Source: EURLEX
Language: en
Format: md

**EN**

# **EN EN**

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 9.1.2009
SEC(2008) 3097 final

**COMMISSION STAFF WORKING DOCUMENT**

**Accompanying document to the**

**Proposal for a**

**DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL**

**ESTABLISHING AN AUDIOVISUAL COOPERATION PROGRAMME WITH**

**THIRD COUNTRIES**

**MEDIA MUNDUS**

## **SUMMARY OF THE IMPACT ASSESSMENT**

**{COM(2008) 892 final}**
**{SEC(2008) 3098}**
**{SEC(2008) 3102}**

# **EN EN**

**1.** **I** **NTRODUCTION**

The audiovisual sector is an essential vector for creating highly skilled future-oriented jobs
and for conveying and developing cultural values. In the frame of the Lisbon strategy the
audiovisual sector is particularly relevant and contributes to the Lisbon agenda, namely to
boost training, prosperity, growth and jobs in a knowledge-based economy. The audiovisual
sector plays a major role in the i2010 initiative — the policy umbrella for the European
Union’s information society and media policies — as part of the Lisbon agenda.

Furthermore the audiovisual sector is important in the context of the _UNESCO Convention on_
_the Protection and Promotion of the Diversity of Cultural Expressions_ . This convention
emphasises the specific and dual (cultural and economic) nature of cultural goods and
services.

The major problem faced by the European audiovisual industry on international markets is the
poor circulation of audiovisual works. Foreign films — other than those from Hollywood
studios — face a similar problem of limited circulation on European markets, although there
is a demand for more diverse audiovisual content.

The international audiovisual landscape has changed significantly over the last two decades,
notably from the impact of technological developments like multi-channel digital television,
digital cinema projection and video on demand. In some foreign markets this has created
strong financial growth and promising investments and consequently, a growing demand for
more audiovisual content. Structural weaknesses affecting the circulation of European works
on foreign markets and inadequate financing of European audiovisual companies prevent the
industry from benefiting fully from this new expansion of international opportunities.

Against this background the Impact Assessment identified two overall policy goals and
general objectives for international cooperation:

    - To increase the competitiveness of the EU audiovisual industry on global markets.

    - To increase consumer choice and cultural diversity on the European and international
markets.

Consultations with the main stakeholders and professionals, such as participants in the current
MEDIA 2007 programme, professionals from third countries, and MEDIA committee
members have been extensive; an open public online consultation was launched in April 2008
and in the context of a public hearing, several conferences and meetings, stakeholders
provided extensive input. Furthermore several services of the Commission have been
consulted and DG INFSO, the author DG, concluded a service contract with _Technopolis /_
_Media Consulting Group_ to acquire external expertise on and input for the impact assessment
integrating ex-ante evaluation requirements.

**2.** **B** **ACKGROUND OF THE INITIATIVE**

Considering the problems and challenges for the European audiovisual sector arising from the
internationalisation of markets the European Parliament adopted, on 13 December 2007, for
the 2008 budget, a Preparatory Action MEDIA International focusing on developing
European Union relations with third-country audiovisual markets. At the joint invitation of
Viviane Reding and Gilles Jacob, President of the Cannes Film Festival, and in the presence
of José Manuel Barroso, ministers in charge of audiovisual matters in the European Union and
the EFTA countries met informally in Cannes on 19 May 2008, and adopted a declaration
welcoming the European Parliament’s initiative on the MEDIA International Preparatory

# EN 2 EN

Action and encouraging the Commission “ _to pursue the development of this initiative and to_
_examine the desirability and the possibility of presenting, before the end of the year, a_
_proposal for a support programme to promote cooperation between European audiovisual_
_industry professionals and industry professionals in third countries for the mutual benefit of_
_all participants”_ . The results of the call for proposals for the Preparatory Action showed a
rapid and strong response from professionals with training, promotion and cinema network
projects already covering the major Latin American and Asian markets.

With a view to proposing a legal basis following the Preparatory Action MEDIA
International, DG INFSO prepared this Impact Assessment on a possible future MEDIA
Mundus programme.

