CELEX: 51990PC0132(01)
Language: en
Date: 1990-05-04
Title: PROPOSAL FOR A COUNCIL DECISION CONCERNING THE IMPLEMENTATION OF AN ACTION PROGRAMME TO PROMOTE THE DEVELOPMENT OF THE EUROPEAN AUDIOVISUAL INDUSTRY ( 1991-1995 )

COMMISSION OF THE EUROPEAN COMMUNITIES
                                           C0MC90) 132 final
                                          Brussels, 4 May 1990
           Commission Communication to the Council
     accompanied by two proposals for Council Decisions
                          relating to an
                       ACTION PROGRAMME
                TO PROMOTE THE DEVELOPMENT OF
              THE EUROPEAN AUDIOVISUAL INDUSTRY
                            "MEDIA"
                           1991-1995
 ---pagebreak---                               nONTENT S
l. Preamble
2. Context
   2.1  The programme industry: a growth sector
   2.2  A major problem : the mismatch, between supply and demand
   2.3   Important observation : the accentuation of "non-Europeann supply
   2.4   A solution : the creation of Community cooperation structures
3. An action programme for the promotion of the European
   3.1 What the Community has done so far : the MEDIA pilot phase
   3.2 Principles of Community action
         3.2.1   Contributing to the completion and operation of a
                 substantial part of the common market in services
         3.2.2   Departitioning of the national markets and creation
                 of cross-frontier cooperation networks
         3.2.3   Support for the restructuring of the audiovisual industry
                 with priority for small firms
         3.2.4   Finding the right balance between "small" and "large"
                 industries
         3.2.5   Launching a coherent set of complementary measures, whose
                 specific value lies in the Community dimension
         3.2.6   Large-scale recourse to market finance for the
                 programmes industry
    3.3. Lines of action
         3.3.1. Mechanisms for encouraging distribution and commercial
                 promotion
                 3.3.1.1 Film distribution in cinemas
                 3.3.1.2 Distribution in video-cassettes and on television
                 3.3.1.3 Support for multilingualism in television
                         programmes
 ---pagebreak---                 3.3.1.4 Development of the independent productions market
   3.3.2.       Mechanisms to iirrprove production conditions
                3.3.2.1.          Developing preproduction
                3.3.2.2.          Restructuring the cartoon film industry
                3.3.2.3.          Promoting the use of new European
                                  technologies in programme production
                3.3.2.4           Creation of a "second market" using archive
                                  material
   3.3.3.       Mechanisms to stimulate financial investment in the
                audiovisual sector
   3.3.4.       Development of professional ski lis
                3.3.4.1.          Activities linked to the other lines of
                                  action
                3.3.4.2.          Training of "new managers" to cope with the
                                  single market
   3.3.5.       Other developments
                3.3.5.1.          New audiovisual services
                3.3.5.2           Audiovisual activities in countries and
                                  regions with lesser audiovisual capacity or
                                  limited language area
   3.3.6.        Synergies with Audiovisual EUREKA
                3.3.6.1.          Two complementary instruments
                 3.3.6.2.         The Community action programme extended to
                                  include new partners
                 3.3.6.3.         The Community as a partner in Audiovisual
                                   EUREKA projects
                 3.3.6.4.         Other forms of participation in Audiovisual
                                   EUREKA
4. Promoting cooperation with professiQTV\>S of non-Community European
   countries. jnrTh-irHng Central and Eastern Europe
5. Conclusion
 ---pagebreak---                                        -1-
1. PREAMBLE
In its Communication to the Council and Parliament on audiovisual policy
(CCM(90)78 final), the Commission defined a general framework for measures
to promote the European audiovisual programme industry.
Pursuant to the plan of work announced in the Communication, the Commission
is presenting to the Council these proposals for Decisions relating to a
five-year action programme starting in 1991 based on the results of the
MEDIA pilot experiments and setting out the arrangements for the
Community's involvement in Audiovisual EUREKA.
Without repeating in full the analysis of the European audiovisual market
presented in the Communication, it is worthwhile recalling a number of
facts which justify the proposed programme and explain the urgent need for
its introduction.
2. QCKEEHI
2.1      THE PROGRAMME INDUSTRY: A GBCWTH SECTOR
The audiovisual sector is now seen as a strategic sector for the services
industry in the European Community. Although relatively modest in economic
terms, its growth is significant: put at ECU 25 billion in 1990, it should
grow to around ECU 35 billion at the end of the decade. In addition to its
potential for economic growth, the audiovisual sector is important because
of its socio-cultural dimension: as a vehicle for the wealth and diversity
of European cultures, its development gives expression to the very essence
of the Community. It helps to shape public opinion and to establish
references for both behaviour and consumption.
The growth forecasts are based above all on the development of television
 services, whose volume in terms of broadcasting time will increase by more
 than 50% over the next five years. In addition to television stations, new
 audiovisual services will come into being thanks to the proliferation of
 techniques such as video, cable, telematics and other computer
 technologies.
 The audiovisual sector is quite clearly one in which demand is set to grow
 substantially: demand for "programmes" in the broader sense of the terra --
 TV programmes, cinema films and miscellaneous audiovisual services -
 engendered by new broadcasting, recording and interactive communication
 opportunities and techniques.
 2.2     A MAJOR FR0BLH4: THE MISMATCH BETWEEN SUPFLÏ AND DEMAND
 However, the audiovisual programmes industry is already marked by a
 conspicuous mismatch between supply and demand, with demand far in excess
 of the industry's ability to satisfy it. There is also a danger that the
 gap between supply and demand may grow considerably wider.
 There are many reasons for this:
 -   The circuits for the distribution/broadcasting of audiovisual works on
    the European scale are inadequate.
 ---pagebreak---                                      -2-
   Nearly 90% of European products - all types together - never go beyond
   the frontiers of their country of origin. Consequently, better
   circulation of such products throughout the Community market would help
   substantially to meet the shortfall in the supply of audiovisual
   products for television, video and cinema.
-  Production capacities are fragile because they are limited by the
   excessively narrow structures of the national industries. The national
   limitations are reflected by the small size of firms, investments and
   markets. The inadequate profitability level of national products is
   aggravated by the constant rise in production costs. This rise is
   especially felt in the field of fiction, i.e. films for cinema and
   television series. And yet fiction is an essential area of audiovisual
   activity. It is the public's favourite type of product and the type on
   which the media base their appeal on the European and world markets and
   will be central to the development of the industry in years to come.
- The European industry has hitherto been unable to develop a "second
   market" for its products. The creation of such a i^broadcasting market
   should open the way for the further exploitation of large stocks of
   programmes which, at the present time, cannot be used profitably owing
    to problems concerning royalties, archive management or simply absence
    of catalogues.
- Lastly, from the point of view of investment, the audiovisual sector is
    regarded by the financial world as a high-risk sector, precisely because
    of the limitations of the production and distribution markets. There
    are too few investors willing to operate on the basis of cross-frontier
   distribution of risks.
2.3      IMPORTANT OBSERVATION: THE AOCHaTOAIION OF "NON-EUROPEAN" SUPPLY
The European audiovisual sector is in a particularly difficult situation on
on world markets. This situation is likely to get worse as the gap between
supply and demand in Europe widens.
The effects of the world context on the audiovisual industry in Europe are
already numerous and there is a danger that this industry will become
trapped in a vicious circle of underdevelopment. Same examples:
- Companies of American origin control, on average, 60% of film
    distribution in Europe (over 90% in some countries such as the United
    Kingdom);
- 40% of European vidéocassette distribution networks are in the hands of
    groups of non-European origin;
 -  In 1988 Europe bought 700 million dollars' worth of television
    programmes from the United States, mainly in the fiction category;
 - Out of 11 000 hours of animated cartoon programmes broadcast by
    television stations in the European Community in 1989, only 350 were of
    domestic origin. The bulk of these programmes were supplied by
    Japan (60%).
 ---pagebreak--- The European industry by contrast, because its ranks are divided, hardly
manages to gain a foothold on the world market. In the Onlted States and
Japan it accounts for barely 2% of audiovisual and cinema programmes.
2.4      A SOUJTION: THE CREATION OF OQNMQNIT? COOPERATION SIKJCIUKES
The fact that the European audiovisual sector has grown up in national
frameworks means that its weaknesses are essentially structural in nature:
they lie in the fragmentation of the market and the dispersion of the
industries. Only cooperation between economic and cultural forces can lead
to the creation of a European audiovisual area, which is the sine qua non
for a strong industrial structure.
