                 
127 http://ec.europa.eu/culture/media/programme/overview/evaluation/studies/index_en.htm 
128 The study was conducted by a team led by WIK-Consult and comprising Plum, IDATE, TNO, and 
senior expert Prof. Dr James Kahan, under Framework Contract for the Provision of Impact Assessment 
and Evaluation-Related Services to DG INFSO (Contract number: 30-CE-0208155/00-08).  
 
EN 121   EN Results of the contract in relation the financia l instrument were used mainly for describing 
problem definition and an alysing the problems.  
The results of all studies, ev aluations, working groups and public consultations have been 
reflected in this Impact Assessment report. 
2. CONTEXT AND PROBLEM DEFINITION  
2.1. The policy context 
The EU 2020 strategy sets three priorities for th e future of Europe: Smart growth, developing 
of an economy based on knowledge and innova tion, sustainable growth promoting a more 
resource efficient, greener and more compe titive economy and inclusive growth fostering a 
high-employment economy delivering economic, soci al and territorial c ohesion. The cultural 
and creative sectors contribute to achieving these goals, namely  through promoting creativity 
and diversity which are essential drivers of  an innovation and knowledge based economy and 
through strengthening the competiveness of  the sectors leading to new jobs. 
The EU budget review129 makes a strong case for increasing the leverage effect of the EU 
budget and gives particular rele vance to financial instrument s, as catalyst of public and 
private resources, to achieve the strategic inve stment levels needed to implement the EU 2020 
strategy. Accordingly, the next Multiannual Fina ncial Framework is e xpected to foresee a 
stronger role for financial instruments wh ich have a multiplying effect on EU budget 
investments and mobilise additional or private co-investments to address market failures in 
line with Europe 2020 policy priorities. 
In accordance with the principles presente d in the EU Budget Review, new financial 
instruments are expected to generate EU adde d value, create synergies between Europe 2020 
objectives, be cross-policy and cross-sector, respect state aid principles, and be financed 
through different budget-lines li nked to the policy areas con cerned. Furthermore, potential 
financial instruments targeting the same polic y area and/or providing similar products should 
as much as possible be integrated. 
Spending EU budget through financial in struments is not a new feature; the term 
“innovative” is used to differentiate th e instruments from the non-repayable grant 
approach . Financial instruments thus cover a broa d range of cases where financial support 
from the budget is provided in ot her forms than pure grants.  
Financial instruments cannot replace grant funding  but complement it by lending 
principally repayable support to projects through equity /risk capital, guarantees to 
intermediaries that provide lending to a la rge number of final be neficiaries who have 
difficulties to access finance (e.g. SMEs, infrastruc ture project companies, people in risk of 
social exclusion, etc.), or risk sharing with fi nancial intermediaries in  order to increase the 
leverage capacity of the EU funds. 
                                                 
129 EU Budget Review — COM(2010) 700 of 19.10.2010 
 
EN 122   EN To distinguish financial instruments from pure grants, the Commission's proposal for 
amendment of the FR130 defines financial instruments as " Union measures of financial 
support provided from the budget on a complementary basis in order to address, when 
necessary and duly justified, one or more sp ecific policy objectives. Such instruments may 
take the form of loans, including loans with interest rate reba tes, guarantees, equity or quasi-
equity, equity/debt investments or participati ons, facilitated where appropriate by the Union 
through risk-sharing instruments, possibly combined  with grants ".  
Financial instruments can be used in areas wh ere projects have a re venue generating capacity. 
They are in particular relevant in fostering the capacity of the private sector to deliver growth, 
job creation and/or innovation: support to st art-ups, SMEs, mid-caps, micro-finance, 
knowledge transfer, investment in intellectual property. 
2.2. The historical context 
Since 1991 MEDIA, the EU's suppo rt programme for the European  audiovisual industry has 
supported the development and distribution of thous ands of films as well as training activities, 
festivals and promotion projects Europe-wid e. From 2001-2006, more than half a billion 
Euros were injected into 8000 projects from over 30 countries. 
The public consultation carried out by the Commission in preparation for MEDIA 2007 
identified areas where changes were required. Amongst others, specific needs were identified 
for targeted action in the field of digitisation and measures to facilitate access to credit for 
small and medium-sized businesses . As a result, decision No  1718/2006/EC establishing the 
MEDIA 2007 provided for an undefined131 possibility for financial intermediaries to benefit 
from the MEDIA Programme.  
The Commission therefore in 2010, set up a four year MEDIA Production Guarantee Fund  
(2010-2014, €8 million) in the framework of  the MEDIA 2007 Programme in view of 
facilitating access to private financing for SMEs in the audiovisual sector.  The Fund is used to 
guarantee 50-55% of the loans gr anted by local banks to film  producers in order to reduce 
their risk and increase their lending activities in  favour of the sector. All financial institutions 
from a participating country of the MEDIA Progr amme are eligible to receive the guarantee, 
provided that the end beneficiary is an i ndependent European production company seeking 
finance for an eligible film project132. Since the Fund only became fully functional to issue 
guarantees in early 2011, the impa ct is yet to be seen but s ection 2.5 Baseline, gives a brief 
overview of the Fund´s achievements to this date.  
Additionally, the MEDIA Programme has been operating separately from the MPGF, the i2i 
Audiovisual scheme, supporting the financial co sts of film producers such as financial 
interests related to bank loans or insurance133. The scope of this acti on line is however limited. 
Indeed, it supports the cost of interest relate d to bank loans, but does not effectively help 
                                                 
130 Proposal for a Regulation of the European Parlia ment and of the Council on the financial rules 
applicable to the annual budget of the Union, COM(2010)815 final, as proposed modified by revised 
Presidency proposal of 8 April 2011. 
131 This support could be implemented through equity investments, loans, guarantees or direct grants. The 
study on film banking and roundtable discussions with banks suggested that a guarantee fund would 
have the greatest impact.  
132 See definitions on http://www.ifcic.eu/media-prod uction-guarantee-fund-1/eligibility-criteria-for-the-
mpgf-guarantee.html or http://www.audiovisualsgr.com/audiovisualsgrmgf/howto.asp 
133 http://ec.europa.eu/culture/media/programme/producer/i2i/index_en.htm 
 
EN 123   EN producers to have access to th ese bank loans in the first pl ace. Furthermore, the interim 
evaluation of the MEDIA 2007 has underlined its lack of impact due to its low annual budget 
of only € 3 million. 
2.3. The European CCS market  
The market context 
In the era of globalisation and international competition, the re venue potential of cultural and 
creative sectors is just as important as the access to commodities or the reliance on a manufacturing base. 
This potential is demonstrated by the fact that  the cultural and crea tive sectors account for 
4.5% of the EU's GDP  in 2008 and employ some 3.8% of its workforce
134. Overall 
employment in creative sectors increased by an average of 3.5% a year in the period 2000-
2007 compared to 1% a year  for the total EU economy135.  
The study " The Economy of Culture " carried out by KEA in 2006 ma kes a distinction between 
a) The “cultural sector” includes  Non-industrial sectors producing non-reproduci ble goods and services aimed at being 
"consumed" on the spot (a concert, an art fair, an exhibition). These are the arts field (visual 
arts including paintings, scul pture, craft, photography; the arts and antique markets; 
performing arts including opera, orchestra, th eatre, dance, circus; and heritage including 
museums, heritage sites, archaeological  sites, libraries and archives).  
Industrial sectors producing cultural pr oducts aimed at mass reproduction, mass-
dissemination and exports (for  example, a book, a film, a sound recording). These are 
“cultural industries” including film and video, video-games, broadcasting, music, book and 
press publishing. 
b) The “creative sector” 
In the “creative sector”, cultu re becomes a “creative” input in  the production of non-cultural 
goods. It includes activities such as design (fashion design, interi or design, and product 
design), architecture, and advertising. Creativ ity is understood in the study as the use of 
cultural resources as an inte rmediate consumption in the production process of non-cultural 
sectors, and thereby as  a source of innovation. 
The total turnover of these se ctors in Europe amounted to € 654 billion  in 2006. The figure 
below demonstrates how the turnover is split betw een the different sub-sectors. It shows that 
those sectors that generated most turnover we re mainly the service providers and content 
                                                
 
134 "Building a Digital Economy: The importance of saving jobs in the EU’s creative industries", TERA 
Consultants, March 2010. According to the Federation of European Publishers, book publishing 
employs 135,000 people full time and contributes approximately € 24 billion to EU GDP. The 
audiovisual industry in Europe produces more than 1,100 films per year and employs over 1 million highly qualified people. (Source: Multi-Territory Licensing of Audiovisual Works in the European 
Union, KEA study, October 2010.)  
135 European Competitiveness Report 2010 
 
EN 124   EN providers136. For film and video the EU turnover si ze was estimated to be €17 billion while 
for television and radio the turnover was €48 billion137. The size of the Europe, the Middle 
East and Africa (EMEA) video game market size was €12, 3 billion in 2008138 while the value 
of EU recorded music sales in 2008 was € 7 billion139. 
Figure 1. 
 
Market trends 
In the years leading up to the economic downturn, namely 2002-2008, trade in goods and 
services from the creative industries grew on average 14 % annually, ev en after taking into 
account the sharp contraction of world demand and international trade in the final months of 
2008. As the decline in internationa l trade affected all economic sect ors, it is still premature to 
draw a definite picture regarding its adverse impact on th e creative economy. 
For instance, world exports of visual arts doubled in six year s, reaching $29.7 billion in 2008. 
The same trend was noticed for exports of audiovisual services, which amounted to $13.7 
billion in 2002 and reached $26.4 billion in 2008, although much of the trade in audiovisual 
products occurs in the form of rights transactions as the mean s for buying and selling creative 
content, for which data is unavailable. 
These figures are still highly underestimated and cannot capture the more vibrant reality of 
the global markets of creativ e industries, due to limitations  in statistic al data and 
                                                 
136 Study on the Entrepreneurial dimension of CCIs (2011) http://ec.europa.eu/culture/key-
documents/doc3124_en.htm 
137 PWC report on Media and creative industry, 2008  
138 IPTS. BORN DIGITAL / GROWN DI GITAL: Assessing the Future Competitiveness of the EU Video 
Games Software Industry. 2010 
139 http://www.impalamusic.org/info_03_indfact.php 
 
EN 125   EN methodologies that obscure the revenues from the trade of copyrights and for some key 
services sectors. Indeed, these represent the major share of key creative industries such as the 
music and film industries, TV and radio broadc asting, performing arts, and trade in digitized 
creative content. Just to give an idea of the magnit ude of the creative eco nomy and its overall 
economic impact, the PwC 2008 study forecast that the global entertainment and media 
industry alone will be injecting around $2.2 trillion in the world economy in 2012.  
Moreover, fast-paced technological progress has altered the way people do business and 
disseminate, receive and consum e products and services, such  as music and audiovisual 
works. New business models are developing and traditional ones need to adapt. New 
economic players and service providers are en tering the market. Consumers are changing the 
way they interact with the ma rket place. Innovative SMEs struggle to benefit from these 
developments, because they are often undercapita lized which in its result leads to the limited 
circulation of cultural goods and services.  
2.4. Identification of problems for th e CCS and their underlying factors 
2.4.1. The structural weaknesses of Cultural and Creative Sectors140 
European cultural markets traditionally show some failures limiting their economic impact 
which is due to their fragmentation  in terms of both production structure and the general 
framework in which they operate. Beyond fr agmentation, other hist orical structural 
weaknesses of the CCS in Europe are the chronic underinvestment and undercapitalisation 
of companies from private sources of financing.   
Around 80% of enterprises in the CCS are sole traders or  micro-SMEs employing only a 
handful of people. Within this majority of 'mic roenterprises' almost 60% consist of very small 
micro-businesses with only 1 to 3 employees141. The numbers of large- scale enterprises is 
marginal, at less than 1%, but are responsible fo r more than 40% of the annual turnover. This 
characteristic of the CCS is often called the "missing middle": a very small number of 
operators are middle sized enterprises (only 2.5% have between 50 and 249 employees). The 
study on " Entrepreneurial dimension of CCIs " indicates that there is a substantial difficulty 
for small enterprises to grow into medium-sized  firms. It concludes that the gap between the 
bigger players and the micro-SMEs renders the growth of micro-SMEs difficult and increases 
the difficulty in accessing markets for the smaller players. As can be seen from the figures below, there are extreme differences in tur nover and asset distributi on between bigger and 
smaller companies
142. 
Figure 2. 
                                                 
140 These issues are widely explained in the respec tive Impact Assessments of  the MEDIA and Culture 
strands of the Creative Europe Programme 
141 See 2011 Study on the Entrepreneurial dimension of CCIs http://ec.europa.eu/culture/key-
documents/doc3124_en.htm 
142 See 2011 Study on the Entrepreneurial dimension of CCIs http://ec.europa.eu/culture/key-
documents/doc3124_en.htm 
 
EN 126   EN 
 
Figure 3. 
 
Taking note of these figures, it is logical to assume that those CCS enterprises which are in 
the most need for public support, are those which are employing the fewest employees and 
those which do not need assist ance are large-cap companies. A target group of a possible 
financial instrument for the cultural and creativ e sectors is therefore SMEs operating in these 
sectors along with organisations which demons trate their capabilities to repay loans.  
The cultural and creative sectors also suffer from stereotypes when it comes to assessing its 
economic performance. Culture is often per ceived as a non-economic activity. Many believe 
 
EN 127   EN that culture and the economy are two separa te worlds, those who recognise the economic 
value of culture tend to perceive the cultura l sector as poor in relation to its economic 
importance. The perception is that of in dividual artists, heavil y subsidised public 
organisations or of a "cottage industry" which is destined to succumb when confronted with 
market realities. However, the study " The Economy of Culture "143 demonstrated in 2006 that 
the creative and cultural sectors in Europe are as competitive as other industry sectors – in 
some cases even more by comparing their produc tivity and profitability with other sectors, 
which are important factors wh en assessing the risk related to lending money to a company. 
Table 1. Productivity and Prof itability of the various CCS 
 Productivity144 Profitability145 
Design 1.92 10.5% 
Architecture 1.43 8.8% Visual Arts 2.04 11.3% Performances 1.72 8.5% Film and Video 2.02 11.7% Radio and TV 1.65 9.9% Advertising 1.50 5.4% 
Press and publishing 1.35 7.9% 
Heritage 1.21 8.6% Video Games 1.66 7.7% Music  1.43 8.9% Tourism 1.44 7.8% 
Source Amadeus – Data elaborated by Media Group (T he Economy of Culture in Europe – KEA – 2006) 
The need for productivity  largely depends on the investment  intensity of a given industry. 
The higher the intensity, the more productive th e industry in question mu st be in order to 
cover investments. Manufacturing industries wi th higher capital cost s usually need higher 
productivity rates than the services industr y. The typical productivity level of service 
industries, similar to those cons tituting most of the cultural a nd creative sectors, is between 
1.2 and 1.9. The average productivit y level for the European cultural & creative sector was 
1.57 in 2003.  The study identified that the best performing sectors in 2003 terms of 
productivity were design, visual arts and film  & video. The biggest increase in productivity 
                                                 
143 KEA European Affairs - 2006 
144 Ratio between value-added and employment costs. Productivity shows how much value is created for 
every Euro spent on employment costs (wages, salaries and social costs) 
145 Operating margin of companies active in the cultu ral and creative economy. Profitability shows what 
percentage of the turnover is left after the deduction of operating costs. 
 