**3.** **P** **ROBLEM DEFINITION AND RATIONALE FOR THE INTERVENTION**

The major problem identified by the Impact Assessment for the European audiovisual
industry on international markets is the poor circulation of audiovisual works. This problem
affects not only European professionals who cannot fully benefit from the internationalisation
of audiovisual markets but also the consumers that are faced with a limited choice and limited

cultural diversity. The European Union itself, a major player in the negotiation of the
UNESCO Convention on Cultural Diversity, is therefore confronted with high expectations
regarding its implementation, and could risk losing its credibility in this regard.

The reasons underlying the poor circulation of audiovisual works are the following: the
different European markets are fragmented not only on the basis of language but also of
market structure. The problem lies with the market size; the original market size determines
the strength of the industry on the international stage. Individually all the Member States (and
most of their foreign counterparts) have relatively small markets compared to that of the USA.
The distribution structure in Europe is made up of small individual companies, unlike their
large multinational vertically-integrated counterparts in the USA; hence the lack of
competitiveness of the European audiovisual industry. In addition European companies
struggle with the problem of under-funding. Audiovisual works are essentially financed with
national public resources, limiting the need for foreign investment and export. Moreover
demand and viewing habits of audiences dominated by US and/or domestic blockbusters
represent a significant obstacle to showing a real diversity. Audiences (in particular young
audiences) are not aware of the wide choice of culturally diverse films, although there is well
documented demand for greater diversity.

Existing EU programmes in the area of audiovisual support such as MEDIA 2007 have had a
successful impact on the audiovisual industry and the circulation of European
cinematographic works inside Europe. It cannot, however, address the challenges of the rapid
internationalisation of the audiovisual sector. Programmes like EUROMED Audiovisual II or
the EU-ACP support programme for cinema and the audiovisual industry are regional
development programmes and as such have a different focus and objectives. A new
programme could create considerable synergies with these programmes.

Other international activities such as existing international film funds mostly have limited
budgetary allocations. Co-production treaties are rarely endowed with budgetary means and
therefore inefficient in addressing the problems described above.

# EN 3 EN

**4.** **O** **BJECTIVES**

The general objectives are to strengthen international cooperation in order to increase the
competitiveness of the European audiovisual sector, and to increase consumer choice and
cultural diversity on the European and international markets.

Four specific objectives have been identified:

(1) Increase information exchange and market intelligence, in particular through
training activities, facilitate networking between European and third-country
audiovisual professionals in order to improve access to foreign markets and to
build trust and long-term commercial relationships.

(2) Contribute towards the facilitation of international co-productions in the
audiovisual markets.

(3) Improve transnational distribution of audiovisual works and enhance the
visibility of European audiovisual works in third countries and vice versa as
well as increasing consumer choice for European and third-country
audiences.

(4) Reach new audiences and promote film literacy.

**5.** **P** **OLICY** **O** **PTIONS**

Three different policy options (including two different scenarios to implement these specific
objectives) have been assessed regarding their economical, social, cultural and environmental
impact and their cost-effectiveness.

(1) _Business as usual_ (in the sense of continuing the existing European activities
in the audiovisual sector).

(2) _Extension of existing instruments_ .

(3) _Creation of a new instrument_ MEDIA Mundus.

As to the _business as usual_ option, in view of the situation evolving on world markets and the
technological challenges, the situation for European audiovisual companies would deteriorate
significantly over time. _Business as usual_ would not entail new costs, but would have a
negative cost: if the opportunities of internationalisation are not seized by European
companies in the new fast-growing markets.

An _extension of existing instruments_ by opening the MEDIA 2007 programme to further
participation and cooperation would entail various difficulties related to WTO rules as well as
resource-intensive negotiations at governmental level and was therefore considered to be
inefficient. Also, an opening of MEDIA 2007, not in the sense of full membership or
cooperation, but in the sense that strands for international cooperation could be introduced in
the current programme, was considered. In terms of costs and procedure the options are
similar. However this policy option, although being an alternative to the creation of a new
instrument, was discarded because one programme focusing on internal and external policies
at the same time would become very complex, lead to brand confusion and be less effective in
meeting the policy objectives defined.