Cooperation will have to develop in all sectors along the whole length of
the     creatlon-finaiKdJig-proteotion-oUstrlbutlon  chain,   through    the
establishment of company networks and common infrastructures, by means of
which the potential of the single market in the audiovisual sector can be
turned to advantage:
 -  The audiovisual sector is made up of a large number of small and
    medium-sized firms. These small independent production companies must
    be encouraged to set up co-production, co-financing and commercial
    promotion structures suited to the requirements of both the European and
    the international markets.
 -  At the same time, distributor networks will have to be set up to remedy
    the lack of "multinational" structures for the circulation of films in
    the Community and elsewhere in the world. In particular, these networks
    must be given incentive mechanisms by means of which the language
    barrier, which is the major obstacle to European and worldwide
    distribution, can be overcome. These mechanisms will be vital for the
    productions of countries with less widely spoken languages.
 -  The creation of a second market by increasing the cross-frontier
    profitability of programmes is a necessary complement to the promotion
    of independent production and distribution. The difficult problems
    connected, in particular, with the exploitation of archives can be
    solved only through European-scale cooperation networks.
 -  Lastly, the European audiovisual sector will have to take advantage of
    new techniques for production and broadoasting/d i stribution. In a
    rapidly changing context, every opportunity offered by technological
    development must be seized in order to encourage the expansion of the
    European audiovisual market. Furthermore, the cost of technological
    innovation and of its uses in programmes warrants the pooling of
    resources in the context of cross-frontier exploitation structures.
 -   In general terms, in addition to the establishment of company networks,
    capital will have to be raised by means of new systems for the
    involvement of investors and the distribution of risks both over the
    sector itself and at Comraunity level.
 An overall and coherent action programme is needed to meet the challenges
 posed by the future of the European programme industry.
 ---pagebreak---                                       -4-
Strengthening the audiovisual capacity of Europe will involve structural
changes on the scale of the Single Market. This is a task of Community
magnitude requiring coordinated efforts on the part of the public
authorities in the Member States and at Community level. A Community
programme within which each party would play its own role is an imperative
requirement for the development of the necessary instruments for
cross-frontier cooperation and in order to set up the incentive nechanisms
needed to give structure to the European audiovisual area.
3. AN ACTION rirraAMMR     THE  «nre w i r m r K OR TH*  HTTOTIPRAW AnnwTsnAT.
    IMUUfcTlKf
The proposed action programme is based on the desire to improve the
economic context of the audiovisual industries in readiness for the advent
of the Single Market. To achieve this objective, incentive measures of a
practical nature will be required in order to generate Community synergies
in each sector. These measures will have to be set into a coherent
programme which takes account of the complex nature of the" audiovisual
sector and its specific mechanisms and which is designed to exploit the
wealth and diversity of European cultures.
Before presenting a definitive programme, the Commission was determined to
make a pragmatic evaluation of the iiistruments needed for a development
strategy. After consulting a wide range of professional circles, the
Commission therefore launched pilot experiments intended to gauge the
appropriateness and effectiveness of a number of economic incentives for
 the audiovisual sector. On the basis of the analysis of these experiments,
a set of realistic proposals can now drawn up finely tailored to the
 requirements of the industry and the market
 3.1      WHAT THE COMMUNITY HAS DONE SO PAR: THE MEDIA PHOT PHASE
The pilot projects have been grouped together under the heading "MEDIA"
 (Measures to Encourage the Development of ..the Audiovisual Industry).
The MEDIA initiatives were designed to explore possible ways of providing
 economic support for the European cinema and television industry
 (cf "Action programme for the European audiovisual media products
 industry" 0GM(86)255 final of 26 April 1986)
 In Parliament, MEDIA is one of the "absolute priorities" of the Committee
 on Youth, Culture, the Media and Sport (PE 107.501/FIN). On the basis of a
 report submitted by Mr G Papapietro, in 1988 the Committee adopted a
 resolution in favour of its development (doc A2-135/88 of 1.7.88).
 This development is now a matter for a Council decision. During the 1990
 budgetary procedure, the Commission undertook to present the Council with a
 proposal for a decision for the continuation of the MEDIA measures from
 1991 onwards. To honour this pledge, the Commission is preparing to bring
 the experimental phase of MEDIA to a close; it intends to move on to the
 principal phase in the context of a Community action programme designed to
 operate synergetically with Audiovisual EUREKA, thereby answering the call
 made to this effect by the Strasbourg European Council.
 ---pagebreak---                                         -5-
   The action programme is the culmination of a coherent series of initiatives
   consisting of three phases:
   -   Consultation of Industry phase (1987)
       This, the first consultation exercise on such a scale carried out with
       the audiovisual industry in Europe, lasted a year and involved more than
       2 000 representatives of the professions involved. It was accompanied
       by in-depth market studies in the production and distribution sectors.
   -   Pilot experiment phase (1980-90)
       On the basis of the consultations and studies, some ten pilot projects
       were set up during 1988, which now involve more than 10 000 people and
       firms in the Community.
   - Main pha.qe Oreglmlngta1991)
       On the basis of the pilot experiments, the Community action programme
       will have to ensure that the achievements and guidelines emerging from
       the trial phase bear fruit on a significant scale, and are supplemented
       where necessary by means of collaboration arrangements with Audiovisual
       EUREKA.
   In proposing the action programme, the Commission refers to the opinions
   expressed by European professional circles meeting at the Audiovisual
   Conference held in Paris last October. The audiovisual professionals
   recognized the great illustrative value of the projects of the pilot phase,
   which, they consider, must be developed in liaison with Audiovisual EUREKA.
   It is proposed that this dialogue with the professionals should be
   continued and intensified by setting up new mechanisms for consultation
   providing an appropriate framework for their involvement in the
   implementation of the new programme.
   Further to the analysis carried out at the audiovisual conference, these
   projects were evaluated by an independent group of experts. The Commission
   has carefully examined the report produced by the experts and taken due
   account of it in its proposal for a programme.
    It is proposed that, in implementing the action programme, the Commission
    should be assisted by an advisory committee consisting of representatives
    of the Member States. This committee, as well as the new mechanism for the
    consultation of professional circles set up by the Commission, will have an
    important role to play, especially in ensuring optimum transparency in the
   management of the programme and appropriate publicity for the various
    projects (thus partly answering the concerns expressed in this connection
    in the review report, particularly points 1.3 and 2 ) .
    It is also proposed that, as suggested in the review report (point 2.1.5),
    the implementation of the programme should be the subject of a new
    evaluation two years after it starts. It is to be noted that the analysis
    of the sector to which the report refers is an ongoing exercise being
    carried out both by the Commission and in other contexts (e.g. Audiovisual
    EUREKA, with the establishment of the European Audiovisual Observatory).
    3.2     PRINCIPLES OF OÛMMnNITÏ ACTION
    The programme proposed by the Commission sets out to improve the
    environment of audiovisual businesses without directly intervening in
    production. The measures will be located upstream and downstream of
    audiovisual production along the whole length of the industrial chain:
2)
 ---pagebreak---                                      -6-
they will concern training, pre-production, the inultilingualism of
programmes, the use of new technologies, distribution moohanisms and
commercial promotion, the creation of a "second market" based on the
exploitation of archives, and the improvement of the financing framework
for the audiovisual sector.
The effect of all these measures will be to establish the conditions for a
Community programme. This will:
-   contribute to the completion and operation of a substantial part of the
    common market in services;
-   aim to bring about the departitioning of the national industries by
    creating cross-frontier cooperation networks;
-   help find a balance between countries of different sizes by seeking to
    safeguard their identities;
-   form a coherent set of activities, whose effectiveness will derive from
    Community dimension;
-   be based to a large extent on the financing of measures by the
    programmes industry.
3.2.1.ffîntliTyitlTTgto tfofiflfftflpletionand operation of ft ffltfftTfrffltlfrl PffiTt
The action programme will seek to respond to the Community's priority
 objective by endeavouring to produce the "dimension effect" of the new
economic area in the programmes industries :
 -  by strengthening the national industries through the distribution of
    their products on a Qammunity scale to a potential audience of
    320 million people;
 -  by establishing arrangements for cooperation between these industries
    based on increased production and distribution capacities on the
    international market.
 The pilot experiments carried out under the MEDIA banner have shown that
 the economic approach brings out the best from the capacities for original
 programme production in the programme industries. They tend to show that,
 if appropriate stimulants are provided, vast markets can be opened up in
 sectors long regarded as uneconomic because they were based on what were
 termed "cultural" industries. It is now becoming clear that the products
 of these industries can reveal considerable commercial potential in a
 "departitioned" economic area.