EN 128   EN was, however, recorded in the video games s ector, one of the fastes t developing CSS in 
Europe.  
As a general rule, a profit margin of 5% up to 10% is considered as an indication of a healthy 
level of profitability  for service industries similar to those included in the CCS. The average 
European level of 9% is theref ore a sign of a highly satisfactory  profitability existing in the 
cultural & creative sector across Europe.  
These findings are important both in terms of ri sk assessment for private financiers and public 
policy making in the CCS. Indeed, the percepti on of sectors surviving only thanks to heavy 
subsidies which are incapable of handling the re imbursement of loans has to be mitigated on 
the basis of their performance in term s of productivity and profitability.  
Furthermore, the evidence above strengthens th e case for distributing public support through 
financial instruments such as guarantees instead of offering di rect subsidies. Various sub-
sectors of the CCS such as f ilm producers, video-game developers, music and book publishers 
which can all demonstrate productivity and prof itability should be encouraged to mitigate 
their reliance on public handouts and instead ad opt a more business-like approach by using 
public financial instruments.  
2.4.2.  Access to finance for SMEs 
Previously we have stated that the overwhelmi ng majority of European enterprises which are 
operating in the CCS fall under  the definition of a SME146 and therefore share the same 
challenges and difficulties with regards to access to finance as conventional SMEs do. 
However, it is accurate to state that cultural a nd creative SMEs are confronted with additional 
barriers to access to finance which will be explained later in the text.  
According to a 2009 Eurobarometer survey, bank loans are by far the main source of external 
financing for SMEs147 but it is difficult to measure the fina ncing gap in terms of the lack of 
access to bank loans among EU SMEs. In general it can be assumed that at the EU27 level, in recent years an estimated 5%-10% of enterprises had their applications for bank loans rejected 
or could only get part of the funding while a nother 5%-7% did not apply because of possible 
rejection
148. If these numbers are applied to the 20.7 million SMEs in the EU149, the number 
of firms having difficulties in obtaining banks loans is in the region between 2 and 3.5 
million150.  
                                                 
146 Enterprises qualify as micro, small and medium-sized enterprises (SMEs) if they fulfil the criteria laid 
down in the table 
Enterprise category Headcount Turnover or Balance sheet total 
medium-sized < 250 ≤ € 50 million ≤ € 43 million 
small < 50 ≤ € 10 million ≤ € 10 million 
micro < 10 ≤ € 2 million ≤ € 2 million 
 
147 The Gallup Organisation, Eurobaro meter 271, Access to Finance, September 2009, commissioned by 
DG ENTR in collaboration with the ECB. 
148 Based on statistics from the 2009 Eurobarometer survey 
149 EC. European SMEs under Pressure – Annual Report on Small and Medium Sized Enterprises 
2009.2010  
150 As it is difficult to estimate the total percentage of SMEs applying for bank loans (vs. those who haven't 
applied for bank loans), this example makes the assu mption that all SMEs would like to receive a bank 
loan.  
 
EN 129   EN It is important to bear in mind that the statistics here above do not necessarily reflect a market 
failure in all cases as there might be credible reasons for the limited or non existent access to 
loans for some SMEs. However, it can be estimat ed from various industr y sources and studies 
that about 15-30% of the SMEs who have had th eir loan applications re jected should in fact 
have received loans but due to their informational asymmetries, their comparatively high transaction costs and their lack of tangible collateral, they fail to obtain bank loans.  
By assuming that in only 20% of the cases abov e the reason for the lack of bank loans is the 
lack of tangible collateral, the number of SMEs  facing the lack of access to bank loans can be 
estimated at between 400,000 and 700,000. Consideri ng an average indivi dual loan amount of 
€100,000 (based on average loan ratios for AECM me mbers), the total value of the financial 
gap due to the lack of collateral can  be estimated at € 40- € 70 billion
151. 
By applying the methodology used for SMEs here above to the 1.4 million152 European SMEs 
operating in the cultural and creative sectors153, the financial gap due to a lack of collateral 
in the CCS can be estimated at €2.8 billio n to €4.8 billion in terms of bank loans154.  
The following reasoning explains why access to fi nance is more challenging for SMEs in the 
cultural and creative sectors comp ared with conventional SMEs: 
1. Firstly this is due to the intangible nature  of many of their a ssets (in particular 
IPR155), which are usually not reflected in financial statements156.  
2. Secondly, unlike other industrial products  CCS products are generally not mass-
produced. Every film, book, opera, videogame can be seen as a unique prototype157. 
3. Thirdly, the demand for financial services of cultural and creative SMEs is often not 
substantial enough for banks to  find them commercially in teresting. In deed, dealing 
with these industries require specific skills (in the area s of market intelligence, 
intellectual property rights, risk analysis of cultural and creative projects, financial analysis of cultural and creative SMEs), needing a certain level of investment in terms 
                                                
 
151 Based on information from the European Asso ciation of Mutual Guar antee Societies (AECM) 
152 See KEA, The Economy of Culture in Europe , 2006 
153 Assuming the same average loan valu e of €100,000 is also applicable to CCS. In some sub-sectors, the 
average loan value is higher (film production, video games), in others, the average value is lower (film 
development, cinema theatres), others are more or less in the same range (working capital for distributors, music companies).  
154 Applying the same assumptions in terms of proportion of SMEs that did not obtain a bank loan (10-
17%) due to a lack of collateral (20%) to the 1.4 million enterprises in the CCS, we can estimate that 280,000-476,000 SMEs in the CCS did not obtain a bank loan due to a lack of collateral. Assuming that 
the average amount of a bank loan is €100,000, the financial gap can then be estimated at between € 2.8 
and 4.76 bn. 
155 Intellectual Property Rights: under intellectual property law, owners are granted certain exclusive rights 
to a variety of intangible assets, such as musical, literary, and artistic works; discoveries and inventions; 
and words, phrases, symbols, and designs. Common types of intellectual property include copyrights, trademarks, patents, industrial design righ ts and trade secrets in some jurisdictions. 
156 The International Accounting Standards Board (IASB) offers some guidance (IAS 38) as to how 
intangible assets should be accounted for in financia l statements. In general, legal intangibles that are 
developed internally are not recognized and legal in tangibles that are purchased from third-parties are 
recognized. 
157 The production of audiovisual works or other crea tive content such as book s are produced project by 
project creating a new prototype for every new project whereas other industries can lead one prototype 
to mass production.  
 
EN 130   EN of training and resources. However, the size of  this specific market does not justify the 
creation of individual specialised CCS depa rtments within banks. There is therefore 
little value for them to engage with the sector. 
4. Cultural and creative SMEs often lack business and management skills and face 
specific challenges in achieving investment readiness158  
5. Finally, there is often a shortage of  reliable data  which limits the possibilities of 
SMEs in the sector to get credit funding as fi nancial institutions often rely on statistical 
evidence in their due diligence for loan applications.  
As a consequence financial inst itutions do not have the tools to  estimate the value of the 
intangible assets of cultural and creative SMEs, to analyse their business plans and to 
understand their risk profile. The current prac tice of the few banks that do grant loans to 
players of the sector is therefore to ask fo r personal collaterals and guarantee bank loans on 
the entrepreneurs' private assets. It is importa nt to note that the a bovementioned challenges 
apply to all cultural and creativ e sectors, as confirmed thr oughout the various consultations 
with stakeholders, stud ies and assessments listed in se ction 1.3. The shortage of data 
concerning the CCS, can be furthermore observed through the lack of st atistics of the actual 
capital needs of the vari ous sub-sectors. Although various st udies have been carried out on the 
lack of access to financing for the CCS, the di stinction between needs for banks loans or 
equity has yet to be comprehensively mappe d and documented. Indeed, very few financial 
institutions have granted credits to companie s in the CCS. However, banks were willing to 
provide financing to individual managers / ow ners / producers via pers onal credits, against 
personal guarantees (private  houses/properties or equi valent tangible assets). 
Further investigations are bein g carried out on this issue an d an expert group on access to 
finance for the CCS, composed of the differe nt stakeholders (SME S, banks, experts and 
policymakers) has been set up by the Europ ean Commission Additional information on the 
scale of current loans to CCS and remaining ga ps, along with the average size of loans, 
maturities, types and costs of capital/i nterest rates will thereby be collected. 
The current MEDIA Production Guarantee Fund is already providing the Commission with 
such information but it is confined to the sub-sector of film production. 
2.4.3.  A new market challenge for Cultural and Creative Sectors159 
Additionally, the economic and fina ncial crisis has led banks to refocus their activities on core 
business and move away for what are perceive d as higher risk sectors such as the CCS, 
making access to finance  for SMEs of the sector even more difficult. 
Also, presales of content to  television channels or co -production deals which have 
traditionally constituted a key resource for th e production of audiovisual works for example 
are getting scarcer. Indeed, the economic crisis , the multiplication of the number of channels 
and the changed viewing habits  in particular of the young a udience has led to a drastic 
                                                 
158 Ability to understand investors' concerns, to unders tand the differences between the types of financiers, 
to fulfil specific financial requirements of banks and investors 
159 They are more widely explained in the respec tive Impact Assessments of  the MEDIA and Culture 
strands of the Creative Europe Programme 
 
EN 131   EN reduction of their advertising re venues. Buying less content for lower prices, television 
channels and other content distributors have  reduced their contri bution to the sector. 
Other consequences of the difficult economic  situation are the re duction of public support 
within a certain number of Member states and the tendency for each territory to focus their 
efforts on their own national cinematography or cultural production rather  than opening up to 
other European countries. 
As a result, cultural and creative SMEs encounter specific difficulties in accessing finance, 
both in terms of credit and equity. While this is  a common challenge for SMEs in general, the 
situation is significantly worse for cultural and creative SMEs, with serious consequences on 
competitiveness, at a time when they have to  find innovative business models for the new 
digital globalised environment. At a global le vel, the lack of private investment in the 
European audiovisual sector can also be s een when comparing for example the amount of 
investment per capita  in film production, where the USA invests USD 40 / per capita, Japan 
USD 20 and Europe only USD 13160.  
2.4.4.  Two problems to be addressed by Financial Instrument 
On the basis of the above analysis, there are es sentially two key problems to be addressed at 
EU level which applies to all cultural and creative sectors: 
• The difficulties for cultural and creative SMEs and projects in accessing bank 
credits  
• The limited spreading and dissemination of expertise  among financial 
institutions in the area of financial analysis of cultural and creative SMEs and 
projects throughout the EU.  
The groups affected by the problem incl ude the following European entities: 
• Audiovisual producers and production companies 
• Cinema exhibitors 
• Providers of video-on-demand services 
• Publishers of video games 
• Publishers of books, newspapers, journals and periodicals 
• Entities involved in trading activities  in book, newspapers, journals or 
periodicals 
• Booksellers 
• Publishers of sound recordings 
• Distributors of sound recordings 
• Entities involved in trading activities in sound recording 
                                                 
160 Calculations made on the basis of statistics from Screen Digest.  
 
EN 132   EN • Entities involved in creation, producti on, distribution, pr omotion or trading 
activities in other cultural and creativ e sectors such as the performing arts, 
visual arts, multimedia, heritage, design or the press 
• Distributors and sales agents (film,  TV, video games, books and music) 
• Financial institutions such as banks, guarantee financial institutions and other 
entities such as investment funds (VCs) and business angels 
• Policy makers 
2.5. The baseline 
2.5.1.  Actions in favour of access to  finance in the MEDIA Programme 
In the context of the MEDIA 2007 Programme, th e i2i Audiovisual scheme, already described 
in section 2.2 has been open to producers of audiovisual content to support part of the costs 
related to bank credits, insurance and completion bonds. 
The MEDIA Production Guarantee Fund launched in 2010 facilitate s access to private sources 
of finance uniquely for film producers via a gu arantee mechanism that encourages banks to 
grant them credits by sharing the risk incurre d. With a total budget of € 8 million for duration 
of 4 years, it is expected to generate over € 100 million bank credits, thanks to the leverage effect of the guarantee mechanism. The MPGF was open to receive ap plications in May 2011 
and has to this date issued more than a dozen guarantees allowing to raise bank credits for a value of around €18 million in a bout ten different member states
161.  
The management of the fund has been delegated to two financia l institutions with specific 
expertise and experience in fi nancial services for the CCS : Audiovisual Aval, S.G.R. 
(Audiovisual SGR) in Spain and Institut pour le Financement du Cinéma et des Industries 
Culturelles (IFCIC) in France. The system s proposed to reach the objective by each 
organization are based on two di fferent financial mechanisms.  
IFCIC  offers solidarity with other guarantee funds it manages on behalf of the CNC162, the 
French public fund in support of the audiovisual industry163. Solidarity means that in case the 
default rate is higher than expected and too many loans ar e not reimbursed, the other fund, 
called the Fonds de Garantie Principal, will  take over obligations of the MEDIA Production 
Guarantee Fund and cover the losses incurred by  the banks. Given the substantial size of the 
Fonds de Garantie Principal, IFCIC can therefore offer a hi gher leverage effect. Indeed, 
solidarity bringing down the level of risk, the mu ltiplier ratio is much higher than for a stand-
alone fund of an equal amount. The downside to this solidarity principle is that, once an 
amount has been committed to guarantee a loan, it is integrated to the Fonds de Garantie Principal and not return ed to the EU budget at the end of  the period. IFCIC receives a 
management fee from the European Commissi on. Furthermore the banks will pay a guarantee 
fee of 1% p.a. for the guaranteed amount. 
                                                
 
161 This is considerably higher th an the estimated averag e of loans to the cultu ral and creative sector 
mentioned under point 2.4.2 as film production normally involves higher costs than most other cultural and creative sectors.  
162 Centre National de la Cinématographie 
163 IFCIC has now extended its services to all cultural and creative sectors.  
 
