COMMISSION STAFF WORKING PAPER IMPACT ASSESSMENT
Date: 2011-11-23
Institutions: European Commission
Subjects: cultural pluralism, cultural promotion, cultural transmission, culture industry, small and medium-sized enterprises, vocational training

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} 

 
 
  
 
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

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

1.4. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

Procedural issues and consultation of interested parties .............................................. 4 

Purpose of the impact assessment report ..................................................................... 4 

Procedural issues, organisation and timing, and consultation of interested parties ..... 4 

External expertise......................................................................................................... 5 

Consultation ................................................................................................................. 5 

Context and Problem definition ................................................................................... 7 

Historical and Policy context ....................................................................................... 7 

Sector context............................................................................................................... 9 

Baseline description: The Culture Programme .......................................................... 10 

Identification of problems and their underlying drivers ............................................ 13 

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 ................................ 13 

2.4.2.  Problem 2: the impact of globalisation and the digital shift on the cultural sector and 

the need for the sector to develop its capacity 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 cultural 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?......................................................................................................... 20 

2.6. 

2.7. 

Baseline trends: how would the problem evolve, all things being equal? ................. 21 

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. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

Objectives................................................................................................................... 25 

Policy options............................................................................................................. 28 

Criteria applied for pre-selection of options to undergo further analysis .................. 28 

Discarded options....................................................................................................... 29 

Option 1 "No Change" ............................................................................................... 30 

Option 2 "Revised Programme"................................................................................. 30 

Option 3 "Synergies and new framework programme" ............................................. 32 

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5. 

5.1. 

5.2. 

5.3. 

6. 

6.1. 

6.2. 

6.3. 

6.4. 

6.5. 

6.6. 

7. 

Analysis of impacts .................................................................................................... 33 

Option 1 "No change" (the baseline) ......................................................................... 35 

Option 2 "Revised programme" ................................................................................. 36 

Option 3 "Synergies and new framework programme" ............................................. 38 

Comparing the Options .............................................................................................. 39 

Effectiveness .............................................................................................................. 39 

Efficiency ................................................................................................................... 40 

Cost-effectiveness ...................................................................................................... 40 

Coherence................................................................................................................... 46 

Scoring of options ...................................................................................................... 46 

Preferred option.......................................................................................................... 48 

Monitoring and Evaluation ........................................................................................ 48 

7.1. 

Indicators.................................................................................................................... 49 

8. 

8.1. 

8.2. 

8.3. 

8.4. 

8.5. 

Annexes...................................................................................................................... 50 

Annex 1: Studies ........................................................................................................ 50 

Annex 2: Indicative indictors ..................................................................................... 51 

Annex 3: Results of the public consultation .............................................................. 51 

Annex 4: Interim Evaluation of the Culture Programme 2007-2013......................... 52 

Annex 5: Annex to the Ecorys Final report – Consultancy services for the impact 
assessment of the future programme on Culture........................................................ 52 

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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 instrument. This document contributes to the 
overall exercise by presenting exclusively the impact assessment of the future strand aimed at 
the cultural sector, including the cross-sectoral strand, but excluding the audiovisual industry. 
The  proposal  is  in  line  with  the  Communication  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  timing,  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  composed  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  September  2010  and  July  2011  in  order  to  provide 
contributions during the impact assessment preparation. During the meeting in July 2011 the 
draft  Commission  Staff  Working  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  creative  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”. 

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(1) 

(2) 

(3) 

The problem definition in relation to the evaluation results of the current programme 
and the stakeholder input, and the intervention logic; 

The budget distribution between the framework programme´s different policy strands 
and the assessment of the available alternatives; 

The assessment of the expected impacts and the structuring and systemic impacts the 
programme aims to achieve. 

This revised version of the IA takes 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 material contributing to this analysis. In 
section  3  a  diagram  depicts  the  inter-linkages  between  the  identified  needs,  the 
specific objectives, and provides indications of some expected results and examples 
of  possible  actions.  The  various  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 presented 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 structuring effects of the new programme, and 
the  various  discarded  options  are  explained.  This  analysis  also  includes  clearer 
indications  of  input  from  the  evaluation  of  the  previous  programme,  studies, 
consultations and external consultation services 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  developments  within  the  cultural  and  creative 
sectors.  This  report  contributed  to  establishing  the  problem  definition,  to  the 
formulation  of  the  objectives  for  future  action  in  this  field,  and  the  analysis  and 
impact  assessment  also  draws 
comparison  of  options.  The  Commission's 
significantly  on  the  findings  of  the  interim  evaluation  of  the  current  Culture 
Programme2 and the studies outlined in annex 1. 

1.4. 

Consultation  

A  public  consultation  on  the  future  of  the  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  

, 

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The  consultation  was  fully  in  line  with  the  General  principles  and  minimum  standards  for 
consultation  of  interested  parties  by  the  Commission.3  Adequate  time  was  provided  for 
preparation and planning of responses, with the online consultation running for 3 months. The 
questionnaire  posed  both  closed  as  well  as  open  questions.  A  considerable  number  of 
organisations  also  sent  in  separate  position  papers.  With  almost  1,000  responses  (589  from 
individuals,  and  376  from  organisations  and  public  authorities),  this  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 needs 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  continuation  of  a  specific 
EU programme for culture, with 93% support among respondents, but also indicated the need 
for  a  realignment  of  the  objectives  with  the  goals  of  Europe  2020  (also  among  most  public 
authorities)  and  the  contribution  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  international  context  (supported  with  a  score  to  'a  great 
extent'  by  70%  of  the  respondents);  and  promoting  the  trans-national  circulation  of  cultural 
works  and  products,  including  the  mobility  of  artists,  performers  and  cultural  professionals 
(supported with a score to 'a great extent' by 72% of respondents). Priorities of a more social 
nature were also endorsed, including widening access to culture and participation in culture of 
disadvantaged groups (social inclusion) (supported with a score to 'a great extent' by 72 % of 
respondents).4 

Some  public  authorities  underlined  the  importance  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  was  consensus  that  it  should  not 
focus  on  mass  digitisation,  which  many  found  should  be  covered  by  other  funding 
programmes.  There  was  some  support  for  small  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 sufficient 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 

4 

“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. 
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-and-actions/consultation-on-the-future-culture-
programme_en.htm). 

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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  the  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 cultural organisations. Amongst other things this meeting underlined 
the  need  to  realign  the  objectives  of  a  future  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  having  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 between 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  mobility 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  cultural  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  support  programmes  is  summarised  in  the  table 
below. 

Table 1: EU programmes 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.  

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citizenship 

In  recent  years  there  have  been  important  developments  concerning  the  policy  context  for 
culture.  In  2007  the  Commission  adopted  its  first  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 intercultural dialogue, to foster 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  through  a  structured  dialogue.  An  assessment  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 diversity, intercultural dialogue and accessible and 
inclusive  culture;  cultural  and  creative  industries;  skills  and  mobility,  cultural  heritage, 
including mobility of collections; culture in external relations; and culture statistics. 

Furthermore, in accordance with the UNESCO Convention on the Protection and Promotion 
of the Diversity of Cultural Expressions, which is part of the acquis communautaire, the EU 
has  a  moral  and  legal  obligation  to  take  action  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, innovation, and entrepreneurship" which are central to the cultural 
sector.  The  EU  needs  to  provide  more  attractive  framework  conditions  for  innovation  and 
creativity, including through incentives for the growth of knowledge-based firms. Access to 
credit  is  a  particular  problem,  not  only  in  the  aftermath  of  the  crisis  but  because  some  new 
sources  of  growth  such  as  the  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 free circulation), An Agenda for New Skills and 
Jobs  (contribution  to  the  employment  headline  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 Poverty (the potential of 

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Communication  from  the  Commission  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 (COM(2007) 242 final), 10.05.2007. 
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  
"Europe  2020  Strategy:  A  European  strategy  for  smart,  sustainable  and  inclusive  growth",  p.  11, 
http://europa.eu/press_room/pdf/complet_en_barroso___007_-_europe_2020_-_en_version.pdf. 
For  example,  the  contribution  of  architecture  to  better  designed  hospitals  and  schools,  which  can 
contribute  to  patient  recovery  and  pupil  behaviour  and  performance,  and  with  spill-overs  also  for 
construction and urban planning. 

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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 and the EU would wish to see all Member States with thriving 
and  vibrant  cultural  sectors,  optimising  the  transformative  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 sectors trigger  spill-overs in other economic 
areas  such  as  tourism,  fuelling  content  for  ICT,  benefits  for  education,  social  inclusion  and 
social innovation. Despite witnessing 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 consultations carried out concerning Europe´s cultural and 
creative sectors, there is considerable difficulty in assessing the sectors´ current state, due to 
variance between Member States and lack of comparable information on the sectors´ turnover, 
sales  and  employment.  The  European  Competiveness  Report  201011  indicates  that  while  a 
number of studies and policy documents indicate the growing importance of trade in creative 
products,  and  the  sound  export  performance  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 however 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  concludes  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 different problems the various 
sub-sectors  are  currently  facing,  namely  cultural  heritage  and  museums,  visual  arts, 
performing  arts  (opera,  dance,  drama,  street  performance,  orchestras),  music,  literature, 
design, applied arts and architecture. Under the programme there are also a growing number 
of multimedia projects and a large number of interdisciplinary projects. The sectors are highly 
diverse  in  terms  of  business  models,  organisational  modes,  cooperation  structures,  levels  of 
public  funding  and  economic  performance,  something  that  is  confirmed  by  the  European 
Competitiveness  Report  201012  and  responses  to  the  Commission's  Green  Paper  on 
“Unlocking the potential of cultural and creative industries”13. However, in most cultural sub-

10 

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12 
13 

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 Works in the European Union, KEA study, October 
2010.)  
European Competitiveness Report 2010, Commission staff working document, SEC(2010) 1276 
European Competiveness report, op.cit. 
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 

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sectors  the  value  chains  are  more  interconnected  than  in  the  audiovisual  industry,  with  the 
main  exceptions  being  the  publishing  and  book  retail  chain  and  popular  music  production, 
distribution and retail chains, since the development, production, distribution, sales of a work 
and the related customer/audience relations are normally the responsibility of the producer of 
the work. This is why – in contrast to the MEDIA 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  December  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,  Norway,  Liechtenstein)  Turkey,  Serbia,  Croatia, 
Montenegro,  Bosnia-Herzegovina,  and  the  Former  Yugoslav  Republic  of  Macedonia.  The 
programme also supports cooperation with certain third countries 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  current  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 emergence of European citizenship.  

Specific objectives14 

Promote the transnational mobility of cultural players 

Encourage  the  transnational  circulation  of  works  and  cultural  and  artistic 
products 

Encourage intercultural dialogue 

With an average € 57 million per annum budget15 throughout the lifetime of the programme 
the  EU  spending  on  transnational  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  estimated  20,000  artists/cultural  professionals,  and 
millions of people directly and indirectly through the supported activities. 

14 
15 

Green  Paper  on  “Unlocking  the  potential  of  cultural  and  creative  industries”,  SEC(2011)  399  final, 
24.03.2011. 
Projects must meet at least two of the specific objectives. 
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).  

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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 transnational cooperation projects, for 
which  it  was  25%,  and  well  below  20%  for  the  larger  category  of  projects.  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 approaches 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  quality;  promoting  access  and  participation  in 
culture,  especially  the  disadvantaged;  education,  training  and  research;  and  information, 
advice and practical support. 

Two broad types of activities are typically undertaken: cultural activities (artistic exchanges, 
joint  cultural  creation,  co-productions,  tours  and  festivals,  and  exchanges  of  artefacts);  and 
support  activities  (exchanges  of  experience  and  networking,  provision  of  information  and 
practical  support  for  operators,  education,  training  and  research).  The  interim  evaluation 
recommends greater clarity in the future on priorities. 

The spending on the programme is currently subdivided 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 projects, special actions, including  literary 
translation  (approximately  77%  of  the  annual  budget  of  which  approximately  60% 
for  cooperation  projects,  4%  for  literary  translation,  13%  for  special  actions 
(including cooperation with third countries)); 

Support  for  bodies  active  at  European  level  in  the  field  of  culture/operating  grants 
(approximately 10% of the annual budget of which approximately 55% allocated to 
Ambassadors, 40% to Networks and 5% to Platforms); 

Support for analysis, collection and dissemination of information (approximately 5% 
of the annual budget); 

Programme management (approximately 8% of the annual budget). 

The interim evaluation, public consultations 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 that 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. 

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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  distribution  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 irrespective of the different sub-sectors. Literature 
projects are most numerous because of the large 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,  interdisciplinary  projects  were  continuously  the  most 
numerous  after  the  performing  arts  in  2008,  2009  and  2010.  The  interim  evaluation 
recommends maintaining the interdisciplinary approach due to the fluidity between different 
sectors,  and  the  fact  that  boundaries  are  becoming  even  more  blurred  with  the  digital  shift. 
Furthermore,  an  interdisciplinary  approach  is  in  line  with  the  European  Agenda  for  Culture 
and the line followed in the OMC and stakeholder platforms, which are organised around key 
challenges, rather than sub-sectors.  

The vast majority of grants under the programme are managed through the Executive Agency 
for  Education,  Audiovisual  and  Culture  (EACEA)  through  annual  calls  for  proposals 
published in a stable Programme Guide. As confirmed by various evaluations this has proved 
to be a cost-effective management mode for the 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 programme, provides information on the programme and assistance 
to  applicants  (they  do  not  distribute).  The  CCP  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  proposals  for  funding  applications  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  organisations  active  at  European  level  in  the  field  of 
culture  (Ambassadors,  Advocacy  networks,  Platforms),  and  cooperation  projects  between 
organisations  involved  in  cultural  policy  analysis).  Whilst  the  interim  evaluation  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 modify 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  occasions  indicated  that  the  large  number  of 
different  actions  generates  complexity  and  confusion  both  for  themselves  and  applicants. 
More general feedback on the programme has repeatedly 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  currently  receives  a  grant  of  €  1.5  million  from  the 
Culture Programme and will, in principle, continue 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 

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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  future  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 finance. These problems are of a trans-national 
nature and require a targeted European approach. In all four cases, tackling these problems at 
a  European  level  –  in  addition  to  actions  taken  at  a  national  and  regional  level  -  would 
contribute  to  cultural  and  linguistic  diversity  and  optimise  the  potential  of  the  sector  to 
contribute to jobs, growth and social inclusion.  

The Commission has reached this conclusion after careful 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  research,  some  of  which  is  referenced  in  this 
document, and support services by an external contractor to assist with the impact assessment 
including  an  analysis  of  the  challenges  facing  the  different  cultural  sub-sectors  (Annex  5). 
Stakeholder views have also been 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  and  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  period  2008-2010.  It  should 
also  be  noted  that  most  of  the  studies  carried  out  for  the  Commission  included  extensive 
surveys of relevant stakeholders. 

It needs to be stressed, however, that there are many other variables 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  diversity,  which  results  in  these  sectors  being 
essentially  fragmented  along  national  and  linguistic  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 cultural 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 specifically, 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 there are two Capitals from 
two  different  Member  States  per  year,  the  current  rotation  period  among  Member  States  is  14  years. 
Similarly, the European Heritage Label is being set up for an unlimited duration. 

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However, one of the consequences of fragmentation which needs addressing at EU level is the 
fact  that  it  leads  to  limited  and  sub-optimal  transnational  circulation  of  works  and 
mobility  of  artists  and  geographical  imbalances.  Cultural  operators  (both  non-profit-
making  organisations  and  enterprises)  need  therefore  to  operate  trans-nationally  to  establish 
new contacts to improve their professional skills and career possibilities, reach new or wider 
audiences  and  markets,  and  extend  the  lifespan  of  tours,  performances  and  exhibitions  in 
order to help recoup costs. Similarly, mobility is often essential to artists' careers, as many are 
involved in relatively short-term project based work, which is reflected 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  

in 

the  culture 

field"20  highlights  also 

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  professionals 
the 
administrative/regulatory difficulties faced by artists, which were reported to be  particularly 
acute for third country participants in the case of the interim 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  future  programme  can  assist  with  the  financial 
obstacles  and  may  be  able  to  help  with  capacity-building  to  help  the  sector  deal  with  the 
regulatory  obstacles,  it  cannot  address  the  administrative  or  regulatory  obstacles  as  such 
themselves, which must be tackled through other means. However as the interim evaluation 
indicated that most project participants found cost, rather than administrative obstacles, to be 
the main difficulty, this suggests that the programme has benefits in this regard for individual 
artists/cultural professionals as the projects are 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 countries 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 

19 
20 

21 

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 sectors (6%), than in total employment (4%). 
Mobility Matters, op.cit. 
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. 
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-Saxon, works ("Mainstream: Enquête sur cette culture 
qui plait à tout le monde", Flammarion, 2020). 

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edition  of  The  Recording  Industry  in  Numbers,  the  International  Federation  of  the 
Phonographic Industry (IFPI)22 stresses the importance of local repertoire for many important 
markets  worldwide.  It  demonstrates  that  music  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.  However,  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  street’  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  published  in  English,  French  and  German.  It  is 
worth noting that none of the other source languages was represented 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  availability  of  foreign 
works is reflected in the Eurobarometer survey on cultural values within Europe, published in 
2007, which shows that only a minority of European people access foreign cultural products, 
with  only  19%  of  European  people  watching  foreign  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 cultural works convey, especially with regard to 
building  social  cohesion  and  inter-cultural  understanding.  It  also  has  negative  economic 
consequences since it reduces potential revenues. 

The  recommendations  of  the  civil  society  platform  "Access  to  culture"  highlights  the 
importance  of  access  to  culture  for  all.  Those  of  the  OMC  working  group  on  developing 
synergies with education,  stress a range of possible measures, including 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  providing  access  to  complementary  cultural  and 
educational resources and to support the exchange of practices. The input from stakeholders 
shows  that  many  address  the  question  of  access  to  culture  from  an  essentially  rights  based 

22 
23 
24 

25 

Recording Industry in Numbers 2011, IFPI 
UNESCO Index Translation. 
Research by the European Council of Literary Translators Associations (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. 
http://ec.europa.eu/dgs/eucation.culture/pdf/culture/baometer.en.pdf. 

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perspective,  while  others  consider  it  primarily  from  the  perspective  of  mainstreaming  into 
education  systems.  More  economically  minded  stakeholders  talk  in  terms  of  new  business 
models. The Commission feels that 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  dimension  due  to  the  fact  that  new  and  larger 
audiences can generate new revenue 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  transnational  circulation  of  works  are  priorities. 
However, at present, the ultimate aim of cultural 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  and  tends  instead  to  be  a  by-product.  This  has  the  result  of 
introducing a certain degree of randomness in the focus of projects, which dilutes the impact 
of the programme.  

The experience of the current programme also suggests that it has helped in addressing the 
problem  of  geographical  imbalances  in  mobility  flows.  On  the  one  hand  research  on  344 
mobility schemes across 35 European countries 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  schemes  supporting  inward  visits  of  creative  people 
from other countries. This gap in provision perpetuates East-West imbalances (in Europe) and 
North-South imbalances (globally), which is confirmed by the final 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 receive artists from other 
countries. The study recommends rectifying the balance of incoming-outgoing schemes in the 
spirit of commitments made by governments when ratifying the 2005 UNESCO Convention 
on the Protection and Promotion of the Diversity of Cultural Expressions. 

On  the  other  hand  the  interim  evaluation  indicates  that  the  programme  has  mostly  met 
expectations  in  terms  of  geographical  spread.  In  terms  of  application  rates,  the  pattern 
generally  shows  a  satisfactory  correlation  between  participation  and  country  size,  with  the 
notable  exception  of  literary  translations,  where  very  few  applications  were  received  from 
publishing  houses  in  most  of  the  largest  countries.  Similarly,  leadership  of  cooperation 
projects and advocacy networks is undertaken in greater proportion by organisations from the 
EU-15 Member States, reflecting the greater experience of project coordination and capacity 
available in those Member States, and the potential 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  suggests  that  EU  support 
can  contribute  to  addressing  the  geographical  imbalances  identified  above.  Concerning 
literary  translation,  the  interim  evaluation  recommends  considering  ways  in  which  more 
translations can be encouraged out of under-represented languages (particularly those in new 
Member  States)  into  more  dominant  ones  which  often  serve  as  pivot  languages  for  further 
translations  and  would  therefore  make  a  valuable  contribution  to  promoting  cultural  and 
linguistic  diversity.  It  also  recommends  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. 

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programme  in  helping  to  address  geographical  imbalances,  even  if  they  continue  to  be  a 
prominent reality. 

2.4.2.  Problem 2: the impact of globalisation and the 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 globalisation 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  account  for  a  large  part  of  global  sales27.  Growing 
concentration  of  supply  poses  a  threat  to  cultural  and  linguistic  diversity  as  it  limits  the 
possibility of small independent players to access the international market and reach the wider 
European public. This is due partly 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). However in sectors such as literature, music, 
theatre  and  fine  art,  it  is  often  small,  independent  operators  that  are  the  most  committed  to 
developing and promoting original talent, both nationally and internationally. 28  

Responses  to  the  Green  Paper  highlight  the  need  to  develop  new  business  models  and  the 
potential for growth in taking advantage of digital technologies and peer learning to acquire 
the  necessary  new  skills.  The  study  on  'The  entrepreneurial  dimension  of  the  cultural  and 
creative  industries'  points  out  that  the  digital  shift  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 regarding the newest changes and opportunities. This 
is  especially  challenging  for  small  companies.  The  study  indicates  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-companies  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  their  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 others 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  small  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  one  hand,  it  introduces  interesting 
new possibilities for considerably extending audience reach, new ways of interacting with the 
public  and  educational  benefits  sometimes  at  relatively  low  cost.  On  the  other  hand,  it  is 
requiring  the  sector  to  devise  entirely  new  business  models  and  revenue  streams,  in  some 
cases as a matter of survival,29 in other cases to optimise opportunities.30 In short, the sector 

27 

28 

29 

Globally the five major record companies (EMI Records, Sony, Vivendi Universal, AOL Time Warner 
and BMG (all headquartered in the US)) account for up to 90% of sales and 95% of radio airtime and 
the top 100 charts.  
For example, in the music sector, IMPALA (Independent Music Companies Association) estimates that 
80% of Europe's new releases are accounted for by SMEs. 
IMPALA  reports  that  thousands  of  cultural  SMEs  are  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 

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will need to alter its past mono-dimensional tendency to focus on the provision of access to an 
object/work/collection from the “provider’s” perspective, towards a more multi-dimensional, 
process-oriented focus on the audience/user/consumer 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  audiences  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 continually evolving technology requires a massive adjustment across 
Europe  by  much  of  the  cultural  and  creative  sectors  and  the  acquisition  of  new 
knowhow  -  which  is  currently  very  limited  and  dispersed  -  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 business models and revenue streams, including 
marketing  and  audience-building  skills,  up-to-date  ICT  knowhow,  and  better  knowledge  of 
issues such as copyright. It also requires the sector to think in terms of developing new types 
of strategic partnerships  with  operators in different sectors, for example, new public-private 
partnerships with ICT, retail, the media. Innovative 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 accelerate 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 audience-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. 
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 the 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. 
See  for  example  the  study,  "Business  Model  Innovation  Cultural  Heritage",  Den  Foundation, 
Knowledgeland,  the  Netherlands  Ministry  of  Education,  Culture  and  Science  (2010);  “Digital 
audiences:  Engagement  with  arts  and  culture  online”,  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. 
"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 similarly 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). 
"Cultural statistics" op.cit. see figure 8.31. 

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31 

32 

33 

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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  evidence-based  policy-making  to  optimise  the 

effectiveness of cultural policies 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  recognised  in  the  sector  and  flagged  up  by  studies 
mentioned in annex 1. The need for more data 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 effective 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 for 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 relates 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-making. 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 identified needs of policy-makers. (The launching 
of  new  specific  studies  or  data  collection  is  not  covered.)  However  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 have a targeted approach, nor capacity, to achieve real progress 
in establishing comparable data, as well as new reliable market data. 

2.4.4.  Problem 4: difficulties for the CCS in accessing finance 

The fourth challenge is related to the difficulties 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  their  assets,  such  as  copyright,  which  are 
usually not reflected in accounts (unlike patents). 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 the Cultural and Creative Industries" op.cit, estimates 
that 80% of cultural and creative enterprises are SME with many sole traders or micro SME employing 
only a handful of people. 