 3.2.2. Départi tinning of th* yvrtinivLi marfrgtfi ^     f*reatian of cross-
 This will be based on a simple mechanism, the effectiveness of which has
 been shown by pilot experiments: the linking up of the economic and
 cultural operators in the programmes industry to form a network.
 The cross-frontier cooperation networks provide effective solutions to the
 major structural problem of the European audiovisual sector, which lies in
 the fragmentation and dispersion of the industries. The effectiveness of
 these networks lies in their potential for "synergy", the effect of which
 is not merely to pool but actually increase the potential of the partners.
 ---pagebreak---                                             -7-
The action programme will continue to develop a "networks policy" as
regards both companies and capital:
- by establishing and extending networks of companies in the form of
   Community cooperation and exchange federations;
- by raising capital by means of new financial engineering techniques in
    the audiovisual sector.
As in the past, the coordination centres of these networks will be
decentralized in the Member States. However, in order to respond to the
criticism set out in point 12 (penultimate paragraph) of the review report,
a better geographical coverage of the Ctammunity will be ensured.
         priority for f^ll. fin*?
In setting up enterprise networks, the programme will focus above all on
small and medium-sized firms, which form the living fabric of the bulk of
the European audiovisual industry and the importance of which will tend to
increase in future. Each of the networks will be organized in relation to
a specific project managed by professional associations set up for the
purpose and operating in different countries. Same 10 000 people and firms
are already involved in the projects being conducted in the experimental
phase of the MEDIA programme.
Organizing the audiovisual sector in federations of small firms will, as it
were, make it possible to restructure the market from the ground up by
giving birth to a new type of "multinational group". These groups may
remedy the absence or inadequacy of large industrial companies in key areas
of the audiovisual sector, for example in film distribution or the animated
cartoon sector.
3.2.4.   f i l i n g t**» rtfflt bfilttyra W^^mj "famuli" «rid "l*rgg« ; ) ^ f r h r i œ
By guaranteeing solidarity between countries and markets of different sizes
 the existing cooperation networks, through their density and cohesion, are
an important factor for the harmonious expansion of the European market.
The scope of the networks makes it possible to overcome the division
between "small" and "large" and to carry out "balancing operations" in
 favour of the less widespread cultures and languages in Europe.
The desire to ensure such a balance will be evident in all the projects
 contained in the action programme. It will take the form of incentive
mechanisms taking account of the particular difficulties which certain
national industries encounter in penetrating the European market.
 3.2.5. T«iry*ri^g «. ryihgrent set of complementary measures, whose specific
         valTje lies In Ifte. Community dimension
 The networks set up will be as extensive as possible in order to produce
 effects of scale and exploit the potential for synergy by covering all the
 countries of the Coraraunity. It is this Community scope which will
 guarantee their impact, giving them a specific value impossible to achieve
 on narrower markets.
 Since the problems of the audiovisual industry can only be solved through
 cooperation at Community level, the action programme will not therefore
 take the place of national initiatives but will play a subsidiary role in
 relation to them.
 ---pagebreak---                                      -&-
Furthermore, the networks will be complementary or "interactive" in nature.
They are already combined within a cohérent experimental framework which
encompasses all the functions of the audiovisual industry. It is in this
coherence of the measures that the specific value of the Ctammunlty-scale
programme will lie. It would serve little purpose to increase the number
of isolated, one-off projects with no functional links. Since all the
different areas of the audiovisual sector are interdependent, an overall
approach must be adopted involving a set of complementary initiatives.
3.2.6. IifM^-srale recourse tn mm***, firmnn    fnr -hhft pmgPftmmflR industry
The programme does not propose a system of subsidies: its basic principle
consists in injecting seed capital into the industry so as to attract
additional finance from private investors, professional organizations and
various promotion bodies.
The power of attraction of the money advanced for the pilot experiments in
progress is considerable. At the end of 1989, the experiments launched
under the MEDIA programme had a total value of around ECU 40 million
compared with an initial outlay of ECU 13.5 million. This figure can be
expected to double in the course of 1990.
The action programme sets out above all to stimulate the market: no
project will receive a financial contribution of more than 50% of its cost,
 the aim being to limit funding to 30%.
 Furthermore, the amounts assigned to the pilot projects have hitherto been
 allocated in the form of loans repayable to the bodies responsible for
managing the project and are intended to be reinvested. These mechanisms,
 which will continue to be applied during the main phase, should enable the
 projects to become self-sufficient after a few years thanks to the creation
 of their own capacity to generate finance (see review report, points 1.2
 and 2.1.2). This mechanism is already in operation as regards the pilot
 experiments; initial returns on investment confirm the economic validity
 of the measures undertaken and justify hopes for their viability in the
 long run.
 The large sums raised in a very short time are a pointer to the enormous
 potential which can be harnessed for the development of the audiovisual
 sector in the European Community. This potential will grow further through
 the extension of initiatives beyond the frontiers of the Twelve, as already
 shown by the participation of Switzerland and Austria in certain projects.
 The involvement of new non-Community partners - particularly in the
 Audiovisual EUKQCA context - will serve to increase the potential for
 synergy and make the European industries more competitive on the world
 market (see review report, point 2.1.3).
 However, the resources available to the MEDIA programme in its pilot phase
 were very limited compared with the requirements of the single audiovisual
 market. In its main phase, the action programme will therefore have to be
 endowed with far more substantial means if it is to have any significant
 impact on that market. The new financial resources will have to be
 modulated over time: their curve will have to rise in the early years
 before declining as the projects become self-financing (see review report,
 points 2.1.1 and 2.1.2).
 ---pagebreak---                                          - 9 -
3.3        LINES OF ACTION
The lines of action proposed for implementing the programme take account of
the lessons learnt from pilot projects and consultations by MEDIA, the
proposals made by the Audiovisual Conference and the recommendations of the
Group of Experts set up to assess the results of the pilot stage.
The action is to be taken both before and after actual production at all
stages of the production chain, but will not involve the direct financing
of specific works. The object is to create a climate which will help the
development of firms by allowing incentives to be offered and cooperation
networks to be set up in order to compensate for the fragmentation of
markets and the dispersion of the industry. The programme is not designed
to provide a framework for direct production subsidies. This approach was
substantiated by the review report (point 1.3). However, in line with the
report's recommendations, implementation of the main phase of the programme
will take account of the need to consider the production chain as a whole
whose links are becoming increasingly interdependent.
Four       sectors         have     been     considered: distribution/promotion,
 "periproduction" (or production environment), the financing framework and
 training.
 3.3.1.     Mgnha.-ni.care for encouraging ^IfytTlbntjnn anfl commercial promotion
 Activities on this front are priorities with an eye to maximum        exploitation
 of the potential of the single market. The cn\rculation               of European
 productions is hampered both by the language barrier and the          partitioning
 of national markets and by the inadequate efforts deployed in         distribution
 and cranraercial promotion.
 3.3.1.1. Film distribution in cinemas
 80% of European films go no farther than the frontiers of their country of
 origin, while an average of 60% of film distribution circuits in Europe
 (over 90% in some countries like the United Kingdom) are controlled by
 companies of American origin. Only cooperation between European
 distributors will enable them to send films across frontiers and so attempt
 to create a single cinema-film market.
 -  An initial pilot experiment has been conducted: it was mounted by EFDO
    (European Film Distribution office), in support of transnational
    distribution of European films in cinemas. It demonstrated that the
    advent of the single market is boosting the profitability of films and
    using creative potential to advantage. Run by producers and
    distributors, EFDO is helping to set up co-distribution networks by
    fostering cooperation between cxanpanies which were previously operating
    in isolation on their national territory. EFDO grants distributors
    advances against receipts of between 50% and 100% of the costs of
    dubbing/subtitling, copymaking and promoting European films, provided
    these are co-distributed in at least three countries. Priority is given
    to films presented by the largest number of distributors of various
    countries by means of a points system which favours films originating in
    the small countries and their film distributors.
 ---pagebreak---                                    - 10 -
   Since EFDO started up in November 1988, 25 films have featured in
   107 launchings    in   13 countries    (the  Community   countries     and
   Switzerland). The number of tickets sold to see these films in cinemas
  will     soon   reach   5 million. Box-office   receipts   are   enabling
   distributors to start paying back EFDO's advances (more than 10% by way
   of contribution to recapitalization). These sums are ploughed back into
   the launching of other films.