EN 133   EN Audiovisual SGR  co-invests € 2 million in the fund ov er the period, bringing the total 
cumulated amount of the part of the fund they ma nage to a total of € 6 million at the end of 
the period. The relatively modest size of the fund means that the leverage effect is lower than 
what IFCIC can offer. However, all the proc eeds remaining in the fund at the end of the 
period will be reimbursed to the Commissi on. Audiovisual SGR receives Study Commissions 
on each applications received: one variable of  0.75% of the guarantee  amount and one fixed 
of 500-1000 €, the latter regardle ss of whether the operation is finally approved. Further to 
that an annual fee of 1.5% of the assumed ri sk is charged for providing the guarantee. 
Participating Members pay an initial membership  fee which is reimbursed when the guarantee 
has expired. 
Figure 4. How the MPGF works 
EU Budget
MEDIA 2007
MPGF €1 0  M€8  M
Audiovisual SGR
IFCICManaged by the DBs
on behalf of the 
European Commission
Bank A
 Bank C Bank B
Producer 1 Producer 5 Producer 6 Producer 2 Producer 3 Producer 4
Film X
Film Y
Film Z
€2  M
EU Budget
MEDIA 2007
MPGF €1 0  M€8  M
Audiovisual SGR
IFCICManaged by the DBs
on behalf of the 
European Commission
Bank A
 Bank C Bank B
Producer 1 Producer 5 Producer 6 Producer 2 Producer 3 Producer 4
Film X
Film Y
Film Z
€2  M
 
 
EN 134   EN Table 2. Comparison of IFCIC and Audiovisual SGR 
 IFCIC Audiovisual SGR 
Co-investment No  € 2 million 
Total amount allocated € 4 million  € 4 million Annual amount allocated € 1 million € 1,5 million Total amount of the fund € 4 million € 6 million Multiplier ratio 10 4 to 6 Share of the risk guaranteed 55% 50% Estimated total amount of 
loans covered € 80-90 million € 50-60 million 
2.5.2.  Other Actions in favour of access to finance 
The European Competiveness and I nnovation Framework Programme (CIP) targets 
small and medium-sized enterprises (SMEs), s upports innovation activities, provides better 
access to finance and delivers business support serv ices in the regions. SMEs in the cultural 
and creative sector are eligible for the SME Guarantee Facility (SMEG), offering transversal support to all SMEs but which ha s mostly consisted of increasi ng the volume of  loans through 
traditional bank credit lines. Due to the CIP´s transversal approach, the SMEG has a very 
limited impact on extending activities in sectors in which intermediaries (financial 
institutions) have little activity (such as in th e cultural and creative sector) also because the 
model is not accompanied by robust capacity building which can help banks to better 
understand the underlying risks which they frequently  perceive to be higher  than it actually is. 
Therefore very few SMEs in the cultural and crea tive sector have been able to benefit from 
the SMEG
164.  
The Creative Industry Alliance  
DG ENTR has recently launched a new action which is called the European creative 
industries Alliance (ECIA). The beneficiaries are regional, national and European actors 
supporting SMEs in all sectors of industry by  user-centred innovation processes and the 
objectives are to: 
– establish a policy dialogue to design better policies and make more strategic 
use of current and planned initiatives in  support of creative industries SMEs at 
local, regional, national and European level 
– mobilise more and better support for the further development of SMEs in the 
creative industries 
                                                 
164 Statistics from the SMEG have show n that very few SMEs with inta ngible assets have received loans 
originating from the SMEG. An analysis of the da ta related to SMEs with NACE "92" demonstrates 
this.  
 
EN 135   EN – showcase the relevance and impact of services innovation (e.g. demand-driven 
and user-centred approaches) 
– design and test better instruments to support innovation in creative industries 
SMEs and their interaction with other sectors 
– strengthen the role of th e creative industries as a catalyst for innovation and 
structural change throughout the economy 
– inform SMEs about relevant existing and new policies and measures. 
It is expected to generate the following results: 
– establish a cooperation platform to el aborate better policies for the creative 
industries in the specific fields identified above 
– establish a guidance tool for, notab ly, SMEs on existing and new innovation 
support for these industries 
– launch pilot actions to te st better innovation suppor t mechanisms for these 
industries 
However, this initiative, only la unched very recently, does not in clude direct funding such as 
grants or support through a financial instrument . It will be a useful complementary action to 
maintain a continuous dialogue with  the sector but is not expected  to directly fa cilitate access 
to finance to the CCS. 
The Risk Sharing Financial Facility (RSFF)  
The Risk-Sharing Finance Facility is part of the financial coll aboration between the European 
Commission and the European Investment Bank (EIB). The RSFF aims to improve access to 
the EIB debt finance for participants of European Research & Development projects. 
Introduced in 2007, it was the first “European scal e programme” to use debt-based finance to 
complement the more traditional financing means for Research, Development and Innovation (RDI) such as grants as unde r the European Commission’s Fr amework Programmes (FP), or 
equity as provided by the European Investment Fund (EIF). However, SMEs in the CCS have very limited access to the RSFF, designed to finance larger scale innovative projects. 
Other SME financing schemes at the EU and national level which are open to CCS can be 
found for example in Germany and in the UK . Further descriptions of these schemes can be 
found in section 2.7.1 describing complementarities with national actions and EU initiatives.  
2.5.3.  Likely development of the problem all things being equal 
The baseline case for this impact assessment assumes continuation of the current MEDIA 
Production Guarantee Fund roughly in its current  form. This section examines the likely 
development of the problem over the period 2011-202 0. It is difficult to predict developments; 
however on the basis of the prev ious evaluations it can be assu med that the positive benefits 
would continue. 
The current CIP will most likely continue in 2014 but given its relative ineffectiveness with 
regards to the CCS of CIP it is not necessary to include it in the analysis of the baseline. The 
 
EN 136   EN ECIA is also excluded from the baseline due to the fact that it was only recently launched and 
because it doesn't provide direct financial supp ort either in the forms of grants or through a 
financial instrument.  
Problem – Limited scope and resources for MPGF 
The MEDIA Production Guarantee Fund currently supports film producers to cash-flow the 
production phase of feature films, animations  and documentaries and TV productions. Its 
limited resources prevent it from covering other el ements of the film industry value chain or 
other sub-sectors of the CCS. Should the ME DIA Production Guarantee Fund be continued 
with the same scope and size and in the absence of innovative initiatives to encourage financial institutions to further engage with th e sector and provide financial instruments such 
as debt funding, the problem of access to fina nce will continue to persist for many cultural 
and creative SMEs. It would most probably beco me more acute in the coming years given the 
new market context and challenges faced by cultural and creative SMEs, as exposed above
165. 
Section 2.4.2 demonstrated that it is more difficult for those SMEs operating in the cultural 
and creative industries to access banks loans and it has been estimated that the financial gap 
for cultural and creative SMEs is between €2.8 bill ion to €4.8 billion. It represents the amount 
of debt funding missing in the cult ural and creative sectors due to  their specificities. In spite 
of its high leverage effect (s ee table above), the current budge t allocated to the MPGF is 
largely insufficient to have a real impact on the problem. Economic and social impacts of the 
baseline are further discussed in section 5.2. 
2.6. EU – Right to act  
EU action towards the audiovisual  sector is based on articles 167 and 173 of the Treaty on the 
Functioning of the European Union (TFEU) on respectively culture, vocational training and 
industrial competitiveness.   
Additionally, the EU Ch arter for Fundamental Rights (Article 22) states that the 
Union shall respect cultural and linguistic diversity. Finally, the Union's mandate is 
recognised in international law, in th e UNESCO Convention on the Protection and 
Promotion of the Diversity of Cultural  Expressions, which is part of the acquis 
communautaire . 
2.7. Subsidiarity and EU added value/ necessi ty test of the new EU initiative 
2.7.1.  Complementarities with national actions and EU initiatives 
The financial instrument will strive to  complement those initiatives undertaken  at national 
level , as national funding scheme s tend to focus on national production activities or the 
promotion of purely national interests. One of  the weaknesses of the national schemes with 
regards to access to financing is, with the exception of France, Germany, Spain and maybe the 
UK, the lack of institutions specialised in the cu ltural and creative sectors. Therefore, it can be 
asserted that the risk of purely national projec ts being able to benef it from the EU financial 
instrument (as option 3 in Section 4 proposes) versus them using their own national schemes 
                                                 
165 For details on expected development see also IAs on Media and Culture strands  
 
EN 137   EN is rather limited, even though it is envisaged that  purely national projects will be eligible for 
the EU guarantee166. 
The study on European Film Banking (2009) carried  out by the Commission confirms this, as 
it revealed that there are indeed very few guarantee funds available in Europe which are 
specially focused on the cultural and creative sectors. Many of them are quite small and 
limited to particular regions but examples of highly specialised funds in the cultural and 
creative sectors with a substa ntial size are the two operators of the Commission's MEDIA 
Production Guarantee Fund (see be low). Both of them are managing their own separate funds 
with their own national contributions which are entirely focused on their domestic markets.  
IFCIC was founded in 1983 at the initi ative of the Ministry of Culture; its unique purpose is 
to contribute to the development of the cultur e sector in France by making it easier for sector 
companies to obtain bank financing. IFCIC is a neutral and independent institution: neutral, 
because its capital is open to most lending ba nks and independent because it is financially 
responsible for all of its decisions .  
Audiovisual SGR was founded on 23 December 2005 by the Ministry of Culture through the 
Institute of Cinematography a nd Audiovisual Arts (ICAA) an d the Audiovisual Producers’ 
Rights Management Association (EGEDA) w ith the aim of supporting the audiovisual 
industry. The Audiovisual SGR is a "mutual guarantee societ y" (MSG) that underwrites low-
interest bank loans for film and TV companies.  Based in Madrid, the company has established 
pre-negotiated loan agreements w ith a range of Spanish banks  
As previously discussed there are clear comp lementarities between these two institutions and 
the current MPGF as they are building on thei r experience from their national guarantee funds 
in managing the MPGF at European level. This  is providing cultural a nd creative SMEs from 
other Member States than France and Spain, easier access to bank credits.  
Other examples of specialised financial instit utions which are focusing solely on the CCS can 
be found in the Netherlands through a culture lo ans offered by Kunstenaars&Co and Triodos 
Bank, in Germany where the KFW Bank has recen tly setup a special unit focusing on film 
financing and in the UK, Coutts & Company ha s a specialised media unit focusing on film, 
TV, music, videogames etc. 
Concerning other European guarantee models, some are open to all SMEs, such as the 
German ( Landesbürgschaften167) and UK ( The Enterprise Finance Guarantee168) 
guarantee funds which offer guarantees to banks  willing to lend to SMEs. Within these 
guarantee funds, there is however only limited expertise with re gards to those sectors which 
                                                 
166 The justification for offering the EU guarantee to purely national projects is to be found in the next 
section: EU Added Value 
167 German Public Guarantee Model:  State guarantees (Landesbürgschaften) are provided by State 
guarantee banks. Each federal State in Germany ha s a public guarantee ba nk with the purpose of 
assuming default guarantees for SMEs, so as to shor e up the disadvantages such companies face on the 
capital market compared to large co mpanies. The guarantees are provid ed by State guarantee banks that 
make credits available to healthy companies and freelance professionals,  which do not have sufficient - 
if any - bank acceptable collateral. Any SME based in the federal State can apply for such a guarantee.  
168 The Enterprise Finance Guarantee (EFG) in the UK facilitates additional bank lending to viable SMEs 
which lack the security to secure  a normal commercial loan. The UK Government provides the lender 
with a guarantee for which the borr ower pays a premium. Accredited lenders administer EFG and make 
all decisions on lending. 
 
EN 138   EN banks usually categorize as "high risk". Subse quently these types of guarantee models are 
more suitable for enabling banks to increase th eir credit exposure to traditional SME sectors 
rather than encouraging them to grant credits to new sectors such as the CCS. Therefore national SME guarantee schemes demonstrate lim ited engagement with SMEs in the CCS as 
is the case with the CIP's SMEG which has previously been mentioned. This has been 
confirmed by various stakeholders in the CCS which have had difficulties obtaining 
guarantees for their loan applications (mostly due to the lack of w illingness from the banks 
point of view).  
At EU level, some actions could be  considered complementary, such as: 
European structural funds  are administrated by the Member  States and may regionally or 
nationally support cultural a nd creative sectors like, for example, modernisation and 
digitisation of cinemas and film  studios or funding of incubation facilities for CCS. They 
might complement the new financial instrument as it is envisaged th at the new Financial 
Regulation will allow for the "topping up" of Eur opean financial instruments with structural 
funds.  
The European Competiveness and Innovation Framework Programme (CIP) and the 
Risk Sharing Financial Facility  mentioned in the baseline,  are complementary to MEDIA in 
terms of the form of intervention (financial instrument vs. direct grants). However, as 
previously stated, they have a very limited impact on the CCS as very few SMEs in the 
cultural and creative sector have been able to benefit from the programme. 
2.7.2.  EU Added value 
Economies of scale 
Financial instruments at EU level can achieve ec onomies of scale and/or minimize the risk of 
failure in areas where it would be difficult for individual Member States, in particular smaller 
Member States, to achieve the required critical mass. The cost-benefit ratio  of a financial 
instrument is likely to be higher for an EU-level  instrument than it would be for a series of 
financial instruments at nati onal, regional or local level,  due to higher volumes under 
management, higher leverage ratios or simp ly lower management fees charged by the 
financial intermediaries. 
Multiplier effect at EU level 
The use of financial instruments will allow the Commission to multiply
169 the effect of the 
EU funds and to achieve a much larger impact fo r the final recipients th an if it provided the 
financial support directly (through direct grants for example). Indeed, it  attracts extra funding 
from investors to the sector thanks to the ri sk sharing with the EU . This can already be 
observed from the current MPGF, where to this date, the EU contribution of €2 million has 
already generated loans to f ilm producers worth €18 million. 
                                                 
169 For the purpose of financial instruments, leverage corresponds to the following formula: 
Finance to final recipients 
____________________________________ 
EU contribution This formula shows the leverage (or multiplier effect) an EU contribution can have in terms of finance provided 
to final recipients.  
 