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whereas  investment  often  needs  to  be  longer-term  to  become  profitable.35  Thirdly, 
investment-readiness  in  the  sector  is  extremely  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 entrepreneurial 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 stakeholder platform on the cultural and creative industries 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 difficulty 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  Member  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 problem which is not at all addressed by the current 
programme  and  the  interim  evaluation  indicates  that  very  few  private  companies  have 
participated,  other  than  under  the  literary  translation  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 generate a profit and the need in most instances 
to  find  foreign  partners.  The  publishing  and  popular  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 problems most directly are: 

• 

• 

• 

35 

36 

The users of cultural products (consumers, audience, the general public), who rely on 
supply  of  cultural  and  creative  works  from  either  national  operators  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  organisations,  etc),  both  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 culture (exhibitors/disseminators of creative and cultural 
works  such  as  galleries,  museums,  theatres,  concert  halls,  festival,  SMEs)  and 
organisers  of  non-commercial  cultural  events,  who  –  because  of  the  lack  of 

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.  
The study on "The Entrepreneurial Dimension of the Cultural and Creative Industries" op. cit., see the 
Executive Summary. 

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transnational  networks  and  circulation  -  generally  depend  on  national  artists  or 
operators for the supply of works; 

• 

• 

Cities and regions across Europe, whose focus is on support for local activities and 
the  international  potential  is  often  untapped,  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  indirectly,  including  television  and  radio  broadcasters, 
newspapers,  magazines,  internet  providers,  and  organisations  and  companies  providing 
services in the field of tourism. 

2.6. 

Baseline trends: how would the problem 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  particular  the  unique  role  it  plays  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 increasing the access of European citizens to European 
works from other countries. These all contribute to sustainable growth and quality jobs. The 
report  also  underlines  that  the  programme  plays  an  important  role  in  respecting  Europe's 
cultural and linguistic diversity.  

As indicated above, the interim evaluation indicated that project 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 cultural 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  after  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  Programme  would  continue  to  provide  funding  to 
support artists to develop international careers, to strengthen cultural organisations to operate 
trans-nationally  and  foster  cultural  and  linguistic  diversity.  However,  the  current  challenges 
would not be addressed in a focused way, including 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  strategies  and  new  business  models.  This  would 
not  optimise  the  sector’s  adaptation  and  have  repercussions  for  its  ability  to  develop  more 
cultural  and  creative  content  for  digital  distribution  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, sustainable and inclusive growth 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 literary 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. 

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Regarding social impacts, the programme would be expected to continue to have benefits. The 
interim  evaluation  indicates  that  two  out  of  three  projects  sought  to  promote  equality  or 
equity, 51% reported that they had specifically promoted opportunities for the disadvantaged, 
some 31% had targeted people suffering socio-economic 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  programme  could  make  to 
cultural and linguistic diversity, 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 properly tackle the data shortages confronting the 
sector. Regarding likely developments at national 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 competence 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. Article 167 of the Treaty on the 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 State action. The EU Charter 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  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  complementarities  to  other  EU  policies  and  programmes 
outlined in section 3.1, the new initiative would have the following transnational benefits. 

• 

37 

First, the sector is facing similar challenges regarding adaptation to the digital shift 
across  Europe  and  EU  support  can  incentivise  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  international  cooperation  can  therefore  bring  great 

See for example, "The economic crisis and the prospects for art and culture in Europe", by SICA, Dutch 
Activities, 
Centre 
http://www.sica.nl/sites/default/files/en_crisis_and_prospects_for_art_and_culture_in_europe_oct2010.
pdf 

International 

for 

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• 

• 

• 

• 

benefits  by  incentivising  adjustment,  facilitating  the  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  foster  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 international networks of national concert halls, festivals, 
international orchestras, residences, tours and exhibitions, which enhance their skills, 
knowhow and employability (rather similar to the role Erasmus plays for university 
students). Many of these European networks 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  organisations  in  countries  with  weaker 
capacity  to  take  part  in  projects  (and  thereby  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  objectives  and  promoting  exchange  of 
knowledge  and  good  practices  among  national  policy-makers  is  important.  This 
stimulates accelerated learning, thereby benefiting the formulation of better national 
policies  and  contributing  to  systemic  change.  There  is  also  clear  added  value  and 
economies of scale for policy support by enabling 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 number of dispersed schemes, which would 
enable  more  funds  to  be  focused  on  financial  guarantees  than  administration, 
fostering  valuable  networking  and  peer  learning  and  having  a  greater  systemic 
impact  on  the  capacity  of  financial  institutions  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-funding  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 national 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 different set of beneficiaries in the audiovisual industry), no other EU 
programme  promotes  the  transnational  mobility  of  artists/cultural  professionals,  nor  the 
circulation of works. Similarly regarding linguistic diversity, while Culture  supports literary 
translation,  MEDIA  subtitling  and  dubbing  of  foreign  films,  the  Lifelong  Learning 
Programme  promotes  language  learning.  Regarding  capacity-building,  the  programme  does 

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not aim at formal or informal learning which is covered by the education, 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  policy  by  reaching  cultural  operators  directly 
and thereby helping bring about systemic change 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 borders and with a strong link to 
the  promotion  of  cultural  and  linguistic  diversity.  Indeed,  the  current  ERDF/ESF  support  is 
for preservation, rehabilitation and development of cultural heritage, development of cultural 
infrastructure, urban regeneration, support to tourism, promotion of entrepreneurship, support 
to  ICT  based  cultural  services  and  the  improvement  of  human  capital,  with  a  very  strong 
focus  on  innovation  and  regional  or  local  development.  Furthermore  the  support  for  policy 
development  would  have  benefits  for  knowledge  sharing  in  the  development  of  cohesion 
policies by Member States. 

The CIP provides access to funding for SMEs (through guarantee and equity) and the up-take 
of digital technologies and contents, but these are generic tools, without any dissemination of 
sector-specific expertise. The new financial instrument to strengthen the financial capacity of 
Europe's cultural and creative sectors would be focused on the specific needs of these sectors, 
in  order  to  foster  greater  understanding  of  assessing  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 digitisation and content aggregation around Europeana (the European 
Digital Library) are implemented within the Digital Agenda for Europe.  

International funding under the culture strand will help the European cultural sector to operate 
internationally and be a projection of the objectives of the internal programme. In contrast to 
other  EU  instruments  aimed  at  cultural  cooperation  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  industries  in  ACP  countries  (€2.3  million  for  2008-2010)  promotes  an 
environment encouraging creation, exchanges, independence 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 intercultural dialogue. National and multi-beneficiary projects 
funded under the Instrument for Pre-accession Assistance (IPA) in the field of culture, mainly cultural 
heritage,  amounted  to  approximately  €37  million  from  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). 

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3. 

OBJECTIVES 

As  recommended  by  the  interim  evaluation,  responses  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  and  there  will  be  more  precision  about  the 
programme’s priorities to supplement the specific 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 problems identified in chapter 2. 

The specific objective to support the capacity of the European cultural and creative sectors to 
operate  transnationally  addresses  the  challenge  of  globalisation  and  the  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 shortage of data. The fourth specific objective – 
to improve the financial capacity of the sector – will be addressed primarily through the new 
financial instrument covered by a separate impact assessment. The three levels of objectives 
for the Culture strand are indicated in table 3. 

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25 

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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  cultural  and  creative  works  and  operators  and  reach  new 
audiences both within Europe and beyond; 

3. Foster policy development, innovation, audience building and new business models through transnational 
policy cooperation 

4. Strengthen the financial capacity of the cultural and creative sectors39 

Priorities 

Specific objective 1: Support the capacity of the 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  international  networks  of cultural  professionals  to  facilitate  access 
to new opportunities and markets. 

Specific  objective  2:  Promote  the  transnational  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  raising  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  practices  and  knowhow,  peer-learning  activities  and 
networking related to policy 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. 

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26 

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Problem  4  (see  section  2.2.4)  –  the  difficulties  of  access  to  finance  –  will  also  need  to  be 
addressed through a future EU programme 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  possibility  of  developing  a  cross-sectoral  strand 
including  a  financial  facility,  which  would  facilitate  access  to  private  sources  of  finance, 
technical  assistance  and  specific  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  depicts  the  inter-linkages 
between  the  identified  needs,  the  specific  objectives,  and  gives  some  expected  results  and 
examples of possible action. 

Needs and 
challenges to 
address 

1. Market 
fragmentation 

3. Financial 
capacity 

2. Impact of 
Globalisation and 
Digitalisation 

4. Data availability 

Some Expected 
results 

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 

New financial instruments 
Specific Business and 
Mgt  -and Finance 
Training 
Synergies with SME 
policy 

Support for international 
touring, events, 
exhibitions Translation 
and promotional support  
Audience building actions 
Support to operators and 
international networks 
facilitating access to 
markets 

Procure context, sector, 
output and impact data 
from internal and 
external sources (EAO, 
Eurostat, EACEA etc) 

Increased capacity to 
operate internationally 
Stronger transnational 
networks and platforms 
Greater economies of 
scale 
Increased share GDP and 
employment/systemic 
effect 

Stronger financial 
structure 
More private sources of 
finance 
Improved investment 
readiness 
Possible concentration 
and vertical integration 

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  

Comparable data for 
monitoring and evaluation 
Increased effectiveness 
and efficiency of public 
policies and 
actions/Evaluation and 
impact assessment 

Specific 
objectives 

1. Support the 
capacity of 
operators to work 
internationally  

2. Promote 
circulation and 
reach new 
audiences 

3. Policy support 
and evidence based 
policy making 

EN 

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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”  

the  programme 

Redesigning 
the 
recommendations  in  the  interim  evaluation  and  expected 
needs in the cultural and creative sectors. 

take  account  of 

to 

“Synergies 
framework programme” 

and 

new 

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  experts,  institutions  etc  have  been  collected  to 
undergo  a  first  screening.  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  Culture  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  given  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  maximum  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 

28 

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• 

• 

• 

• 

• 

• 

• 

Create a financial instrument to progressively 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 previously 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  segments  and  players  of  different  sectors  to 
achieve a knock-on effect and have a broader impact  
Support measures that can increase sector and market reach through a transnational 
approach 
Coordinated  approach  on  all  sources  of  content  (music,  audiovisual,  cross-media, 
publishing  etc).  (A  common  approach  to  creative  and  cultural  sectors  is  proposed 
under option 3.) 

4.2. 

Discarded options  

All  options  raised  by  stakeholders,  external  experts,  institutions,  etc.  were  collected  and 
screened.  The  option  proposing  the  ''Merging  the  Culture,  MEDIA  and  MEDIA  Mundus 
Programmes'' into a single transversal programme to cover the cultural and creative sectors as 
a whole with common calls for proposals was discarded. This is because although the sectors 
face similar problems due to the particular characteristics 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 clarity 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  Ariane  programme  for  the  book  and  reading  sector 
(1997-1999)  and  Raphael  for  cultural  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 becoming 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-sectors  suggesting  that  the  current 
approach  works  well.  It  should  also  be  added  that  the  limited  budget  would  not  permit  the 
sub-sectoral approach to work effectively. 

Another discarded sub-option was to focus either exclusively on capacity-building or on the 
circulation  of  artists/cultural  operators  and  their  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 

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29 

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current programme in which both elements are highly important 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 Multi-annual Financial Framework for 2014-2020 has 
taken the clear decision to continue EU support 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  weaknesses  of  the  existing  one  drawing  on  direct 
experience  of  managing  the  programme,  the  findings  of  the  interim  evaluation  and 
stakeholder  feedback,  including  the  recommendations  of  the  stakeholder  platforms,  studies 
and  research,  and  the  Cultural  Contact  Points  who  are  in  direct  contact  with  applicants. 
Naturally, however, the Commission  has had to assess 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  number  of  clear  priorities  and  a  greater  scale 
effect  as  a  consequence.  This  would  be  done  through  more  relevant  and  better  focused 
objectives and clearer indication in the calls for proposals of our priorities (see chapter 3). The 
number of calls for proposals, instruments, and small grants would also be reduced in order to 
prioritise projects  with  a greater structuring effect. This would include  the introduction  of a 
new  instrument  –  European  platforms  -  to  stimulate  a  scale  effect  with  regard  to  the 
circulation objective of the programme. 

The measures which would be discontinued or modified are the following: 

• 

• 

41 

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  shifting  focus  and  is  not  able  to  adapt  to 
newly  emerging  priorities.  In  addition,  from  a  practical  perspective,  building  solid 
international partnerships takes time, which 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  international  preference  of  the  sector  more 
appropriately.41 The current ceiling for third country 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-subscribed over the last two years, partly at 

Interim Evaluation of the Culture Programme 2007-2013, op.cit. 

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• 

• 

least  due  to  the  absence  of  an  obligation  to  have  European  partners.  However 
festivals  are  clearly  important  cultural  events,  with  a  massive  public  outreach  and 
would continue to be eligible under cooperation projects.  

The  current  advocacy  networks  would  be  open  simply  to  networks  fostering  the 
goals of the programme rather than 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 administratively 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 broadened 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  would  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 (especially EN, FR and 
DE).  A  stronger  signal  would  be  given  to  encourage  more  translation  out  of  small 
languages  into  pivot  languages,  as  this  can  have  an  exponential  impact  on  further 
translations and therefore be beneficial for cultural diversity. 

• 

The operating grants would be discontinued in favour of project funding as they are 
complex  to  manage  due  to  the  annual  cycle,  degressivity  rules,  and  are  not 
sufficiently result-oriented as an instrument.  

As  already  mentioned  these  measures  should  allow  a  reduction  in  the  number  of  calls  for 
proposals managed by the EACEA to be reduced from 9 to 4 and priority would be given in 
the  criteria  to  projects  with  a  structuring  and  systemic  effect42  to  avoid  the  previous 
fragmentation which diluted the 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  applying  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  can  foster  accelerated  learning.  This  can  generate 
economies of scale by bringing together fragmented expertise and knowhow. "Systemic effect" refers to 
system level changes, for example, a change of national policy, or a permanent change in the activities 
and priorities of a sector. 

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The cooperation projects, networks and  platforms could address more than one specific and 
operational objective, reflecting the desire of operators – as seen in the current programme – 
to undertake a range of activities within 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  works,  exhibit  them,  develop  new  talent,  and  run  educational 
programmes,  etc.  This  means  that  when  these  sectors  engage  internationally,  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 artists and professionals (eg 
managers)),  which  contrasts  with  the  audiovisual  industry,  where  script-writers,  developers, 
distributors, exhibitors, etc need to be targeted separately. A flexible and fluid 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,  compared  to  requiring  different  calls  targeted 
separately on capacity-building and circulation, which would result in the need for promoters 
to make more than one application (for smaller amounts) whereas in the past they could cover 
the same activities within a single project. This approach would also reduce the administrative 
burden on the EACEA by having fewer, larger grants to deal with. 

Due to the more segmented nature of the book chain, the literary translation strand would be 
more  targeted,  focusing  on  circulation,  and  would  remain  aimed  at  publishing  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 added value, with long-
term  structuring  and  systemic  impact,  and  addressing  geographical  imbalances.  In  order  to 
increase  the  impact  of  projects,  audience-building  strategies  would  be  included  as  a 
requirement of circulation projects to improve the current criteria 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 greater systemic effect through improved support for 
policy by means of the OMC for culture, which can influence policy priorities at the national 
(system)  level.  This  would  include  better  support  through  studies,  support  for  expert 
networks,  work  with  Eurostat  to  improve  the  comparability  and  reliability  of  data,  and 
membership of the European Audiovisual Observatory, 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  which  are  members  of  EEA;  the  Swiss  Confederation;  candidate 
countries  benefiting  from  a  strategy  of  pre-accession  to  the  EU;  countries  of  the  Western 
Balkans and the countries of the European neighbourhood area. The programme would also 
be  open  for  bilateral  or  multilateral  cooperation  actions  targeted  at  selected  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 framework, “Creative Europe” Programme. Such a framework 

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programme  could  build  on  synergies  from  the  fact  that  the  different  sectors  face  similar 
challenges,  while  at  the  same  time  keeping  distinct  strands  for  Culture  and  MEDIA.  The 
Culture  strand  would  be  virtually  identical  to  the  above  “Revised  programme”  option. 
However,  it  would  be  part  of  a  framework  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 cultural and creative sectors which would include a 
financial  instrument.  Under  this  scenario,  one  part  of  the  third  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 activities 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  new  and  cross-sectoral  business  approaches  to 
funding,  distributing  and  monetising  creation.  The  other  part  –  the  Culture  and  Creative 
Sector  Financial  Facility  –  would  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 advantage of accommodating the value chains in 
the  different  cultural  sub-sectors  appropriately,  which,  as  mentioned  in  section  4.1,  are  too 
heterogeneous to permit homogenised instruments and calls. 

As this is the option which has been identified in the Commission's Multi-Annual Financial 
Framework, the foreseen breakdown is only explained for this option. 

The  indicative  budget  split  between  the  programmes  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 high 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  division  of  funds  would  be  by  the  four  measures  indicated  in 
option 2, as well the special actions which are mostly managed 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  demand  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  platforms (previously the European 
cultural  bodies  category),  9%  to  literary  translations  (previously  included  within  the 
cooperation projects) and 10% to the special actions. 

5. 

ANALYSIS OF IMPACTS 

The  analysis  of  impacts  is  based  on  the  proposed  options  which  were  compared  to  the 
baseline.  

There are uncertainties in relation to the possible development of the problem and it needs to 
be  recalled  that  there  are  many  other  causal  factors  at  work  beyond  the  scope  of  the 
programme which could impact either positively 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 

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33 

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time. The expectation is, however, that audience demand will continue to have greater impact 
on developments and the new programme will lay 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,  such  as  national  policy  and  national  funding 
support. While EU policy coordination may have some impact on national priorities, as this is 
an area of strong subsidiarity, many effects 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 contributes to uncertainty 
about the current state of the sector and about the evolution of current problems. The stronger 
emphasis  on  systematic  data  collection  in  the  future  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 expected impacts of the identified options.  

The analysis assesses the impact of each option against the economic, social, environmental 
and fundamental rights impacts. The impacts looked 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  knowledge  sharing  aimed  at  evidence  based  policy 
development.  These  are  the  areas  where  the  programme  can  help  address  the  problems 
described  in  section  2.2.  Table  5  summarises  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 

Areas of social impact  Areas of 

environmental impact 

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  

The cultural and 
creative sector's 
capacity to operate 
on an international 
level 

economic 
Better 
the 
of 
performance 
cultural 
creative 
and 
sectors  in  terms  of  new 
and 
streams 
revenue 
greater profitability 

More employment in 
the cultural and creative 
sectors 

Better job quality in the 
cultural and creative 
sectors 

Improved capacity of 
European cultural 
organisations to work 
internationally 

Reduced cost of business for 
cultural and creative SMEs 

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 

Greater cultural and 
linguistic diversity 

New economic opportunities 
and revenue streams for the 
cultural sector 

Better  functioning  of  the 
internal market  

Access to culture 
(digital access/stronger 
circulation networks) 
for new audiences and 
also the disadvantaged 
(social inclusion) 

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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  equal  opportunities,  technological  developments, 
developing countries or public health. However, artists and cultural 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 projects touch upon this theme.  

It should be pointed out that the impacts in terms of the environment and fundamental rights 
should not be overplayed, notwithstanding this they have been assessed. 

Through  promoting  the  mobility  of  cultural  operators  all  options  would  have  an 
environmental effect, for example due to transport and production processes, but the effects 
would not be greater than at present. Additionally, this would be counter-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  audiences  to  be  reached  without  physical  travel. 
Furthermore,  the  revised  and  framework  programme  would  continue  to  have  some  indirect 
benefits due to the sector's natural role as a communication vector on pressing societal issues, 
however  this  would  depend  on  the  projects  selected.  A  certain  number  of  projects  already 
address climate change issues. 

Fundamental rights are not explicitly targeted by the current programme, but transnational 
cooperation and exchange in this field can contribute to a greater awareness of and empathy 
for  fundamental  rights.  As  the  revised  and  framework  programme  options  would  directly 
target  cultural  and  linguistic  diversity  they  would  have  effects  in  this  regard,  which  can  be 
greater than under the baseline. The overall impact in this regard would be marginally greater 
under the framework programme (because of transversal elements).  

5.1. 

Option 1 "No change" (the baseline) 

Economic impacts 

In  this  scenario,  the  Programme  would  continue  to  provide  funding  to  support  artists  to 
develop  international  careers,  to  strengthen  cultural  organisations  to  operate  trans-nationally 
and  foster  cultural  and  linguistic  diversity.  However,  the  current  challenges  identified  in 
section 2.2 would not be addressed in a focused way, and would not sufficiently respond to 
the  need  to  help  the  sector  adjust  to  global  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  develop  more  cultural  and  creative  content  for 
digital distribution, negatively impacting on competitiveness. The programme would therefore 
fail  to  make  use  of  the  sector’s  potential  to  contribute  to  smart,  sustainable  and  inclusive 
growth  and  the  aims  of  the  Digital  Agenda.  Some  projects  might  choose  to  address  these 

EN 

35 

   EN 

 
 
 
challenges, but it would be random and there would be no significant scale effect. Instead the 
programme  would  be  supply  orientated,  would  continue  to  produce  benefits  for  the 
participants  in  projects,  but  the  strategic  structuring  effect  on  the  sector  would  be  limited. 
Although  transnational  circulation  of  works  would  be  supported,  the  design  of  the  support 
would not optimise the potential of new economic opportunities, including those regarding the 
support for literary 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. 
Knowledge sharing to foster transnational policy development and bring about step changes 
in policies for the sectors across 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  the  results  would  be  random,  depending  on  the 
bottom  up  submission  of  applications.  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  the  burden  for  applicants  and  beneficiaries. 
However,  there  would  continue  to  be  separate  information  points,  management  committees 
and  less  use  of  trans-disciplinary  cross-border  policy  coordination  processes,  including 
exchanges  of  experiences  and  new,  cross-sectoral  testing  of  new  business  approaches  to 
funding, distributing and monetising creation. 

5.2. 

Option 2 "Revised programme" 

The effect of option 2 would be an overall greater 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  sectors  in  many  Member  States.  Compared  to  the 
baseline, this option would send a clear signal regarding demand side issues. This would lead 
to an increased and more diverse offer of European 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 the 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  contribute  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  (thereby  also  helping  to 
reduce  reliance  on  public  funding).  By  targeting  multipliers,  an  exponential  effect  will  be 

EN 

36 

   EN 

 
sought.  More  targeted  support  for  the  transnational  circulation  of  works  should  help  to 
generate  economies  of  scale  by  fostering  physical  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  cinemas,  open  air  screens  or  other  venues)  and 
thereby facilitating the recoupment of costs through more extended runs and larger audiences.  

More  effective  funding  for  literary  translation  would  reduce  the  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  works  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  selling  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 correcting 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 translation and thereby increase the circulation of 
European literature, and could impact on consumers' choice and open opportunities for greater 
revenue streams.  

Compared  to  the  baseline  this  option  would  generate  greater  trans-national  trade  in  cultural 
works  within  the  Single  Market  thereby  reducing  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 models and foster the collection of comparable 
data  at  a  European  level  which  could  also  have  economic  benefits  at  the  national  and  sub-
national level.  

Social impacts 

The  programme  would  create  employment  benefits,  through  strengthening  the  commercial 
capacity of cultural organisations and SMEs and their adaptation to the digital shift and their 
capacity  to  operate  internationally,  and  encouraging  transnational  mobility  of  cultural 
workers, providing transnational opportunities for learning and career development. This will 
create professional pathways and jobs. 

The activities should increase access to culture through new means, helping the sector on the 
one hand to create new audiences (including young people), but also to engage innovatively 
with  them  in  order  to  increase  educational  benefits,  and  reach  out  to  the  socially  excluded. 
Greater  exposure  to  foreign  works  would  also  foster  greater  pluralism,  and  increase  inter-
cultural  understanding  through  the  empathy  generated  by  exposure  to  culturally  diverse 
works. 

The  programme  would  have  a  positive  impact  on  (the  EU’s  relations  with)  3rd  countries, 
through  creating  opportunities  for  dialogue  and  co-operation  between  operators  in  those 

43 

For  example,  the  interim  evaluation of  the current programme  indicates  that  translation  costs  account 
for some 23% of revenues. Other estimates by the sector indicate that the cost burden is even higher. 