-  The Twelve produce over 500 full-length films a year, hut over 80% of
   these films never leave their country of origin. To have any
   significant impact on the Community market, incentives to cross-frontier
   distribution should extend to at least 20% of this output, i.e. to a
   hundred or so films. Stimulating tije market, by strengthening the
   network of European distributors, will also have a positive effect on
   the circulation of films not directly supported by the system.
-   In the pilot stage EFDO confined itself to promoting works which cost
   less than ECU 2 250 000 to produce (i.e. 80% of European output). To
   promote better circulation of films costing more than that (which are
   increasing in number because of the proliferation of co-productions and
   rising costs) the support system will have to be extended to cover the
   distribution of films costing between ECU 2 250 000 and ECU 4 500 000
    (see review report, points 2.2.1 and 3).
-   A special effort must be made for European film promotion campaigns
   outside the Community in order to boost their distribution and their
   international competitiveness (offices to promote European film and
    television programmes, particularly in the United States and Japan,
   group presence at festivals and fairs) (see review report, point 3 ) .
Lastly, the EFDO pilot project has confirmed that, to be fully effective,
the distribution of European films calls for an enhancement of the
film-projection sectors, i.e. the cinema network/csircuit. Measures to
promote this sector will be developed so as to promote the programming of
European films.
3.3.1.2.   Distribution in vidéocassettes and on television
A growing proportion of film receipts is now accruing from their screening
as vidéocassettes, although this market represents a volume of only
ECU 3 billion compared with ECU 7 billion in the US. European films are
very much under-represented on these circuits. That is why a series of
measures must be envisaged in addition to the support for cinema
distribution:
-   The EVE (European Video Area) pilot project has devised a scheme of
    advances against receipts to promote the cross-frontier issue and
    circulation of European works, based on the model tested by EFDO (see
    review report, points 2.2.9 and 11). A maximum advance of 40% of
    issuing, dubbing/subtitling and promotion costs will be earmarked for
    European films not issued on video and distributed by at least three
    issuers in different countries.
    The scheme will be supplemented and reinforced by organizing
 ---pagebreak---                                     - 11 -
   cooperation between existing European public médiathèques and libraries
   to encourage the issue of video films and the constitution of subject
   "collections", particular in the field of documentaries and children's
   films.
-  The circulation of European films by the television channels is the next
   stage in ensuring optimum exploitation and a growing source of revenue,
   in view of the increasing number of competing distributors. Some
   measures seeking to boost the proportion of European films in
   circulation have already been tested and will be strengthened (see
   below 3.3.1.3.), but additional measures are needed, particularly to
   promote independent production.
3.3.1.3.   Support for mu1t.111ngua11sm in television programmes
Multilingual ism is one of the basic requisites for the circulation of
audiovisual production. The need to develop it will be even greater with
the growth of direct satellite broadcasting, which will make it possible
for each programme to be available in several language versions over
extensive geographical areas, and even in all the countries of Europe (see
review report, points 2.2.8 and 10).
-   The BABEL pilot project (Broadcasting Across the Barriers of European
    Language) has confirmed the substantial needs in the multilingualism
    sector, a key factor in the circulation of European productions. The
    assistance with dubbing or subtitling provided by BABEL is granted by an
    International Committee of experts on multilingualism and production,
    priority being given to works using the less widely spoken languages in
    Europe, to works of fiction (especially those intended for young people,
    including cartons), to pilot TV series and documentaries.
    With limited funds, BABEL has so far managed to support the dubbing or
    subtitling of 52 television programmes and series from 13 countries for
    102 transmissions   in several      languages: 32 of   these  programmes
    originate in "small countries".
 -  Given more substantial funds (with, as for other incentive schemes, a
    scheme of advances against receipts for "sound" postproduction of
    programmes), BABEL will have to stimulate circulation more effectively
    and thus boost the profitability of European products designed for
    television, especially those made by independent producers.
 -   BABEL must also support the development of multilingual broadcasts,
    including the provision of simultaneous interpreting in television
    discussion programmes, particularly in the field of information,
    training and culture to affirm European identity and benefit from the
    diversity of its constituents ("Euronews" project; broadcasts of the
     Seven; programmes on Olympus, ... ).
 3.3.1.4. Development of the independent productions market
 All in all, almost 90% of European television productions remain within
 their country of origin. Better circulation of existing productions
 ---pagebreak---                                      - 12 -
throughout the Community market would, however, help to make up the deficit
in audiovisual supply. The marketing of these productions is an essential
stage in their distribution.
- EURO-AIM (European Association for an Independent Producers market), set
   up in the MEDIA pilot project, organizes grouped producers' attendance
   at international, media trade fairs, offers guidance on the presentation
    of films and contacts with buyers, and facilitates access for its
   members to productions available through its data base. Presence in
    EURO-AIM's stands on special financial terms is intended first and
    foremost for producers who have not previously had access to these
    The services offered to independent producers by EURO-AIM in the pilot
    stage have confirmed that this is the right approach. For an investment
    of ECU 1.5 million during MEDIA'S trial period more than a thousand,
    production companies were promoted at seven major international fairs,
    achieving a turnover of ECU 20 million.
This volume must be increased
- by highlighting the profile, promotion and effectiveness of the European
    presence on the major markets and by featuring particular sectors of
    production (archives, documentaries, youth productions, etc. ) ;
- by developing these promotional activities on non-Community markets to
    stimulate sales of European productions, notably in North America and
    Japan, in conjunction with the activities to promote the European cinema
    (see above);
 - by developing the services (legal and marketing assistance; contacts
    with buyers; promotion guidance; coordination of co-productions)
    available to small production firms, outside the fairs;
 - by expanding the EURO-AIM data base to cover all the parameters of the
    independent production market (producers and buyers, rates, available
    productions, planned co-productions, etc.) and by facilitating use of
    the data base by setting up a decentralized network of access points.
These services should continue to be offered at reduced rates during the
 first two years of the programme. The possibility of charging for them at
 cost price should then be considered (see review report, points 2.2.7
 and 9 ) .
 3.3.2.     M^nhani.cms to improve product.inn ppTYiitinnfi
 The discussions conducted before the launching of the MEDIA pilot phase,
 like the Audiovisual Conference, emphasized the quantitative deficit of
 European production. To help make up the deficit, the effort of the action
 programme will focus on improving production conditions, both before and
 after the programmes are actually made. This will facilitate the
 development of "preproduction",* rationalization of infrastructures, use
     Which is, in a manner of speaking, the equivalent in audiovisual terms
     of "research and development".
 ---pagebreak---                                        - 13 -
    of advance technologies, use of programme stocks for the creation of a
    second market and, more generally, the conditions for financing production
    and distribution.
    3.3.2.1. Developing pre-production (fUjm and dooumentaries)
    Fiction is the type of work for which public demand is greatest and is the
    product most sought after by distributors, in Europe and throughout the
    world. It constitutes a major commercial prize. A large variety of
    pre-production material containing story lines well suited to the
    requirements of a transnational audience must be available to attract the
    essential investments by financial institutions and so expand European
    production capacity and competitiveness.
    - The pilot project of the European Script Fund, which examined a thousand
        files and backed a hundred or so pre-production plans, offers a sound
        basis for development. SCRIPT set up a Steering Committee consisting of
        experienced professionals from each of the twelvetanmunitycountries in
        order to organize and supervise the selection of fiction scripts to be
        developed up to the production stage. The scripts approved by an
        executive panel assisted by a network of readers and consultants
        throughout Europe received loans averaging 50% of the screenplay and
        pre-production costs invested by the producers, directors and writers.
     -  In order to reach a significant threshold with a real impact on
        production in Europe, SCRIPT'S funding capacity must be at least doubled
        and backed by specialized professional services so that projects can be
        tailored more closely to market requirements (see review report,
        points 2.2.2 and 4).
        To give these projects the best chances of reaching production, SCRIPT
        should offer two additional forms of assistance:
        (i)    assistance with screenplay writing ("script monitoring");
        (ii) assistance with production financing, to facilitate contacts
               between potential associates.
     - The assistance provided for development and the pre-production of
        projects must be extended to production companies offering a set of
        projects.
     - While priority will be given to works of fiction, these measures could
        also be applied to the development of creative documentaries involving
        cooperation between a number of countries. Most of the documentaries
        produced in Europe are of a specifically national cast, which limits
        their potential for screening.