EN 139   EN Cross border effect 
The previous section (2.7.1) mentions that under the financial instrument for the cultural and 
creative sectors, it is envisaged that all CCS SMEs will be eligible  irrespective of whether 
they have cross-border operations or aspira tions. EU funding may be used to support purely 
national SMES and projects as a financial inst rument for cultural and creative SMEs offers 
greater EU added value  and visibility to the cultural a nd creative sectors by disseminating 
European-wide sector-specific expertise amon g financial institutions, which is currently 
limited number to a small number of EU Member States, financial institutions, consultants or experts.. 
This trend has in fact  begun with the current MEDIA Production Guarantee Fund  where 
for example a Dutch producer with a national pr oject gets a loan from  a Dutch bank which he 
most likely wouldn't have received without  the EU guarantee accompanied by the risk 
assessment by Audiovisual SGR, a specialised gu arantee institution from Spain backed by EU 
funds.  
Furthermore, the problem definition mentions that the financial needs of the CCS have a 
limited critical mass, constituting one of the obstacles for financial institutions to get 
involved in the CCS. Limiting the financial instrument only to cross-border CCS would 
possibly decrease the interest of financia l institutions to engage in the CCS.  
Additionally, EU added value will be ensured through the pan-European nature  of many 
cultural and creative projects. Most SMEs in th e audiovisual sector for example are engaged 
in transnational co-operations for exampl e through co-productions. Concerning other 
subsectors such as music, publishing or video games, the digital shift has created a global 
market through online platforms, which will accelerate the trend towards transnational 
collaboration in these sub-sectors as well. This point is also discussed in the MEDIA and Culture Impact Assessments. 
Skills development at European level 
The financial instrument would build upon the experience of pan-European MEDIA 
Programme  which has supported transnational co-p roduction of audiovisual works and 
networking activities such  as markets and training courses for the past 20 years. MEDIA has 
actually already started to work towards the de velopment of financial and management skills 
for companies of the European au diovisual industry in order to  respond to the need for such 
capacity building identified in the latest ev aluations. These courses will continue to be 
financed by the Creative Europe programme af ter 2014, and extended to other CCS. This will 
be complementary to the capacity-building pillar of the CCS financial instrument specifically 
targeting skill development within financ ial institutions as explained below. 
Non-financial leverage on national markets 
Additionally, financial instrume nts implemented at EU level can have important influence 
in the targeted markets . Non-financial leverage is obt ained by ensuring that financial 
instruments are designed to pursue specific policy objectives and that the interests of 
participating financial institutions are aligned with these objectives.  The dissemination of 
European-wide sector-specific e xpertise is a clear example of how the non-financial leverage 
of the financial instrument for the CCS woul d work and the consistent application and 
promotion of best standards, accompanying th e EU financial instrument may foster a 
 
EN 140   EN qualitative development of a market segment and increase intermediary sophistication over 
time, while contributing to less fragmented EU cultural and creative markets.  
3. OBJECTIVES  
The general objective of the cultura l and creative financial instrume nt is in line with those of 
the Creative Europe Framework Programme which is to: to foster the safeguarding and 
promotion of European cultural and linguistic diversity, and strengthen the 
competitiveness of the cultural and creative sector, with a view to promoting smart, 
sustainable and inclusive growth, in  line with the Europe 2020 strategy.  
The specific objective of the financial instrument strand is to strengthen the financial 
capacity of the cultural and creative sector170.  
Priorities are: 
– To provide expertise/cap acity building to the financial institutions  
– To provide guarantees to banks dea ling with cultural and creative SMEs 
thereby enabling them easi er access to bank credits 
– To increase the number of financial instit ution which are willing to work with 
cultural and creative SMEs 
– To maximise the European geographical di versification of fina ncial institutions 
willing to work with cultural and creative SMEs.  
4. POLICY OPTIONS  
In the context of its reflection on new innova tive financial instruments and building on the 
experience of the previously mentioned ME DIA Production Guarantee Fund, the Commission 
explored several ways to set up a financial inst rument for SMEs operating in the cultural and 
creative sectors.  
4.1. Discarded options 
Analysis of options for a financial instrument for SMEs in the cultural and creative sectors 
included investigating the feasibility of different  types of mechanisms, as the most appropriate 
type of funding for SMEs depends on a number of factors such as the type of SME, the 
availability of debt or equity finance, the co st of capital or the willingness of the stakeholders 
(SMEs, financial institutions, i nvestors, etc). This exercise involved various stakeholders, 
experts, professionals and financial institutions as can be evidenced by the list of consultations in Section 1 and Annex 1. 
                                                
 
170 This reflects the specific objectiv es set for other strands of the Creative Europe Framework Programme, 
particularly (i) support the capacity of the European cultural and creative sectors to operate 
transnationally including by strengthening the re lations and networks between operators; and (ii) 
strengthening the financial capacity of the cultural and creative sectors.  
 
EN 141   EN On the basis of the consultations and analysis  provided above, a closer look was taken into 
some other options which were discarded:  
• Creating a standalone financial instrument within EAC:  One of the options 
considered was to set up a standalone guarantee instrument for the cultural and 
creative sectors. Such an instrument would be in full conformity with the rules set 
under the planned EU Debt Platform.  DG EAC would mandate the European 
Investment Fund (EIF) for the management  of the instrument, but would itself 
remain responsible for its coordination, m onitoring and control. However, following 
the MFF decision and given the limited amount that can be attributed to a specific CCS financial instrument, this option wa s ruled out since it does not fulfil the 
minimum size requirements of future Commission Financial instruments (as mentioned in 1.3.1). Additionally, this opti on could be administratively burdensome 
and risky due to limited infrastructure and expertise within DG EAC to deal with financial instruments. 
• Creating an equity financial instrument: although it would undoubtedly respond 
to a certain need among the CCS, the setting up of an equity instrument rather than or 
in addition to a debt instrument has been discarded given serious issues in terms of 
cost-effectiveness, market readiness and feasibility.  
Consultations with the EIF and other experts rev ealed that it would be  difficult to implement 
such a financial instrument for various reasons: 
– The cost-effectiveness of equity funds makes them less attractive for public 
support as they normally do not offer th e same leverage effect as debt 
instruments. This results in a lower cr itical mass and therefore a more limited 
impact. 
– Venture capital funds and other forms of  private investment  have different 
objectives than traditional financial ins titutions, as they are looking for fast-
growing investments and high returns on investment through a successful exit 
strategy. Although some companies operating in the CCS could fulfill these requirements, the specific nature of the CCS  makes it difficult to attract venture 
capitalists. Firstly, cultural and creative companies often need a longer time to 
become profitable and rarely offer appropr iate short term exit strategies to VC 
funds. Secondly, their value is mainly pr oject-based, while equity investors are 
looking for corporate value. 
– There is a lack of unde rstanding among investors on how to evaluate 
companies whose value is mainly based on intangible assets such as IP rights 
and other forms of traditi onal creative collateral.  
– Finally, consultations with potential pa rtners such as venture capital funds 
including the European Vent ure Capital Association (E VCA), revealed that it 
would be difficult to attract private investments to co-investment with the European Commission in such an instru ment, mainly for the reasons exposed 
above but also due to their standard pr actice of not investing for less than €5 
million in each venture which is clearly too large of an investment for most 
SMEs operating in the CCS. 
 
EN 142   EN This option was therefore discarded from the beginning.  
Microfinance and Microenterprises: Micro-enterprises operating in  the cultural and creative 
sectors often need microfinance in their early development phase. The EIF´s experience with 
microfinance shows that dedicated instruments wh ich are run separately from other financial 
instruments are only appropriate in sectors where lower profitability is expected, such as the social sector. The EIF has howev er indicated that financial intermediaries wishing to offer 
micro-financing to their CCS c lient base could apply for a CCS  guarantee on their portfolio. 
It is therefore more appropriate and effectiv e to focus all DG EAC financial resources on a 
debt instrument and an investment readiness
171 programme for privat e investors and CCS 
professionals that would be organized by the EIF and/or th e Commission itself. 
The current impact assessment considers 3 options: 
4.2. Option 1 – No change (the baseline) 
Option 1 assumes continuation of a stand- alone MEDIA Production Guarantee Fund was 
launched in 2010 with € 8 million for duration of 4 y ears. Its objective is to facilitate access to 
private sources of finance for producers via a gu arantee mechanism that encourages banks to 
grant them credits by sharing the risk incu rred. For more details see also section 2.5. 
4.3. Option 2 – No action (the "n o financial instrument" option) 
This option foresees the discontinuation of the current MEDIA Production Guarantee Fund 
and the absence of any form of financial instrument in the MEDIA Programme/Creative 
Europe Programme. 
4.4. Option 3 – Setting up a Cultural and Crea tive Sector Guarantee Facility within 
the framework of a larg er financial instrument 
This option entails the funding by the EU budget of a financial instrument for the cultural and 
creative sectors which would be  part of a larger cross-po licy financial instrument.  
The new instrument would provide  credit risk protection to financial intermediaries building 
portfolios of loans in the CCS, along w ith providing them with the necessary 
capacity/expertise to correctly analyse the relevant risks.  
Based on the current MFF decision for the Creative Europe Programme, DG EAC is 
proposing a budget of € 180 million172 for the financial instrument  which would be delegated 
to the EIF for the seven year duration of the in strument to cover losses on the programme, to 
                                                 
171 Investment readiness is the ability to understand i nvestors' concerns, to understand the differences 
between the types of financiers and to fulfil specific financial requirements of banks and investors. 
172 A political commitment has been made by the EC President to at least maintain the respective sizes of 
both MEDIA and Culture for the next MFF. Taking note of the MFF allocation of €1,6 billion it is 
likely that the CCS GF will be a llocated around €180-200 million. Th is amount is subject to change 
depending on the final Creative Europe budget. It is furthermore possible that the proceedings from the 
current MPGF could be added to the new CCS GF as Article 18.2 of th e [FR], states that " revenues and 
repayments generated by the guarantees shall be assigned to the financial instrument. For financial instruments already set up in the previous multian nual financial framework, revenues and repayments 
generated by operations started in the previous period shall be assigned to the financial instrument in 
the current period."  
 
EN 143   EN provide capacity building to or ganise networking/knowledge shar ing activities and to cover 
fees to the EIF for the management of the facility.  
4.4.1.  Sub-options 
Under option 3, Setting up a Cultural and Creative Sector Guarantee Facility within the 
framework of a larger financial instrument, th ere are essentially two sub-options which need 
to be analysed. They are Sub-option 3a – a cap ped guarantee facility and Sub-option 3b – an 
uncapped guarantee facility. This section descri bes both sub-options both  with regards to the 
points which they share and the on es that are different. Section 5 provides an analysis on the 
sub-options and finally S ection 6 compares them.  
Sub-option 3a – Capped guarantee facility 
The EIF has suggested that the ne w guarantee facility would offer a first loss piece portfolio 
guarantee , meaning that the EIF would deliver  financial guarantees to financial 
intermediaries in order to partially cover the risk of new loans to final beneficiaries (CCS 
SMEs) as defined below. According to the proposal, each financial intermediary would 
receive a partial guarantee to be applied on each  underlying loan (i.e. 70% Guarantee Rate) up 
to a Cap Rate of 25% on each portfolio. This is an example of a capped guarantee model and 
is further illustrated in figure 1.  
The guarantee would cover the risk associated w ith a portfolio of loans to individual CCS 
SMEs up to a Cap Rate of 25% on each portfolio. Each financial intermediary would receive a 
partial guarantee to be applied on each underlying loan (i.e. 70% Guarantee Rate). The 25% cap limits the maximum loss that the EIF/EC w ould be ready to cover and is the sum of the 
estimated expected and part of the unexpected loss. The expected loss is calculated on the 
basis of the existing default rate  in the sector (eg. 10%  in the CCS), and the unexpected loss is 
the maximum loss that could be incurred under more extreme scen arios. Such a model allows 
the EIF to offer free guarantees to the fina ncial intermediaries. An example of capped 
guarantee facility is the SMEG in the context of the CIP.  
An example of a capped guarantee model is further illustrated in the figure below.  
Figure 5. 
 
EN 144   EN Guarantee R ate 
on a loan by loan basis
Financial Intermediary 1
ECGuarantee
Guarantee
GuaranteeEUFI
FI
Guarantee Cap R ate
FI
FI
FI
FI
EIF
As
guarantorFinancial 
Intermediary 2
Financial 
Intermediary NExpert
Institutions/
Agencies/
consultants
EIB
As
LenderGlobal Loan
Global LoanGlobal LoanSMEs (through associations, clusters, etc)
Technical AssistanceTechnical AssistanceT. A.Technical Assistance
 
Sub-option 3b – Uncapped guarantee facility 
The uncapped guarantee model would also de liver financial guarantees to financial 
intermediaries in order to cove r the risk of new loans to final beneficiaries (CCS SMEs) with 
each financial intermediary receiving a partial guarantee to be applied on each underlying loan (for example 50% in the case of RSFF for SMEs
173). This model offers complete 
portfolio risk sharing with financial intermediaries, irrespective of losses, while the capped guarantee model covers only a part of the portfolio  of loans (ie. expected  + part of unexpected 
losses). A current example of an uncapped gu arantee model is the RSFF for SMEs (Risk 
Sharing Instrument) for Research and I nnovation projects, managed by the EIF.  
Table 3. Main differences between the capped and uncapped guarantee models 
 Uncapped guarantee model Capped guarantee model 
Example RSI – RSFF for SMEs SME Guarantee Facility, 
possibly the new CIP guarantee facility 
EIF involvement Takes balance sheet risk in 
addition to managing the instrument Manages the instrument but 
does not take a stake in the risk sharing 
Guarantee fees The EIF charges a fee (eg. 1-
3%) to financial intermediaries to compensate for sharing the risk Could be offered for free 
(0% fee for financial intermediaries)  
Guarantee cap Uncapped – complete risk 
sharing with financial Capped, traditionally 25-
30%. Covers the expected 
                                                
 
173 The guarantee rate is typically lower than in the capped model. 
 
EN 145   EN intermediaries, irrespective 
of losses.  and unexpected losses. 
Guarantee rate Typically lower (around 50% 
for example for RSFF for SMEs) Typically higher 
Leverage of EC contribution T ypically lower Typically higher 
EIB involvement Takes residual risk (the 
senior risk). 
Charges premium fees (1-
3%) to cover admin costs, risk, capital costs. Would offer a standard EIB 
Global Loan to financial intermediaries 
No residual risk 
European Commission Takes the first loss risk (sub-
ordinated) up to a certain cap which is agreed upon between the EC and the EIB/EIF. Does not charge premium fees but asks for 
additions such as passing on 
benefits to final beneficiary or higher volumes Takes the first loss risk (sub-
ordinated) up to a certain cap Adds conditions to the guarantee which the financial intermediaries must comply with, such as passing on the 
benefits to the final 
beneficiaries, taking additional risks (such as lending to new types of businesses) or creating higher volumes, capacity/expertise training in CCS is mandatory  
Target financial 
intermediaries Commercial banks including 
some specialist banks in the CCS Specialist banks in the CCS 
but possibly also some general financial intermediaries which will be content with the capacity/expertise training accompanying the guarantee 
Product for financial 
intermediaries Virtual portfolio including 
various types of loans to different sectors (ex. ICT, R&I and CCS) 
Capital relief is possible for 
banks Portfolios ring-fenced in 
each bank comprised of sector specific loans (ex. CCS) 
Potential regulatory capital 
relief depending on jurisdiction a nd on the type 
of institution 
Benefit for final beneficiarie s Could possibly attract new 
financial institutions to the Those financial 
intermediaries who have 
 
EN 146   EN CCS but some might be put 
off by the fee (such as those banks which have expertise in the CCS). experience of working with 
the CCS would most probably like the idea of a capped but free guarantee to cover their expected losses. The capped guarantee might however not be sufficient in itself to attract new banks to the market but this will also depend on the quality and implementation of the capacity/expertise training accompanying the guarantee. 
4.5. Eligibility criteria applicabl e to both sub-options 
Financial intermediaries  
eligible for the CCS GF will be thos e financial institutions active in 
SME lending having entered into a guarantee ag reement with EIF, under which they commit 
to promote CCS loans to the final beneficiaries. The financial intermediaries will also commit 
to keep a minimum of 20% economic exposure  on each loan. 
The financial intermediaries benefitting from th e CCS GF will be selected in conformity with 
best market practices. The Commission and the EIF will encourage financial intermediaries 
from all countries covered by the Creative Euro pe Programme to appl y, while making special 
provisions to ensure a wide  geographical coverage.  
Eligible final beneficiaries  will be SMEs (or possibly orga nisations which comply with the 
eligibility criteria described below) based in a country covered by the Creative Europe 
Programme, with an activity in one of the CCS sectors as defined by the CCS segments outlined in footnote number 1 on page 3 which covers a wide range of diverse activities. Each industry in CCS counts on its own value chai n, with different steps involved (e.g. 
Development, Production, Promotion, Distribu tion, Exhibition in the case of the film 
industry) and therefore conditioni ng the activities of the CCS SM Es participating. Besides, 
projects related to mobility and circulation of cultural/creative artworks, digitisation and 
cultural diversity are also within th e scope of the CCS Guarantee Facility
174.  
4.6. Loan characteristics175 applicable to both sub-options 
– Newly originated loans to Final Beneficiaries.  
– Loan amount: maximum of € 2.5 million (s ubject to diversification of the 
portfolio at Financial Intermediary level).  
– Purpose of the loan: investment in tangi ble or intangible asse ts, and/or working 
capital; 
– Maturity: from 12 months to 84 months.  
                                                 
174 More details about the eligibility criteria can be found in Annex 3  
175 This parameters need to be further analysed within the Commission Expert Group on Access to finance 
for the CCS.  
 