EN 

37 

   EN 

 
                                                 
countries  and  in  Member  States,  as  well  as  the  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 fundamental rights impacts of this option would be 
greater than those for the “Revised programme” (see above section). In the same way as the 
revised programme, it would send a clear signal regarding 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 attribute 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 shift 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  sectors  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  monetising  creation.  It  could  also  accommodate 
networking,  collaborations  and  strategic  partnerships  between  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  reaching  new  and  larger  audiences  and  creating  new 
revenue  streams.  This  would  provide  greater  consumer  choice,  and  would  –  over  time  – 
reduce  the  cost  of  business.  It  would  also  lead  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 their separation is in some ways artificial. This is demonstrated 
by  the  fact  that  the  denomination  "cultural  and  creative  industries"  both  outside  the  EU 
context  as  well  as  in  EU  texts  tends  to  encompass  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  address  these  in  a  common  framework  funding 
programme. Further economies of scale could be gained by a transversal approach to policy 
support where it is often artificial to separate the audiovisual industry from the other cultural 
and creative sectors analytically.  

Social impacts 

If  the  improved  synergies  and  cross-fertilisation  under  a  framework  programme  help  to 
increase  audiences  in  particular  through  the  greater  use  of  new  information  and 

EN 

38 

   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  studies  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  increasing  percentage  of 
people  employed  in  creative  occupations  and  in  the  EU-15  Member  States  employment  in 
creative occupations grew at around 3% a year on average between 2002 and 2008 with the 
highest  growth  being  recorded  for  artistic  entertainment  occupations  (5.7%).  The  relatively 
low  cultural  participation  rates  indicated  by  Eurostat's  cultural  statistics44  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  single  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  information  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 enable the respective Management Committees of 
the current programmes to be brought together.  

In  addition,  a  cross-sectoral  strand  encompassing  a  new  financial  instrument  for  the  CCS, 
could  be  included.  By  facilitating  access  to  bank  loans,  which  are  a  better  adapted  tool  for 
SMEs compared to grants, this would also constitute 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 objectives, efficiency, cost-
effectiveness  (result  per  Euro  spent),  and  coherence.  Under  coherence,  both  internal  and 
external  coherence  have  been  assessed,  i.e.  both  the  coherence  between  the  option  and  the 
objectives  to  be  reached  (internal)  and  the  coherence  with  and  relevance  to  the  overall  EU 
policy and strategies (external coherence).  

6.1. 

Effectiveness 

Section  5  describes  the  main  effects  and  impacts  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 enabling better synergies with the 
audiovisual  sector,  a  more  comprehensive  and  structured  collection  of  data,  the  sharing  of 
information  for  policy  development  and  the  testing  of  new,  cross-sectoral  business  models 

44 

Eurostat statistics op. cit. 

EN 

39 

   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 instrument 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 management 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.  Assuming  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 highest for action lines that 
are  oversubscribed  (high  ratio  of  applications  to  awards),  make  a  large  number  of  small 
grants, or involve more complex selection criteria and management. This means, for example, 
that at present the multi-annual projects are the most 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 the programme, further simplifications will be 
made to the delivery mechanisms through the greater use of flat rates, more grant decisions 
and  framework  partnership  agreements,  electronic  applications  and  reporting,  and  an 
electronic portal to reduce paperwork for applicants and beneficiaries.  

However,  options  2  and  3  would  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 efficient, 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  administrative  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 programme is managed centrally by the 
EACEA.  They  would  however  continue  to  share  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.  Therefore  the  burden  in  the  baseline  and  other 
options is marginal. 

6.3. 

Cost-effectiveness 

With  regard  to  cost-effectiveness,  the  result  per  euro  spent,  it  is  not  possible  to  make  a 
quantitative  estimate.  However,  it  can  be  assumed  that  option  3  would  score  best  in  this 
regard,  followed  by  option  2.  This  is  because  both  programmes  would  be  clearer  and  more 
focused  in  terms  of  the  targeted  results,  leading  to  greater  systemic  and  structuring  impact, 
including through a rationalisation of instruments (including over-subscribed ones) and more 

EN 

40 

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larger projects, which would reduce the administrative costs per euro significantly. Common 
information  provision  and  entry  points  under  a  framework  programme  would  make  the 
programme  more  easily  comprehensible  and  accessible  for  the  cultural  and  creative  sectors 
and would lead to greater cost-effectiveness. Furthermore, the programme would be explicitly 
seeking  to  prioritise  projects  capable  of  increasing  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 because of the already identified benefits and economies of scale 
which  could  be  gained  through  better  synergies  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  between  the  different  strandss  is  based  on  the 
Commission's commitment  not to reduce the current budget allocations 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 programme, also taking into account the minimum 
volume required for the new Cultural and Creative Sector Financial Instrument. The proposed 
total  budget  required  to  implement  actions  within  the  Culture  strand  in  the  next  MFF  will 
amount to approximately €487 million in current prices over the period 2014-2020. 

Budget breakdown in current prices over the period 2014-202045 

Strands 

MEDIA 

Culture 

Financial instrument 

Cross-sectoral  

Total 

€ million 

905.5

487.2

211

75

1,678

Cost of outputs in the Culture 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  statement  attached  to  the  Creative  Europe 
proposed decision. They differ from the Multi-annual Framework quoted in 2011 prices  

EN 

41 

   EN 

 
                                                 
building 

European  platforms,  such  as  those  providing  a 
structure for international professional development 

Special  actions,  such  as  Prizes,  ECOC,  European 
Heritage label, 

0.340 

0.406 

39 

48 

13.2 

2.7% 

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,  such  as  those  supporting 
international touring 

0.360 

European  networks,  such  as 
audience building 

those  promoting 

0.100 

European  platforms, 
international careers 

such  as 

those 

fostering 

0.340 

Literary translations and promotional support 

Special  actions,  such  as  Prizes,  ECOC,  European 
Heritage label,  

0.05 

0.406 

Sub-total for specific objective N°2 

Total cost of the CULTURE Strand 

553 

205 

60 

859 

74 

1751 

2326 

199.2 

41% 

20.5 

4.2% 

20.5 

4.2% 

8.8% 

6.2% 

42.9 

30.2 

313.3 

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 

14420 

211.20 

74% 

(EIF fees plus 
expected loss) 

Sub-total for specific objective N°1 

211.20 

SPECIFIC OBJECTIVE No 2: Support transnational policy cooperation 

Network of Creative Europe desks 

Studies,  evaluations  and  policy  analysis  [NB:  This 
also includes the European audiovisual observatory] 

Transnational exchanges and networking 

Testing new cross-sectoral approaches  

0.226 

0.317 

1.585 

1.132 

42 

EN 

189 

36 

4 

4 

42.7 

11,4 

6.4 

4.5 

15% 

4% 

2% 

1.5% 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
Conferences, seminars and policy dialogue 

0.232 

Sub-total for specific objective N°2 

Total cost of the innovative cross-sectoral Strand 

3.5% 

42 

275 

9.8 

74.8 

286 

The  distribution  of  funds  for  the  above-mentioned  action  lines  is  based  on  the  evaluation 
results,  which  confirm  the  effectiveness  while  indicating  a  need  to  realign  the  programme's 
objectives.  The  table  below  makes  an  assessment  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  expectations  about  the  results 
which could be achieved under the framework programme due to the clarity of its objectives. 
It justifies a minimum scale for the 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.  

supply 

the  capacity  needed 

The new programme is based on an assessment 
of  the  sectors'  needs,  taking  into  account  the 
current level of support and the sectors' current 
in 
needs  concerning 
relation  to  emerging  interdisciplinary  trends, 
new technologies, new business models, a shift 
from 
(audience  and 
to  demand 
consumer preferences) and rights' management. 
Support  for  cooperation  measures  such  as 
activities  stimulating  peer  learning,  European 
networks  providing  services  to  strengthen  the 
for  European 
sectors' 
platforms,  such  as  those  providing  a  structure 
for international professional development.  

capacity, 

support 

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 

43 

   EN 

 
 
 
 
 
 
 
 
                                                 
EN 

44 

   EN 

 
 
Specific  objective  N°  2  Promote  the  transnational  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. 

to 

the 

some 

circulation 

transnational 

interim  evaluation  of 

The 
the  Culture 
Programme  2007-2013  indicates  that  cost  is  a 
barrier 
and 
mobility.  This  is  also  emphasized  in  other 
studies, 
lack  of 
identifying 
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 
languages.  A  more 
translation 
to  support 
targeted  approach 
transnational  circulation  for  example  through 
support 
touring  and  exhibitions  and 
audience building initiatives.  

is  required 

into  pivot 

for 

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 

45 

   EN 

 
 
 
 
Specific  objective  N°  3  Foster  policy  development,  innovation,  audience  building  and 
new business models through transnational 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)  

6.4. 

Coherence 

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). 

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 consistent 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  strand  as  part  of  a  framework  Creative  Europe 
Programme. This option scored higher than all other options and was ranked as the preferred 
option. 

EN 

46 

   EN 

 
 
Option 1  
No 
Baseline) 

change 

(the 

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 business models) through mutual learning 

Support artists/cultural professionals to internationalise their careers 

Strengthened  European  and  international  networks  of  cultural  professionals  to  facilitate 
access to new opportunities and markets 

Supporting international touring, events, exhibitions 

Supporting literary translation, including promotion packages 

Support for audience-building as a means of raising curiosity of the public and particularly 
young people and building a long-term audience for European cultural works 

Stimulating access to funding 

Improving the capacity of financial institutions to assess cultural and creative projects 

Cost-effectiveness (result per € spent) 

Implementation costs – EU 

Implementation costs – MS 

coherence  

Overall assessment 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

++ 

++ 

++ 

++ 

++ 

+ 

0 

0 

+ 

0 

0 

+ 

+ 

++ 

++ 

++ 

++ 

++ 

++ 

++ 

++ 

++ 

+ 

+ 

++ 

++ 

Legend: 0 = no change, + = better than the baseline, ++= much better than the baseline, - = worse than the baseline, --= much worse than the baseline.

EN 

47 

EN 

 
  
 
6.6. 

Preferred option 

A single framework programme would 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 the context of broader policy discussions on 
the  cultural  and  creative  sectors,  including  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,  facilitating  the  access  of 
citizens  to  information  on  EU  funding,  and  helping  to  ensure  the  best  possible 
service to operators.  

for  both 

The  fourth  is  that  these  simplifications  would  also  enable  some  reduction  in  the 
the  Commission  and  Member  States. 
administrative  burden 
Simplifications will be made to the delivery mechanisms through greater use of flat 
rates, grant decisions and framework partnership agreements, electronic applications 
and  reporting,  and  an  electronic  portal  to  reduce  paperwork  for  applicants  and 
beneficiaries. Similarly, the transversal 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  order  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  sectors  and  offer  the  best  basis  for  a  common  EU 
strategy to focus attention on the challenges currently facing these 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 growth, 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  Communication  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  into  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  (constant  prices)  to  the 
programme for the seven year duration. 

7. 

MONITORING 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 

48 

   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  section)  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  individual  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 the indicators, especially context/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  interim  and  final  evaluation.  For  the  round  of 
multiannual programmes to be launched in 2014, the Commission’s intention is to use a single 
interim evaluation, which would also serve as a final evaluation for the previous programme. 
The successor of the Culture programme would follow 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  conducted  by  independent,  impartial  bodies.  The 
methodological approach taken to evaluation would need to be determined 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,  achievable,  relevant  and  timed  (S.M.A.R.T.).  For 
that  reason,  a  number  of  indicators  for  the  specific  objectives  will  be  developed,  which  are 
intended  to  capture  the  essence  of  the  objective  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 

EN 

a 

For 
http://ec.europa.eu/europeaid/evaluation/methodology/methods/mth_att_en.htm. 

description 

attribution 

analysis 

fuller 

and 

contribution 

of 

analysis, 

see: 

49 

   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.eu/culture/key-documents/doc537_en.htm 

Title of the Study 

Study on the entrepreneurial dimension of cultural and creative industries 

Study on the contribution of culture to regional development 

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 

Publication  

January 2011 

September 2010 

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 

Study concerning an inventory of the best practices linking culture with education 

2006 

2003 

Study on the exploitation and development of the job potential in the cultural sector in the 
age of digitalisation 

June 2001 

EN 

50 

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8.2. 

Annex 2: Indicative indictors  

Related objective 

Type of indicator 

Indicator 

Source of data 
collection 

General objective: 

Impact 

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 

The sectors' share of 
employment and share of 
GDP  

Studies and European 
Audiovisual Observatory 
data (the latter will take 
some time to put in place) 

% of people reporting 
that they access European 
cultural works 

Regular Eurobarometer 
surveys 

Specific objective 1: 

Result 

To support the capacity of the 
European cultural and creative 
sectors to operate transnationally 

Internationalisation 
of 
cultural operators and the 
number  of  transnational 
partnerships created  

Evaluation; self-
assessment monitoring 
survey 

Number of learning 
experiences created for 
artists/cultural operators 
which have increased 
their skills and 
employability 

of 

people 
Number 
directly 
indirectly 
or 
reached through projects  

Evaluation; self-
assessment monitoring 
survey 

OMC reports  

 Number of MS making 
use of the results of the 
OMC in their national 
policy development and 
number of new policy 
initiatives 

Specific objective 2: 

Result 

To promote the transnational 
circulation of cultural and 
creative works and operators and 
reach new audiences both in 
Europe and beyond 

Specific objective 3: 

To strengthen transnational policy 
cooperation in order to foster 
policy development, innovation, 
audience building and new 
business models  

8.3. 

Annex 3: Results of the public consultation  

Summary of the Public Consultation Meeting (16 February 2011) regarding the new 
programme for culture: http://ec.europa.eu/culture/our-programmes-and-actions/consultation-on-
the-future-culture-programme_en.htm 

Summary of the results of the public consultation regarding the programme for culture: 
http://ec.europa.eu/culture/our-programmes-and-actions/consultation-on-the-future-culture-
programme_en.htm 

EN 

51 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
8.4. 

Annex 4: Interim Evaluation of the Culture Programme 2007-2013  

Interim Evaluation of the Culture Programme 2007-2013, Final Report, Ecorys UK on behalf 
of the European Commission (2010): 
http://ec.europa.eu/dgs/education_culture/evalreports/culture/2010/progreport_en.pdf 

8.5. 

Annex  5:  Annex  to  the  Ecorys  Final  report  –  Consultancy  services  for  the 
impact assessment of the future programme on Culture 

EN 

52 

   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 

53 

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

Procedural issues and consultation of interested parties ............................................ 56 

Purpose of the impact assessment report ................................................................... 56 

Organisation and timing............................................................................................. 56 

Consultation and expertise ......................................................................................... 57 

1.3.1.  Consultation ............................................................................................................... 57 

1.3.2.  Evaluations and external expertise............................................................................. 58 

2. 

2.1. 

2.2. 

Context and Problem definition ................................................................................. 59 

The policy context...................................................................................................... 59 

Historical development and results 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. 

2.4. 

Market context ........................................................................................................... 66 

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. 

2.7. 

3. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

4.6. 

4.7. 

5. 

EU – Right to act........................................................................................................ 76 

Subsidiarity and EU added value/ necessity test of the new EU initiative ................ 76 

Objectives................................................................................................................... 78 

Policy options............................................................................................................. 80 

Selecting the appropriate instrument.......................................................................... 80 

Criteria applied for pre-selection of options to undergo further analysis .................. 81 

Discarded options....................................................................................................... 82 

Option 1: No change (the baseline)............................................................................ 83 

Option 2: No action (the “no programme” option) .................................................... 83 

Option 3: Integrated programme................................................................................ 83 

Option 4 - Integrated MEDIA strand within a framework programme ..................... 86 

Analysis of impacts .................................................................................................... 86 

EN 

54 

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5.1. 

5.2. 

Framework for analysing impacts.............................................................................. 87 

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................................................................................................... 89 

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. 

6.4. 

6.5. 

7. 

8. 

9. 

10. 

11. 

Coherence................................................................................................................. 101 

Feasibility................................................................................................................. 101 

Preferred option........................................................................................................ 101 

Monitoring and evaluation ....................................................................................... 102 

Annex 1: Glossary.................................................................................................... 104 

Annex 2: Evaluations and Impact Assessments of MEDIA and MEDIA Mundus . 107 

Annex 3: Causal Model............................................................................................ 108 

Annex 4: Indicative indicators ................................................................................. 112 

EN 

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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, 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  will  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 the Council is foreseen at the end of 2011. 

The  detailed  work  on  the  impact  assessment  (IA)  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  first  meeting  of  this  ISSG  was  convened  on  30 
September  2010.  The  following  DGs  participated  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 the future MEDIA and MEDIA Mundus programmes 
will be merged. These programmes are currently covered 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  compatibility  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  creative  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 

56 

   EN 

 
                                                 
programme  there  will  be  equal  access  for  professionals  worldwide,  without  being  based  on 
the concept of membership, this problem is not an obstacle anymore.  

The  MEDIA  2007  Programme  is  listed  in  the  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  conditions  (in  particular  MFN)  where  international  activities  are 
concerned. Furthermore, the concerns expressed about merging MEDIA and MEDIA Mundus 
when the latter was adopted have in part already been dispelled by the 5 calls for proposals 
since  2008,  meaning  that  the  approach  based  on  reciprocity  for  international  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  geographical  scope.  Merging  the  two  programmes  would 
therefore  significantly  improve  coherence  and  efficiency,  and  reduce  the  administrative 
burden on both the Commission and the beneficiaries (see details in section 6.2.2). 

Independently  from  the  decisions  taken  under  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 management will be moved to the Executive 
Agency EACEA with related activities being integrated 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  Assessment  Board  on  7  September  2011,  the  IAB 
Opinion  was  issued  on  7  October  2011.  Recommendations  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  explanations  related  to  the  discarding  of  certain 
options;  the  breakdown  of  the  budget  of  Creative  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-ante impact assessment (Article 21(1) of the IR); a 
better  reflection  of  the  stakeholders  views;  the  rationale  behind  the  merge  of  MEDIA  and 
MEDIA Mundus. 

1.3. 

Consultation and expertise 

1.3.1.  Consultation 

The minimum consultation standards50 have been complied with: the Commission undertook 
an online consultation on the future of the MEDIA 2007 Programme from September through 
the  Commission’s  public  online 
November  2010.  2,586  respondents  responded 

to 

49 

50 

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)  that  any  other  nation  also 
receives and a nation with MFN status will not be treated worse than any other nation with MFN status. 
“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 

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consultation51. They represent a wide range of self selected stakeholders within the European 
audiovisual  sector,  from  many  Member  States  and  other  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 perceived 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 Commission received 367 replies from 51 countries53. 
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 international co-production funds. 
Continuous training also received 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  organised  conferences  and  meetings  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 
Brussels54.  The  public  hearing  gathered  together  approximately  250  stakeholders  such  as 
filmmakers, producers, distributors, film directors, exhibitors, film funds etc., to present their 
views  and  debate  on  the  future  of  the  programmes.  A  further  900  people  followed  via 
streamed transmission. The main outcomes of this hearing were the following: In it's 20 years 
of existence MEDIA helped to significantly change the European audiovisual landscape; most 
European films would not be seen outside their home territories without MEDIA support; the 
European  animation  industries  now  play  a  very  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  challenges  and  opportunities  from  digitisation  and 
globalisation and support will be needed to enable the sector to develop new business models 
and  to  benefit  from  the  changing  market  conditions.  It  will  be  very  important  to  support 
projects acting across the value 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  various  evaluations  of  MEDIA  and  predecessor 
programmes  carried  out  in  recent  years.  On  top  of  those,  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 

52 

53 

54 

55 

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.  
Group A countries are those with the strongest audiovisual production capacity: France, Germany, Italy, 
Spain and the UK. 
A summary of the online consultation's results regarding the MEDIA Mundus Programme after 2013 is 
available at: 
 http://ec.europa.eu/culture/media/mundus/docs/public-consultation-future-media-mundus_en.pdf.  
The 

at:
http://ec.europa.eu/culture/media/mundus/docs/Programme_public_hearing_The_future_of_th

conclusions 

available 

hearing 

public 

this 

are 

of 

e_MEDIAs_en.pdf.  
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).  

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Programme  after  2013."  The  contractor  collected  market  data  and  compiled  relevant 
information deriving from the various sources mentioned 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, focus groups, public hearing and 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. 

CONTEXT 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  strategic  objectives:  to  promote  cultural  diversity  and 
intercultural dialogue, to foster culture as a catalyst for jobs and growth, 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  Protection  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  explicitly  mentions  films  and  emphasises  the  specific  and  dual 
(cultural and economic) nature of cultural goods and services. 

The importance of the cultural and creative sectors (which include audiovisual industries) to 
create  growth  and  jobs  has  been  widely  recognised58.  MEDIA  can  help  addressing  some  of 
the  key  challenges  and  thus  contribute  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  environment  –  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 directly related to MEDIA objectives: 

The circulation and competitiveness of European works (for instance through actions aimed at 
creating a vibrant digital market including actions addressing copyright and licensing)62. 

56 

57 

58 

59 

60 
61 

Communication  from  the  Commission  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 (COM(2007) 242 final), 10.05.2007. 
http://portal.unesco.org/en/ev.php-
URL_ID=31038&URL_DO=DO_TOPIC&URL_SECTION=201.html . 
The  economics  of  the  sector  is  discussed  in  “Multi-territory  licensing  of  Audiovisual  works  in  the 
European Union”, Kea and Mines, October 2010. 
An  Agenda  for  new  skills  and  jobs:  A  European  contribution  towards  full  employment,  COM(2010) 
682, 23 November 2010. 
An integrated industrial policy for the globalisation era, COM(2010) 614. 
A Digital Agenda for Europe, COM(2010)245, 19 May 2010. 

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Pluralism  and  linguistic  and  cultural  diversity  (for  instance  through  Actions  aimed  at 
delivering  ICT-enabled  benefits  for  EU  society  including  financing  the  EU  digital  library, 
digitising  European  cinema  and  implementation  of  relevant  provisions  in  the  AVMS 
Directive)63. 

The  Commission  also  issued  a  Green  Paper  on  “Unlocking  the  potential  of  cultural  and 
creative industries”64 seeking to develop a strategic approach to creative and cultural sectors 
so that Europe’s strong and attractive cultural assets become the basis of a creative economy 
and a cohesive society through the development of the right enablers. 

2.2. 

Historical development and results of the current programme 

The first MEDIA programme was created in 1991 on the basis of EU industrial policy. This 
action  was  part  of  the  Commission  overall  approach  to  the  audiovisual  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  support  has  evolved  and  its  scale  has  increased  as 
illustrated in Table 1. 

62 
63 
64 
65 

66 

67 

See Section 2.1 of the Digital Agenda. 
See Section 2.7 of the Digital Agenda. 
Green Paper, Unlocking the potential of cultural and creative industries, COM (2010) 183. 
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  diversity,  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. 
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. 
For  example,  broadcasters  must  reserve  a  certain  proportion  of  their  transmission  time,  for  European 
works, and for independent productions. 

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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 

2001-2006 

MEDIA Plus 

€454m  Development, distribution and promotion 

MEDIA Training 

€59m 

Networking between training partners 

2007-2013  MEDIA 2007 

€755m  Distribution,  development,  promotion  and 

training 

2008-2010  MEDIA 

€ 8m 

Cooperation with third countries 

International 

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  complementary  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  cultural  diversity  and  its  cinematographic  and 
audiovisual  heritage,  guaranteeing  its  accessibility  to  European  citizens,  and 
promoting intercultural dialogue. 

Increasing  the  circulation  of  European  audiovisual  works  inside  and  outside  the 
European Union. 

Strengthening  the  competitiveness  of  the  European  audiovisual  sector  in  the 
framework of an open and competitive market. 

The  geographic  scope  of  the  programme  is  all  EU  Member  States  and  Croatia,  Iceland, 
Liechtenstein, Norway and Switzerland. 

The  eligibility  criteria  of  the  action  lines  focus  support  on  European  independent  producers 
and distributors and exhibitors: there is a bias towards SMEs. The programme generally funds 
up  to  50%  of  eligible  costs  for  relevant  activities  rather  than  offering  full  funding.  The 
programme  provided  funding  via  5,515  contracts  in  the  period  2007-2009  with  an  average 
funding of € 53.925 per contract. 

68 

Established under Decision 1718/2006/EC which sets out details of the programme objectives, actions, 
budget and implementation. 

EN 

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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  proposals,  the  pre-selection  of  projects,  the 
management of the contracts and the grants payments (see section 6.2). 