     3.3.2.2. Restructuring the cartoon film industry
     Despite the universally recognized talent of its cartoonists and despite a
     priceless heritage in the art of drawing, Europe is handicapped by its
     cartoon studios' lack of production capacity, in an international 1 y
     expanding market. 11 000 hours of cartoon programmes were broadcast in the
     Community in 1989, whereas only 350 were produced by the domestic industry.
(3)
 ---pagebreak---                                     - 14 -
-  The networking of European studios, begun during the second pilot phase
  by CARTOON (European Animated Film Association), is the response to the
  problem of the dispersion of production structures, and facilitates the
   production of major, high-quality cartoon series at competitive prices.
   Each network, made up of 3 to 5 studios based in different countries,
   will receive for a maximum of three years an advance against technical
   coordination and management costs.
-  Eventually, some twenty pools will group over 80 studios to develop
   solid production infrastructures and increase the share of the
   international market held by Europeans. This partnership of studios
   should be strengthened by industrializing their working methods,
   harmonizing the materials used and computerizing production techniques.
   It will help to ensure in Europe the volume of activity currently being
   subcontracted to the Asian industries, which represents a turnover of
   over ECU 80 million a year.
-  As with other types of products, the pre-production and production
   stages of pilot films are essential in the making of cartoon films. To
   obtain quality material they demand substantial start-up capital in the
   form of advances against receipts. Up to now, some twenty projects have
   been successfullY completed; the aim is to produce fifty "pilots" a
   year (see review report, points 2.2.4 and 6 ) .
-  In addition, an information system specific to European cartoon-film
   making will be developed:
           by organizing, twice a year, a "CARTOON Forum" attended by
           distributors and studios to match supply to demand, speed up
           co-production of projects and shorten the time taken to put
           together financial packages;
           by developing the data bank on cartoon-film makes and artists,
           available studios and facilities, projects in hand and training
           programmes.
3.3.2.3.   Promoting the use of European new technologies in programme
           production
The new technologies (infography, digital television, high-definition,
interactivity) represent a rapidly expanding market. To gain a foothold on
this market, dominated by the United States and Japan, Europe must group
its efforts to obtain synergies in research, production and information.
-   To help meet this challenge, in the pilot phase, the "MEDIA Investment
   d u b for Advance Technologies applied to the Production of Audiovisual
   Programmes" has brought together industrial companies, communications
   groups and financial institutions to promote the place of audiovisual in
   leading-edge technologies. It represents a           "meeting point" for
    exchanging information and providing incentive. Its current members
   are: Thomson        Techniques      de      Communication (F),      Philips
    International (NL), PESA Electronica (E), Maxwell Connnunications (UK),
   CDC Participations     (Caisse    des   Depots    et    Consignations) (F),
   Antenne 2 (F),      Radio-Televisione     Italiana/RAI (I),     Nederlandse
   Ctoroepbedrijf (NL),      SBP (I),     the     Institut     National     de
    l'Audiovisuel/INA (F), and the Commission.
 ---pagebreak---                                    - 15 -
  A Technical Committee, assisted by a permanent secretariat whose
   operating costs are partly borne by the Community iudget, selects
   innovatory projects concerning audiovisual creation and production
   (generally presented by smaller companies), training and information
   technology. Initial, financing is provided from a fund made up of club
   members' fees and by a matching contribution from the Ccanraunity budget.
   In a second stage the most promising projects from the marketing angle
   are financed solely by their promoters.
   Up to now, the (Hub has handled 60 projects, of which it has supported
   two European-standard     HDTV productions, two synthesized         image
   3D productions, a European infography and synthesized image training
   programme, an interactive c«nrpact-<lisc production (CD-I) and a
   production by the IMAX-CMNIMAX cinematographic process.
-  As its activity in the pilot phase is still below the critical
   threshold, the (Hub must expand in order to achieve the volume of
   finance which will make it the effective catalyst for a European scheme
   to boost the innovative and creative capacity of European companies
   engaged in the production of audiovisual programmes (see review report,
   points 2.2.5 and 7 ) .
-   In order to put to work the assets represented by Europe's know-how in
   research and development, creation, information and training, the d u b
   will issue invitations to tender to promote innovatory projects in
   infography, composite techniques (mixture of real and synthetic images),
   interactive systems and high-definition television.
   In liaison with EURKA and Audiovisual EURKA and with the EEIG
    "Vision 1250",   created   with    Community   support   and    grouping
   industrialists and distributors involved in the development of HDTV, the
   Club must support measures to promote the making of films and programmes
   utilizing European-standard HDTV. It must help with the training of
   professional image-makers in the use of the new equipment.
3.3.2.4. Creation of a "second market" using archive material
Although they could be making up the deficit in the supply of European
programmes, considerable resources are locked away in television and cinema
archives. These constitute substantial assets, both economicallY and
culturally.
-   The MAP-TV (Memoiy-Aichives-Pi^grammes) project, supported during
    MEDIA'S pilot phase, has created a network between the archive services
    of European TV ccanpanies, cinema-film libraries and other repositories
    of audiovisual material. It is endeavouring to make use of the
    archives, both for documentary and news productions and for fiction.
    The Community must provide financial support to operate and expand this
    network.
-   Turning the assets of this "memory bank" to advantage by reissuing and
    rebroadcasting works or by using them in the production of new series
 ---pagebreak---                                          - 16 -
   will help to create a genuine "second market" designed to reduce the
   European deficit in production and boost the sector's profitability.
- All this will necessitate agreements between producers and distributors
   in order to find solutions to the problems of royalties, which often
   hamper the use of archives, and to compile the catalogues required to
   promote them on the market.
3.3.3.    Mftr*umi.caire -hn «rtmn1*-hft f l r w i f i i f t l iTtrertinPrvh JTÏ «Khg « n H r n H s m l
           fîeûtox
The restructuring of the European audiovisual industry, the impetus given
to carefully prepared projects and the outlets offered by the single market
must all help to attract new investors to the audiovisual sector. The
purpose of the action programme will be to study and, by coordinating the
efforts of the operators and encouraging them to join together on a
European scale, to develop new financial mechanisms adapted to the sector's
specific problems.
whenever it proves essential to mobilize and coax the investors, the
programme will provide finance to initiate the setting-up of the structures
which, if need be, can subsequently be developed in liaison with
Audiovisual EUREKA. The aid. arrangements will be studied according to the
nature and specific needs of each mechanism, with reference being made to
the initiatives already launched by the Community, especially in favour of
small firms and companies developing new technologies.
In the MEDEA pilot phase, two structures have been developed: a
risk-capital fund - MEDIA Venture - and a guarantee fund - MEDIA Guarantee.
The plan is not to renew this form of Community assistance, in line with
the suggestions of the review report (points 2.2.6 and 8 ) .
The Commission nevertheless considers that, because of the absolute
necessity to improve the financial framework of production and
distribution, appropriate measures must be taken to prompt the
establishment at European level of other mechanisms, some of which exist
solely at national level. To this end, the Community's role should mainly
consist of promoting innovation in the setting-up of new transnational
investment inechanisms in the audiovisual sector, in establishing new
networks and in contributing to the "getting together" of professional s
operating in this field. One example of the type of measure to be applied
would be the setting-up of a network (creation of an association and a data
bank) of European suppliers of risk capital operating on the audiovisual
 front or prepared to do so.
Moreover initiatives in this field may give rise to developments in liaison
with Audiovisual EUREKA.
 3.3.4.    Development of profefyrioml fftlllfi
The development of the European audiovisual sector depends on the ski 11 and
proficiency of its operators. The action programme will include many
 activities in this area, which have already been fully tried and tested
during the MEDIA pilot phase. These activities have one common
 ---pagebreak---                                     - 17 -
feature: they are all concrete measures involving professionals on the
job, and are therefore of an essentially pragmatic nature designed to meet
the practical needs of the market.
They split into two types: awareness-stimulating and knowhow-transfer
measures urnr^ to each of the programme's lines of action, and the
specifically economic training of the "new managers" who will be needed by
the audiovisual industry operating on the scale of the single market.
3.3.4.1. Activities linked to the other lines of action
This bears first and foremost on imiltilingualism, screenplay writing,
cartoon designing and the new technologies.
-   Multilingualism: BABEL will provide facilities for perfecting the
    skill s for journalists and other audiovisual professionals working in
    multilingual environments;
-   Screenplay writing: SCRIPT is proposing "script doctoring" sessions
    intended to increase the professional ski lis of European screenplay
    writers;
-   Animation: CARTOON will endeavour to promote the transfer of knowhow
    between the cartoonists, studio managers and graphics coordinators who
    will be needed to form the networks of cartoon studios;
 - New technologies: the MEDIA (Hub is developing schemes for the
    initiation of professionals in the use, in producing audiovisual works,
    of new techniques in image synthesis, digital TV, high-definition TV and
    interactive TV.