EN 147   EN – Private collateral cannot be requested.  
– Completion bonds cannot be requested176 
4.7. Duration of guarantees applicab le to both sub-options 
Individual guarantees may have a maturity of up to 10 years 
4.8. Loss cover Mechanism applicab le to both sub-options 
The default will be defined on the basis of Dir ective 2006/48/EC relating to the taking up and 
pursuit of the business of credit institutions (reca st). EIF will pay the defaulted amount to the 
Financial Intermediary within 60 days of defaul t notice being received. Default notice will be 
sent quarterly at the end of  each calendar quarters. Recoveries once received would be 
shared between the financial in termediary and EU/EIF contribu tion according to the guarantee 
Rate (70% for the EU/EIF and 30% for th e financial intermediary, on a pari passu177 basis). 
4.9. Geographical coverage applicable to both sub-options 
The objective is to use the expertise currently available only in a few financial intermediaries 
(in France, Spain, Germany, UK) to widespread across the EU. This will be achieved thanks 
to the capacity building programme, and throug h specific provisions en suring that financial 
intermediaries commit themselves to offer all CCS SMEs non-discriminatory and equal 
treatment with regards to  their loan applications. It can al so be envisaged to introduce positive 
discrimination measures in order to favour coun tries where access to finance is most difficult 
for the CCS. For example, thos e financial intermediaries willing to operate trans-nationally 
or on a regional level  (for example: Nordic countries, Be nelux, South-East Europe, Eastern 
Europe etc.) and based outside  of the five big countries (Germany, France, UK, Spain and 
Italy) may benefit from easier access to the gua rantee mechanism. The experience from the 
current MPGF will be valuable in this exercise. 
4.10. Capacity building (CB) applicable to both sub-options 
CB will be a basic pillar of the CCS Guaran tee Facility. During previous meetings and 
consultations which are mentioned in Section 1 and Annex 1, CCS stak eholders (including 
financial intermediaries) agreed on the fact th at the specific nature of CCS SMEs requires 
different and specific approaches and skills than in other sectors, where credit risk can be assessed in more standardized ways. Furtherm ore, with the exception of a few of them, 
European financial intermediaries do not curren tly have the in-house necessary expertise to 
evaluate the risk associated with this sector a nd its specific characteristics. Expertise needs to 
be shared among the financial intermediaries on  CCS specificities, thereby encouraging them 
to increase their activities in the sector. The EIF is already offering such programmes in 
parallel to some of its financial instrume nts. The capacity buildin g providers would be 
selected by the EIF on behalf of the CCSGF and under the supervision of DG EAC through a 
public and open procedure  (Call for Expressions of Intere st). The selection process will 
follow current EIF Procurement practices, wh ich fully comply with EU Procurement 
                                                
 
176 This point has yet to be decided on 
177 Pari passu means that the EU/EIF and the financial intermediary have equal rights of payment, or equal 
seniority. This means that in case of a default of € 100,000 out of a € 500,000 loan for example, the 
Fund would reimburse € 70,000, while the bank would support a € 30,000 loss. 
 
EN 148   EN requirements. Several Calls for Expressions of Interest (or several lo ts) may be published to 
cover the different geographical markets  and cultural and creative sub-sectors  covered by 
CCSGF.  
CB providers could typically be agencies, guarantee institutions, banks, experts or consultants 
who demonstrate appropriate exper tise and meet certain basic eligibility and selection criteria. 
Applications received in response to the Call  for Expressions will then be evaluated by a 
selection panel on the ba sis of award criteria178. The criteria will be published in the Call for 
an Expressions of Interest.  
The selection of CB providers w ill take place during the roll out phase of CCSGF. However, 
additional windows for the selec tion of CB Providers can be opened subsequently as new 
markets are embraced by CCSGF and/or on a peri odic basis. Specific  contracts with CB 
providers will be signed for delivering CB in the context of a specific market and / or to an 
individual financial intermediary. 
5. IMPACT OF THE OPTIONS  
5.1. Framework for analysing impacts179 
To assess the impacts of the proposed options relative to the baseline , it is necessary to 
assume that other complementar y or related policy instrument s, such as national support, 
other Commission programmes, a nd legislative measures would continue to apply in roughly 
their current form. 
The focus of the Cultural and Creative Sector Gu arantee Facility and the other options is on 
achieving economic and social outc omes, and hence the largest im pacts are likely to be in 
these categories. Environmental impacts are likel y to be only marginal and they are therefore 
not analysed. 
The options have been assessed in view of their potential effectiveness in achieving the 
desired objectives. In the tabl e below, economic and social impacts identified flow mainly 
from the intended effects of the options on the competitiveness of the sector and to encourage 
financial institutions to provide financial services to the cultural and creative SMEs.  
There are certain risks and uncer tainties which have to be take n into consideration in this 
analysis which is mostly due to the diverse natu re of the different sub-sectors of the cultural 
and creative sectors. Furthermore, there are lim ited statistics availabl e on the current amount 
of bank loans being made to the European cultura l and creative sectors which complicates this 
exercise with regards to estimating the optimum  size of a financial instrument for the CCS. 
Therefore the following analysis of impacts adopts a rather qualitative approach which tries to 
build on previous Commission experience in this field.  
Table 4. Main areas of economic and social impacts  
Areas of economic impact Areas of social impact 
                                                 
178 Such as experience in CCS financing (direct and/or indirect), expertise, geog raphical reach, capacity of 
delivery, knowledge of  the market, etc  
179 See Commission Guidelines on Financial Instruments in Annex 2 
 
EN 149   EN Areas of economic impact Areas of social impact 
Functioning of the internal market and 
competition (trade level)  
Revenues and profits of the cultural 
and creative sectors  
New business opportunities for 
financial institutions  
Competitiveness of cultural and 
creative SMEs  
Cost of business for cultural and 
creative SMEs s  
Structuring effect, less reliance on 
public subsidy Employment in the cultural and 
creative sectors  
Job quality in the cultural and 
creative sectors  
Capacity building 
5.2. Analysis of impacts 
• Option 1 - The baseline 
Economic impacts 
Should the MPGF be continued, European film producers will continue to have access to the 
MPGF which will have a positive impact on this sp ecific sector but due to its relatively small 
size, it is probable that the supply will not match demand.  
A continued MPGF with the same scope and size and in the absence of other innovative 
initiatives to encourage financial institutions to  further engage with the cultural and creative 
sector, the problem of access to finance will co ntinue to be a major issue for the economic 
growth of the cultural and creativ e sectors. It would most proba bly become more acute in the 
coming years given the new market context and challenges faced by cultural and creative 
SMEs, as exposed earlier in this Impact Assessment. 
Previously we have estimated that there is a considerable financial gap for SMEs in the 
cultural and creative sectors and it  is therefore certain that those SMEs which are operating in 
other cultural and creative sector s other than film production will  continue to be faced with 
access to finance barriers. This will certainly ha mper their competitiveness and growth as they 
will continue to be reliant on public subsidy. However, the MPGF will continue to have a 
structuring effect on the film production so ciety, decreasing dependence on state subsidies 
and creating linkages between financ ial institutions and producers. 
Social impacts 
Film producers will continue to have acce ss, although limited, to the MPGF which will 
preserve some quality jobs in the film produc tion sector. However the cultural and creative 
sector will not benefit from any specific capacity building acti on, although some  expertise is 
undoubtedly shared throughout the financial sector due to th e guarantees being issued. 
• Option 2 - No action 
Economic impacts 
 
EN 150   EN Taking note of the difficulties experienced by European financ ial institutions caused by the 
economic and financial crisis and observing the severe lack of access to  finance for SMEs in 
the cultural and creative sectors (as mentioned previously in Sec tion 2) it is quite likely that 
this problem will persist if no action is taken.  This would affect the competitiveness of the 
cultural and creative sector as  it would continue to be re liant on public subsidies and 
furthermore place additional burde n on already cash-strapped national budgets. It would have 
an overall negative impact on the scale of the cultural and creative sectors in the European 
Union. 
Social impacts 
As Member States will most lik ely continue to pursue their cu ltural objectives but banks will 
not engage further in the CCS leading to fewe r CCS SMEs being able to thrive which could 
affect the level and quality of employment in the production companies currently benefiting 
from the MPGF. Furthermore this could have a slightly negative impact on the European 
cultural and creative supply. Th e supply of capacity buildi ng programmes by the EU for 
financial institutions or professionals in the CCS would remain too marginal to have any impact.  
• Option 3 – Setting up a Cultural and Creative Sector Guarantee Facility 
Economic impacts Common to both sub-options 
(i) Macro-economic impacts 
The use of the Cultural and Creative Sector Guar antee Facility which wo uld be bigger in size 
and scope of the coverage, would improve access to finance for cultural and creative sector 
SMEs to a larger degree than the current MEDIA Production Guarantee Fund, leading to the 
strengthening of their financial capacity a nd of the commercial potential of works. A 
significant increase of the size of the financial instrument would also have a stronger 
structuring effect, increasing the capacity of the sectors to attract private sources of finance 
and thereby lessen SME depende nce on public subsidies.  
Additionally, it is possible that some Member St ates or regions will follow the example of the 
Cultural and Creative Sector Guarantee Facility  by contributing their own resources (which 
most likely would have been used for purely na tional projects in the form of grants). This 
would have a positive economic impact on the use of public resources at the national and 
regional level. 
The high leverage on public funding via a financ ial instrument will have a structuring effect 
on the CCS as there will be a progressive transition from direct support in the form of subsidies to financial instrument s, at least for some types of supports and beneficiaries, such 
as: 
– Micro-loans for individual  project development:  
– Funding for independent game developers 
– Loans to exhibitors for the di gitisation of cinema theatres 
 
EN 151   EN – Working capital loans to distributors  to cover distribu tion costs (print, 
marketing, advertising, dubbing and subtitling) 
– Early stage funding for content aggreg ators and new dist ribution platforms 
(etc) 
Despite the obvious advantages of the transition fr om grants to other forms of financing such 
as loans or equity, there will continue to be  certain complementarities between public grants 
and financing. For instance, pilot projects will n eed to continue to be  funded via grants as 
risks related to these actions are very high and the economic profit uncertain. The long-term impact of such early stage gr ants to innovative projects can ho wever be high. For example the 
MEDIA Plus programme had support available fo r new online distribution platforms as part 
of its Pilot programme. Due to the success of th is type of pilot sche me, a new action line was 
created for the Video-On-Demand, as the market had responded favourably to the EU 
initiative and today there are numerous European operators of VOD platfo rms. It is expected 
that some of these operators will be able to utilise the new CCS GF. This is an example of 
where grants are duly justified and how they  can be complementary with a financial 
instrument (and loans).  
(ii) Micro-economic impact s (sensitivity analysis) 
Sub-option 3a. Capped guarantee model  
The impact of this option on the financial gap identified in section 2.4 can be evaluated on the 
basis of the following assumptions with a leverage effect of 5.7
180:  
• Total contribution of the EU to the Fund 2014-2020: € 180.000.000 
• EIF management fee and costs: 6%181 
• Average individual loan: € 100.000182 
• Default rate: 10%183 
To simplify the calculations a nd reach a conservative estimati on, we also ignore the revolving 
nature of the fund. Indeed, we do not consider  the funds being freed up for new guarantees 
every time a loan is reimbursed without calling for the guarantee. 
The total net contribution to the Facility would reach € 169.200.000 at the end of the period, 
allowing to cover a total of over 30,000 individual transactions fo r a total amount of credits of 
                                                 
180 The leverage is determined by the Guarantee Rate an d the Cap Rate. The 5,7x leverage is calculated for 
a 70% Guarantee Rate and 25% Cap Rate (1 / (70%* 25%)). An increase of the Guarantee Rate or the 
Cap Rate would reduce the leverage. It means that w ith €1 million, the facility can guarantee credits for 
a total amount of up to €5.7 million 
181 Assumption based on previous costs related to EU financial instruments and includes costs related to 
the capacity building measures 
182 See section 2.4.2 
183 The two operators of the current MPGF, IFCIC and Audiovisual SGR have both had default ratios well 
below 5% in their domestic operations in recent y ears. Default estimates fo r the Cultural and Creative 
Sector Guarantee Facility are though likely to be higher than those of IFCIC and Audiovisual SGR due 
to their broader geographical and sector scope.  
 