Under the option _creation of a new instrument_ the four _specific objectives_ were broken down
to more detailed _operational objectives / action lines_ that refer to the actual deliverables:

(1) Increase information exchange and market intelligence, in particular through training
activities, facilitate networking between European and third country audiovisual

# EN 4 EN

professionals in order to improve access to foreign markets and to build trust and longterm commercial relationships.

    - Building up websites and databases (aims at collecting and disseminating information
about European and third countries’ audiovisual markets)

    - Network of contact points (in various regions of the world in order to monitor the regional
audiovisual industry)

    - Training activities (aims at supporting various training measures such as the certification of
training institutions, provide scholarships or continuous and initial training projects)

    - Market access mechanisms and events (aims at supporting access to film market and other
key events)

(2) Facilitation of international co-productions in the audiovisual markets.

    - Supporting the development stage of co-production (aims at supporting script
development, partner searching or other activities in the development phase such as
financing or casting)

    - Supporting the funding of co-productions (aims at a direct funding to co-productions or
measures that could facilitate the access to commercial financing of co-productions)

(3) Improve transnational distribution of audiovisual works. Enhance the visibility of
European audiovisual works in the world and vice versa and increase consumer choice
for European / third-country audiences.

    - Distribution support (aims at supporting the costs of acquisition, printing, advertising,
dubbing and subtitling etc.)

    - Cinema networks (aims at supporting cinema networks in Europe and in third countries
that commit themselves to programming of a significant number/percentage of European
audiovisual works and vice versa)

    - Support to broadcasters and digital platforms (aims at encouraging the showing of
European works on TV and platforms like VOD, mobile TV etc. in third countries and vice
versa)

(4) Reach new audiences and promote film literacy

    - Festivals and special events (aims at supporting festivals that programme third countries’
and European audiovisual works or awareness-raising events)

    - Networks to target young audiences including education activities

    - Support for TV programmes dedicated to young audiences

The definition of the specific and operational objectives was largely inspired by stakeholders’
consultation and is based on cost-benefit analyses carried out by the various ex-post
evaluations of MEDIA programmes and the ex-ante evaluation of MEDIA 2007.

Two different scenarios have been examined within the specific objective ‘facilitation of
international co-productions’ and ‘supporting distribution’. Regarding the facilitation of coproductions the alternative scenarios related either to the setting up of funds by the
Commission (development fund for co-productions, co-production funds for feature films,
documentary and animation films, gap financing fund), or alternatively the financing of script
development training, market access mechanisms and existing co-production funds. In view
of the heavy administrative burden, the creation of co-production funding instruments by the
Commission was not pursued further. With regard to distribution support, one scenario was
more oriented towards the classical MEDIA approach. It was however found that the
requirements for international cooperation regarding distribution were different on the internal

# EN 5 EN

and the external markets. Therefore an option focusing the support on partnerships between
rights-holders and distributors was assessed to be more effective and appropriate.

The calculation of the cost implications that was used to compare the different scenarios was
in particular based on the evaluations of previous MEDIA programmes, the experiences of
MEDIA 2007, the public consultations and the Preparatory Action MEDIA International.

In summary the Impact Assessment reached the conclusion that the following scenario should
be further pursued in order to achieve the objectives identified:

In order to take into account the current economic crisis, a third scenario has been built on the basis of
a smaller budget than that of scenarios 1 and 2. This "crisis" scenario intends to maximise the
effectiveness of the intervention given the budgetary constraint. Hence, only the most effective
operational objectives and actions analysed under scenarios 1 and 2 have been selected. They have
been gathered into a narrower framework limited to three specific objectives. Such an option would
ensure continuity following the preparatory action and could pave the way for a larger programme
under new financial perspectives.

# EN 6 EN

**6.** **C** **ONCLUSION**

The Impact Assessment on the establishment of an audiovisual cooperation programme with
third countries reached the following conclusions: There is a lack of circulation of European
audiovisual works in third countries and vice versa. This has an impact on the competitiveness
of the European audiovisual sector and, as a consequence, European companies cannot fully
benefit from the opportunities of internationalisation. Furthermore, consumers cannot benefit
from a wide choice of films and therefore there is limited cultural diversity. A new instrument
should therefore pursue those two global objectives: to increase the competitiveness of the
European audiovisual sector and to increase consumer choice and cultural diversity.

# EN 7 EN