 Since these activities constitute any integral part of the actions in
question, it is proposed that part of the overall budget allocation per
action line be devoted to each of them.
 3.3.4.2. Training of "new managers" to cope with Hie single market
 Special emphasis is laid on an original idea, namely ecîonomic and
 commercial training with an eye to the single market. Hitherto absent from
 cinema and television schools in Europe, this type of pragmatic training is
 central to MEDIA'S activity. It is designed to enable the professionals to
 adapt to the new economic dimension of the European audiovisual area and to
 acquire the management ski lis needed to take full advantage of it.
 From that angle, the action programme must continue, and refine, the
 economic and cx3mmercial training courses for young producers, created by
 "European Audiovisual Entrepreneurs (EAVE) (see review report, points 2.2.3
 and 5). Some 80 producers have so far attended the "Entrepreneurs"
 workshops to develop their production material. Much of this material has
 already been given tangible shape by financing, which has resulted in the
 production of full-length cinema films, television films, documentaries and
 a series of video clips.
 In addition, other training, of varying length and level, must be organized
 as a practical response to the economic and cranmercial problems confronting
 the various audiovisual specialities in an environment stamped with the
 needs of the single market.
 As this training measure, although an integral part of the Programme, is
 not directly linked to the other lines of action, it is proposed that it
 should receive a specific budget allocation.
 ---pagebreak---                                    - 18 -
3.3.5. fflhgr dflyelopments
As announced in the Commission communication to the Council and Parliament
on audiovisual policy, the action programme will, in order to maintain
flexibility and an open approach, continue to explore new ground with a
view to adapting to the longer-term trend of the European audiovisual
sector.
3.3.5.1. Hew audiovisual services
The programme can promote the birth, at European level, of new audiovisual
programme services using new commuMoations technologies (interactive
communication on videodisc, broadcasting by satellite or in the new cable
networks).       New   specialized    services,    e.g. subject   channels,
particularly in areas such as training, tourism and news, can be tried out.
The programme will support exchanges of experience and transnational
cooperation between European suppliers of this type of service.
3.3.5.2. Audiovisual activities in countries and regions with lesser
          audiovisual capacity or limited language area
Activities in regions with lesser audiovisual capacity, and in those with a
limited language area in Europe, will be designed to enhance their
audiovisual potential and affirm their identity and their assets.
Moreover, audiovisual development in those regions could have a knock-on
effect for their other economic activities. Regional development of the
audiovisual industry may have a positive economic impact on those regions
and lead to the creation of new and skilled jobs.1
Measures will be tailored to the specific needs and potential of each area.
Transregional initiatives will thus group regions of varying levels in
order to combine assets and promote the transfer of ski lis and
technologies.
    "Regions with lesser audiovisual capacity" must not be confused with
    "less-favoured regions" in the macrceconomic sense. Regions or
   countries with lesser audiovisual capacity are those where the
   audiovisual sector, either because the market is limited in terms of
   population size or because it belongs to an area using one of the less
   widely spoken languages, and regardless of the level of general economic
   development, is particularly likely, provided certain conditions are
   met, to benefit from the effects of transnational cooperation. The
   programme will seek to satisfy these conditions.
 ---pagebreak---                                        - 19 -
One possibility will be to support "horizontal" measures involving the
coproduction of multilingual cross-frontier          magazines, programme
exchanges, vocational training and, especially, the training of managers
familiar with the characteristics of the countries and regions concerned.
The favoured instrument will be to form networks of media development
corporations in regions with either low or high audiovisual capacity in
order to prompt mutually beneficial cooperation.
3.3.6.     Synffrglffi with Awllovlffirt) fflWRgA
3.3.6.1. TWo complementary instruments
Both Community policy and Audiovisual EURKA are pursuing the same general
objective, namely to boost Europe's audiovisual capacity (see the
conclusions of the Rhodes and Strasbourg European Councils). Annex 2 of
the Joint Declaration signed in Paris on 2 October 1989 states that the
European Community may take part in Audiovisual EUR^A projects, notably
through its programmes, but that these projects are not designed to replace
the existing frameworks of cooperation, their objective being rather to
extend or supplement them as appropriate. In practical terms the Community
will be involved in two ways: the opening-up of Community projects to
professionals of non-member countries (on contractual terms to be defined)
 and Community participation in Audiovisual EURKA projects which fit into
 the lines of action described earlier.
 The concept of Community "added-value" will determine Commission action in
 Audiovisual EURHCA.
 The complementarity of the two instruments is facilitated by the difference
 in their nature:
 -  The action programme is a coherent set of incentive measures acting
    upstream and downstream of production proper, with an effect of scale
    deriving from the participation of the twelve Community countries;
 -  Audiovisual EUREKA offers a host structure (based on the original
    technological EURQCA) for helping professional s to devise and execute
    transnational projects by the multiplication of initiatives, especially
    in the production field., with the flexibility afforded by the
    involvement of private and public partners in varying proportions.
 The specific characteristics of these two instruments can produce synergy
 of two types:
 3.3.6.2. The Community action programme extended to include new partners
 The Community gain will be enhanced by the effects of geographical,
 economic and creative enlargement.
 ---pagebreak---                                     - 20 -
The professionals of the signatory countries to the Joint Declaration are
invited to participate in the initiatives of the action programme.
Accessions will be formalized in agreements between the new non-Camraunity
participants and those responsible for the project in question within the
framework of the action programme. The new participants will make a
financial contribution calculated on the hasts of the operational and
management costs of the project.
The action programme is a Community instrument and will be managed by the
Commission, However, extending it to non-Conraunity participants will give
it much greater œramercial and economic potential.
3.3.6.3. The Community as a partner in Audiovisual EURŒA projects
The Community stands to gain from EURKA projects where the broader
dimension might have a positive impact on the activities of the audiovisual
programmes industry in Europe.
The Community will be able to participate in Audiovisual EURffiA projects
via its action programme. In each case the arrangements will be specified
in an agreement.
Participation will be designed:
-   to increase the overall coherence of the various initiatives of the
    action programme by means of participation in projects which build on
    the measures already undertaken;
-   to generate synergies between projects which, when joined together,
    could have a propulsive effect;
 -  to stimulate the independent production sector;
 -  to help in creating a second market for the distribution of European
    works;
 -  to provide projects with the extra finance they need in order to use and
    derive maximum benefit from the European new technologies applied to
    programmes (notably HDTV);
 -  to ensure, by means of support for a project, that the potential of
    regions "with lesser audiovisual capacity" is used to best effect;
 -  to contribute to the success of Audiovisual EUREKA in order to attain
    the general objective of boosting Europe's audiovisual capacity.
The projects which will receive for GDonoraunity support may come under any of
 the programme's lines of action. Such support will be determined by
 reference to the specific features of each project and according to whether
 the Audiovisual EUREKA ijretrument is suited to the objectives. The
Advisory Committee of Member States' representatives will give its opinion
 on the choice of Audiovisual EUREKA projects to be supported by the
 ODmmunity.
 3.3.6.4. Other forms of participation in Audiovisual EURffiA
 Finally, the toraminity will make a contribution - according          to  the
 percentage rates agreed within the Coordinators Committee -           to  the
 operating costs of the Audiovisual EUREKA Secretariat and             to  the
 preparatory work on the European Audiovisual Observatory (and,         if the
 go-ahead is given, to its establishment).
 ---pagebreak---                                         - 21 -
    4. wirTrnre rmraRAmm wrm          PBOFESSJICKALS OP  TOMTtmnNrre HgQFBAK
    This aspect of the programme is of special importance. Beyond the economic
    development they stimulate, exchanges in the audiovisual field will have a
    decisive political impact on the democratic future of the countries
    concerned and on their cooperation with Ctommunity Europe. The aim is
    therefore to promote, horizontally in all the lines of action of the
    programme, cooperation between "Western" and "Eastern" professionals.
    The synergies with the industries of those countries can not only expand
    the market to the benefit of all concerned, but also boost the production
    potential and creativity of Europe as a whole. The programme will include
    innovatory joint-venture formulas, providing in particular for payment in
    the form of services in view of the lack of financial capacity of the new
    partners.