EN 152   EN € 964.440.000, covering between 20 and 35% of the financial gap  estimated in section 2.4 
and serving up to 8% of the number of Europ ean SMEs in the cultural and creative sectors. 
This quantitative impact would be in line with the guidelines laid down in DG ECFIN's Issues 
Paper on the EU Equity and Debt Platforms. 
Note : These figures correspond to a conservative s cenario, where the revolving nature of the 
fund is not considered. However, a pure statistic al calculation based on the same cap rate, the 
guarantee rate and the default ratio would lead to a higher leverage ratio. In this more 
optimistic scenario, the instrument could potentia lly cover over 50% of the estimated financial 
gap (€2.8 bn). 
Table 5. Capped guarantee model projection 
Year Annual 
contribution 
to Fund184 Cumulated 
contribution Cost = 
EIF Fee = 
6% Net 
Contribution 
to fund Cumulated 
Contribution 
to fund Cumulated 
Amount of 
credits covered Balance of 
credits after 
default (guarantees 
called) Nbr of 
transa
ctions 
2014 10.000.000 10.000.000 600.000 9.400.000 9.400.000 53.580.000 48.222.000 482
2015 20.000.000 30.000.000 1.200.000 18.800 .000 28.200.000 160.740.000 144.666.000 1.447
2016 30.000.000 60.000.000 1.800.000 28.200 .000 56.400.000 321.480.000 289.332.000 2.893
2017 30.000.000 90.000.000 1.800.000 28.200 .000 84.600.000 482.220.000 433.998.000 4.340
2018 40.000.000 130.000.000 2.400.000 37.600 .000 122.200.000 696.540.000 626.886.000 6.269
2019 30.000.000 160.000.000 1.800.000 28.200 .000 150.400.000 857.280.000 771.552.000 7.716
2020 20.000.000 180.000.000 1.200.000 18.800.000 169.200.000 964.440.000 867.996.000 8.680
Total 180.000.000  10.800.000 169.200.000       31.827
Sub-option 3b. Uncapped guarantee model 
To get a comparison with an uncapped guarantee facility which would be sharing 50% of the 
risk on each individual loan, and 100% of the risk on each portfolio , the same following 
assumptions could be used 
• Total contribution of the EU to the Fund 2014-2020: € 180.000.000 
• EIF management fee and costs: 6% 
• Average individual loan: € 100.000 
• Default rate: 10% 
• Revolving nature of the fund ignored 
                                                 
184 Given the important back loading of the Creative Europe budget in the cu rrent MFF, the annual 
contributions to the Facility will be low in the first years. 
 
EN 153   EN However, to be effective, such a model requir es the EIF to take the residual risk beyond the 
amount that the facility can cover consideri ng only the EU contribution. The following table 
show the difference between an uncapped guarant ee model with or without the participation 
of the EIF. 
Table 6. Uncapped guarantee model projecti on without the EIF sharing the risk  
In this case, the net EU contribution of € 169.2 million can produce a limited leverage effect 
of 2185. It would allow to cover only 11,000 indivi dual transactions for a total amount of 
credits of € 338 million, covering a mere 7 to 12% of the financial gap  estimated in section 
2.4 and serving less than 3% of  the number of European SMEs  in the cultural and creative 
sectors. This quantitative impact would therefore be considerably less than in sub-option 3a of 
a capped guarantee. 
Year Annual 
contribution 
to Fund Cumulated 
contribution Cost = 
EIF Fee = 
6% Net 
Contributio
n to fund Cumulated 
Contributio
n to fund Cumulated 
Amount of 
credits covered Balance of 
credits after 
default (guarantees 
called) Nbr of 
transacti
ons 
2014 10.000.000 10.000.000 600.000 9.400.000 9.400.000 18.800.000 16.920.000 169
2015 20.000.000 30.000.000 1.200.000 18. 800.000 28.200.000 56.400.000 50.760.000 508
2016 30.000.000 60.000.000 1.800.000 28.200 .000 56.400.000 112.800.000 101.520.000 1.015
2017 30.000.000 90.000.000 1.800.000 28.200 .000 84.600.000 169.200.000 152.280.000 1.523
2018 40.000.000 130.000.000 2.400.000 37.600 .000 122.200.000 244.400.000 219.960.000 2.200
2019 30.000.000 160.000.000 1.800.000 28.200 .000 150.400.000 300.800.000 270.720.000 2.707
2020 20.000.000 180.000.000 1.200.000 18.800.000 169.200.000 338.400.000 304.560.000 3.046
Total 180.000.000  10.800.000 169.200.000      11.167
 
Table 7. Uncapped guarantee model projec tion with the EIF sharing the risk 
Should the EIF accept to share the risk on its own balance sheet (put ting at stake its own 
assets), the multiplier would be around 10, accor ding to the EIF experience. It would allow 
covering over 55,000 individual transactions for a total amount of credits of € 1.7 billion, 
covering 35 to 60% of the financial gap  estimated in section 2.4 and serving between 8 and 
14% of the number of European SMEs in the cu ltural and creative sectors. This quantitative 
impact would therefore be better than in sub-option 3a of a capped guarantee. 
Year Annual 
contribution to Fund Cumulated 
contribution Cost = 
EIF Fee = 6% Net 
Contribution to fund Cumulated 
Contribution to fund Cumulated 
Amount of credits 
covered Balance of 
credits after default 
(guarantees 
called) Nbr of 
transactions 
                                                 
185 1 / (50%*100%) = 2 
 
EN 154   EN 2014 10.000.000 10.000.000 600.000 9.400.000 9.400.000 94.000.000 84.600.000 846
2015 20.000.000 30.000.000 1.200.000 18.800 .000 28.200.000 282.000.000 253.800.000 2.538
2016 30.000.000 60.000.000 1.800.000 28.200 .000 56.400.000 564.000.000 507.600.000 5.076
2017 30.000.000 90.000.000 1.800.000 28.200 .000 84.600.000 846.000.000 761.400.000 7.614
2018 40.000.000 130.000.000 2.400.000 37.600 .000 122.200.000 1.222.000.000 1.099.800.000 10.998
2019 30.000.000 160.000.000 1.800.000 28.200 .000 150.400.000 1.504.000.000 1.353.600.000 13.536
2020 20.000.000 180.000.000 1.200.000 18.800.000 169.200.000 1.692.000.000 1.522.800.000 15.228
Total 180.000.000  10.800.000 169.200.000     55.836
However, the EIB Group has indicated that it is not  interested in taking part of the risks of an 
uncapped guarantee debt instrument for the cu ltural and creative sectors onto their balance 
sheets. Indeed, they do not  have the same level of expertis e in estimating the risks of these 
sectors as in the re search and innovation sectors where they have a long track record.  
Social Impacts 
Common to both sub-options 
A major social impact of the cultural and crea tive sectors is their contribution to employment. 
CCS are knowledge intensive, requ iring specific skills and high- level qualifications of their 
workforce, and labour intensive, especially those with a high c oncentration of creative inputs. 
The contribution of the CCS to employment is usually significant; typically, they account for 
around 2 to 8 per cent of the workforce in the economy, again depending on the scope of the 
sector. The job-creation potential of these s ectors can be important in policy terms. 
Furthermore, it is sometimes noted that the quality of jobs generated by the CCS economy 
may provide greater levels of employee satisfact ion than more routine occupations because of 
the commitment and sense of cultural invo lvement engendered among participants in a 
creative endeavour. 
This option would lead to an improved dialogue  and trust building between the cultural and 
creative SMEs and financial instit utions as it would involve considerable capacity building for 
financial institutions increasing their expertis e and knowledge in the sectors. Additionally, 
SMEs in the cultural and creative sectors co uld benefit from this capacity building by 
developing the appropriate skills to elabor ate business plans and to prepare accurate 
information of their projects that would help th e financial intermediary evaluate the cultural 
and creative projects in an efficient way. 
6. COMPARING THE OPTIONS  
6.1. Comparison of options 
This section compares the options on the basis of effectiveness in terms of achieving 
objectives, efficiency, coherenc e with the Creative Europe Programme and coherence with 
overall EU strategies related to the cultural an d creative sectors. The options are then ranked 
on this basis.  
 
EN 155   EN Generally speaking, the use of fi nancial instruments has a higher effectiveness and efficiency 
than grants. Indeed, it allows the Commission to multiply the effect of the EU funds and to 
achieve a much larger impact fo r the final recipients than if it provided the financial support 
directly. This is due to the im pact of additional investments from investors that would not 
invest or would invest less had the EU contribution not been there.  
Section 5 describes the main ef fects and impacts of the each option. Table 3 summarises these 
impacts in relation to the effectiveness of the options in meeting the objectives of the 
programme (as defined in section 3).  
Effectiveness criteria 
In order to assess the effectiveness of the options, their results and impacts have been 
analysed for a series of key drivers derived from the objec tives. The following drivers are 
those that have been iden tified as most relevant: 
• Multiplier effect: how many EUR from the pr ivate sector will one EUR from the EU 
budget generate? 
• Volume of loans to CCS: what will be the amount of loans issued to SMEs in the 
cultural and creative sector s generated by the option? 
• Geographical coverage: how many financia l institutions from how many Member 
States will be active in offering bank credits to cultural and creative SMEs? 
• Administrative costs/barriers /delays: direct financial s upport such as grants are 
normally only offered at a certain time of the year and SMEs normally have to wait 
up to six months to know whether they have been selected. 
• Business capacity building: how will the op tion encourage financial institutions to 
develop their own in-house expertis e in the CCS (investor readiness) 
• Structuring effect: how will the option encour age cultural and creative SMEs to limit 
their reliance on public subsi dy and instead turn to other forms of financing such as 
bank loans? 
Efficiency criteria 
In order to assess efficiency  of the individual options, direct costs related to the facility (fund 
management fees, expected loss and capacity-bui lding costs), and EU management costs have 
been taken into account. 
Coherence criteria 
Both internal and external coherence of the instrument are also considered as comparison 
criteria. 
– Option 1 - Baseline 
The Commission would benefit fr om the experience gained in the management of the MEDIA 
Production Guarantee Fund for film producers, as it could draw lessons from the challenges 
encountered in the previous operational period.  
 
EN 156   EN • In spite of its high multiplier/leverage effect186, the current budget allocated to the 
MEDIA Production Guarantee Fund would be largely insufficient to have a real 
impact on the issues facing SMEs in th e whole cultural and creative sectors as 
already mentioned in Section 2.5.2.  
• The volume of loans would most likely be at par with the current MPGF or in the 
range of €100-150 million187 
• The geographical coverage would most lik ely be quite limited but would gradually 
build on the success of the previous fund  
• There would however be limited capacity bui lding among financial intermediaries as 
the MPGF offers only indirect  capacity/expertise building. 
• Administrative costs/barrie rs/delays would continue to be low as the Fund would 
continue be open to beneficiaries on a continued basi s (unlike grants) 
• The structuring effect would be confined to film producers as the MPGF would not 
take into consideration the needs of other cultural and creative sectors 
• The direct costs would most likely be similar as in the previous fund (depending on 
the fee structure) and ad ministrative costs would pr obably be similar too.  
• There would be continued efficiency as a financial instrument  managed by a third 
party would require less ad ministrative management 
• This option would be coherent with th e Creative Europe Programme although it 
would be restricted to film production 
• This option would be coherent with the overa ll EU approach to cultural and creative 
industries As far as external  coherence is concerned, this  option would be consistent 
with the Treaty on the Func tioning of the European Un ion (TFEU), Europe 2020, 
and the Digital Agenda.  
– Option 2 - No action 
None of the key drivers; multiplier, volume of loans, geographical coverage, business 
capacity, structuring effect would be positive for the No action option in comparison with the baseline. Should there be no financial instrument available for the film sector or other cultural 
and creative sectors, support to the sector will continue to rely primarily on public grants, 
which will incur more costs to the EU budget resulting in negative effects in terms of 
efficiency and effectiveness of EU action. As e xplained earlier, issuing grants would be more 
costly as fewer projects will be supported w ith EU funds than thr ough a leveraged financial 
instrument which offers the re-usage of funds. Furthermore, giving only grants to SMEs in the 
                                                
 
186 The Commission estimates that, thanks to the leveraging effect of the MEDIA Production Guarantee 
Fund (€ 8 million), more than €100 million will be fr eed up for loans to film producers. This is partly 
due to the high leverage offered by IFCIC (x10) which in turn does not allow for used EC funds to return to the EU budget. Audiovisual SGR offers a 4-6 times leverage and they also add €2 million of 
their own funds to the MPGF.  
187 Depending on the EU contribution to the new scheme 
 
EN 157   EN cultural and creative sectors would result in a less structuring effect, lower competitiveness 
and financial capacity of the cultural and crea tive sectors with no loans being guaranteed. 
Naturally there wouldn't be any direct costs invo lved with this option but administrative costs 
would most likely be higher as actions woul d only be implemented through grants which 
involve higher costs as can be  attested from the EACEA exam ple given in option 3 of this 
section.  
Finally, any complementarities or coherence with  other internal EU and external cultural and 
creative actions would be neutral.  
– Option 3 – Setting up a Cultural and Creative Sector Guarantee Facility 
The Cultural and Creative Sector  Guarantee Facility option woul d help increase the overall 
effectiveness and efficiency of EU support po licy for cultural and creative sectors and it 
would address the sectors' specifi c financial needs with sufficien t critical mass and a targeted 
approach, thus resulti ng in a real impact.  
Both sub-options would offer:  
• Greater competitiveness of SMEs in the cultural and creative sectors as they will 
have easier access to private sources of fundi ng. This option could also have a strong 
structuring effect as it could reduce the heavy dependency of CCS on public 
subsidies (in the long term).  
• Innovative business capacity building with in financial intermediaries could 
encourage banks to change their standard practice of demanding personal collateral  
from SMEs operating in the cultural and cr eative industries and in stead accept other 
forms of assurances such as pre-sales cont racts, various forms of grant agreements 
and catalogues of intellectu al property rights (IPRs). 
• The Cultural and Creative Sector Guaran tee Facility would be available to 
beneficiaries on a continuous basis and they would be informed in a relatively short 
period whether thei r application has been accepted or not. This option would 
therefore limit administrati ve costs/barriers/delays  
• Wide geographical coverage as the prior ities are to encourage the geographical 
spreading of expertise/capacity throughout the EU and to maximise the geographical 
diversification of financial institu tions willing to work with the CCS.  
• This option would also lead to improved efficiency as a financial instrument 
managed by a third party would require less administrative management for the 
Commission than for those actions which are being managed by the executive agencies. Fees to the management instit ution of the Cultural and Creative Sector 
Guarantee Facility will have to be negotiated at a later stage with the aid of DGs ECFIN and BUGD.  
• Overall it would also lead to improved internal coherence  of the Creative Europe 
Programmes since, as explained in the MEDIA and Culture strands impact 
assessments, the support to certain players of the sector and to certain types of action 
could be progressively shifte d from direct grants to loans. The overall action in 
favour of CCS would have 2 different instrume nts at its disposal to provide the most 
 