The MEDIA Desks & Antennae constitute a network of local MEDIA representation offices 
that  contribute  to  the  implementation  of  the  Programme,  by  informing  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 alongside 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 service body, created in the 
form  of  an  enlarged  partial  agreement  of  the  Council  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 

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A  mid-term  evaluation  of  MEDIA  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: 

• 

• 

70 

Training  –  MEDIA  2007  and  MEDIA  Mundus  provide  support  for  institutions 
and/or  organisations  offering  training  courses  relevant  to  the  objectives  of  the 
programme.  About  1,800  professionals  (producers,  distributors,  scriptwriters)  are 
trained  annually  acquiring  relevant  qualifications  and  skills  and  benefitting  from 
cross-border  networking  opportunities.  This  support  to  capacity  building  in  the 
industry  helps  to  professionalise  the  sector  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  opportunities,  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 the script, finding international partners and 
consolidating budgets and financial plans. As a result, 400 quality European projects 

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 

63 

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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  financial  solidity  and  a  longer  term  perspective  to 
production  companies  (mainly  small  under-capitalised  SMEs).  The  evaluation 
confirmed that this approach has an important structuring effect on the industry. 

line, 

the  development  action 

Additionally,  within 
i2i  Audiovisual  supports 
production companies by taking over the financial costs related to the production of 
audiovisual  works.  It  subsidises  part  of  the  costs  related  to  bank  credits,  insurance 
and  completion  bonds  of  European  independent  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, especially in view of the creation in 2010 
of the MEDIA Production Guarantee  Fund.  The MPGF facilitates access to private 
sources of finance for producers via a guarantee 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  than  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 distribution. Support to specific genres such as documentaries 
and animations have proven to be critical given 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, both works in progress and finished products. 
The  evaluation  confirmed  that  presence  in  major  festivals  and  markets  provides 
business  opportunities  for  professionals  and  improves  the  visibility  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  films72.  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  crucial  Theatrical  release  window  which 
remains the principal “brand building” mechanism for films and drives their value in 
the  subsequent  “video”,  TV  and  other  windows.  50%  of  European  films  released 
outside of their national territory cross borders 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 

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 expected to generate over € 100 million in bank credits  
Source: European Audiovisual Observatory, 2008. 

• 

• 

• 

• 

71 

72 

EN 

64 

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• 

share  of  American  films  decreased  from  47%  to  44%  despite  a  high  increase  in 
marketing spending from US majors in Europe. This improved market performance 
of European films in theatres is at least partly 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  European  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  available  in  Europe.  Most  are  independent 
cinemas that provide a broad and diverse offer 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  Europe  (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 films account for 57% of admissions to Europa 
Cinema screenings, against a European average of 27,7%. 

The above mentioned mid-term evaluation confirmed 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  their  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 other activities. Finally, the evaluation recommends 
some innovations in the form of intervention of the programme, and some 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  action  of  the  European  Parliament.  The  MEDIA 
Mundus  programme  (2011-2013),  the  successor  to  the  MEDIA  International  Preparatory 
action (2008-2010), is a broad international cooperation programme to strengthen cultural and 
commercial relations between Europe's film industry 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  Europe  and  from  third  countries.  MEDIA  Mundus  supports 
projects  with  in  principle  at  least  three  partners,  one  being  the  team  coordinator  based  in  a 
MEDIA territory, and at least one partner located outside of the EU. 

MEDIA Mundus actions and evaluation results 

The action lines under MEDIA Mundus broadly correspond to those under MEDIA 2007: 

• 

• 

• 

Training: to strengthen the skills of European and third- country professionals:  

Market  Access:  to  promote  access  to  international  markets  and  partner  search  for 
audiovisual  works.  These  projects  concern  the  development  and/or  pre-production 
phases (for example international co-production 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. 

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• 

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  MEDIA  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  results  of  the  ongoing  final 
evaluation of its predecessor programme MEDIA International expected 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  overwhelmingly  positive  feedback,  for  example  in  the 
public  consultation,  on  the  relevance  of  the  programme's  objectives  and  the  success  of  the 
supported  projects  under  MEDIA  International.  This  success  was  further  confirmed  by  the 
result of the first call for proposals 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.  Due  to  the  budget  restraints  even  excellent 
projects  had  to  be  rejected,  indicating  a  high  level  of  extra  absorption  capacity  of  the 
programme73. 

2.3.  Market context 

Activities carried out through the above described 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  entertainment  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 films in 2010 compared to 754 in the USA, 
1288 in India (2009) and 526 in China. In 2009, Europe was the third largest cinema market 
in the world with 966 million admissions; compared to 2917 million in India, 1341 million in 
North America and 264 million in China76. 

Feature film production capacity is concentrated in France, Germany, the UK, Italy and Spain 
(the so-called “Group A” countries) representing 62% of films produced in the EU in 200977, 
primarily  because  consumption  in  these  markets  is  large  enough  to  support  national  film 
production. EU 15 (without the “Group A” countries) countries accounted for 23% of films 

73 
74 

75 
76 
77 

For more on the merger between MEDIA and MEDIA Mundus see section 1.2.and 6.2.2. 
Building a Digital Economy: The importance of Saving Jobs in the Eu's creative industries" – TERA 
Consultants. 
Source: PwC Global Entertainment Outlook 2009. 
Source: European Audiovisual Observatory - Focus 2010. 
Source: European Audiovisual Observatory - Yearbook Online Premium Service 2010. 

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produced  and  EU  12  only  for  15%.  In  EU  12  markets,  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  component  of  the  audiovisual  sector.  According  to 
PricewaterhouseCoopers (2009), the global video games market was estimated at some €45 – 
50 billion in 2009, and is expected to grow four times faster than 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'  studios,  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  audiovisual  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  evaluation  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  different  cultural  traditions  that  make  up  our 
European  heritage  diversity,  which  is  something  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  audiences  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-national  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 audiences 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 2010 (with less than 20% of the total number of 
films  released),  compared  to  25,3%  for  European  films  (though  they  represent  over  60%  of 

78 

79 

In 2009,  France,  Germany,  Italy,  Spain  and  United Kingdom  accounted for  nearly  30%  of  the global 
videogames market. 
In 2008, among the world top 100 developers studios, 27 were European, 32 were American, 26 were 
Japanese,  11  were  Canadian,  2  were  South  Korean,  1  was  Australian  and  1  was  Chinese  (source: 
www.develop100.com ).  

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the  total  number  of  films  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 

U.S. 

European films  
Europe / U.S. inc82 

Others 

2005 

2006 

2007 

2008 

2009 

2010 

62,5% 

63,4% 

62,6% 

65,6% 

24,6% 

27,9% 

28,1% 

28,2% 

10,3% 

2,6% 

5,6% 

3,2% 

7,5% 

1,8% 

4,4% 

1,8% 

67,1% 

26,7% 

4,2% 

2,0% 

68,0% 

25,3% 

7,9% 

1,3% 

On  average,  each  European  film  is  only  released  in  two  countries  including  the  country  of 
origin,  or  4.6  countries  in  the  case  of  co-productions  involving  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 considered as a reasonable absolute number of 
films  circulating  abroad,  European  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 time 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, benefit 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  numbers  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 European films versus US films in 200985 

Region 

Mexico 

Market share of European films 

Market share of US films  

4% 

84% 

80 

81 
82 
83 
84 
85 

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). 
Source: European Audiovisual Observatory – Lumiere database. 
Films produced in Europe with incoming US investment. Example: Harry Potter 
Source: European Audiovisual Observatory, 2007. 
Source: European Audiovisual Observatory, 2008. 
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 Association of America (MPAA). 

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Argentina 
Brazil 
South Korea 
India 
USA 

4% 
4% 
2% 
2% 
3% 

73% 
78% 
43% 
10-12% 
92.% 

Indeed, whilst diversity is indeed a key driver for Europe's rich cinematographic production, it 
has  a  negative  impact  on  the  industry's  competitiveness,  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 important 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 distributed successively on a country by country basis, 
only after successful release on one territory. In addition, the US Majors87 are fully vertically 
integrated: in addition to their important financial  and  production capacity, they own global 
distribution networks. On the contrary, due to the fragmented market, EU films often have an 
insufficient national basis to make up for the costs of production, especially in countries with 
a restricted linguistic or geographical area. 

As far as video games are concerned, they might well represent a significant opportunity for 
Europe  in  the  coming  years  but  they  face  similar  circulation  and  market  share  issues.  If 
Europe  boasts  numerous  independent  successful  games  development  studios  (see.  2.3), 
publishing  activities,  as  for  the  film  industry,  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  content  is  characterised  by  high  fixed  and  low 
marginal  costs.  This  creates  a  need  for  investment  in  the  early  stages  that  affects  power 
relations in the value chain, and leads to the emergence of the publishers as the financing, and 
therefore  dominant,  actors.  This  situation  prevents  European  video  games  developers  from 
their 
achieving 
competitiveness89.  

their  revenue  base  and 

their  full  potential  and 

thus  diminishes 

In conclusion, the fragmentation of the European audiovisual markets and industry limits the 
circulation of European works and the revenues of the operators (producers, distributors and 
exhibitors)  within  the  sector,  with  negative  impact  on  its  competitive  position.  This  is  a 

86 

87 

88 

89 

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. 
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,  Western,  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). 
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. 
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  vertical  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. 

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problem  at  EU  level,  inasmuch  as  it  prevents  the  industry  from  fulfilling  its  potential  for 
generating  economic  activity,  growth  and  employment.  Furthermore,  it  reduces  cultural 
diversity  because  people  are  unable  to  fully  benefit  from  the  cultural  and  social  value  that 
European audiovisual works convey, especially with regard to building social cohesion, inter-
cultural understanding and a European cultural identity. 

However, this fragmentation is inherent to the 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  overcome  it,  by  encouraging  transnational  circulation  of  works  and 
cross-border  collaboration  between  professionals.  Examples  of  actions  towards  that  purpose 
as well as an evaluation of the results and impacts 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 screens and networking activities. 

Stakeholders  have  identified  fragmentation  as  one  of  the  priority  problems  to  be  tackled  by 
EU  action.  The  analysis  of  the  responses  to  the  online  consultation  carried  out  in  2010 
indicates that fragmentation was the 7th 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  sector.  Firstly  this  is  due  to  the  intangible 
nature of many of their assets, such as copyright, 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  characteristics.  Secondly,  unlike  other 
industrial  products,  cinema  and  other  audiovisual  works  are  generally  not  mass-produced. 
Every  film  or  videogame  can  be  seen  as  a  unique  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. There is therefore substantial difficulty for these small 
under-capitalized enterprises to grow and maintain their competitiveness. 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 
91 

92 

This subject is discussed in details in the Impact Assessment of the new CCS Financial instrument 
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. 
Ability to understand investors' concerns, to understand the differences between the types of financiers, 
to fulfil specific financial requirements of banks and investors. 

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Additionally, the economic and financial crisis has led banks to refocus their activities on core 
business and move away for what are perceived as higher risk sectors such as the audiovisual 
industry, making access to finance for SMEs of the sector even more difficult. 

Also, presales of audiovisual works to television 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 particular of young audiences has led to a drastic reduction of their 
advertising revenues. Buying fewer programmes for lower prices, television 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 sales and distribution. 

Other  consequences  of  the  difficult  economic  situation  are  the  reduction  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  rather  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 partly different from than those 
associated with the film industry. However, in terms of access to finance, most players in the 
gaming industry are SMEs, face the same challenges 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  production  companies  to  access 
private funding" and "establishing a European Guarantee Fund" improve the competitiveness 
of the European Audiovisual sector. Secondly, the Potential Cultural and Creative Industries 
Platform93  also  mentions  Access  to  Finance  as  a  key  recommendation.  Amongst  others,  it 
suggests the development of financial tools adapted to the needs of the cultural and creative 
industries such as loan guarantee schemes or cultural and creative SME-friendly growth loan 
finance. 

The current MEDIA Programme has so far responded to that need in a relatively limited way. 
The i2i action, representing 2% of the annual MEDIA budget, supports the financial costs of 
film producers such as financial interests related to bank loans or insurance costs. Following 
the results of the stakeholder consultations carried out in 2004 in preparation of MEDIA 2007, 
a MEDIA Production Guarantee Fund, also representing 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 guarantees with a loan value of around €18 million 
in about ten different member states. 

Problem n°3 – Impact of globalisation 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.  

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The  consequences  of  these  structural  weaknesses  have  been  further  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  cinema  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-Demand)  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  opportunities  for  European  audiovisual  works,  which 
have little space in the traditional model, based on mainstream theatrical distribution circuits 
and  traditional  broadcasting.  Lower  distribution  costs,  new  distribution  channels  and  new 
opportunities for niche products can indeed facilitate their circulation worldwide. In order to 
seize these opportunities and adapt to the new context, the sector needs important investments 
to  upgrade  equipment,  develop  new  means  of  production  and  distribution,  adapt  business 
models  and  structure  the  market.  The  economic  situation  and  structural  weaknesses  of  the 
sector however make it difficult to meet these costs, while in some foreign markets the digital 
revolution has created strong financial growth and promising investments and, consequently, 
a growing demand for more audiovisual content reinforcing their competitive advantage.  

There  is  consequently  a  need  for  structural  industrial  support  to  the  European  audiovisual 
sector.  The  key  challenge  for  the  European  audiovisual  policy  is  therefore  to  address  the 
needs of the audiovisual industry in order to adapt to the new context, and to help it find new 
ways of creating value and driving revenues. 

So  far  the  current  MEDIA  Programme  has  supported  a  series  of  innovative  pilot  projects 
based  on  innovative  technology  and  aimed  at  developing  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  Digital  Cinema  Distribution.  It  also  supports 
different training programmes focused on technological innovations such as 3D for example. 
However,  the  interim  evaluation  of  MEDIA  2007,  the  stakeholders  consultations  as  well  as 
studies carried out by EAC or other 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 online consultation carried out in 2010 indicates 
that  digitisation  was  the  2nd  top  preoccupation  (out  of  60)  expressed  by  the  market  players. 
Indeed, the need to adapt to take advantage of digital technologies stood up as a key challenge 
(more specifically digital masters, digital cinema and VOD). 

94 

This can be compared to the appearance of TV in the 50s and the multiplication of TV channels in the 
80s. 

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Problem n° 4 – Shortage of reliable data 

The  shortage  of  reliable  data  at  European,  global  and  national  level  has  consequences  for 
European policy coordination, which can be a useful driver for national policy developments 
and  systemic  change.  Policy  coordination  is  most  effective  when  underpinned  by  a  strong 
evidence  base.  There  are  serious  problems  concerning  the  availability  of  data,  notably  that 
from private companies. 

Currently, the Commission services dealing with the audiovisual industries can only rely on 
the statistics provided by the European Audiovisual Observatory or the EACEA, which do not 
constitute sufficient basis in terms of consistency and scope for informed policy development. 
There is therefore a need to strengthen 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  problem  was  again  confirmed  in  the  interim 
evaluation of MEDIA 2007. Regarding context and market data, the different definitions and 
methods used by the various sources 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  the  programme  was  hindered  by  weaknesses  in 
monitoring and context data. In conclusion, evaluators recommended to "Continue the effort 
of adaptation to the market, which involves being 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 level 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. 

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• 

• 

• 

Video games developers and distributors 

Institutions offering education 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  MEDIA  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 complementary initiatives identified in section 2.7 
in  roughly  their  current  form.  This  section  examines  the  likely  development  of  the  problem 
over the period 2011-2020. 

On  the  basis  of  the  previous  evaluations  it  can  be  assumed  that  the  positive  benefits  would 
continue. 

Problem n° 1 – Fragmentation  

The  scale  of  the  problem  in  terms  of  measurable  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 likely to continue should the features  and dynamics of the sector  remain 
the same over the period; however, there are a number of areas of potential change that could 
affect the scale of the problem and/or introduce new aspects to it. 

With regard to distribution channels, cinema audiences 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 services are increasing but there is uncertainty over the future 
scale  of  audiences  on  these  new  distribution  channels  and  the  performance  of  new  business 
models.  On  international  markets  new  digital  technologies  create  a  strong  demand  for  new 
audiovisual content. MEDIA Mundus enables European professionals to acquire the necessary 
skills  and  networks  to  benefit  from  these  new  global  opportunities  and  facilitates  the 
international  sales  of  films.  With  the  limited  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  slightly,  with  a  proportion  of 
audience time migrating to new distribution channels. Overall, this will increase the weight of 
aspects of the problem relating to new distribution channels, in particular 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  audiovisual  works.  Financial  pressure  on  television 
broadcasters  and  the  decreasing  DVD  market  are  likely  to  negatively  affect  the  funding 
available for film. 

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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 finance96 

The MEDIA Production Guarantee Fund (MPGF) was launched in 2010 with € 8 million for a 
duration of 4 years. Should this mechanism be continued 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  such  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 the 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  SMEs  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  lack  of  tangible  collateral.  It  represents  the  amount  of  debt 
funding  missing  in  CCS  due  to  their  specificities.  In  spite  of  its  high  leverage  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 globalisation and the digital shift 

As  explained  in  section  2,  the  digital  shift  implies  fundamental  changes  in  the  way  that 
audiences  consume  audiovisual  content.  The  Internet  has  developed  a  significant  role  in 
providing  content  and  information  on  what  is  available  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 shift and the new marketing, distribution and showing techniques 
it provides. This would be particularly 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 addition 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  could  lack  the  information  necessary  to  make 
investments in the globalised and digitised future landscape. 

96 
97 

98 

This issue is discussed in depth in the IA on Cultural and Creative Sector Financial Instrument.  
The current MPGF only covers independent film producers to cash flow the production 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 
See detailed calculations in the Impact Assessment for the CCS Financial Instrument 

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In conclusion, continuing MEDIA in its current form would enable support to the audiovisual 
sector  to  be  pursued  and  to  partially  tackle  the  issue  of  fragmentation  and  circulation. 
However,  it  would  fail  to  support  the  sector  in  addressing  the  new  challenges  raised  by 
digitisation and globalisation, 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  Union  recognises  that  the  internal  market  and 
economic  growth  must  be  accompanied  by  respect  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 Charter 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  the  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/ necessity 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 focus on national production activities or 
the  promotion  of  purely  national  interests.  A  broader  European  approach  will  continue  to 
complement  these  initiatives  by  strengthening  the  cross  border  and/or  trans-European 
dimension,  for  example  through  supporting  circulation  of  non-national  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  essential  given  that  individual  Member  States  support  quasi-
exclusively the production phase, while MEDIA continues to concentrate on actions upstream 
(training,  development)  and  downstream  (distribution,  promotion,  exhibition)  of  the  value 
chain. 

European structural  funds are administrated by the Member  States  and  may  regionally  or 
nationally support audiovisual industries like, for example, modernisation and digitisation of 
cinemas and film studios. They might complement MEDIA in some instances, but would not 
cover the whole EU since it depends on regional initiatives or many of the activities supported 
currently by the MEDIA Programme.  

The  European  Competiveness  and  Innovation  Framework  Programme  (CIP)  targets 
small  and  medium-sized  enterprises  (SMEs),  supports  innovation  activities,  provides  better 
access  to  finance  and  delivers  business  support  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). However, due to this transversal 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. 

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In the context of the development policy, the EU has set up a series of instruments in support 
of  the  audiovisual  industry  in  third  countries.  The  objectives  of  MEDIA  Mundus  are 
complementary  to  those  of  ACP  Films,  ACP  Culture,  the  Euromed  Audiovisual 
programme  and  Mercosur  Audiovisual.  MEDIA  Mundus 
to  support 
international  cooperation  and  partnership  building  rather  than  development  of  the  local 
industries  (production,  promotion,  distribution,  training,  professional  development)  in  the 
regions targeted by the other developing policy's programmes99. 

intended 

is 

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  economic  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  supporting  international  co- 
productions. These funds100 cover all geographic zones of the world and all parts of the value 
chain. However, their budgetary allocations are very limited (a total of less than € 10 million 
in 2010). 

(2) 

Added value and leverage effect 

European  markets  need  to  collaborate  and  act  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.  influenced  by  technological  developments),  and 
markets (MEDIA Mundus) and where expertise is geographically dispersed and fragmented. 
European  projects  also  bring  added  value  where  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  projects  with  stronger  financial  plans  and  better  structured 
production  partnerships.  In  the  long  run,  sustainable  transnational  partnerships  have  arisen 
between producers and between distributors, thus strengthening the structure of the industry 
and  helping  to  overcome  the  issue  of  fragmentation.  These  actions,  also  relating  to 
international markets, can only be taken at European level. 

99 

100 

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 Partnership Agreement. It supports the production of 
cinema and audiovisual works, the promotion, distribution, dissemination and networking of the cinema 
and audiovisual sector, and the development and training 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  countries,  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  audiovisual  cooperation  within  South 
America. 
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 

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EU policy towards the audiovisual industry inspires national and regional authorities in the 
design of support mechanisms. For example, new Film 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,  Malaysia,  South  Korea,  Japan,  Australia  and 
Russia. 

Overall, a MEDIA quality label has emerged over the years, attracting additional sources of 
finance  such  as  national  or  regional  support  or  private  investments  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 theatres network for example, 
13 Euros revenue is generated for each Euro invested in the European network, and 17 Euros 
in the international network101. As far as the distribution sector is concerned, distributors are 
subject to a reinvestment obligation of the grants received, that need to be reinvested in the 
release of more non-national European films, producing a leverage effect 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 budget of around € 100 million per year in a market 
worth  1000  times  more,  MEDIA  has  produced  significant  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 partly 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 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 

101 
102 

Source: Europa Cinemas. 
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  tackled  by  specific  networking  activities  between 
professionals  at  European  level  and  support  to  international  distribution;  and  skills  gaps  by  specific 
training programmes. 

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strategy. 

Specific objectives 

• 

1. Support the capacity of the European cultural and 
creative sectors to operate transnationally; 

2. Promote the transnational circulation 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 transnational policy cooperation. 

Priorities 

Specific objective 1: Support the capacity of the European cultural and 
creative sectors to operate transnationally: 

- 

Providing audiovisual professionals with 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 transnational 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  financial  capacity  of  the  cultural  and 
creative sectors: 

- 

Provide expertise/capacity building to the financial institutions and 
encourage its geographical spreading 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 institution 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. 

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models 

- 

Studies on the market context and 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 new financial instrument that will facilitate 
access  to  financing  for  the  SMEs  of  the  Cultural  and  Creative  Sectors.  Given  the  technical 
complexity of this issue, it is addressed by a separate Impact Assessment. 

4. 

POLICY OPTIONS 

4.1. 

Selecting the appropriate instrument 

As  mentioned  before,  the  current  EU  audiovisual  policy  has  been  implemented  trough 
legislative  instruments  and  expenditure  programmes.  Different  instruments  have  been 
considered during the preparation of the new programme. However, to address the problems 
described above, and to overcome the fragmentation 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. 

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Option 

The baseline 

No action  

 Integrated programme 

Table 4: Policy options  

Summary 

The  “no  change”  option.  Continuation  of  the  MEDIA  2007 
and MEDIA Mundus programmes. 

The  “no  programme”  option.  No  further  renewal  of  the 
MEDIA 2007 and MEDIA Mundus programme at the end of 
2013. 

Redesigning the programmes, possibly 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, external experts, institutions etc 
have been collected to undergo a first screening. 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  MEDIA  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 extension 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  simplifications  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. 

• 

104 

Focus on structuring actions with a maximum 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  longer  term  impact  on  the 
whole  production  company  robustness  and  viability  rather  than  just  on  one  of  its 
projects) 

A systemic impact is achieved when an action aimed at one element of a system has an impact on the 
whole system 

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• 

• 

• 

• 

• 

• 
• 

Create  a  financial  instrument  to  progressively  replace  direct  grants  where  possible 
(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  MEDIA  Production 
Guarantee Fund 
Streamlining of the international dimension previously in separate MEDIA Mundus 
Programme under a single legal basis 
Cross-cutting value chain approach by supporting a limited number of film projects 
with  high  commercial  and  circulation  potential  ("champions")  throughout  the  value 
chain, from training to distribution 
Transversal  projects  covering  several  segments  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  creative  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  possibility  to  participate  to  "the  greater  European 
audiovisual  area",  i.e.  all  neighbouring  countries.  Those  countries  in  return  would  pay  a 
participation  fee  which  reflects  the  importance  of  their  respective  audiovisual  sectors, 
following  the  example  of  Switzerland  and  Croatia  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  minimum  size  required  for  the  new  financial 
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. Given the needs expressed by the market to meet the challenges and 
fulfil  the  needs  identified  in  section  2  and  considering  the  expected  budgetary 
constraints,  there  is  a  lot  of  pressure  on  the  MEDIA  Programme  to  optimise  cost-
effectiveness, 
the 
implementation of a new expenditure programme.  

realistic  options 

the  number  of 

reducing 

thereby 

for 

A preliminary analysis of the needs to be addressed by the new programme had led 
to  various  proposals  to  reinforce  some  existing  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 been discarded given their partial approach 
to the problem to be addressed at EU level. Indeed, acting only on one element of the 
value  chain  would  not  be  cost-effectiveness,  since  it  would  not  produce  sufficient 
knock-on  effects  on  other  elements  of  the  value  chain  and  there  fail  to  achieve  the 
required  systemic  impact  as  mentioned  in  section  4.2  above.  Each  element  of  the 
value  chain  (training,  development,  production,  post-production,  promotion, 
distribution,  and  exhibition)  would  then  suffer  disproportionately.  Since  EU  action 

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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 basis 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  showing  of  European  content  can  not  be 
envisaged  due  to  insufficient  budget  and  lack  of  commitment  from  broadcasters. 
Similarly, the budget is too small to introduce a support to European production and 
have a significant impact. Additionally, it would 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 option would be largely a carbon copy of both 
these  programmes.  Their  main  action  lines  would  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  develop  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  renewal  of  the  MEDIA  2007  and  MEDIA  Mundus 
Programme at the end of 2013. In assessing the impact of this option, it was assumed that all 
other relevant programmes (including audiovisual support programmes of the Member States) 
remain in force,  but that they do  not  take specific actions to attempt to replace the MEDIA 
programmes. 