    For example,
    -   on the training side, the operations undertaken within the action
        programme to improve the economic management of the European audiovisual
        industry and to improve knowledge of the market will be particularly
        useful to the professionals from "the East", who will be contending with
        new problems posed by the advent of a mixed economy, open to
        competition. In exchange, the Gammunity professionals could benefit,
        for instance, from the excellent instruction imparted in the Polish and
        Soviet cinema schools;
     -  the application of new European technologies will help to impose
        European standards throughout Europe, especially in the field of HDTV;
     -  films produced in some of- the countries in question will be eligible for
        the Community schemes of loans to be reimbursed from receipts;
        Community films will be distributed in cinemas and on video circuits in
        those countries;
     -  the exchanges of television broadcasts between East and West will help
        to reduce the European production deficit and also strengthen the
         "second market";
     -   the collaboration of cartoon studios, such as the Czechoslovak,
        Yugoslav, Hungarian and other studios in the European studios network
        will help to raise the quality of their products and make them more
        competitive.
     It is proposed that part of the financial allocation earmarked for each
     line of action be devoted to this type of cooperation.       The cooperation
     agreements already in existence or under discussion with these countries
     could, provide a framework for such measures.
     5. QQNCU3SJQN
     The Council is requested to endorse the objectives and lines of action
     presented above by adopting the decisions annexed.    The first, which
(4)
 ---pagebreak---                                   - 22 -
concerns the entire action programme other than the specific training
measure described in point 3.3.4.2., would be based on Article 235 of the
EEC Treaty.
The second, which concerns the specific training measure, would be based on
Article 128 of the EBC Treaty.
Article 235 may be used only when the Treaty does not provide elsewhere the
necessary powers to take action. This is not the case with the training
measure. However, the Commission underlines the importance it attaches to
the overall coherence of the programme.        It considers the decision
proposed on the basis of Article 128 as being complementary to the one
based on Article 235.
 ---pagebreak---                                    - 23 -
                               Proposal for a
                              COUNCIL DECISION
      concerning the Implementation of an action programme to promote
      the development of the European audiovisual industry (1991-1995)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic Community,
and In particular Article 235 thereof,
Having regard to the proposal from the Commission,1
Having regard to the opinion of the European Parliament,2
Having regard to the opinion of the Economic and Social Commit tee, 3
Whereas the Heads of State and Government meeting in the European Council
in Rhodes on 2 and 3 December 1988 underlined the vital importance of
stepping up efforts, including cooperation, to develop Europe's audiovisual
capacity, in matters such as the free movement of programmes, the promotion
of the European high-definition television system or of a policy of
encouraging creativity, production and broadcasting so as to provide an
opportunity of demonstrating the wealth and diversity of European culture;
Whereas the Community already possesses certain instruments designed to put
such a policy into practice;
Whereas on 3 October 1989 the Council adopted Directive 89/552/EEC on the
coordination of certain provisions laid down by law, regulation or
administrative action in Member States concerning the pursuit of television
broadcasting    activities,4 and    that   Directive  contributes    to the
establishment of a large audiovisual market which must benefit both the
audiovisual Industry and ordinary citizens and which has yet to be
consolI dated;
 1 OJ
 2 OJ
 3 OJ
 4 OJ No L 298, 17.10.1989, p. 23.
 ---pagebreak---                                - 24 -
Whereas on 27 April 1989 the Council   adopted Decision 89/337/EEC on high-
definition television, 5
Whereas between 30 September and 2 October 1989 the Commission and the
French Government Jointly organized the European Audiovisual Conference In
Paris; whereas the experts attending the meeting stressed the need for
stronger Community action, particularly to encourage audiovisual creative
work;
Whereas the Joint Declaration of 2 October 1989 approved by      26 European
countries and the Commission established a transnational          cooperation
structure entitled Audiovisual Eureka;
Whereas the Heads of State and Government meeting in the European Council
 in Strasbourg on 8 and 9 December 1989 indicated that a Community action
programme    following  on  from  the Media   (Measures   to encourage    the
development of the audiovisual industry) programme should be endowed with
the necessary financial resources and that the necessary synergy with the
Audiovisual Eureka initiative should be ensured;
Whereas on                  the Council favourably received the Commission
Communication on audiovisual policy setting out the priority objectives and
 lines of action of a Community policy to provide an overall approach to
 regulatory, technological and industrial questions in the audiovisual
 sector and establishing a timetable for the submission of the specific
proposals required for its implementation;
Whereas the development of the industrial aspects of this overall policy
will have to be based on the experience acquired and the positive results
 achieved by the Commission in applying the pilot phase of the Media
 programme; whereas the evaluation of that phase carried out by the
 Commission and by a group of independent experts has demonstrated the need,
 if Europe's audiovisual capacity is to be expanded, for a longer-term
 programme;
 Whereas, beyond the continuation and further development of the projects
 carried out at the pilot phase, developing new pilot projects may have a
 catalysing effect on areas of the European audiovisual market which have as
 yet not been adequately explored;
 Whereas, to achieve maximum results, Community action must allow for the
 European dimension of the audiovisual market, which also entails taking
 account of the work to be carried out within the framework of Audiovisual
 Eureka;
 Whereas for this purpose encouragement should be given, via the appropriate
  instruments and in the spirit of the Joint Declaration of 2 October 1989,
 to the development of additional links between Community schemes and those
 carried out within the framework of Audiovisual Eureka-,
 5   OJ No L 142, 25.05.1989, p. 1.
 ---pagebreak---                                - 25 -
Whereas, as stated in the Joint Declaration of 2 October 1989, Audiovisual
Eureka projects are not designed as replacements for Community schemes,
their purpose being, where appropriate, to extend or supplement them;
Whereas it is Imperative that the European audiovisual industry match
supply to demand; whereas it must therefore act to prevent further
fragmentation of the markets and overhaul its production and distribution
structures, which are too narrow and do not yield an adequate return;
Whereas, in this context, special attention needs to be given to small and
medium-sized businesses and to the Community            regions with   lesser
audiovisual capacity, when organizing market structures; whereas action
must therefore be taken to ensure all appropriate coordination with the
Community Initiatives now under way in these fields-,
Whereas in the development of the programme-making industry proper regard
should be had for the different cultural identities of the various
countries and regions; whereas, in the same spirit, account needs to be
 taken of the position of regions in Europe with less widely spoken
 I anguages;
Whereas the development of the programme-making industry calls for a
mastery of new technology and should enable economies of scale to be made;
Whereas increased use of new forms of European technology, particularly
 high-definition television and in the areas of audiovisual programme
 production and distribution, may help to enhance the value of the
 technologies in question;
 Whereas the response to the cultural, technological and           industrial
 challenges generated by evolving communications techniques and the growing
 requirement for audiovisual programmes Is to be found first and foremost in
 the commitment and drive displayed by the professionals;
 Whereas the media professionals and the Member States must be closely
  involved in developments during the main phase of the programme; whereas
 the exchange of information and experience and consultation between the
 various parties involved and the Commission are vital to the task of
 enhancing the effectiveness and overall cohesion of the Community's
 audiovisual policy as a whole;
 Whereas the purpose   of the Community's action in this area must not be to
 try to stand in for   but to supplement and extend what Is being done by the
 authorities in the      Member States; whereas establishing machinery for
  liaison, cooperation  and training complements national moves;
 Whereas the primary aim of financial input from the Community must be to
 arouse interest and contributions from additional sources of financing
 supplied by interested parties, thereby having a multiplier effect on the
 development of the audiovisual industry-,
 Whereas measures designed to establish the internal market in stages over a
 ---pagebreak---                            - 26 -
period ending on 31 December 1992 need to be adopted; whereas the Internal
market comprises an area with no Internal frontiers In which freedom of
movement for goods, people and services is guaranteed;
Whereas, to attain the objectives of the Community as stipulated in
Article 2 of the Treaty, it is clearly necessary to promote the European
audiovisual programme-making industry as part of the operation of the
single, market ; whereas, since the Treaty makes no provision for specific
powers for that purpose, it is necessary to rely on Article 235;
Whereas the estimated requirement in terms of the Community's contribution
to the proposed programme is for 235 million ECU, to be spread over five
years from 1991 onwards; whereas the allocations will be determined on the
basis of the financial perspectives and within the limits of the amounts
available for each year's budget,
HAS DECIDED AS FOLLOWS:
                                   Article 1
An action programme to promote the development of the European audiovisual
 industry, called "Media", is hereby adopted for a period of five years from
 1 January 1991.
                                   Article 2
The aims of the programme shall be as follows:
 -  to help establish a European audiovisual area within which Community
    firms will act as a driving force alongside those from other European
    countr les-,
    to stimulate and increase the capacity of European film and audiovisual
    programme makers to supply on competitive terms, with special regard for
    the role and requirements of small and medium-sized businesses, the
    legitimate interests of creators and the position of countries In Europe
    with smaller audiovisual production capacities or less widely spoken
    languages;
 -  to step up intra-European exchanges of films and audiovisual programmes
    and, with a view to securing a better return on investment, to make
    maximum use of the various means of distribution which either exist or
    are still to be set up in Europe-,
 -  to contribute towards European production and distribution      companies
    being able to obtain a larger share of world markets:
 -  to promote and enhance the value of the new European communications
    technologies in the production and distribution of audiovisual material;
 -   to encourage an overall approach which allows for the interdependence of
    the various audiovisual sectors and ensures that moves undertaken at
    national     level complement   those undertaken    at  European   level.