EN 158   EN appropriate type of support to each benefici ary and for each type of project. Also, it 
would contribute to go one step further tha nks to a common approach to cultural and 
creative sectors under the Creative Europe framework and would contribute to its 
general objective.  
• As far as external  coherence is concerned, this option would be coherent to the 
overall EU approach to cultu ral and creative industries; it would be consistent with 
the Treaty on the Functioning of the Eu ropean Union (TFEU), Europe 2020, and the 
Digital Agenda.  
The main differences between the sub-options concern the multiplier/leverage effect and the 
costs for the European Commission.  
Multiplier 
• Sub-option a) will offer a multiplier effect  which according to the EIF would be in 
the range of 5.7x and would provide high volu mes of loans to SMEs in the cultural 
and creative sectors (see also section 5.2.)  Indeed, money invested in guarantee 
facilities has a higher leverage effect than direct subsidies, by attracting additional sources of private and public finance. A lthough this is a lower multiplier than 
currently offered by IFCIC (x10), it is more advantageous as the money invested in the CCS GF will return to the EU budget (apa rt from fees, defaults and costs) while 
funds used by IFCIC to guarantee loans wi ll remain with the IFCIC solidarity fund. 
Also, the instrument would be more effective since the creditors will be able to call the guarantee as soon as a default of paymen t is reported, while in the case of IFCIC, 
the guarantee can only be called in case of bankruptcy of the borrower. 
• Sub-option b) will however only offer a multiplier of 2 which is considerably lower 
than for sub-option a) or for the baseline, given the impossibility for the EIF to share 
the risk related to the CCS GF. 
Management and direct costs 
• Transaction costs for sub-option a) ha ve been estimated at less than €1.000, 
including both the EIF fees and the expected loss. The cost per transaction is calculated by dividing the to tal costs (annual EIF fee, capacity building programme, 
expected and unexpected losses) by the exp ected number of transactions (see table 
4.). 
In comparison to the baseline, this would repr esent a significant cost-efficiency improvement. 
Indeed, the current cost per transaction unde r MEDIA for awarding grants is currently 
estimated at over €3,400
188. The costs under the current MPGF are expected to be much 
higher, given the important i nvestment required to set up a pilot action both for the 
Commission and the delegated bodi es. Statistics based on the fi rst year of implementation 
suggest that the cost per transaction is  much higher than for sub-option a). 
• Sub-option b) would however have consid erably higher costs involved (need to 
demonstrate the cost for the uncapped model here 
                                                 
188 The total administrative cost of the EACEA for th e management of MEDIA projects was €8.607.000 in 
2010, for approximately 2.500 grants awarded.  
 
EN 159   EN As far as sub-option b) with  the EIF taking the risk, there are a number of obstacles to the 
setting up of such an instrument: 
– An uncapped guarantee debt instrument with the EIB Group taking part of the 
risk, would require charging a co nsiderable fee for the guarantees189 which 
would limit the interest of the instrument for financial institutions. The experience of the MPGF where a guarantee fee is charged also  shows that these 
fees are too expensive and constitute an obstacle for some banks to engage in the process. The solution may be to pa ss on the additional cost to the final 
beneficiary, which would however be cont rary to the objectives of facilitating 
access to bank loans
190. The guarantee fee will be free for the capped guarantee 
model (sub-option a), conditioned to the benefits being passed on by the financial beneficiary in terms of interested  rate rebate and no private collateral 
requested on these loans.  
– The EIB Group has indicated th at it is not interested  in taking part of the 
unexpected losses of an uncapped guarant ee debt instrument for the cultural 
and creative sectors onto their balance sheets as it does not have the expertise in estimating the risks of these sectors. 
– It would also be more feasible for DG  EAC to adopt a capped guarantee model 
in line with current Commission financia l instruments such as the SMEG and 
build upon their experience.  
– From a general market point of view, the perception of high risk associated 
with these sectors naturally leads to the necessity of limiting the guarantee level that can be offered. 
– As far as the guarantee rate of 50% is concerned, various consultations with the 
private and public financial sector indicates that, in order for banks to play a 
greater role in the "whole" of the cultural and crea tive sectors and not just in 
film production, it would be necessary to have a higher guarantee rate  than 
the 50-55% offered by the MPGF.  
On the basis of the multiplier and costs criteria, it can be concluded that sub-option a) Capped 
guarantee model is much more effective and e fficient than sub-option b) Uncapped guarantee 
model without  the EIF sharing the risk. 
Additionally, given all the obstacles and disa dvantages associated with sub-option b) 
Uncapped guarantee model with the EIF sharing the risk, sub-option a) is more feasible than 
sub-option b) Uncapped guarantee model with  the EIF sharing the risk. 
                                                
 
189 The fees to be paid by financial institutions to benefit from an uncapped guarantee would be very 
expensive in order to compensate for the high risk exposure that the Fund would need to take.  
190 In France for example, banks using the nati onal IFCIC guarantee mechanism charge the final 
beneficiaries with premium interest rates, in order to cover for the guarantee fee charged by IFCIC. 
Producers consulted have expressed that the financial costs related to loans granted by these banks are 
prohibitive (up to 12%). 
 
EN 160   EN Table 8. Comparing the options   
 1 
Baseline 2 
No action 3 
Cultural and Creative Sector 
Guarantee Facility  
   3a Capped 
Guarantee 
Model 3b Uncapped 
Guarantee 
Model 
 Effectiveness     
Multiplier effect 0 ▬ ▬ ­­ ­ 
Volume of loans to CCS 0 ▬ ▬ ­­ ­ 
Geographical coverage 0 ▬ ▬ ­­ ­ 
Business capacity building 0 ▬  ­ ­ 
Administrative costs 0 ▬ ­ ­ K
E
Y 
D
R
I
V
E
R
S 
Structuring effect  0 ▬ ­­ ­ 
Direct costs 0 ­­ ▬  ▬ 
Efficiency  Management costs  0 0 ­ ­ 
Coherence with other strands of 
Creative Europe Programme 0 0 ­­ ­­ 
Coherence  0 0 ­ ­ 
 Overall assessment 0 ▬ ▬ ­­ ­ 
6.2. Preliminary modalities for implementation of the CCS GF 
Should the new cultural a nd creative sector guarantee facili ty be incorporated in a larger 
Commission financial instrument, four key im plementation modalities have been identified 
which ideally would be fulfilled, in orde r to reach the objectives of the CCS GF191. 
1. Create a specific window with its own earmarked / ring-fenced budget 
In order to retain control on th e use of the contribution of DG EAC to a larger instrument, it 
would be necessary to create a specific window with its own earmarked / ring-fenced budget 
that would be exclusively dedicated to the support of SMEs of the CCS. 
                                                 
191 These modalities have been discussed with other Commission services. It appears that it should be 
possible to implement them within a larger instrument.  
 
EN 161   EN 2. Fit into the overall framework and adapt in tervention modalities to the specific CCS 
needs 
While the instrument would need to fulfil the requirements set out by DG ECFIN and fit into 
the overall framework of a larg er financial instrument, it w ould have to respond to the 
specificities of the cultural and creative SMEs . Indeed, as mentioned in point 2.4 the cultural 
and creative SMEs have specific problems with regard to access to finance which the instrument would have to take into account bo th in terms of the mechanism and technical 
specificities. For example, policies in terms of collateral requirements, pricing, duration of the 
guarantees would have to be adap ted to this specific sector. 
3. Keep its own branding, visibili ty and communication strategy 
Given the high level of recognition and notorie ty of the MEDIA brand in the audiovisual 
sector, and in view of ensuring high visibility  of the instrument in the sector, the CCS 
financial instrument should keep  the MEDIA/Creative Europe bra nd inside its name (such as 
the current MEDIA Production Guarantee Fund) and DG EAC should be able to define and 
implement a specific communication stra tegy for this particular CCS window. 
4. Capacity / expertise building  
The setting up of a specific capacity and e xpertise building programme for financial 
institutions, as described above must be an inte gral part of the mechanism, as this will be a 
key success factor of the CCS  financial instrument.  
6.3. Possible frameworks for the implementa tion of a CCS Guarantee Facility 
The option to create a stand-alone CCS financial instrument has been discarded in section 4.1. 
It is therefore more appropriate to  insert the CCS Guarantee Facility  as a specific window 
within an existing larger financial instrument. Provided that the four modalities are met, it is 
expected that the impact of the Cultural a nd Creative Sector Guarantee Facility will be 
equivalent regardless of which larger Co mmission financial inst rument it would be 
incorporated into. The Commission's proposal  in the next MFF aims to focus on and 
strengthen existing financial instruments that proved to be successful , while bringing a strong 
EU added value and avoiding duplication of alr eady existing schemes at national or regional 
level. 
At present, it remains unclear which DGs will have financial instruments in the new MFF 
period, although it is quite likely that both DG RTD and DG ENTR will continue to operate 
financial instruments in the future. Buildin g on the strong track record of financial 
instruments such as the SMEG ma naged by DG ENTR under the CIP
192 and RSFF currently 
managed by DG RTD under the 7th Framework Programme for research, their successor 
programmes would provide equity and guarantee instruments targeting SMEs that need access 
to finance. 
Following various consultations and research  carried out inside and outside of the 
Commission, it appears that these can be consid ered as examples of possible frameworks 
within which the Cultural and Creative Sect or Guarantee Facility could be operated.  
                                                 
192 http://ec.europa.eu/enterprise/policies/finance/cip-financial-instruments/index_en.htm 
 
EN 162   EN Framework i) Horizon 2020 - Risk Sharing Fi nance Facility (RSFF) Debt Instrument 
As mentioned in Section 1.3.1, DG EAC has been  participating in a working group on future 
Financial Instruments, organised and chaired by DG RTD. Discussions ha ve taken place with 
DG RTD concerning the possible inclusion of a guarantee mechanism for the cultural and 
creative sectors in the Horizon 2020 debt inst rument in the form of ring fenced window 
(compartment) for the CCS. DG EAC would contri bute to the window a nd define eligibility 
criteria for financial institutions and end be neficiaries. DG EAC would participate in the 
governance of these platforms along with othe r policy DGs and DG ECFIN. The management 
of the instrument would be mandated to the EIF.  
The new Horizon 2020 debt platform which w ill most likely be based on the current RSFF 
(Risk Sharing Financial Facility ) intends to have a double appro ach in its implementation: a 
market-driven approach (based on the principle "f irst come, first served") and a policy-driven 
approach with earmarked windows for various policy fields, including CCS193. 
The main advantage  for the Creative Europe programme  is that it would involve less 
responsibility, workload and resource input while  allowing reaching its obj ectives in terms of 
facilitating access to finance for SMEs of the CCS. Also, it woul d offer the possibility to use 
other financial instruments w ithin the RSFF (equity, microfinance etc) and would be less 
expensive in terms of EIF/EIB fees.  
There are however some issues  to address, such as the level of visibility of DG EAC and its 
MEDIA brand, the adequacy to the specific need s of the CCS or the need to streamline its 
technical specificities with RSFF parameters. A dditionally, a considerable part of the cultural 
and creative sectors are not "research or i nnovation" driven and would therefore not be 
relevant to the objectives of the new Horizon 2020 Programme.  
Framework ii) New DG ENTR debt instrument for SMEs 
Although it is unclear at this stage what form the new Competitiveness and Innovation 
Programme (CIP) will take after 2013, it is likel y that DG ENTR will continue to provide 
financial instruments in favour of SMEs, and notably through guarantee  facilities. The CCS 
Guarantee Facility could potentially be in corporated into a new "SMEG" or "SME 
Internationalisation", in a similar "ring-fen ced window" as mentioned here above, although 
modalities still need to be further discussed with DG ENTR. This framework would probably 
be more suitable in terms of policy coherenc e as it will focus on SMEs with cross-border 
activities and could offer possible synerg ies with the Creativ e Industry Alliance194 which DG 
ENTR has recently launched and focuses among other things on capacity building and 
clusters in the CCS. 
                                                 
193 This is described in the following manner: "Earmarking: There will be specific windows catering for 
(1) a bottom-up, demand-driven, first-come first-served approach, including a ring-fenced part for SMEs and mid-caps, and (2) a policy-driven approach, with loan volume targets for sectors crucial to 
sustainable growth and competitiveness, namely those covered by the proposed Common Strategic 
Framework (CSF) for Research & Innovation and by other programmes, such as the successors of the 
current MEDIA and Culture programme".  
194 Example of this is DG ENTR "Creative Industry A lliance", which is looking at ways to strengthening 
the investment readiness of SMEs in the cultural and creative industries. Furthermore it is envisaged 
that the new MEDIA Programme will offer support for various capacity building which will include 
investment readiness actions.  
 
EN 163   EN The same advantages  as regards to the responsibility , workload and resource input would 
most likely apply to this framework as well. The issue  is the uncertainty around concerning 
future Commission financial instruments, incl uding those for the CIP. It is also unclear 
whether the four requirements mentioned above can be fulfilled within a new ENTR financial 
instrument. Indeed, the CIP instruments have so far been insufficiently visible and adapted to 
CCS needs as they have had a quite general focus resulting in a limited impact for the CCS. 
In addition to DG RTD and DG ENTR instruments,  the possibility to join forces with DG 
REGIO / Structural funds to support the CCS ca n also be considered. Indeed, under the new 
Multi-annual Financial Framework,  the regional policy financia l instruments will offer new 
opportunities to national and region al authorities. For example, Member states and regions 
will be able to extend financial instruments opera ted at EU level to be applied to their own 
territory. In that context, it can  be envisaged to extend the CCS Guarantee Facility to specific 
countries or regions, which w ould provide additional financi ng and expand the scale of the 
CCS instrument 195. 
It would be particularly relevant for some of the Creative Europe objectives such as the 
digitisation of cinemas. Also, it would offer a valuable combination of EU added value and 
national/regional policies for the CCS. However,  it would probably be less appropriate with 
regard to the EU dimension requirements for the rest of the Creative Europe actions and it is 
uncertain whether Member States and/or regions will be willing to partic ipate. It would also 
be difficult to manage, since it would invol ve a lot of different actors (Member States, 
regions, Commission etc). This could be achie ved through either the DG RTD or DG ENTR 
platform but further dialogue with DG REGI O is required to investigate these issues196. 
Concerning the two possible implementation fr ameworks, e.g. placing the CCS GF either 
under "Framework i) Horizon 2020 - Risk Sharin g Finance Facility (RSFF) Debt Instrument" 
or under " Framework ii) New DG  ENTR debt instrument for SMEs, this impact assessment 
report does not offer a preferred opt ion. This is due to the lack of information about these two 
instruments at present stage. However based on the facts at hand t oday, both options would 
appear to be feasible. 
7. MONITORING AND EVALUATION  
Monitoring 
A key point for the new EU equity and debt pl atforms is to ensure standardised reporting 
across instruments which makes it possible to co mpare the performance of them. In addition, 
duplication of monitoring should be avoided. An integrated monitoring sy stem should be put 
in place for the financial instrument to provide  reasonable assurance th at EU funds are used 
for the purposes intended, making use of st andardised performa nce indicators and 
standardised reporting formats in order to allow comparative analysis of the success of instruments. DG EAC will co-operate with DG ECFIN, the EIF and depending on the 
platform under which the CCS Guarantee Faci lity will be operated, either DG RTD or DG 
ENTR on establishing these indicators. Th e EU Equity and Debt Platforms which are 
                                                
 
195 Subject to competition and state aid rules 
196 The need to comply with new the Financial Regulation and the new rules concerning structural funds, 
as well as State aid and competition rules would add even more complexity to the matter.  
 