4.6. 

Option 3: Integrated programme 

The option would be to take an integrated approach addressing 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 down 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 complementarities 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 integrating approach across the value chain.  

The links between the needs and objectives identified, the actions proposed and the expected 
impacts are illustrated in the figure below. 

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Figure 1 – Intervention logic of the new MEDIA Integrated Programme 

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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  option  would  refocus  the  resources  of  the  programme  spent  on 
distribution  on  areas  where  most  impact  is  expected  on  circulation  and  market  share.  For 
example,  selective  distribution  would  be  refocused  on  the  basis  of  the  priorities  of  the  new 
programme (for example, specific focus on animation 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  support  to  fiction  would  be  focused  on  a  limited 
number  of  co-produced  high-quality  TV  series  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 dedicated to sales agents with a wide international 
reach, in order to benefit from their knowledge of the market and support their international 
sales  activities  of  European  works.  Specific  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  globalised  environment  makes  stimulation  of  audience  demand 
increasingly important. The current MEDIA Programme is indirectly supporting demand for 
European  films  by  supporting  the  marketing  costs  of  distributors  releasing  non-national 
European  films.  The  new  programme  would  include  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 (subject 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 promotion actions in favour of operators 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  European  companies  coproducing  also  with  third 
countries (outside of the Eurimages scope), support could be made available to Europe-based 
international co-production funds in order to encourage co-production 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  tools  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 such as the European Audiovisual Observatory 
and Eurostat. The analysis of internal data will require the constitution of an internal market 
intelligence  capacity  to  collect  and  analyse  context  and  monitoring  data.  Other  actions  in 
favour  of  market  transparency  where  the  MEDIA  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. 

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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  address  fragmentation  and  resultant 
diseconomies of scale in the cultural sector in Europe. There are potential synergies that can 
be considered, entailing the extension of some of the activities carried out under the MEDIA 
Programme to other sectors of the cultural and creative sectors (CCSs), in particular regarding 
the financial instruments.  

This option would entail: 

Creating an common framework programme "Creative 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 points 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 priorities, and separate calls for proposals. This 
approach  would  have  the  advantage  of  accommodating  the  value  chains  in  the  different 
cultural  sub-sectors  appropriately105.  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  support  measures  such  as  data  collection  (see 
4.6),  policy  analysis,  studies  and  evaluations  about  the  Cultural  and  Creative  Sectors  (also 
covering  the  European  Audiovisual  Observatory).  It  would  also  encompass  a  network  of 
Creative  Europe Desks,  representing the  Creative Europe  Programme in the Member  states. 
Actions  financed  under  this  strand  would  also  include  transnational  exchanges  and 
networking  activities,  the  testing  of  new  cross-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  covering  all  the  cultural  and  creative  sectors,  would  bring 
economies of scale. As mentioned earlier cultural and creative companies and organisations 
would  benefit  from  this  instrument  as  it  would  globally  improve  their  access  to  private 
sources of finance106.  

5. 

ANALYSIS OF IMPACTS 

To  assess  the  impacts  of  the  proposed  options  relative  to  the  baseline,  it  is  necessary  to 
assume  that  other  complementary  or  related  policy  instruments,  such  as  national  support, 

105 

106 

Indeed,  there  is  considerable  variation  between  cultural  sub-sectors  compared  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. 
The financial instrument is analysed in details in a separate Impact Assessment exercice 

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other Commission programmes, and legislative measures would continue to apply in roughly 
their current form. 

The  focus  of  the  new  integrated  MEDIA  programme  and  the  other  options  is  on  achieving 
economic  and  social  outcomes,  and  hence  the  largest  impacts  are  likely  to  be  in  these 
categories.  As  with  most  expenditure,  there  will  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 circulation of audiovisual works. 

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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) 

Level of consumer choice of 
audiovisual content 

Demand for transport (passenger 
and freight) 

Revenues and profits of the 
audiovisual sector 

Competitiveness of European 
audiovisual companies 

Cost of business for SMEs  

Cultural diversity 

Cultural identity 

Media pluralism (diversity of media)  

Employment in the audiovisual 
sector 

Job quality in the audiovisual sector 

Energy consumption 

As mentioned in section 4, the impact 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 description of the current state of the sector. 
Causal uncertainties – the causal model posited in annex fits the available evidence, 
however, there may be alternative interpretations. The greatest uncertainty relates to 
new  distribution  channels  such  as  VOD  and  demand  stimulation,  where  robust 
evidence is scarce. 
Exogenous  uncertainties  –  there  is  uncertainty  over  future  market  and  technology 
developments  and  the  actions  of  Member  States  (e.g.  continuation  of  present 
subsidies  and  policies).  The  way  in  which  new  audiovisual  services  will  develop, 
particularly the business models employed and 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  problem  is  likely  to  increase  and  lead  to  a  lower 
competitiveness  of  the  European  audiovisual  sector  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 operators 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). 

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Social impacts 

Similarly, and as explained in section 2, the digital shift implies fundamental changes in the 
way  that  audiences  consume  audiovisual  content.  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 cultural diversity, on the global promotion of European 
cultural identity and on the level 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  limited  interest  in  the  European  and  international 
dimension of the sector. There is limited robust data to demonstrate 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,  the  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, correspondingly 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 impact on the number of co-productions and in the 
mid-term  on  the  circulation  of  European  films.  The  lack  of  support  to  distribution  could 
additionally reduce the circulation by more than half (representing 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 competitiveness of European audiovisual companies and 
probably  the  disappearance  of  those  that  focus  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 distributed. It would have an overall negative 
impact on the scale of the audiovisual industry in the European Union. 

Social impacts 

The  negative  economic  impacts  and  the  discontinuation  of  training  programmes  for 
professionals  would  have  an  overall  negative  impact  on  the  level  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. 

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Overall, the new integrated approach would lead to higher level 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 impact 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 effects 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  competitiveness  of  European  video  games  developers, 
especially SMEs, increased revenues, bigger market share, and widening the audience. 

Increased resources for distribution would intensify the circulation of European audiovisual 
works, though the scale of impact of incremental 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  international  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  the  value  chain.  Specific  support  to  a  number  of 
high-growth  distribution  channels  would  strengthen  the  competitiveness  of  the  European 
audiovisual sector in new distribution 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  distribution  channels  and 
improve  the  offer  of  content,  with  positive  impact  on  cultural  diversity  and  promotion  of 
European  cultural  identity.  Direct  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 competitiveness 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  expected  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  instruments109  would  improve  access  to  finance  for  operators  of  the 
audiovisual  sector  to  a  larger  degree  than  the  current  MEDIA  Production  Guarantee  Fund, 
leading  to  the  strengthening  of  their  financial  capacity  and  potentially  of  the  commercial 
potential  of  works.  Consequently  the  circulation  of  works  would  increase  and  the  sector 
would  become  more  competitive  relative  to  the  baseline,  particularly  with  respect  to 
audiovisual  production.  A  significant  increase  of  the  size  of  the  financial  instrument  would 
also have a stronger structuring effect, increasing the capacity of the industry to attract private 
sources  of  finance  and  thereby  lessen  their  dependence  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 types of supports and beneficiaries. 

109 

Further analysis is provided in the separate Impact Assessment for a new CCS financial instrument. 

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Moreover, the scope of financial instruments will be extended to cover the needs in working 
capital  for  distributors,  early  stage  financing  for  new  distribution  platforms  and  video  game 
developers or long term credit for exhibitors in the transition to digital cinema.  

Data  collection  will  increase  transparency  and  dissemination  of  information  concerning 
audiovisual  markets.  This  would  be  beneficial  for  policy-makers  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 beneficial effect on the transnational 
circulation of films.  

Social Impacts 

Thanks  to  the  increased  circulation  of  European  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  and  capacity  building  is  measures  expected  to 
improve  know-how, 
improve  competitiveness  of  European  audiovisual  companies, 
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  effect  of  the  new  form  of  a  programme  reinforcing  EU  action 
across the whole value chain would be combined with those of the 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  through  simplification  and  through  reduction  of 
administrative costs. The scale of any additional resources would tend to be small relative to 
the  total  programme  budget,  but  would  nonetheless  enable  the  programme  to  have  slightly 
larger effect. 

A  concrete  example  would  be  the  positive  impact  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 cannot be evaluated quantitatively a this stage. 

6. 

COMPARING THE OPTIONS 

This  section  compares  the  options  on  the  basis  of  effectiveness  in  terms  of  achieving 
objectives,  efficiency,  coherence  and  feasibility.  The  options  are  then  ranked  on  this  basis. 

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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  impacts  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 effectiveness of the options, their 
results and impacts  have  been  assessed for a series  of key drivers derived 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. and 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  and  effectiveness  of  each  option  in  quantitative 
terms. Their expected effectiveness is therefore assessed in qualitative 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 greater 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. 

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Table 6: 

Comparing the options 

1 
Baseline 

2 
No action 

3 
Integrated 
programme 

4 
Integrated MEDIA 
strand within a 
framework 
programme  

Effectiveness 

Improving competitiveness 

Stimulating access to funding 

Improving Circulation 

Stimulating demand 

Competency in new models 

Diversity 

Leverage and structuring 
effect 

K
E
Y 

D
R
I
V
E
R
S 

Direct costs 

Efficiency Management costs 

Feasibility 

Coherence 

Overall assessment 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

▬ ▬ 

▬ ▬ 

▬ ▬ 

▬  

▬  

▬ 

▬ 

(cid:173) 

(cid:173)(cid:173) 

(cid:173)(cid:173) 

(cid:173)(cid:173) 

(cid:173)(cid:173) 

(cid:173) 

(cid:173) 

(cid:173)(cid:173) 

▬ ▬ 

0 

0 

0 

▬ ▬ 

(cid:173) 

0 

(cid:173) 

(cid:173) 

(cid:173) 

(cid:173)(cid:173) 

(cid:173)(cid:173) 

(cid:173)(cid:173) 

(cid:173)(cid:173) 

(cid:173) 

(cid:173) 

▬ ▬ 

(cid:173) 

+ 

(cid:173)(cid:173) 

(cid:173)(cid:173) 

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 currently the case for both Culture and MEDIA, 
and will be as of 2012 for MEDIA Mundus. An interim 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  management  and  additional  programme  strands.  It 
offers high quality services to the beneficiaries, and conforms to the internal procedures of the 
Commission and sound financial management. It achieves its objectives efficiently, thanks to 
such elements as simplification and harmonisation of internal procedures, a flat organisation 
and experienced staff. 

110 

Source: Interim Evaluation of the EACEA, Final Report, COWI 2009. 

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The main difference between the options with regard 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 people in 2009), 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 highest for action lines that are oversubscribed (high 
ratio  of  applications  to  awards),  make  a  large  number  of  small  awards,  or  involve  more 
complex selection criteria and management. For example, television broadcasting is the most 
efficient  as  it  involves  a  relatively  small  number  of  large  contracts,  while  development  has 
low  efficiency  as  it  involves  a  large  number  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 budget against headcount, 2007-2009112 

Action line 

% amount of grants 

% number of contracts 

% EACEA headcount  

TV broadcasting 

11% 

VOD & DCD 

Distribution  

Promotion 

Training 

Development  

6% 

47% 

11% 

7% 

23% 

4% 

1% 

62% 

8% 

3% 

23% 

6% 

3% 

38% 

14% 

10% 

30% 

The  relative  management  costs  of  new  action  lines  (guarantee  fund,  audience  building,  co 
production  funds  etc)  are  not  yet  known.  It  is  assumed  that  most  would  have  equivalent 
management  costs,  while  financial  instruments  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  the  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  decisions,  removing  comitology  on  all  selection 
results,  setting  up  a  beneficiaries  portal,  electronic  application  forms  for  all  strands,  and 
electronic  final  report  forms  which  would  improve  efficiency,  as  well  as  monitoring  and 
measurement  of  results  and  reduce  the  administrative  burden  on  applicants.  Electronic 
application  and  final  report  forms  will  permit  proper  monitoring  of  project  results  with 
minimal administrative cost for the EACEA. Additionally, savings in management costs will 

111 

112 

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. 
Source: Interim evaluation of MEDIA 2007, Euréval, 2009. 

EN 

94 

   EN 

 
                                                 
be  made  thanks  to  a  reduction  in  the  number  of  instruments  and  the  potential  merging  of 
information points for the culture and MEDIA programmes. 

Furthermore,  the  merger  of  MEDIA  and  MEDIA  Mundus  is  expected  to  bring  additional 
benefits  related  to  the  reduction  of  management  costs  (within  the  Commission  and  the 
EACEA);  the  publication  of  single  calls  for  proposals  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  simplification  process  is  expected  to  improve  administrative  and 
management  efficiency  for  the  European  Commission,  and  also  reduce  the  administrative 
burden on applicants. In other respects, the options are equally 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 cases, 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  the  case  of  option  4,  thanks  to  the  merger  of  the  information 
points for the culture and MEDIA programmes. 

6.2.4.  Cost-effectiveness analysis responding to ex ante evaluation requirements 

• 

The  new  Multiannual  Financial  Framework  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 Culture Programmes on the one hand, and the 
minimum size required for the new financial 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 

MEDIA 

Culture 

Financial instrument 

Cross-sectoral  

Total 

€ million 

905.5

487.2

211

75

1,678

113 

114 

For about 2/3 of MEDIA Mundus activities no separate calls and administration of projects would be 
necessary (ex. Training, markets, promotion, networks) 
These  figures  in  current  prices  are  based  on  the  financial  statement  attached  to  the  Creative  Europe 
proposed decision. They differ from the Multi-annual Framework quoted in 2011 prices  

EN 

95 

   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) 

0.110 

2301 

253.1 

[outputs:  number  of  individual  projects,  slates,  interactive 
works,  pilots  of TV  series, TV  productions  of  documentaries, 
fiction and animation] 

Support  to  co-production  funds  [output:  number  of  co-
production funds supported] 

Audiovisual  markets,  promotion  tools  and  strands  [output: 
number of markets, market stands, online tools etc.] 

Innovative projects in the field of ICT applicable to AV 
industry  

[output: number of applications of ICT to the industry] 

0.300 

0.1925 

0.500 

48 

452 

30 

14.3 

87.1 

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 

0.046 

6932 

318.9 

[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.] 

International  grouping  of  sales  agents,  distributors  and  right 
holders [outputs: number of groupings ]  

Network  of  cinemas  screening  majority  of  European  films 
[output: number of cinema networks] 

Film  festivals  and  events  [output:  number  of  festivals  and 
events] 

literacy 

Film 
festivals with focus on film literacy, awards] 

initiatives  [output:  number  of  workshops, 

New  marketing  and  advertising  tools  [outputs:  number  of 
projects establishing e.g. film community platforms] 

Sub-total for specific objective N°2 

Total cost of the MEDIA Strand 

0.271 

13.893 

0.040 

0.040 

0.040 

40 

7 

645 

269 

213 

8106 

11362 

10.8 

97.2 

26 

10.7 

8.5 

472.1 

905.5 

EN 

96 

   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] 

Sub-total for specific objective N°1 

848 

14420 

211.20 

(EIF fees plus 
expected loss) 

SPECIFIC OBJECTIVE No 2: Support transnational policy cooperation 

Network of Creative Europe desks 

Studies,  evaluations  and  policy  analysis  [NB:  This  also 
includes the European audiovisual observatory] 

Transnational exchanges and networking 

Testing new cross-sectoral approaches  

Conferences, seminars and policy dialogue 

Sub-total for specific objective N°2 

0.226 

0.317 

1.585 

1.132 

0.232 

189 

36 

4 

4 

42 

275 

Total cost of the innovative cross-sectoral Strand 

6.2.5.  Could the same results be achieved at lower costs? 

211.20 

42.7 

11,4 

6.4 

4.5 

9.8 

74.8 

286 

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 implementation options with respect to the current 
MEDIA  Programme  that  are  expected  to  optimize  the  cost-effectiveness  and  cost-efficiency 
of the proposed actions.  

Specific objective N° 1. - Capacity building 

Scope of the action 

Costs 

improve 

The  development  of  skills  and 
competencies  will 
the 
competitiveness  of  the  European 
audiovisual  sector.  The  Programme 
will 
425 
projects over the period a year. 

approximately 

fund 

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 

97 

   EN 

 
 
 
 
 
 
                                                 
The support to project development 
intended 
release 
continues  to  cover  single  projects 
and slates of projects. 

theatrical 

for 

12% of total MEDIA budget 

The support to TV programmes will 
be  refocused  on  documentaries  and 
animation  with  high  circulation 
potential,  while  support  to  fiction 
will  be  refocused  on  high-quality 
TV 
international 
series  with 
circulation potential. 

12% of total MEDIA budget 

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 new action line will be opened to 
international co-production funds  

1% of total MEDIA budget 

countries,  where 

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 
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-effectiveness  and  by  prizes 
awarded  by  partner  training  organisations  or  co-
production markets, to improve cost-efficiency.  

evaluations 

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  would  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 

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  opportunities  there  than  on 
mainstream platforms such as PC or console, thanks to 
lower production costs and easier access to consumers. 

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-production between European 
and 
thereby 
contributing to further opening international markets.  

non-European 

professionals 

and 

EN 

98 

   EN 

 
 
 
 
 
 
 
 
 
Actions  in  favour  of  the  promotion 
of European works on international 
markets 
their 
effectiveness in the current MEDIA 
2007 programme 

proved 

have 

10% of total MEDIA budget 

A  comparable  budget  will  continue  to  be  allocated  to 
business 
to  business  markets  and  co-production 
forums and other promotional 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.  Additionally,  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 
to 
Programme  with 
circulation  of  works  is  the  support 
to theatrical distribution.  

regard 

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  distribution  of  non-national 
European  works  in  cinemas,  together  with  a  selective 
scheme  encouraging 
the  grouping  of  European 
distributors to distribute a specific selection of middle-
range budget films with high circulation potential. 

Automatic  distribution  is  expected  to  support  the 
transnational  distribution  of  around  100  European 
films per year in an average of 5 different territories at 
a cost of € 40.000 per film and 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 
to 
circulation  of  works  is  the  support 
to a cinema network 

regard 

The  support  to  Europa  Cinema  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. 

11% of total MEDIA budget 

In  order  to  have  sufficient  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  European  cultural  diversity, 
the  level  of  support  needs  to  be  maintained  at  a 

EN 

99 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
for 

the 

importance  of  new 
Given 
distribution  platforms 
the 
circulation  of  European  works,  the 
to  online  or  mobile 
support 
an 
platforms  with 
innovative 
appropriate 
and 
line 
editorial 
offering  a  broad 
selection  of 
European  works  will  need  to  be 
reinforced.  

6% of total MEDIA budget 

The  support  to  festivals  showing  a 
minimum  proportion  of  European 
films will be pursued. 

3% of total MEDIA budget 

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 
been 
demonstrated  in  evaluations  and 
consultation process. 

or  Asia 

has 

4.5% of total MEDIA budget 

minimum  level  of  €13  million  per  year.  It  will  cover 
the  non-European  cinemas  currently  financed  under 
MEDIA Mundus. 

Based  on  the  current  experience,  a  minimum  of 
€350.000  per  unit  annually  is  required  to  allow  those 
platforms to develop their technological infrastructure, 
catalogue and business model. 

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. 

Support to this key element of the value chain should 
be  reinforced  in  order  to  help  Sales  Agents  exporting 
valuable  catalogues  of  European  works  with  high 
circulation  potential  at  global  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  allowance  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, the estimated budget required 
is  €40.000  per  film  and  per  territory.  The  required 
budget 
therefore  estimated  at  €5.000.000  for 
is 
automatic support.  

2)  Sales  support:  support  to  costs  related  to  and  the 
presence  of  Sales  Agents  presence  on  international 
markets  (both  inside  and  outside  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 

100 

   EN 

 
 
 
 
 
 
 
 
 
 
In conclusion, the cost-effectiveness of the programme is optimised. The only way in which 
the  cost  of  the  programme  could  be  significantly  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 programme. The programme’s multiplier effect would be seriously at 
risk and so would be its expected results and impacts. 

6.3. 

Coherence 

Evaluations (the interim evaluation 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 sophistication. The various tools and the conditions of 
their implementation have been adjusted many times to in relation to three constraints: their 
appropriateness  for  meeting  the  sector’s  needs,  their  effectiveness,  and  their  management 
‘cost’.  The  MEDIA  2007  Programme  has  been  revised  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 actions and an integrated approach to the value 
chain, and option 4 would contribute to go one step further thanks to a common approach to 
cultural and creative sectors 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  the  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  options  have  been  used  under  the  MEDIA  and 
MEDIA Mundus programme, some only since recently, others for almost 20 years. Therefore, 
these  actions  are  known  to  be  feasible  as  from  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 project 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. Similarly, national support for the games sector 
and TV series exist in Norway and France. 

From a political point of view, the MEDIA Programme has always benefited from support on 
the  part  of  the  Member  States  and  national  public  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 above, the preferred option would be option 4 where the MEDIA 
strand  (covering  both  MEDIA  and  MEDIA  Mundus)  would  be  integrated  within  a  larger 
Creative Europe framework programme. 

116 

Source: Interim evaluation of MEDIA 2007, Euréval, 2009. 

EN 

101 

   EN 

 
                                                 
A single framework programme would 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 the context of broader policy discussions on 
the  cultural  and  creative  sectors,  including  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.  

It  would, 

The third advantage is that it can contribute to simplifying the management of these 
programmes. 
the  establishment  of  single 
information/access  points,  thereby  improving  visibility,  facilitating  the  access  of 
citizens  to  information  on  EU  funding,  and  helping  to  ensure  the  best  possible 
service to operators.  

for  example,  permit 

for  both 

The  fourth  is  that  these  simplifications  would  also  enable  some  reduction  in  the 
administrative  burden 
the  Commission  and  Member  States. 
Simplifications will be made to the delivery mechanisms through greater use of flat 
rates, grant decisions and framework partnership agreements, electronic applications 
and  reporting,  and  an  electronic  portal  to  reduce  paperwork  for  applicants  and 
beneficiaries. Similarly, the transversal 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  order  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  sectors  and  offer  the  best  basis  for  a  common  EU 
strategy to focus attention on the challenges currently facing these 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 growth, 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  Communication  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  into  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. 

MONITORING AND EVALUATION 

Evaluation 

Historically, it has been common practice for the Commission to conduct two evaluations of a 
programme:  an  interim  evaluation  and  a  final  evaluation.  For  the  round  of  multiannual 
programmes  to  be  launched  in  2014,  the  Commission’s  intention  is  to  use  a  single  interim 

EN 

102 

   EN 

 
evaluation. Going forward, the interim  evaluation  would  also  serve 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 discontinuing the successor programme in the future, it should be 
conducted  roughly  four  years  prior  to  the  expiration  of  the  successor  programme,  currently 
envisioned  for  2020.  If  it  were  conducted  too  early,  there  would  be  too  little  experience  to 
evaluate;  if  too  late,  the  results  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  planned  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 indicators (see annex 4) to be collected and monitored will be revised 
once the shape of a successor programme has been finalised. 

To  fulfil  objective  n°4,  new  policy  support  actions  (see  4.6)  should  contribute  to  improve 
market  transparency  and  to  measure  the  indicators  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  operational  modes  and  objectives  of  each  action  line, 
they  should  continue  to  be  evaluated  individually.  The  indicators  should  be  updated  on  a 
regular basis, maintained as a time series, and modified as little as possible over the life of the 
programme, so as to enable trends to be monitored. 

Also specific indicators should be developed to measure the circulation of European films; to 
evaluate the financial instruments; and the international dimension of the programme. 

EN 

103 

   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  including  all  of  the  activities  associated  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  kinds  of  audiovisual  works,  including  drama, 
animation, and documentaries, rather than on forms 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 local. 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 days after the original broadcast. 

Cultural  and  Creative  Industries  (CCI):  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, 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 creative 
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” (CCS). 

Digital cinema: Digital cinema refers to the use of digital technology to distribute and project 
films. 

Digital master: A digital version of a film suitable for projection in digital cinemas. 

Digital  Terrestrial  Television  (DTT):  Television  channels  using  digital  signals  delivered  to 
homes through a conventional aerial, and converted through a set top box or integrated digital 
television set (IDTV). 

Dubbing:  Dubbing is  the  post-production  process  of  recording  and  replacing  voices  on 
a film or television soundtrack subsequent to the original production. 

EAO: European Audiovisual Observatory 

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Game Console: A video game console is an interactive entertainment computer or modified 
computer system that produces a video display signal 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  facilitate  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  the  financing  itself.  i2i  covers  three  types  of  cost:  insurance, 
completion guarantee, financing costs. 

Internet  Protocol  Television  (IPTV):  Delivery  of  television  content  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 expanding their service reach outside their areas of 
operation over unbundled third-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,  usually  provided  by  both  analogue  and  digital  cable  and  satellite, 
but also by digital terrestrial methods. 

Prime Time: Prime time is the block of programming 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,  turning  the  signal  into  content  which  is  then 
displayed on the television screen. 

Smart Phone: A Smartphone is a mobile phone offering advanced capabilities, often with PC-
like functionality (PC-mobile 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. Streaming is different to downloading, where content is 
saved on the user's hard disk before the user accesses it. 

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Subtitling: Subtitles are textual versions of the dialogue in films and television programmes, 
usually displayed at the bottom of the screen. 

VoD: Video-on-demand - VOD systems allow users to select and watch video content over a 
network  as  part  of  an  interactive  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 film and television content separately form any 
linear TV service  

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Annex 2: Evaluations and Impact Assessments 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 requirements in view of the preparation of a 
proposal for the next MEDIA programme after 2013 (2011); 

Ex  post  evaluation  of  the  Preparatory  action  MEDIA  International  (2008-10) 
including  some  input  for  the  ex  ante  evaluation  of  the  MEDIA  Mundus 
Programme  in  view  of  its  renewal  after  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/programme/overview/evaluation/index_en.htm 

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Annex 3: Causal Model 

The European audiovisual industry 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 the audiovisual industry, and the problems 
requiring EU action as listed in the present document. The model distinguishes among causes 
based on their location in the value chain: production, distribution, or consumer. 

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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 culture with stars they know, the specific case of the mainstream 
productions  from  the  US  majors  set  aside.  The  low  level  of  investment  by  the  sector  in 

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marketing  NNE  works,  a  low  level  of  media  coverage  of  NNE  works,  and  a  low  level  of 
visibility  of  NNE  works  on  the  internet  may  contribute  to  this.  It  is  also  possible  that 
producers and distributors lack skills 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, especially SMEs, there is limited access to and / 
or  a  high  cost  of  finance117.  The  perceived  high  risk  of  lending  to  single  audiovisual 
productions118  and  a  lack  of  risk  sharing  instruments  or  guarantee  funds  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 relating to small-scale video game financing. 
Finance is also difficult to obtain at the distribution and exhibition levels of the value chain 
because typically companies are 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 finance, and often 
rely  on  national  subsidies.  As  these  subsidies  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 models (e.g. 3D, interactive). 

(6) 

Distribution-related causes 

Television distribution 

The  budgets  of  broadcasters,  especially  advertising  funded  commercial  broadcasters  and 
public service broadcasters, are under pressure following the multiplication of TV and online 
channels  and  the  consequent  dilution  of  advertising  revenues.  This  pressure  leads  to 
broadcasters  having  scarce  resources  for  film  and  other  relevant  audiovisual  works  (fiction, 

117 

118 

119 
120 

Including  working  capital  /  corporate  finance,  interim  financing,  gap  financing  and  tax  incentive 
financing. 
Audiovisual  production  is  a  hit-driven  business  in  which  only  a  small  proportion  of  works  generate 
strong revenues. 
Study on the role of banks in the European film industry, PeacefulFish, May 2009. 
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. 

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animation  and  creative  documentaries).  Broadcasters  also  have  weak  incentives  to  transmit 
NNE works. 

Cinema distribution 

Cinema  exhibition  is  important  to  generate  revenue.  In  a  market  where  success  relies  to  a 
large degree on "word of mouth", theatrical release remains an important building block for 
marketing  and  publicity  in  order  to  drive  consumption  in  other  distribution  channels.  Low 
audience  demand  for  NNE  film  provides  a  weak  incentive  for  distributors  to  take  on  NNE 
films. Furthermore, European distributors that tend to work with European films are typically 
national  and  small  in  scale  (i.e.  fragmented)121  and  cannot  afford  important  investment  in 
NNE works (e.g. distribution costs such as subtitling, marketing and minimum guarantees). 

VOD services 

The  industry  is  in  a  period  of  transition  during  which  consumption  of  film  and  television 
content on VOD services122 is growing, and the DVD market is declining. During this period, 
VOD  may  remain  relatively  small  in  scale,  generating  little  or  no  pre-sales  investment  in 
European content, which may in turn make access to finance even more difficult. Challenges 
for distributors include transient issues linked to high transaction cost of widely participating 
in  the  market,  and  lack  of  know-how,  particularly  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 distributors in VOD distribution of NNE works, 
and  the  small  scale  of  any  European  VOD  aggregators  and  service  providers  such  that  the 
European sector may not have sufficient negotiating power to obtain favourable distribution 
deals with global internet-based VOD services (e.g. Apple iTunes, YouTube). 

121 

122

Cinema distribution in Europe is dominated by major US-owned distributors that are tied to major US 
studios.  There  were  646  active  theatrical  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%. 
75 
and other devices in the catch-up TV, premium VOD or other rights windows. 

VOD services include those that offer on-demand access to audiovisual content on TVs, PCs 

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Annex 4: Indicative indicators 

Objective 

Type of 
indicator 

Indicator 

Source of data 
collection 

Baseline  

General objective: 

Impact 

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. 

Specific objective 1: 

Result 

Support the capacity 
of the European 
cultural and creative 
sectors to operate 
transnationally 

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  

Evaluation, 
self-
assessment, 
monitoring, 
survey  

% 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 

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Specific objective 2: 

Result 

Promote the 
transnational 
circulation of 
cultural and creative 
works and 
professionals and 
reach new audiences 
in Europe and 
beyond 

% 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) 

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Specific objective 3: 

Result 

Strengthen the 
financial capacity of 
the cultural and 
creative sectors 

Specific objective 4: 

Result 

Support 
transnational policy 
cooperation 

The volume of loans 
granted to 
audiovisual 
companies 

Evaluation, 
reporting from 
financial 
intermediaries 

New action 

Number and 
geographical 
diversification of 
financial institutions 
involved in the 
financing of the 
sector  

% 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 

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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

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

Procedural issues and consultation of interested parties .......................................... 118 

Background .............................................................................................................. 118 

Consultation and expertise ....................................................................................... 119 

1.2.1.  Consultations............................................................................................................ 119 

1.2.2.  External expertise..................................................................................................... 120 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

Context and problem definition ............................................................................... 121 

The policy context.................................................................................................... 121 

The historical context............................................................................................... 122 

The European CCS market....................................................................................... 123 

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 Cultural and Creative Sectors..................................... 130 

2.4.4.  Two problems to be addressed by Financial Instrument.......................................... 131 

2.5. 

The baseline ............................................................................................................. 132 

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. 

2.7. 

EU – Right to act...................................................................................................... 136 

Subsidiarity and EU added value/ necessity 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. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

Objectives................................................................................................................. 140 

Policy options........................................................................................................... 140 

Discarded options..................................................................................................... 140 

Option 1 – No change (the baseline)........................................................................ 142 

Option 2 – No action (the "no financial instrument" option)................................... 142 

Option 3 – Setting up a Cultural and Creative Sector Guarantee Facility within the 
framework of a larger financial instrument.............................................................. 142 

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4.4.1.  Sub-options .............................................................................................................. 143 

4.4.2.  Eligibility criteria applicable to both sub-options.................................................... 146 

4.4.3.  Loan characteristics applicable to both sub-options ................................................ 146 

4.4.4.  Duration of guarantees applicable to both sub-options............................................ 147 

4.4.5.  Loss cover Mechanism applicable to both sub-options ........................................... 147 

4.4.6.  Geographical coverage applicable to both sub-options ........................................... 147 

4.4.7.  Capacity building (CB) applicable to both sub-options........................................... 147 

5. 

5.1. 

5.2. 

6. 

6.1. 

6.2. 

6.3. 

7. 

8. 

8.1. 

8.2. 

8.3. 

Impact of the options................................................................................................ 148 

Framework for analysing impacts............................................................................ 148 

Analysis of impacts .................................................................................................. 149 

Comparing the options ............................................................................................. 154 

Comparison of options ............................................................................................. 154 

Preliminary modalities for implementation of the CCS GF..................................... 160 

Possible frameworks for the implementation of a CCS Guarantee Facility ............ 161 

Monitoring and evaluation ....................................................................................... 163 

Annexes.................................................................................................................... 166 

Annex 1 - List of consultations and studies ............................................................. 166 

Annex 2 - Commission guidelines on Financial Instruments .................................. 168 

Annex 3 – Eligibility criteria for SMEs to have access to the CCS GF................... 169 

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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 financial 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  contributes  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  legal  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. The adoption of Commission's proposal for a 
Decision  of  the  European  Parliament  and  of  the  Council  is  foreseen  at  the  end  of  the  year 
2011. 

As  the  current  MEDIA  Production  Guarantee  Fund  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 setting up and managing of financial instruments, 
DGs  ECFIN,  RTD  and  REGIO  were  all  consulted  in  the  preparation  for  this  Impact 
Assessment both individually and collectively through various inter-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 complying 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 assessed, clarifications have been made 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 discarding some options have been strengthened, sub-

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options  have  been  introduced,  described,  analysed  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  relevant  to  this  IA.  This  section 
however reflects only the consultations having particular effect on the financial instrument. 

Due to the diverse nature of the cultural and creative sectors which includes numerous groups 
of  stakeholders  such  as  from  the  audiovisual,  music,  publishing  and  videogame  industries, 
minimum consultation standards have been complied with123 in recent years, both internally 
and externally. The most important ones are the following: 124 

Public  Consultation  which  was  carried  out  by  the  Commission  in  preparation  for 
MEDIA Programme after 2013125 identified specific needs concerning facilitating access to 
finance  for  SMEs  in  the  audiovisual  sector  by  suggesting  that  the  MEDIA  Production 
Guarantee  Fund  should  become  larger  and  open  to  other  stakeholders  in  the  audiovisual 
industry  than  just  film  producers.  Additionally  it  was  mentioned  that  the  fund  should  also 
focus on corporate financing rather than just project financing. 

Public  Consultation  launched  by  the  Commission'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 important – if not the most important – problem faced by 
cultural and creative SMEs is access to funding. Respondents shared the view expressed in 
the Green Paper that due to the financial recession, many banks had become even more risk-
adverse and, as a result, more reluctant to support cultural and creative businesses because of 
their  high  risk  profile.  In  this  connection,  several  respondents  pointed  to  the  need  to  set  up 
guarantee  mechanisms  to  encourage  investors  and  banking  institutions  to  invest  in  creative 
enterprises. Many respondents highlighted the crucial role of public finance (at both national 
and EU level) in this regard. As a good example, 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  expressed  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  option  with  the  EIF  in  cooperation  with  other 

123 
124 

125 

126 

http://www.cc.cec/home/dgserv/sg/stakeholder/index.cfm?lang=en  
For more information on consultation and expertise see Annex 2 and the IA for MEDIA Programme, 
Chapter 1.3.  
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, 
further details provided in IA MEDIA. 
http://ec.europa.eu/culture/our-policy-development/consultation-on-green-paper_en.htm 

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Commission  services  such  as  DG  ECFIN  and  DG  RTD,  the  European  Investment  Bank, 
various financial institutions and representatives from the cultural and creative sectors. 

Working Group on EU Equity and Debt Platforms (DG ECFIN): The College agreed on 
21  January  2011  on  the  principle  of  a  more  systematic  and  standardised  use  of  financial 
instruments  based  on  the  EU  Equity  and  Debt  Platforms  to  ensure  a  high  degree  of 
standardisation and efficiency in the design and management of such 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,  COMP,  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 supporting research and innovation in the next 
Multiannual  Financial  Framework:  an  integrated  approach".  The  document  has  been 
circulated to the Director Generals in June 2011. 

Seminar:  Facilitating  access  to  funding  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  funding  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 knowledge 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  audiovisual  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  consortium  led  by  WIK-Consult128  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 deriving from the various sources mentioned above. 

127 
128 

http://ec.europa.eu/culture/media/programme/overview/evaluation/studies/index_en.htm 
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).  

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Results  of  the  contract  in  relation  the  financial  instrument  were  used  mainly  for  describing 
problem definition and analysing the problems.  

The  results  of  all  studies,  evaluations,  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 the future of Europe: Smart growth, developing 
of  an  economy  based  on  knowledge  and  innovation,  sustainable  growth  promoting  a  more 
resource  efficient,  greener  and  more  competitive  economy  and  inclusive  growth  fostering  a 
high-employment economy delivering economic, social and territorial cohesion. 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  relevance  to  financial  instruments,  as  catalyst  of  public  and 
private resources, to achieve the strategic investment levels needed to implement the EU 2020 
strategy.  Accordingly,  the  next  Multiannual  Financial  Framework  is  expected  to  foresee  a 
stronger  role  for  financial  instruments  which  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  presented  in  the  EU  Budget  Review,  new  financial 
instruments are expected to generate EU added value, create synergies between Europe 2020 
objectives,  be  cross-policy  and  cross-sector,  respect  state  aid  principles,  and  be  financed 
through  different  budget-lines  linked  to  the  policy  areas  concerned.  Furthermore,  potential 
financial instruments targeting the same policy area and/or providing similar products should 
as much as possible be integrated. 

Spending  EU  budget  through  financial  instruments  is  not  a  new  feature;  the  term 
“innovative”  is  used  to  differentiate  the  instruments  from  the  non-repayable  grant 
approach.  Financial  instruments  thus  cover  a  broad  range  of  cases  where  financial  support 
from the budget is provided in other forms than pure grants.  

Financial  instruments  cannot  replace  grant  funding  but  complement  it  by  lending 
principally  repayable  support 
to 
intermediaries  that  provide  lending  to  a  large  number  of  final  beneficiaries  who  have 
difficulties  to  access  finance  (e.g.  SMEs,  infrastructure  project  companies,  people  in  risk  of 
social  exclusion,  etc.),  or  risk  sharing  with  financial  intermediaries  in  order  to  increase  the 
leverage capacity of the EU funds. 

through  equity/risk  capital,  guarantees 

to  projects 

129 

EU Budget Review — COM(2010) 700 of 19.10.2010 

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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  specific  policy  objectives.  Such  instruments  may 
take the form of loans, including loans with interest rate rebates, guarantees, equity or quasi-
equity, equity/debt investments or participations, facilitated where appropriate by the Union 
through risk-sharing instruments, possibly combined with grants".  

Financial instruments can be used in areas where projects have a revenue 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  start-ups,  SMEs,  mid-caps,  micro-finance, 
knowledge transfer, investment in intellectual property. 

2.2. 

The historical context 

Since 1991 MEDIA, the EU's support programme for the European audiovisual industry has 
supported the development and distribution of thousands of films as well as training activities, 
festivals  and  promotion  projects  Europe-wide.  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  granted  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 Programme are eligible to receive the guarantee, 
provided  that  the  end  beneficiary  is  an  independent  European  production  company  seeking 
finance  for  an  eligible  film  project132.  Since  the  Fund  only  became  fully  functional  to  issue 
guarantees in early 2011, the impact is yet to be seen but section 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  costs  of  film  producers  such  as  financial 
interests related to bank loans or insurance133. The scope of this action line is however limited. 
Indeed,  it  supports  the  cost  of  interest  related  to  bank  loans,  but  does  not  effectively  help 

130 

131 

132 

133 

Proposal  for  a  Regulation  of  the  European  Parliament  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. 
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.  
See  definitions  on  http://www.ifcic.eu/media-production-guarantee-fund-1/eligibility-criteria-for-the-
mpgf-guarantee.html or http://www.audiovisualsgr.com/audiovisualsgrmgf/howto.asp 
http://ec.europa.eu/culture/media/programme/producer/i2i/index_en.htm 

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producers  to  have  access  to  these  bank  loans  in  the  first  place.  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 revenue 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  creative  sectors  account  for 
4.5%  of  the  EU's  GDP  in  2008  and  employ  some  3.8%  of  its  workforce134.  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 makes a distinction between 

a) 

The “cultural sector” includes  

Non-industrial  sectors  producing  non-reproducible  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,  sculpture,  craft,  photography;  the  arts  and  antique  markets; 
performing  arts  including  opera,  orchestra,  theatre,  dance,  circus;  and  heritage  including 
museums, heritage sites, archaeological sites, libraries and archives).  

Industrial  sectors  producing  cultural  products  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”, culture becomes a “creative” input in the production of non-cultural 
goods.  It  includes  activities  such  as  design  (fashion  design,  interior  design,  and  product 
design),  architecture,  and  advertising.  Creativity  is  understood  in  the  study  as  the  use  of 
cultural  resources  as  an  intermediate  consumption  in  the  production  process  of  non-cultural 
sectors, and thereby as a source of innovation. 

The total turnover of these sectors in Europe amounted to € 654 billion in 2006. The figure 
below demonstrates how the turnover is split between the different sub-sectors. It shows that 
those  sectors  that  generated  most  turnover  were  mainly  the  service  providers  and  content 

134 

135 

"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.)  
European Competitiveness Report 2010 

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providers136. For film and video the EU turnover size 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,  even  after  taking  into 
account the sharp contraction of world demand and international trade in the final months of 
2008. As the decline in international trade affected all economic sectors, it is still premature to 
draw a definite picture regarding its adverse impact on the creative economy. 

For instance, world exports of visual arts doubled in six years, 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 means 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  creative  industries,  due  to  limitations  in  statistical  data  and 

136 

137 
138 

139 

Study on the Entrepreneurial dimension of CCIs (2011) http://ec.europa.eu/culture/key-
documents/doc3124_en.htm 
PWC report on Media and creative industry, 2008  
IPTS. BORN DIGITAL / GROWN DIGITAL: Assessing the Future Competitiveness of the EU Video 
Games Software Industry. 2010 
http://www.impalamusic.org/info_03_indfact.php 

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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 broadcasting, performing arts, and trade in digitized 
creative content. Just to give an idea of the magnitude of the creative economy 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  consume  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 entering the market. Consumers are changing the 
way  they  interact  with  the  market  place.  Innovative  SMEs  struggle  to  benefit  from  these 
developments, because they are often undercapitalized which in its result leads to the limited 
circulation of cultural goods and services.  

2.4. 

2.4.1. 

Identification of problems for the CCS and their underlying factors 

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  fragmentation,  other  historical  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 'microenterprises' 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 for 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  turnover  and  asset  distribution  between  bigger  and 
smaller companies142. 

Figure 2. 

140 

141 

142 

These  issues  are  widely  explained  in  the  respective  Impact  Assessments  of  the  MEDIA  and  Culture 
strands of the Creative Europe Programme 
See 2011 Study on the Entrepreneurial dimension of CCIs http://ec.europa.eu/culture/key-
documents/doc3124_en.htm 
See 2011 Study on the Entrepreneurial dimension of CCIs http://ec.europa.eu/culture/key-
documents/doc3124_en.htm 

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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  assistance  are  large-cap  companies.  A  target  group  of  a  possible 
financial instrument for the cultural and creative sectors is therefore SMEs operating in these 
sectors along with organisations which demonstrate 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 perceived as a non-economic activity. Many believe 

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that  culture  and  the  economy  are  two  separate  worlds,  those  who  recognise  the  economic 
value  of  culture  tend  to  perceive  the  cultural  sector  as  poor  in  relation  to  its  economic 
importance.  The  perception  is  that  of  individual  artists,  heavily  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  productivity  and  profitability  with  other  sectors, 
which are important factors when assessing the risk related to lending money to a company. 

Table 1. Productivity and Profitability of the various CCS 

Productivity144 

Profitability145 

Design 

Architecture 

Visual Arts 

Performances 

Film and Video 

Radio and TV 

Advertising 

Press and publishing 

Heritage 

Video Games 

Music  

Tourism 

1.92 

1.43 

2.04 

1.72 

2.02 

1.65 

1.50 

1.35 

1.21 

1.66 

1.43 

1.44 

10.5% 

8.8% 

11.3% 

8.5% 

11.7% 

9.9% 

5.4% 

7.9% 

8.6% 

7.7% 

8.9% 

7.8% 

Source Amadeus – Data elaborated by Media Group (The 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  the  industry  in  question  must  be  in  order  to 
cover  investments.  Manufacturing  industries  with  higher  capital  costs  usually  need  higher 
productivity  rates  than  the  services  industry.  The  typical  productivity  level  of  service 
industries,  similar  to  those  constituting  most  of  the  cultural  and  creative  sectors,  is  between 
1.2  and  1.9.  The  average  productivity  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 
144 

145 

KEA European Affairs - 2006 
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) 
Operating  margin of  companies  active  in  the  cultural  and creative  economy.  Profitability  shows what 
percentage of the turnover is left after the deduction of operating costs. 

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was,  however,  recorded  in  the  video  games  sector,  one  of  the  fastest  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 therefore a sign of a highly satisfactory profitability existing in the 
cultural & creative sector across Europe.  

These findings are important both in terms of risk assessment for private financiers and public 
policy making in the CCS. Indeed, the perception of sectors surviving only thanks to heavy 
subsidies which are incapable of handling the reimbursement of loans has to be mitigated on 
the basis of their performance in terms of productivity and profitability.  

Furthermore, the evidence above strengthens the case for distributing public support through 
financial  instruments  such  as  guarantees  instead  of  offering  direct  subsidies.  Various  sub-
sectors of the CCS such as film producers, video-game developers, music and book publishers 
which  can  all  demonstrate  productivity  and  profitability  should  be  encouraged  to  mitigate 
their  reliance  on  public  handouts  and  instead  adopt  a  more  business-like  approach  by  using 
public financial instruments.  

2.4.2. 

Access to finance for SMEs 

Previously we have stated that the overwhelming 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 and 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 financing 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 another 5%-7% did not apply because of possible 
rejection148. 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 

147 

148 
149 

150 

Enterprises qualify as micro, small and medium-sized enterprises (SMEs) if they fulfil the criteria laid 
down in the table 
Enterprise category 
medium-sized 
small 
micro 

Turnover 
≤ € 50 million 
≤ € 10 million 
≤ € 2 million 

Headcount 
< 250 
< 50 
< 10 

≤ € 43 million 
≤ € 10 million 
≤ € 2 million 

Balance sheet total 

or 

The  Gallup  Organisation,  Eurobarometer  271,  Access  to  Finance,  September  2009,  commissioned  by 
DG ENTR in collaboration with the ECB. 
Based on statistics from the 2009 Eurobarometer survey 
EC.  European  SMEs  under  Pressure  –  Annual  Report  on  Small  and  Medium  Sized  Enterprises 
2009.2010 
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 assumption that all SMEs would like to receive a bank 
loan.  

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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 estimated from various industry sources and studies 
that about 15-30% of the SMEs who have had their loan applications rejected 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 above 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. Considering an average individual loan amount of 
€100,000 (based on average loan ratios for AECM members), the total value of the financial 
gap due to the lack of collateral can be estimated at € 40- € 70 billion151. 

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 billion to €4.8 billion in terms of bank loans154.  