EN 164   EN currently being set up by DGs BUGD/ECFIN/SG,  will be the key reference for creating these 
indicators and reporting formats. 
The monitoring activity for the financial instru ment will include documentary checks based 
on regular reviews of the reports sent by the EI F and, where appropriate, visits to the EIF and 
financial intermediaries (FI) which will be set out in an annual monitoring plan.  
The monitoring visits are organised on the ba sis of the respective delegation agreement197. 
Monitoring visits to FIs and EI F are prepared and carried out in accordance with the Annual 
Monitoring Plan and the provisions set out below.  
Monitoring visits take into  account the following input: 
• Reporting received from the EIF,  
• Project file,  
• Supporting documentation from EIF and FI. 
The output will consist of: 
• Notification letters to the EIF and FI, 
• Monitoring Visit Report,  
• Follow-up letters to the EIF. 
EAC staff will contact the EIF and request the organisation of a visit sufficiently in advance 
for such organisation to take place.The Commissi on does not contact FIs directly to organise 
such visits. However, following such visits to the EIF, an FI may be contacted directly for 
clarification purposes and any missi ng information as a result of the work done in a visit. The 
EIF will be kept informed of such contacts. 
Visits will be carried out typically by Commission staff from DG EAC and DG ECFIN but 
this will also depend under which platform the CCS Guarantee Facility will operate. The 
preparation of a monitoring vi sit, observations and findings and final report shall be 
documented. 
A more detailed description of the procedures  for the monitoring visits and of further 
monitoring tasks will be developed at a later stage with the relevant Commission services 
such as DG ECFIN and DG BUDG.  
Evaluation 
According to the Financial Regulations, financ ial instruments should be designed in a way 
that there is appropriate information to carry out intermediate and ex post  evaluations and in 
particular, to analyse their impact on the basis of pre-de fined indicators.  
                                                 
197 The type of the agreement with the EIF depends on the new Financial Regulation. The current 
agreements with the two managers (IFCIC and Audiovisual SGR) of the MPGF are Delegation 
Agreements based on Art. 54 of the FR.  
 
EN 165   EN The following indicators have been establishe d for the ex-post evaluation of the financial 
instrument: 
• The volume of loans granted to  cultural and creative SMEs. 
• Number and geographical diversification of financial institutions involved in the 
financing of the sector 
• Number, national origin and s ub-sectors of final benefici aries benefitting from the 
guarantees 
Commission guidelines on interim (mid-term) and ex post evaluations may need to be adapted 
to the financial instrument but in order to enab le the results of the interim evaluation to be 
taken into account for decisions on renewin g, modifying or discontinuing the successor 
financial instrument, it should be  conducted roughly four years pr ior to the expiration of the 
financial instrument, currently envisioned fo r 2020. If it were condu cted too early, there 
would be too little experience to evaluate; if to o late, the results could not be fully factored 
into the next multiannual cycle. This implies that the interim evaluation of the successor 
financial instrument should be conducted in 2016, assuming no change in the planned year of 
expiration. 
Table 9. Indicative indicators  
Related objective Type of 
indicator Indicator Source of data 
collection 
General objective:  
To foster the safeguarding and 
promotion of European cultural and linguistic diversity, and 
strengthen the competitiveness of 
the cultural and creative sectors, with a view to promoting smart, 
sustainable and inclusive growth  Impact 
 The sectors' share of 
employment and share of 
GDP  
% of people reporting 
that they access 
European cultural works 
 Annual European 
competitiveness report, 
evaluation 
Regular Eurobarometer 
surveys  
Specific objective:  
To strengthen the financial 
capacity of the cultural and creative sectors Result The volume of loans 
granted in the framework 
of the financial instrument 
The number and 
geographical spread of financial institutions 
providing access to 
finance for the cultural and creative sectors  
The number, national 
origin and sub-sectors of final beneficiaries 
benefitting from the 
guarantees 
 Evaluation; reporting by 
the EIF and the financial 
intermediaries  
 
EN 166   EN Table 10. Indicators with current situation and targets 
Indicator Current Situation Targets (over 7 years) Specific Objectives Strengthen financial capacity 
Volume of loans granted in the 
framework of the financial instrument [MEDIA Production 
Guarantee Fund: €18 million worth of loans] 1 billion worth of loans 
Number and geographical spread 
of financial institutions providing access to finance for the cultural and creative sectors [MEDIA Production 
Guarantee Fund: Banks from 7 differen t countries] Banks from 10 different 
countries 
Number, national origin and sub-
sectors of final beneficiaries benefitting from the instrument  15.000 beneficiaries, 15 
different countries, 5 sub-sectors (film, video games, publishing, music, design) 
8. A
NNEXES  
8.1. Annex 1 - List of cons ultations and studies 
– MEDIA Meets the Film Funds - During the Cannes Film Festival in May 2011, the 
MEDIA Programme organised a second mee ting of international, national and 
regional film funds as a follow-up from last  years successful film fund meeting. One 
point on the agenda was "The MEDIA Production Guarantee Fund and new EU 
Financial instruments. How can they stre ngthen the European audiovisual industry 
and what are the possible oppor tunities for film funds?" 
The main conclusions from the second panel of this meeting were: 
– A guarantee facility for the cultural and creative sectors would be welcomed by 
the financial institutions 
– Guarantees for gap financing could be part of the new instrument but this 
would most likely be used by i nvestment funds and not banks 
– National and regional film funds could use the new financial instrument for 
their own purposes, where their contribu tion would be "ring-fenced" for their 
respective territory. They c ould co-invest in the fund, in the same way as ICAA 
(Spanish national film fund has co-invested in the part of the MEDIA 
Production Guarantee Fund mana ged by SGR Audiovisual). 
– The Commission will continue  this dialogue with film funds as the preparation 
for the new financial instrument progresses 
 
EN 167   EN – Meeting with DG REGIO: DG ECFIN/L2 organised a meeting between DG 
REGIO/D3 and DG EAC/D3 on the possible a lignment of Structural Funds with the 
Cultural and Creative Debt Instrument  on June 16th 2011. REGIO informed EAC of 
its proposal for the Structural Funds' new re gulations which could enable a wider use 
of financial instruments.  
– Recommendations from the European Platfo rm on the Potential of Cultural and 
Creative Industries : This Platform, created in 2008 in the context of the EU 
structured dialogue with civil society, is  a group of more than 40 organisations 
representing a wide range of cultura l and creative sect ors. Through policy 
recommendations and public advocacy, the platform aims at highlighting the 
fundamental role of cultural and creativ e industries in Europe and unlocking their 
full potential. In the autumn 2009, the Platfo rm produced a report containing a set of 
recommendations. One of the recommendations was to develop financial tools 
adapted to the needs of cultural and crea tive industries such as public private 
loan guarantee schemes , cultural and creativ e SME- friendly growth loan finance 
etc.  
– Recommendations from the Member Stat es Expert Group on "Maximising the 
potential of Cultural and Creative Industries, in particular that of SMEs": This group, 
set up in the framework of the implementa tion of the European Agenda for culture, 
produced a set of recommendations in Ju ne 2010. Mentioning the good practice of 
IFCIC in France, the report calls fo r developing financial mechanisms’ 
benchmarking (caution, guarantees, loans,  investments, bonds, export incentives, 
etc.) to facilitate conditions for cultural businesses/projects to accede to private 
funding mechanisms and for stimulating the release of capital from financial 
institutions dedicated to the cultural and creative sectors, specially SMEs, including 
with the support of guarantees of the EIF  
– Study on the " Entrepreneurial dimension of cult ural and creative industries" 
(2011): The aim of this study was to provide a better unde rstanding of the operations 
and needs of companies in the cultural a nd creative sectors, especially SMEs. The 
study underlines transversal problems common  to all these industries and indicates 
specific challenges that prevent them from benefiting from the internal market and 
the digital shift. In doi ng so, it looks at key dete rminants for strengthening 
entrepreneurship within these industries, notably access to finance. It describes 
access to finance as the greatest obstacle faced by entrepreneurs and enterprises in 
cultural and creative sectors. It recomm ends that support opportunities should be 
developed for all sectors of the cultural and creative sectors at their crucial points of 
their relative value chains. In this respect, it calls for EIB and EIF Funds to back national or regional initiatives aime d at developing guarantee schemes. 
– Mini-study carried out for DG ENTR of the European Commission on the "Access 
to finance activities of the Eu ropean Creative Industry Alliance"  (2010): The 
study describes access to funding as a core ba rrier to growth for many businesses in 
the cultural and creative sectors and highlight s the lack of investment readiness for 
cultural and creative SMEs (in particular due to the lack of information and 
understanding about sources of relevant fina nce or the difficulty to present a business 
model that meets the criteria of the bank/inve stor community) as well as the lack of 
investor readiness. It also identifies so me equity and non equity-based (such as 
guarantees) schemes existing at national level.  
 
EN 168   EN – Study project on " Promoting Investment in the Cu ltural and Creative Sector: 
Financing Needs, Trends and Opportunities (2010)198: The study provides an 
analysis of the financing needs of the cultural and cr eative sector and identifies 
opportunities for improvements in access to finance within the sector in some 
European countries. It underlines that acces s to finance represents a challenge for 
85 % of companies surveyed in the course of producing the re port. It also reveals that 
according to a survey conducted in the Netherlands one in seven creative businesses call on external finance but less than half  expect to get financing when needed, 
compared to two in three SMEs from other sectors. The study concludes that due to a 
market failure public intervention is justifie d – for example in the form of guarantee 
schemes – to trigger more private investment  in this sector and unlock its very high 
growth potential. 
8.2. Annex 2 - Commission guidelines  on Financial Instruments 
In the evaluation of the options above, it is important to keep in mind that specific 
requirements
199 have been defined at Commission level with regard to Financial Instruments. 
In the next Multi-annual Financ ing Framework (MFF), the EU le vel financial instruments are 
guided by the principles for the design of ne w Financial Instruments as endorsed by the 
Commissioners' Group and the principles in th e Budget Review documents, in particular: 
• EU level financial instruments should play  a more important role in helping reach 
Europe 2020's policy objectives. 
• EU level instruments should be coherent, have  the critical size/ma ss to attract interest  
and commitment from financial institutions , make an impact in the market and 
ensure a broad reach-out to final beneficiaries as well as visibility. 
Furthermore, according to the proposed chan ges to the Financial Regulations, financial 
instruments shall comply with the principles  of sound financial management, transparency, 
proportionality, non-discrimination and equal treatm ent, in accordance w ith the objectives and 
for the duration established in the basic act that  applies to those financ ial instruments. They 
shall comply also with the following conditions: 
(a) added value of the EU intervention, whic h means that financial instruments shall 
only be implemented at EU level where thei r objectives, in particular by reason of 
their scale or effects, can be better achi eved at Union level th an at national level; 
(b) they shall be implemented in order to a ddress sub-optimal investment situations, 
which have proven to be financially viable but do not give rise to sufficient funding 
from market sources; 
                                                 
198 Carried out for Nantes Metropole in the co ntext of the Interreg-funded Ecce-Innovation 
199 Conceived as a new set of standardised common rules and principles for equity and debt instruments, 
the aim of the EU Debt and Equity Platforms is to simplify the task of policy DGs or families of such 
DGs in designing new instruments themselves. The plan  is that standard, non- policy specific issues will 
be settled at the level of the Platforms (Suc h as, for example, capital accumulation rules and 
transparency principles), with the specific features required to cater for a particular policy or set of 
beneficiaries incorporated in the design of individual instruments.  
 
EN 169   EN (c) additionality, which means that financial instruments of the EU shall not aim at 
replacing those of a Memb er State, private funding or another financial EU 
intervention; 
(d) financial instruments shall be implem ented in a way which does not distort 
competition in the internal market; 
(e) they shall have a multiplier effect, whic h means that the Union contribution to a 
financial instrument shall mobilise a global investment exceeding the size of the Union contribution according to th e indicators defined in advance; 
(f) (appropriate measures shall be put in place to ensure that the entrusted entity has 
aligned interest, which means that when implementing financial instruments, the 
Commission shall ensure that there is a common interest in achieving the policy objectives defined for a financial instrument , possibly fostered by provisions such as 
co-investment, risk sharing requirements or financial incentives, while preventing 
conflict of interest with other activities of the entrusted entity. 
8.3. Annex 3 – Eligibility criteria for SM Es to have access to the CCS GF 
For the avoidance of doubt, regardi ng eligibility criteria, CCS SMEs  shall meet at least one of 
the following criteria: 
1. SME intends to use the SME loan to de velop a CCS project as evidenced by the 
business plan, 
2. SME NACE code is one of the following: 
R91.0.1Library and arch ives activities  
R91.0.2Museums activities  P85.5.2Cultural education 
…..  Full list to be completed on the basis of ESTAT and with industry associations
200 
3. In the last 24 months, the SME and/or th e project promoter/team must have met one 
of the following sub-criteria: 
(a) CCS projects developed by the CCS SME a nd/or the project promoter/team have 
received grants/loans/funding/guarantees from European or national CCS institution or association over the last 24 months incl uding those of the EU´s Creative Europe 
Programme (MEDIA and Culture). 
(b) CCS projects developed by the CCS SME a nd/or the project promoter/team have 
been awarded a CCS prize over the last 24 months; 
                                                
 
200 Work is ongoing at ESTAT level to identify the NACE Codes corresponding to cultural activities. 
Work is expected to be finalised in 2011.  
 
EN 170   EN (c) CCS projects developed by the CCS SME a nd/or the project promoter/team have 
filed copyrights, trademarks, distribution rights or any other equivalent rights201 in 
the field of CCS in the last 24 months; 
(d) CCS SME investors have benefited from ta x credit or tax exemption related to 
development of IPRs or CCS activities in the last 24 months; 
(e) CCS SME has demonstrated to the Financia l Intermediary that it has developed its 
activity in the field of the CCS in the last 24 months. 
(f) CCS SME falls under the eligibility cr iteria for the EU´s Creative Europe 
Programme (MEDIA and Culture) 
(g) Requirements with regard to the project / work financed: 
– Type of work (film, book, music, concert, etc) 
– Specific criteria for each type of work (for ex. Length of film, etc) 
– European content (European Test) 
– Exclusion of certain types of works 
 
                                                 
201 According to local jurisdiction, IPRs might be held in different legal formats.