The following reasoning explains why access to finance is more challenging for SMEs in the 
cultural and creative sectors compared with conventional SMEs: 

1.  Firstly  this  is  due  to  the  intangible  nature  of  many  of  their  assets  (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  interesting.  Indeed,  dealing 
with  these  industries  require  specific  skills  (in  the  areas  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 
152 
153 

154 

155 

156 

157 

Based on information from the European Association of Mutual Guarantee Societies (AECM) 
See KEA, The Economy of Culture in Europe, 2006 
Assuming the same average loan value 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).  
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. 
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 rights and trade secrets in some jurisdictions. 
The  International  Accounting  Standards  Board  (IASB)  offers  some  guidance  (IAS  38)  as  to  how 
intangible assets should be accounted for in financial statements. In general, legal intangibles that are 
developed internally are not recognized and legal intangibles that are purchased from third-parties are 
recognized. 
The production of audiovisual works or other creative content such as books are produced project by 
project creating a new prototype for every new project whereas other industries can lead one prototype 
to mass production.  

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of training and resources. However, the size of this specific market does not justify the 
creation  of  individual  specialised  CCS  departments  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 financial institutions often rely on statistical 
evidence in their due diligence for loan applications.  

As  a  consequence  financial  institutions  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  practice  of  the  few  banks  that  do  grant  loans  to 
players of the sector is therefore to ask for personal collaterals and guarantee bank loans on 
the  entrepreneurs'  private  assets.  It  is  important  to  note  that  the  abovementioned  challenges 
apply  to  all  cultural  and  creative  sectors,  as  confirmed  throughout  the  various  consultations 
with  stakeholders,  studies  and  assessments  listed  in  section  1.3.  The  shortage  of  data 
concerning the CCS, can be furthermore observed through the lack of statistics of the actual 
capital needs of the various sub-sectors. Although various studies have been carried out on the 
lack  of  access  to  financing  for  the  CCS,  the  distinction  between  needs  for  banks  loans  or 
equity  has  yet  to  be  comprehensively  mapped  and  documented.  Indeed,  very  few  financial 
institutions  have  granted  credits  to  companies  in  the  CCS.  However,  banks  were  willing  to 
provide  financing  to  individual  managers  /  owners  /  producers  via  personal  credits,  against 
personal guarantees (private houses/properties or equivalent tangible assets). 

Further  investigations  are  being  carried  out  on  this  issue  and  an  expert  group  on  access  to 
finance  for  the  CCS,  composed  of  the  different  stakeholders  (SMES,  banks,  experts  and 
policymakers)  has  been  set  up  by  the  European  Commission  Additional  information  on  the 
scale  of  current  loans  to  CCS  and  remaining  gaps,  along  with  the  average  size  of  loans, 
maturities, types and costs of capital/interest 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 financial crisis has led banks to refocus their activities on core 
business  and  move  away  for  what  are  perceived  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 the 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  audience  has  led  to  a  drastic 

158 

159 

Ability to understand investors' concerns, to understand the differences between the types of financiers, 
to fulfil specific financial requirements of banks and investors 
They  are  more  widely  explained  in  the  respective  Impact  Assessments  of  the  MEDIA  and  Culture 
strands of the Creative Europe Programme 

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reduction  of  their  advertising  revenues.  Buying  less  content  for  lower  prices,  television 
channels and other content distributors have reduced their contribution to the sector. 

Other  consequences  of  the  difficult  economic  situation  are  the  reduction  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  level,  the  lack  of  private  investment  in  the 
European  audiovisual  sector  can  also  be  seen  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 essentially 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 include 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.  

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• 

• 

• 

• 

Entities  involved  in  creation,  production,  distribution,  promotion  or  trading 
activities  in  other  cultural  and  creative  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, the 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 facilitates access to private sources 
of finance uniquely for film producers via a guarantee mechanism that encourages banks to 
grant them credits by sharing the risk incurred. 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 applications 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 about ten different member states161.  

The  management  of  the  fund  has  been  delegated  to  two  financial  institutions  with  specific 
expertise  and  experience  in  financial  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  systems  proposed  to  reach  the  objective  by  each 
organization are based on two different 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  are  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  higher  leverage  effect.  Indeed, 
solidarity bringing down the level of risk, the multiplier 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  returned  to  the  EU  budget  at  the  end  of  the  period.  IFCIC  receives  a 
management fee from the European Commission. Furthermore the banks will pay a guarantee 
fee of 1% p.a. for the guaranteed amount. 

161 

162 
163 

This  is  considerably  higher  than  the  estimated  average  of  loans  to  the  cultural  and  creative  sector 
mentioned under point 2.4.2 as film production normally involves higher costs than most other cultural 
and creative sectors.  
Centre National de la Cinématographie 
IFCIC has now extended its services to all cultural and creative sectors.  

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Audiovisual  SGR  co-invests  €  2  million  in  the  fund  over  the  period,  bringing  the  total 
cumulated amount of the part of the fund they manage 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  proceeds  remaining  in  the  fund  at  the  end  of  the 
period will be reimbursed to the Commission. 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  regardless  of  whether  the  operation  is  finally  approved.  Further  to 
that  an  annual  fee  of  1.5%  of  the  assumed  risk  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
EU Budget

MEDIA 2007
MEDIA 2007

€ 8 M
€ 8 M

€ 2 M
€ 2 M

Audiovisual SGR
Audiovisual SGR

Managed by the DBs
Managed by the DBs
on behalf of the 
on behalf of the 
European Commission
European Commission

MPGF € 10 M
MPGF € 10 M

IFCIC
IFCIC

Bank A
Bank A

Bank B
Bank B

Bank C
Bank C

Producer 1
Producer 1

Producer 2
Producer 2

Producer 3
Producer 3

Producer 4
Producer 4

Producer 5
Producer 5

Producer 6
Producer 6

Film X
Film X

Film Y
Film Y

Film Z
Film Z

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Table 2. 

Comparison of IFCIC and Audiovisual SGR 

Co-investment 

IFCIC 

No  

Total amount allocated 

€ 4 million  

Annual amount allocated 

€ 1 million 

Total amount of the fund 

€ 4 million 

Multiplier ratio 

10 

Share of the risk guaranteed 

55% 

Audiovisual SGR 

€ 2 million 

€ 4 million 

€ 1,5 million 

€ 6 million 

4 to 6 

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  Innovation  Framework  Programme  (CIP)  targets 
small  and  medium-sized  enterprises  (SMEs),  supports  innovation  activities,  provides  better 
access to finance and delivers business support services 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 has mostly consisted of increasing 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 the 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 creative sector have been able to benefit from 
the SMEG164.  

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 shown that very few SMEs with intangible assets have received loans 
originating  from  the  SMEG.  An  analysis  of  the  data  related  to  SMEs  with  NACE  "92"  demonstrates 
this.  

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– 

– 

– 

– 

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  the  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  elaborate  better  policies  for  the  creative 
industries in the specific fields identified above 

establish  a  guidance  tool  for,  notably,  SMEs  on  existing  and  new  innovation 
support for these industries 

launch  pilot  actions  to  test  better  innovation  support  mechanisms  for  these 
industries 

However, this initiative, only launched very recently, does not include 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 facilitate access 
to finance to the CCS. 

The Risk Sharing Financial Facility (RSFF)  

The Risk-Sharing Finance Facility is part of the financial collaboration 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 scale programme” to use debt-based finance to 
complement the more traditional financing means for Research, Development and Innovation 
(RDI) such as grants as under the European Commission’s Framework 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 2011-2020. It is difficult to predict developments; 
however  on  the  basis  of  the  previous  evaluations  it  can  be  assumed  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 

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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 support 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 elements of the film industry value chain or 
other  sub-sectors  of  the  CCS.  Should  the  MEDIA  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 the sector and provide financial instruments such 
as  debt  funding,  the  problem  of  access  to  finance  will  continue  to  persist  for  many  cultural 
and creative SMEs. It would most probably become more acute in the coming years given the 
new market context and challenges faced by cultural and creative SMEs, as exposed above165. 

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 billion to €4.8 billion. It represents the amount 
of debt funding missing in the cultural and creative sectors due to their specificities. In spite 
of  its  high  leverage  effect  (see  table  above),  the  current  budget  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  Charter  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  the  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/ necessity 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  schemes  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 cultural and creative sectors. Therefore, it can be 
asserted that the risk of purely national projects being able to benefit 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  

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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  substantial  size  are  the  two  operators  of  the  Commission's  MEDIA 
Production Guarantee Fund (see below). 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 initiative of the Ministry of Culture; its unique purpose is 
to contribute to the development of the culture 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  banks  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  and  Audiovisual  Arts  (ICAA)  and  the  Audiovisual  Producers’ 
Rights  Management  Association  (EGEDA)  with  the  aim  of  supporting  the  audiovisual 
industry. The Audiovisual SGR is a "mutual guarantee society" (MSG) that underwrites low-
interest bank loans for film and TV companies. Based in Madrid, the company has established 
pre-negotiated loan agreements with a range of Spanish banks  

As previously discussed there are clear complementarities between these two institutions and 
the current MPGF as they are building on their experience from their national guarantee funds 
in managing the MPGF at European level. This is providing cultural and creative SMEs from 
other Member States than France and Spain, easier access to bank credits.  

Other examples of specialised financial institutions which are focusing solely on the CCS can 
be found in the Netherlands through a culture loans offered by Kunstenaars&Co and Triodos 
Bank,  in  Germany  where  the  KFW  Bank  has  recently  setup  a  special  unit  focusing  on  film 
financing and in the UK, Coutts & Company has 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 regards to those sectors which 

166 

167 

168 

The  justification  for  offering  the  EU  guarantee  to  purely  national  projects  is  to  be  found  in  the  next 
section: EU Added Value 
German  Public  Guarantee  Model:  State  guarantees  (Landesbürgschaften)  are  provided  by  State 
guarantee  banks.  Each  federal  State  in  Germany  has  a  public  guarantee  bank  with  the  purpose  of 
assuming default guarantees for SMEs, so as to shore up the disadvantages such companies face on the 
capital market compared to large companies. The guarantees are provided 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.  
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 borrower pays a premium. Accredited lenders administer EFG and make 
all decisions on lending. 

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banks  usually  categorize  as  "high  risk".  Subsequently  these  types  of  guarantee  models  are 
more suitable for enabling banks to increase their 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 limited 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 willingness  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  and  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  that  the  new  Financial 
Regulation will allow for the "topping up" of European 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 economies 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  national,  regional  or  local  level,  due  to  higher  volumes  under 
management,  higher  leverage  ratios  or  simply  lower  management  fees  charged  by  the 
financial intermediaries. 

Multiplier effect at EU level 

The use of  financial instruments will allow the Commission to  multiply169 the effect of the 
EU funds and to achieve a much larger impact for the final recipients than 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  risk  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 film producers worth €18 million. 

For the purpose of financial instruments, leverage corresponds to the following formula: 

169 
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.  

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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 aspirations. EU funding may be used to support purely 
national  SMES  and  projects  as  a  financial  instrument  for  cultural  and  creative  SMEs  offers 
greater EU added value and visibility to the cultural and creative sectors by disseminating 
European-wide  sector-specific  expertise  among  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 project 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 guarantee 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 financial 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 the audiovisual sector for example are engaged 
in  transnational  co-operations  for  example  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-production  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 development of financial and management skills 
for companies of the European audiovisual industry in order to respond to the need for such 
capacity  building  identified  in  the  latest  evaluations.  These  courses  will  continue  to  be 
financed by the Creative Europe programme after 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 financial institutions as explained below. 

Non-financial leverage on national markets 

Additionally, financial instruments implemented at EU level can have important influence 
in  the  targeted  markets.  Non-financial  leverage  is  obtained  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 expertise is a clear example of how the non-financial leverage 
of  the  financial  instrument  for  the  CCS  would  work  and  the  consistent  application  and 
promotion  of  best  standards,  accompanying  the  EU  financial  instrument  may  foster  a 

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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 cultural and creative financial instrument is in line with those of 
the  Creative  Europe  Framework  Programme  which  is  to:  to  foster  the  safeguarding  and 
linguistic  diversity,  and  strengthen  the 
promotion  of  European  cultural  and 
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/capacity building to the financial institutions  

To  provide  guarantees  to  banks  dealing  with  cultural  and  creative  SMEs 
thereby enabling them easier access to bank credits 

To increase the number of financial institution which are willing to work with 
cultural and creative SMEs 

To maximise the European geographical diversification of financial institutions 
willing to work with cultural and creative SMEs.  

4. 

POLICY OPTIONS 

In  the  context  of  its  reflection  on  new  innovative  financial  instruments  and  building  on  the 
experience of the previously mentioned MEDIA Production Guarantee Fund, the Commission 
explored several ways to set up a financial instrument 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 cost of capital or the willingness of the stakeholders 
(SMEs,  financial  institutions,  investors,  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 objectives 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  relations  and  networks  between  operators;  and  (ii) 
strengthening the financial capacity of the cultural and creative sectors.  

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140 

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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, monitoring and control. However, following 
the  MFF  decision  and  given  the  limited  amount  that  can  be  attributed  to  a  specific 
CCS  financial  instrument,  this  option  was  ruled  out  since  it  does  not  fulfil  the 
minimum  size  requirements  of  future  Commission  Financial  instruments  (as 
mentioned in 1.3.1). Additionally, this option 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 revealed 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  the  same  leverage  effect  as  debt 
instruments. This results in a lower critical mass and therefore a more limited 
impact. 

Venture  capital  funds  and  other  forms  of  private  investment  have  different 
objectives  than  traditional  financial  institutions,  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 appropriate short term exit strategies to VC 
funds. Secondly, their value is mainly project-based, while equity investors are 
looking for corporate value. 

There  is  a  lack  of  understanding  among  investors  on  how  to  evaluate 
companies whose value is mainly based on intangible assets such as IP rights 
and other forms of traditional creative collateral.  

Finally,  consultations  with  potential  partners  such  as  venture  capital  funds 
including the European Venture Capital Association (EVCA), revealed that it 
would  be  difficult  to  attract  private  investments  to  co-investment  with  the 
European Commission in such an instrument, mainly for the reasons exposed 
above but also due to their standard practice 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. 

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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 which 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  however  indicated  that  financial  intermediaries  wishing  to  offer 
micro-financing to their CCS client base could apply for a CCS guarantee on their portfolio. 

It is therefore more appropriate and effective to focus all DG EAC financial resources on a 
debt  instrument  and  an  investment  readiness171  programme  for  private  investors  and  CCS 
professionals that would be organized by the EIF and/or the 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 years. Its objective is to facilitate access to 
private sources of finance for producers via a guarantee mechanism that encourages banks to 
grant them credits by sharing the risk incurred. For more details see also section 2.5. 

4.3.  Option 2 – No action (the "no 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 Creative Sector Guarantee Facility within 
the framework of a larger 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-policy financial instrument.  

The new instrument would provide credit risk protection to financial intermediaries building 
the  necessary 
portfolios  of 
capacity/expertise to correctly analyse the relevant risks.  

the  CCS,  along  with  providing 

them  with 

loans 

in 

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 instrument to cover losses on the programme, to 

171 

172 

Investment  readiness  is  the  ability  to  understand  investors'  concerns,  to  understand  the  differences 
between the types of financiers and to fulfil specific financial requirements of banks and investors. 
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  allocated  around  €180-200  million.  This  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 the [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 multiannual 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 

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provide  capacity  building  to  organise  networking/knowledge  sharing  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, there are essentially two sub-options which need 
to be analysed. They are Sub-option 3a – a capped guarantee facility and Sub-option 3b – an 
uncapped guarantee facility. This section describes both sub-options both with regards to the 
points which they share and the ones that are different. Section 5 provides an analysis on the 
sub-options and finally Section 6 compares them.  

Sub-option 3a – Capped guarantee facility 

that 

the  EIF  would  deliver  financial  guarantees 

The EIF has suggested that the new guarantee facility would offer a first loss piece portfolio 
guarantee,  meaning 
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  with  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 would 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 scenarios. Such a model allows 
the  EIF  to  offer  free  guarantees  to  the  financial  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. 

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143 

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Guarantee Rate 
on a loan by loan basis

Financial 
Intermediary 1

FI

FI

FI

FI

EIB
As
Lender

Global Loan

Financial 
Intermediary 2

Global Loan

Global Loan

Financial 
Intermediary N

FI

FI

Guarantee Cap Rate

SMEs (through associations, clusters, etc)

T. A.

Technical Assistance

Expert
Institutions/
Agencies/
consultants

EIF
As
guarantor

EC
EU

Technical Assistance
Guarantee
Guarantee

Technical Assistance

Guarantee

Sub-option 3b – Uncapped guarantee facility 

The  uncapped  guarantee  model  would  also  deliver  financial  guarantees  to  financial 
intermediaries in order to cover 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  SMEs173).  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  guarantee  model  is  the  RSFF  for  SMEs  (Risk 
Sharing Instrument) for Research and Innovation 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, 
new  CIP 
possibly 
guarantee facility 

the 

EIF involvement 

Guarantee fees 

Takes  balance  sheet  risk  in 
addition 
the 
instrument 

to  managing 

Manages  the  instrument  but 
does  not  take  a  stake  in  the 
risk sharing 

The EIF charges a fee (eg. 1-
3%) 
financial 
intermediaries to compensate 
for sharing the risk 

to 

Could  be  offered  for  free 
(0% 
financial 
for 
intermediaries)  

fee 

Guarantee cap 

Uncapped  –  complete  risk 
financial 
with 
sharing 

Capped, 
traditionally  25-
30%.  Covers  the  expected 

173 

The guarantee rate is typically lower than in the capped model. 

EN 

144 

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Guarantee rate 

intermediaries, 
of losses.  

irrespective 

and unexpected losses. 

Typically lower (around 50% 
for  example  for  RSFF  for 
SMEs) 

Typically higher 

Leverage of EC contribution  Typically lower 

Typically higher 

EIB involvement 

European Commission 

Takes 
senior risk). 

residual 

risk 

(the 

Charges  premium  fees  (1-
3%)  to  cover  admin  costs, 
risk, capital costs. 

is 
agreed 
the  EC  and 

Takes the first loss risk (sub-
ordinated) up to a certain cap 
upon 
which 
between 
the 
EIB/EIF.  Does  not  charge 
premium  fees  but  asks  for 
additions  such  as  passing  on 
benefits  to  final  beneficiary 
or higher volumes 

Would  offer  a  standard  EIB 
Global  Loan 
financial 
intermediaries 

to 

No residual risk 

to 

conditions 

Takes the first loss risk (sub-
ordinated) up to a certain cap 
Adds 
the 
guarantee which the financial 
intermediaries  must  comply 
with,  such  as  passing  on  the 
final 
benefits 
to 
taking 
beneficiaries, 
(such  as 
additional 
types  of 
lending 
businesses) 
creating 
volumes, 
higher 
capacity/expertise  training  in 
CCS is mandatory  

risks 
to  new 
or 

the 

Target 
intermediaries 

financial 

Commercial  banks  including 
some  specialist  banks  in  the 
CCS 

also 

Specialist  banks  in  the  CCS 
some 
but  possibly 
general 
financial 
intermediaries  which  will  be 
content 
the 
with 
capacity/expertise 
training 
accompanying the guarantee 

Product 
intermediaries 

for 

financial 

Virtual  portfolio 
including 
various  types  of  loans  to 
different  sectors  (ex.  ICT, 
R&I and CCS) 

Capital  relief  is  possible  for 
banks 

ring-fenced 

Portfolios 
in 
each  bank  comprised  of 
sector  specific 
(ex. 
CCS) 

loans 

Potential  regulatory  capital 
on 
relief 
jurisdiction  and  on  the  type 
of institution 

depending 

Benefit for final beneficiaries  Could  possibly  attract  new 
financial  institutions  to  the 

Those 
intermediaries  who 

financial 
have 

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145 

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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 
the 
capacity/expertise 
training 
accompanying the guarantee. 

of 

4.5. 

Eligibility criteria applicable to both sub-options 

Financial intermediaries eligible for the CCS GF will be those financial institutions active in 
SME lending having entered into a guarantee agreement 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 the 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 Europe Programme to apply, while making special 
provisions to ensure a wide geographical coverage.  

Eligible final beneficiaries will be SMEs (or possibly organisations 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  chain,  with  different  steps  involved  (e.g. 
Development,  Production,  Promotion,  Distribution,  Exhibition  in  the  case  of  the  film 
industry)  and  therefore  conditioning  the  activities  of  the  CCS  SMEs  participating.  Besides, 
projects  related  to  mobility  and  circulation  of  cultural/creative  artworks,  digitisation  and 
cultural diversity are also within the scope of the CCS Guarantee Facility174.  

4.6. 

Loan characteristics175 applicable to both sub-options 

– 

– 

– 

Newly originated loans to Final Beneficiaries.  

Loan  amount:  maximum  of  €  2.5  million  (subject  to  diversification  of  the 
portfolio at Financial Intermediary level).  

Purpose of the loan: investment in tangible or intangible assets, and/or working 
capital; 

–  Maturity: from 12 months to 84 months.  

174 
175 

More details about the eligibility criteria can be found in Annex 3  
This parameters need to be further analysed within the Commission Expert Group on Access to finance 
for the CCS.  

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– 

– 

Private collateral cannot be requested.  

Completion bonds cannot be requested176 

4.7. 

Duration of guarantees applicable to both sub-options 

Individual guarantees may have a maturity of up to 10 years 

4.8. 

Loss cover Mechanism applicable to both sub-options 

The default will be defined on the basis of Directive 2006/48/EC relating to the taking up and 
pursuit of the business of credit institutions (recast). EIF will pay the defaulted amount to the 
Financial Intermediary within 60 days of default 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 intermediary and EU/EIF contribution according to the guarantee 
Rate (70% for the EU/EIF and 30% for the 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  through  specific  provisions  ensuring  that  financial 
intermediaries  commit  themselves  to  offer  all  CCS  SMEs  non-discriminatory  and  equal 
treatment with regards to their loan applications. It can also be envisaged to introduce positive 
discrimination measures in order to favour countries where access to finance is most difficult 
for the CCS. For example, those financial intermediaries willing to operate trans-nationally 
or on a regional level (for example: Nordic countries, Benelux, 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  guarantee  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  Guarantee  Facility.  During  previous  meetings  and 
consultations  which  are  mentioned  in  Section  1  and  Annex  1,  CCS  stakeholders  (including 
financial  intermediaries)  agreed  on  the  fact  that  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.  Furthermore,  with  the  exception  of  a  few  of  them, 
European  financial  intermediaries  do  not  currently  have  the  in-house  necessary  expertise  to 
evaluate the risk associated with this sector and 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  instruments.  The  capacity  building  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  Interest).  The  selection  process  will 
follow  current  EIF  Procurement  practices,  which  fully  comply  with  EU  Procurement 

176 
177 

This point has yet to be decided on 
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. 

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requirements. Several Calls for Expressions of Interest (or several lots) 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 expertise 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 basis of award criteria178. The criteria will be published in the Call for 
an Expressions of Interest.  

The selection of CB providers will take place during the roll out phase of CCSGF. However, 
additional  windows  for  the  selection  of  CB  Providers  can  be  opened  subsequently  as  new 
markets  are  embraced  by  CCSGF  and/or  on  a  periodic  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. 

5.1. 

IMPACT OF THE OPTIONS 

Framework for analysing impacts179 

To  assess  the  impacts  of  the  proposed  options  relative  to  the  baseline,  it  is  necessary  to 
assume  that  other  complementary  or  related  policy  instruments,  such  as  national  support, 
other Commission programmes, and legislative measures would continue to apply in roughly 
their current form. 

The focus of the Cultural and Creative Sector Guarantee Facility and the other options is on 
achieving  economic  and  social  outcomes,  and  hence  the  largest  impacts  are  likely  to  be  in 
these categories. Environmental impacts are likely 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  table  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  uncertainties  which  have  to  be  taken  into  consideration  in  this 
analysis which is mostly due to the diverse nature of the different sub-sectors of the cultural 
and creative sectors. Furthermore, there are limited statistics available on the current amount 
of bank loans being made to the European cultural 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 

179 

Such as experience in CCS financing (direct and/or indirect), expertise, geographical reach, capacity of 
delivery, knowledge of the market, etc  
See Commission Guidelines on Financial Instruments in Annex 2 

EN 

148 

   EN 

 
                                                 
Areas of economic impact 

Areas of social impact 

Functioning of the internal market and 
competition (trade level) 

Employment in the cultural and 
creative sectors 

Revenues and profits of the cultural 
and creative sectors 

Job quality in the cultural and 
creative sectors 

Capacity building 

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 

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 specific 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  continue  to  be  a  major  issue  for  the  economic 
growth of the cultural and creative sectors. It would most probably 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 sectors other than film production will continue to be faced with 
access to finance barriers. This will certainly hamper 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  society,  decreasing  dependence  on  state  subsidies 
and creating linkages between financial institutions and producers. 

Social impacts 

Film  producers  will  continue  to  have  access,  although  limited,  to  the  MPGF  which  will 
preserve  some  quality  jobs  in  the  film  production  sector.  However  the  cultural  and  creative 
sector will not benefit from any specific capacity building action, although some expertise is 
undoubtedly shared throughout the financial sector due to the guarantees being issued. 

• 

Option 2 - No action 

Economic impacts 

EN 

149 

   EN 

 
Taking  note  of  the  difficulties  experienced  by  European  financial  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 Section 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  reliant  on  public  subsidies  and 
furthermore place additional burden 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 likely continue to pursue their cultural objectives but banks will 
not engage further in the CCS leading to fewer 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.  The  supply  of  capacity  building  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 Guarantee Facility which would 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  and  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 dependence on public subsidies.  

Additionally, it is possible that some Member States 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  national  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 financial 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 instruments, 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 digitisation of cinema theatres 

EN 

150 

   EN 

 
–  Working  capital  loans  to  distributors  to  cover  distribution  costs  (print, 

marketing, advertising, dubbing and subtitling) 

– 

Early  stage  funding  for  content  aggregators  and  new  distribution  platforms 
(etc) 

Despite the obvious advantages of the transition from 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  need  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 grants to innovative projects can however be high. For example the 
MEDIA Plus programme had support available for new online distribution platforms as part 
of its Pilot programme. Due to the success of this type of pilot scheme, 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 platforms. 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 impacts (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 5.7180:  

• 

• 

• 

• 

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 and reach a conservative estimation, 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 for a total amount of credits of 

180 

181 

182 
183 

The leverage is determined by the Guarantee Rate and 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 with €1 million, the facility can guarantee credits for 
a total amount of up to €5.7 million 
Assumption  based on  previous  costs related  to  EU  financial  instruments  and  includes  costs  related  to 
the capacity building measures 
See section 2.4.2 
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 years. Default estimates for 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 

151 

   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 European 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 scenario, where the revolving nature of the 
fund is not considered. However, a pure statistical 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 potentially 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 
credits 
covered 

of 

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 

• 

• 

• 

• 

• 

184 

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 

Given  the  important  back  loading  of  the  Creative  Europe  budget  in  the  current  MFF,  the  annual 
contributions to the Facility will be low in the first years. 

EN 

152 

   EN 

 
  
  
                                                 
However, to be effective, such a model requires the EIF to take the residual risk beyond the 
amount that the facility can cover considering only the EU contribution. The following table 
show the difference between an uncapped guarantee model with or without the participation 
of the EIF. 

Table 6. Uncapped guarantee model projection 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  individual  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 
credits 
covered 

of 

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

2015 

20.000.000 

30.000.000 

1.200.000

18.800.000

28.200.000

56.400.000 

50.760.000

169

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 projection with the EIF sharing the risk 

Should  the  EIF  accept  to  share  the  risk  on  its  own  balance  sheet  (putting  at  stake  its  own 
assets), the multiplier would be around 10, according 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 cultural 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 
Contributio
n to fund 

Cumulated 
Contributio
n to fund 

Cumulated 
Amount 
credits 
covered 

of 

of 
after 

Balance 
credits 
default 
(guarantees 
called) 

of 
Nbr 
transacti
ons 

185 

1 / (50%*100%) = 2 

EN 

153 

   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  cultural  and  creative  sectors  onto  their  balance 
sheets.  Indeed,  they  do  not  have  the  same  level  of  expertise  in  estimating  the  risks  of  these 
sectors as in the research 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 creative sectors is their contribution to employment. 
CCS  are  knowledge  intensive,  requiring  specific  skills  and  high-level  qualifications  of  their 
workforce, and labour intensive, especially those with a high concentration 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  sectors  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 satisfaction than more routine occupations because of 
the  commitment  and  sense  of  cultural  involvement  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 institutions as it would involve considerable capacity building for 
financial  institutions  increasing  their  expertise  and  knowledge  in  the  sectors.  Additionally, 
SMEs  in  the  cultural  and  creative  sectors  could  benefit  from  this  capacity  building  by 
developing  the  appropriate  skills  to  elaborate  business  plans  and  to  prepare  accurate 
information of their projects that would help the 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,  coherence  with  the  Creative  Europe  Programme  and  coherence  with 
overall EU strategies related to the cultural and creative sectors. The options are then ranked 
on this basis.  

EN 

154 

   EN 

 
 
  
 
Generally speaking, the use of financial 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 for the final recipients than if it provided the financial support 
directly.  This  is  due  to  the  impact  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 effects 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  objectives.  The  following  drivers  are 
those that have been identified as most relevant: 

• 

• 

• 

• 

• 

• 

Multiplier effect: how many EUR from the private 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 sectors generated by the option? 

Geographical  coverage:  how  many  financial  institutions  from  how  many  Member 
States will be active in offering bank credits to cultural and creative SMEs? 

Administrative  costs/barriers/delays:  direct  financial  support  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  option  encourage  financial  institutions  to 
develop their own in-house expertise in the CCS (investor readiness) 

Structuring effect: how will the option encourage cultural and creative SMEs to limit 
their reliance on public subsidy 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-building 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 from 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 

155 

   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  the  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  likely  be  quite  limited  but  would  gradually 
build on the success of the previous fund  

There would however be limited capacity building among financial intermediaries as 
the MPGF offers only indirect capacity/expertise building. 

Administrative  costs/barriers/delays  would  continue  to  be  low  as  the  Fund  would 
continue be open to beneficiaries on a continued basis (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 administrative costs would probably be similar too.  

There  would  be  continued  efficiency  as  a  financial  instrument  managed  by  a  third 
party would require less administrative management 

This  option  would  be  coherent  with  the  Creative  Europe  Programme  although  it 
would be restricted to film production 

This option would be coherent with the overall EU approach to cultural and creative 
industries As far as external coherence is concerned, this option would be consistent 
with  the  Treaty  on  the  Functioning  of  the  European  Union  (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 explained earlier, issuing grants would be more 
costly as fewer projects will be supported with EU funds than through a leveraged financial 
instrument which offers the re-usage of funds. Furthermore, giving only grants to SMEs in the 

186 

187 

The  Commission  estimates  that,  thanks  to  the  leveraging  effect  of  the  MEDIA  Production  Guarantee 
Fund (€ 8 million), more than €100 million will be freed 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.  
Depending on the EU contribution to the new scheme 

EN 

156 

   EN 

 
                                                 
cultural  and  creative  sectors  would  result  in  a less  structuring  effect,  lower  competitiveness 
and  financial  capacity  of  the  cultural  and  creative  sectors  with  no  loans  being  guaranteed. 
Naturally there wouldn't be any direct costs involved with this option but administrative costs 
would  most  likely  be  higher  as  actions  would  only  be  implemented  through  grants  which 
involve  higher  costs  as  can  be  attested  from  the  EACEA  example  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  would  help  increase  the  overall 
effectiveness  and  efficiency  of  EU  support  policy  for  cultural  and  creative  sectors  and  it 
would address the sectors' specific financial needs with sufficient critical mass and a targeted 
approach, thus resulting 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 funding. 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  within  financial 
intermediaries  could 
encourage banks to change their standard practice of demanding personal collateral 
from SMEs operating in the cultural and creative industries and instead accept other 
forms  of  assurances  such  as  pre-sales  contracts,  various  forms  of  grant  agreements 
and catalogues of intellectual property rights (IPRs). 

The  Cultural  and  Creative  Sector  Guarantee  Facility  would  be  available  to 
beneficiaries on a continuous basis and they would be informed in a relatively short 
period  whether  their  application  has  been  accepted  or  not.  This  option  would 
therefore limit administrative costs/barriers/delays  

Wide  geographical  coverage  as  the  priorities  are  to  encourage  the  geographical 
spreading of expertise/capacity throughout the EU and to maximise the geographical 
diversification of financial institutions 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  institution  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  shifted  from  direct  grants  to  loans.  The  overall  action  in 
favour of CCS would have 2 different instruments at its disposal to provide the most 

EN 

157 

   EN 

 
appropriate type of support to each beneficiary and for each type of project. Also, it 
would contribute to go one step further thanks 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 cultural and creative industries; it would be consistent with 
the Treaty on the Functioning of the European 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 volumes 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.  Although  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 (apart from fees, defaults and costs) while 
funds used by IFCIC to guarantee loans will 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 payment 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)  have  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 total costs (annual EIF fee, capacity building programme, 
expected  and  unexpected  losses)  by  the  expected  number  of  transactions  (see  table 
4.). 

In comparison to the baseline, this would represent a significant cost-efficiency improvement. 
Indeed,  the  current  cost  per  transaction  under  MEDIA  for  awarding  grants  is  currently 
estimated  at  over  €3,400188.  The  costs  under  the  current  MPGF  are  expected  to  be  much 
higher,  given  the  important  investment  required  to  set  up  a  pilot  action  both  for  the 
Commission  and  the  delegated  bodies.  Statistics  based  on  the  first  year  of  implementation 
suggest that the cost per transaction is much higher than for sub-option a). 

• 

188 

EN 

Sub-option  b)  would  however  have  considerably  higher  costs  involved  (need  to 
demonstrate the cost for the uncapped model here 

The total administrative cost of the EACEA for the management of MEDIA projects was €8.607.000 in 
2010, for approximately 2.500 grants awarded.  

158 

   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  considerable  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  pass  on  the  additional  cost  to  the  final 
beneficiary, which would however be contrary to the objectives of facilitating 
access to bank loans190. 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  that  it  is  not  interested  in  taking  part  of  the 
unexpected  losses  of  an  uncapped  guarantee  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 financial 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 creative 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 efficient than sub-option b) Uncapped guarantee 
model without the EIF sharing the risk. 

Additionally,  given  all  the  obstacles  and  disadvantages  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 

190 

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.  
In  France  for  example,  banks  using  the  national  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 

159 

   EN 

 
                                                 
Table 8. 

Comparing the options 

1 

2 

Baseline 

No action 

3 

Cultural and Creative Sector 
Guarantee Facility 

3a Capped 
Guarantee 
Model 

3b Uncapped 
Guarantee 
Model 

K
E
Y 

D
R
I
V
E
R
S 

Effectiveness 

Multiplier effect 

Volume of loans to CCS 

Geographical coverage 

Business capacity building 

Administrative costs 

Structuring effect 

Direct costs 

Efficiency Management costs 

Coherence  with  other  strands  of 
Creative Europe Programme 

Coherence  

Overall assessment 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

▬ ▬ 

▬ ▬ 

▬ ▬ 

▬  

▬ 

▬ 

(cid:173)(cid:173) 

0 

0 

0 

▬ ▬ 

(cid:173)(cid:173) 

(cid:173)(cid:173) 

(cid:173)(cid:173) 

(cid:173) 

(cid:173) 

(cid:173)(cid:173) 

▬  

(cid:173) 

(cid:173)(cid:173) 

(cid:173) 

(cid:173)(cid:173) 

(cid:173) 

(cid:173) 

(cid:173) 

(cid:173) 

(cid:173) 

(cid:173) 

▬ 

(cid:173) 

(cid:173)(cid:173) 

(cid:173) 

(cid:173) 

6.2. 

Preliminary modalities for implementation of the CCS GF 

Should  the  new  cultural  and  creative  sector  guarantee  facility  be  incorporated  in  a  larger 
Commission  financial  instrument,  four  key  implementation  modalities  have  been  identified 
which ideally would be fulfilled, in order 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 the 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 

160 

   EN 

 
   
   
 
 
 
 
 
 
 
 
                                                 
2. 

Fit into the overall framework and adapt intervention 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  larger  financial  instrument,  it  would  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  both  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 adapted to this specific sector. 

3. 

Keep its own branding, visibility and communication strategy 

Given  the  high  level  of  recognition  and  notoriety  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 brand inside its name (such as 
the current MEDIA Production Guarantee Fund) and DG EAC should be able to define and 
implement a specific communication strategy for this particular CCS window. 

4. 

Capacity / expertise building  

The  setting  up  of  a  specific  capacity  and  expertise  building  programme  for  financial 
institutions, as described above must be an integral part of the mechanism, as this will be a 
key success factor of the CCS financial instrument.  

6.3. 

Possible frameworks for the implementation 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  and  Creative  Sector  Guarantee  Facility  will  be 
equivalent  regardless  of  which  larger  Commission  financial  instrument  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 already 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.  Building  on  the  strong  track  record  of  financial 
instruments such as the SMEG managed by DG ENTR under the CIP192 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  considered  as  examples  of  possible  frameworks 
within which the Cultural and Creative Sector Guarantee Facility could be operated.  

192 

http://ec.europa.eu/enterprise/policies/finance/cip-financial-instruments/index_en.htm 

EN 

161 

   EN 

 
                                                 
Framework i) Horizon 2020 - Risk Sharing Finance 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 have taken place with 
DG  RTD  concerning  the  possible  inclusion  of  a  guarantee  mechanism  for  the  cultural  and 
creative  sectors  in  the  Horizon  2020  debt  instrument  in  the  form  of  ring  fenced  window 
(compartment) for the CCS. DG EAC would contribute to the window and define eligibility 
criteria  for  financial  institutions  and  end  beneficiaries.  DG  EAC  would  participate  in  the 
governance of these platforms along with other policy DGs and DG ECFIN. The management 
of the instrument would be mandated to the EIF. 

The  new  Horizon  2020  debt  platform  which  will  most  likely  be  based  on  the  current  RSFF 
(Risk Sharing Financial Facility) intends to have a double approach in its implementation: a 
market-driven approach (based on the principle "first 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 objectives in terms of 
facilitating access to finance for SMEs of the CCS. Also, it would offer the possibility to use 
other  financial  instruments  within  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  needs  of  the  CCS  or  the  need  to  streamline  its 
technical specificities with RSFF parameters. Additionally, a considerable part of the cultural 
and  creative  sectors  are  not  "research  or  innovation"  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  likely  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  incorporated  into  a  new  "SMEG"  or  "SME 
Internationalisation",  in  a  similar  "ring-fenced  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  coherence  as  it  will  focus  on  SMEs  with  cross-border 
activities and could offer possible synergies with the Creative Industry Alliance194 which DG 
ENTR  has  recently  launched  and  focuses  among  other  things  on  capacity  building  and 
clusters in the CCS. 

193 

194 

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". 
Example of this is DG ENTR "Creative Industry Alliance", 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 

162 

   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,  including  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 can also be considered. Indeed, under the new 
Multi-annual  Financial  Framework,  the  regional  policy  financial  instruments  will  offer  new 
opportunities  to  national  and  regional  authorities.  For  example,  Member  states  and  regions 
will be able to extend financial instruments operated 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  would  provide  additional  financing  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 participate. It would also 
be  difficult  to  manage,  since  it  would  involve  a  lot  of  different  actors  (Member  States, 
regions, Commission etc). This could be achieved through either the DG RTD or DG ENTR 
platform but further dialogue with DG REGIO is required to investigate these issues196. 

Concerning  the  two  possible  implementation  frameworks,  e.g.  placing  the  CCS  GF  either 
under "Framework i) Horizon 2020 - Risk Sharing 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 option. This is due to the lack of information about these two 
instruments at present stage. However based on the facts at hand today, both options would 
appear to be feasible. 

7. 

MONITORING AND EVALUATION 

Monitoring 

A  key  point  for  the  new  EU  equity  and  debt  platforms  is  to  ensure  standardised  reporting 
across instruments which makes it possible to compare the performance of them. In addition, 
duplication of monitoring should be avoided. An integrated monitoring system should be put 
in place for the financial instrument to provide reasonable assurance that EU funds are used 
for  the  purposes  intended,  making  use  of  standardised  performance  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  Facility  will  be  operated,  either  DG  RTD  or  DG 
ENTR  on  establishing  these  indicators.  The  EU  Equity  and  Debt  Platforms  which  are 

195 
196 

Subject to competition and state aid rules 
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 

163 

   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  instrument  will  include  documentary  checks  based 
on regular reviews of the reports sent by the EIF 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 basis of the respective delegation agreement197. 

Monitoring visits to FIs and EIF 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 Commission 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 missing 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  visit,  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,  financial  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-defined 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 

164 

   EN 

 
                                                 
The  following  indicators  have  been  established  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  sub-sectors  of  final  beneficiaries  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  enable  the  results  of  the  interim  evaluation  to  be 
taken  into  account  for  decisions  on  renewing,  modifying  or  discontinuing  the  successor 
financial instrument, it should be conducted roughly four years prior to the expiration of the 
financial  instrument,  currently  envisioned  for  2020.  If  it  were  conducted  too  early,  there 
would be too little experience to evaluate; if too 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 
indicator 

of 

Indicator 

Source 
collection 

of 

data 

General objective: 

Impact 

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 

Specific objective:  

Result 

strengthen 

To 
capacity  of 
creative sectors 

the 

financial 
the  cultural  and 

The  sectors'  share  of 
employment and share of 
GDP  

Annual 
competitiveness 
evaluation 

European 
report, 

%  of  people  reporting 
that 
access 
they 
European cultural works 

Regular  Eurobarometer 
surveys 

Evaluation;  reporting  by 
the EIF and the financial 
intermediaries  

loans 
The  volume  of 
granted in the framework 
of 
financial 
the 
instrument 

and 
number 
The 
geographical  spread  of 
institutions 
financial 
providing 
to 
access 
finance  for  the  cultural 
and creative sectors  

The  number,  national 
origin  and  sub-sectors  of 
beneficiaries 
final 
benefitting 
the 
guarantees 

from 

EN 

165 

   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 
financial 
framework 
instrument 

the 

of 

[MEDIA 
Guarantee 
million worth of loans] 

Production 
€18 

Fund: 

1 billion worth of loans 

Number  and  geographical  spread 
of  financial  institutions  providing 
access  to  finance  for  the  cultural 
and creative sectors 

Number,  national  origin  and  sub-
sectors  of 
final  beneficiaries 
benefitting from the instrument 

Production 
[MEDIA 
Guarantee  Fund:  Banks 
from 7 different countries] 

Banks  from  10  different 
countries 

15.000  beneficiaries,  15 
different 
countries,  5 
sub-sectors  (film,  video 
publishing, 
games, 
music, design) 

8. 

ANNEXES  

8.1. 

Annex 1 - List of consultations and studies 

– 

MEDIA Meets the Film Funds - During the Cannes Film Festival in May 2011, the 
MEDIA  Programme  organised  a  second  meeting  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  strengthen  the  European  audiovisual  industry 
and what are the possible opportunities 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 investment funds and not banks 

National  and  regional  film  funds  could  use  the  new  financial  instrument  for 
their own purposes,  where their  contribution would be "ring-fenced"  for  their 
respective territory. They could 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 managed by SGR Audiovisual). 

The Commission will continue this dialogue with film funds as the preparation 
for the new financial instrument progresses 

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– 

– 

– 

– 

– 

Meeting  with  DG  REGIO:  DG  ECFIN/L2  organised  a  meeting  between  DG 
REGIO/D3 and DG EAC/D3 on the possible alignment 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 regulations which could enable a wider use 
of financial instruments.  

Recommendations from the European Platform 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  cultural  and  creative  sectors.  Through  policy 
recommendations  and  public  advocacy,  the  platform  aims  at  highlighting  the 
fundamental  role  of  cultural  and  creative  industries  in  Europe  and  unlocking  their 
full potential. In the autumn 2009, the Platform produced a report containing a set of 
recommendations.  One  of  the  recommendations  was  to  develop  financial  tools 
adapted  to  the  needs  of  cultural  and  creative  industries  such  as  public  private 
loan  guarantee  schemes,  cultural  and  creative  SME-  friendly  growth  loan  finance 
etc.  

in  France, 

Recommendations  from  the  Member  States  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 implementation of the European Agenda for culture, 
produced  a  set  of  recommendations  in  June  2010.  Mentioning  the  good  practice  of 
IFCIC 
the  report  calls  for  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  cultural  and  creative  industries" 
(2011): The aim of this study was to provide a better understanding of the operations 
and  needs  of  companies  in  the  cultural  and  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  doing  so,  it  looks  at  key  determinants  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  recommends  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 aimed at developing guarantee schemes. 

Mini-study carried out for DG ENTR of the European Commission on the "Access 
to  finance  activities  of  the  European  Creative  Industry  Alliance"  (2010):  The 
study describes access to funding as a core barrier to growth for many businesses in 
the cultural and creative sectors and highlights the lack of investment readiness for 
cultural  and  creative  SMEs  (in  particular  due  to  the  lack  of  information  and 
understanding about sources of relevant finance or the difficulty to present a business 
model that meets the criteria of the bank/investor community) as well as the lack of 
investor  readiness.  It  also  identifies  some  equity  and  non  equity-based  (such  as 
guarantees) schemes existing at national level.  

EN 

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– 

Study  project  on  "Promoting  Investment  in  the  Cultural  and  Creative  Sector: 
Financing  Needs,  Trends  and  Opportunities  (2010)198:  The  study  provides  an 
analysis  of  the  financing  needs  of  the  cultural  and  creative  sector  and  identifies 
opportunities  for  improvements  in  access  to  finance  within  the  sector  in  some 
European  countries.  It  underlines  that  access  to  finance  represents  a  challenge  for 
85 % of companies surveyed in the course of producing the report. 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 justified – 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 
requirements199 have been defined at Commission level with regard to Financial Instruments. 
In the next Multi-annual Financing Framework (MFF), the EU level financial instruments are 
guided  by  the  principles  for  the  design  of  new  Financial  Instruments  as  endorsed  by  the 
Commissioners' Group and the principles in the 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/mass 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  changes  to  the  Financial  Regulations,  financial 
instruments  shall  comply  with  the  principles  of  sound  financial  management,  transparency, 
proportionality, non-discrimination and equal treatment, in accordance with the objectives and 
for the duration established in the basic act that applies to those financial instruments. They 
shall comply also with the following conditions: 

(a) 

(b) 

198 
199 

added  value  of  the  EU  intervention,  which  means  that  financial  instruments  shall 
only  be  implemented  at  EU  level  where  their  objectives,  in  particular  by  reason  of 
their scale or effects, can be better achieved at Union level than at national level; 

they  shall  be  implemented  in  order  to  address  sub-optimal  investment  situations, 
which have proven to be financially viable but do not give rise to sufficient funding 
from market sources; 

Carried out for Nantes Metropole in the context of the Interreg-funded Ecce-Innovation 
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  (Such  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 

168 

   EN 

 
                                                 
(c) 

(d) 

(e) 

(f) 

additionality,  which  means  that  financial  instruments  of  the  EU  shall  not  aim  at 
replacing  those  of  a  Member  State,  private  funding  or  another  financial  EU 
intervention; 

financial  instruments  shall  be  implemented  in  a  way  which  does  not  distort 
competition in the internal market; 

they  shall  have  a  multiplier  effect,  which  means  that  the  Union  contribution  to  a 
financial  instrument  shall  mobilise  a  global  investment  exceeding  the  size  of  the 
Union contribution according to the indicators defined in advance; 

(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 SMEs to have access to the CCS GF 

For the avoidance of doubt, regarding eligibility criteria, CCS SMEs shall meet at least one of 
the following criteria: 

1. 

2. 

SME  intends  to  use  the  SME  loan  to  develop  a  CCS  project  as  evidenced  by  the 
business plan, 

SME NACE code is one of the following: 

R91.0.1Library 
R91.0.2Museums 
P85.5.2Cultural education 

and 

archives 

activities  
activities  

….. 

3. 

(a) 

Full list to be completed on the basis of ESTAT and with industry associations200 

In the last 24 months, the SME and/or the project promoter/team must have met one 
of the following sub-criteria: 

CCS  projects  developed  by  the  CCS  SME  and/or  the  project  promoter/team  have 
received grants/loans/funding/guarantees from European or national CCS institution 
or association over the last 24 months including those of the EU´s Creative Europe 
Programme (MEDIA and Culture). 

(b) 

CCS  projects  developed  by  the  CCS  SME  and/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.  

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(c) 

(d) 

(e) 

(f) 

CCS  projects  developed  by  the  CCS  SME  and/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; 

CCS  SME  investors  have  benefited  from  tax  credit  or  tax  exemption  related  to 
development of IPRs or CCS activities in the last 24 months; 

CCS  SME  has  demonstrated  to  the  Financial  Intermediary  that  it  has  developed  its 
activity in the field of the CCS in the last 24 months. 

CCS  SME  falls  under  the  eligibility  criteria  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.  

EN 

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