 ---pagebreak---                                      - 27 -
                                   Article 3
To attain the objectives set out In Article 2, the following measures shall
be put Into effect In accordance with the procedure laid down In Article 7:
-   the Improvement of mechanisms for the distribution of European
    productions, in particular through the establishment of specialist
    networks, support for multilingualism and market access for independent
    productions;
-   the improvement of the production environment, with particular reference
    to the development of screenplay-writing and pre-production, the
    application of new forms of technology, including high-definition
    television, the development of specific sectors such as animation and
    the creation of a "secondary market", notably by making use of archives;
-    the creation of a climate favourable to the financing of production and
    co-production schemes, particularly by encouraging the setting-up of
    European venture-capital and guarantee-fund networks;
-    the promotion of new audiovisual services, particularly those which use
    new    audiovisual   techniques    for  disseminating   and   transferring
     Informat Ion-,
-    the development of the audiovisual potential of regions with smaller
     production capacity or less widely spoken languages, particularly
     through the establishment of transnational networks of media promotion
     and development agencies;
     the encouragement of cooperation between audiovisual professionals in
     the Member States and other European countries, especially Central and
     Eastern Europe.
 These measures are described in greater detail in Annex I.
                                    Article 4
 The implementation of the action programme shall also involve Community
 participation in Audiovisual Eureka projects which complement or extend the
 measures described in Article 3 and satisfy the conditions for Community
  involvement set out in Annex II.
 The Community shall also contribute to the operating costs of the
 Audiovisual Eureka Secretariat [and to the setting-up of the European
 Audiovisual Observatory],
                                    Article 5
 The resources allocated to the measures provided for in the programme shall
 be     determined    in  the   framework    of   the   budgetary   procedure.
 ---pagebreak---                                     - 28 -
                                   Article 6
As a rule, parties to contracts with the Commission for the implementation
of the measures provided for in Article 3 must provide a substantial
proportion of the funding, representing at least 50% of their total cost.
                                   Article 7
1. The Commission    shall   be   responsible  for  Implementing the   action
   programme.
2. For the purpose of     implementing the action programme the Commission
   shall be assisted by    a committee of an advisory nature, consisting of
   the representatives     of   the Member    States and chaired     by   the
   representative of the   Commission.
   The representative of the Commission shall submit to the committee a
   draft of measures to be taken. The committee shall deliver its opinion
   on the draft within a time limit which the chairman may lay down
   according to the urgency of the matter, if necessary by taking a vote.
   The opinion shall be recorded in the minutes; in addition, each Member
   State shall have the right to ask to have his position recorded in the
   minutes.
   The Commission shall take the utmost account of the opinion delivered by
   the committee. It shall inform the committee of the manner in which its
   opinion has been taken into account.
3. The matters on which the Commission consults the committee shall include
   the fol lowing:
   - priority schemes;
   -  the criteria for selecting projects and contractors;
   -  the allocation of funding for priorities;
   -  financial contributions within the meaning of Article 4;
   -  the evaluation of projects;
   - exceptions to Article 6;
   -  the evaluation of the programme for the purpose of drawing up the
     report provided for in Article 8.
 ---pagebreak---                                 - 29 -
                                    Article 8
   After the programme has been in operation for two years, the Commission
   shall present a report on the results achieved to the European Parliament,
   the Council and the Economic and Social Committee.
   At the expiry of the programme, the Commission, in accordance with the
   procedure laid down in Article 7, shall send a report on the Implementation
   and results of the programme to the European Parliament, the Council and
   the Economic and Social Committee.
   Done at Brussels,                               For the Council
                                                   The President
5)
 ---pagebreak---                             - 30 -
                           ANNEX I : Measures
                 and Indicative breakdown of costs (ECU million)
1.  Distribution mechanisms                                            100
1.1 Distribution of films In cinemas                                    40
    Significant development of action taken by EFDO (European Film
    Distribution Office) to promote the cross-frontier distribution of
    European films in cinemas; extension of this support system to works
    produced at a cost of up to ECU 4 500 000;
    Measures to promote European films outside the Community (offices for
    the promotion of European films and television programmes, group
    presence at festivals and on fairs);
    Study and implementation of measures to promote the film sector
    (cinemas) -,
1.2 Distribution on video cassette and television broadcasting          20
    Prolongation of the EVE measure (European Video Area), which is a
    system of advances on receipts to promote the production and cross-
    frontier distribution of European works. Extension of the system, by
    creating networks of médiathèques and public libraries to promote the
    output of programmes on video cassette;
    Encouragement for the broadcasting by television stations of
    programmes produced by independent European producers.
1.3 Support for multilingualism in television programmes                10
    Extension of the BABEL scheme ("Broadcasting Across the Barriers of
    European Language"), to promote the circulation of European products
    designed for television;
    Support for the development of multilingual television stations;
    Undertake with the framework of BABEL, measures for perfecting the
    skills of journalists and other audiovisual professionals working in
    a multilingual environment.
1.4 Development of markets for independent producers                    30
     Intensification of the EURO-AIM scheme, a services structure which
    organizes the group presence of independent producers on
     international markets and gives them advice; it will:
 ---pagebreak---                            - 31 -
    - ensure a more conspicuous European presence on the major markets;
    - highlight particular sectors of production (archives,
       documentaries, youth interests, etc.);
    - develop promotional activities on non-Community markets-,
    - develop the services available to small producers;
    - computerize the compilation and dissemination of data on
       independent European production.
2.   Improvement of production conditions                               90
2.1 Development of preproductlon                                        25
    Development of the European SCRIPT Fund (encouragement for the
    development of screenplays and preproductlon) by increasing its
    financing capacity and providing, in addition, professional services
    such as:
    - assistance In the field of script writing;
    - assistance with regard to the financing of production.
    Extension of aid for development and preproductlon to companies
    presenting "packages" of programmes;
    Extending these measures (intended primarily for works of fiction) to
    creative documentaries;
    Developing, within the framework of SCRIPT, the professional skills
    of European screenplay writers, in particular by organising "script
    doctoring" sessions;
2.2 Restructuring of the animated cartoon industry                      25
    Encouragement for the formation of networks of production studios by
    cofinaneing coordination and management costs; ensure that the
    complementary measures for the transfer of know-how between the
    cartoonists, studio managers and graphics coordinators who will be
    needed to form these networks are taken;
    Contributing to the harmonization and computerization of production
    modes and to the industrialization of working methods;
    Support for the production of "pilots" by providing seed capital in
     the form of advances on receipts;
    Development of an information system specific to the European
    animated cartoon industry based on meetings between producers and
    distributors as well as the computerization of professional
     Informat ion.
 ---pagebreak---                            - 32 -
2.3 Promotion of the use of new European technologies in the production
    of programmes                                                       25
    Extension of the activities of the MEDIA Investment Club:
    - by increasing the number of Its members,
    - by issuing invitations to tender so as to encourage innovative
      projects,
    - by providing support for measures designed to promote the
      production of films and programmes using the European HDTV standard
      (in liaison with EUREKA-Audlovlsual and EEIG "Vision 1250").
    - by promoting schemes for the initiation of professionals in the
      use, in the production of audiovisual works, of new techniques in
       Image synthesis, digital TV, high-definition TV and interactive TV.
2.4 Contribution to the establishment of a "Second Market", using archive
    material                                                            15
    Support for the operation and consolidation of MAP-TV (linking up of
    European archives services);
    Turning this "memory bank" to advantage by reissuing and
    rebroadcasting works or by using them for the production of new
    serles;
    Research into and experimentation with solutions for the problems
    concerning royalties, which hamper the use of archives;
    Production of catalogues to be used for the promotion of archives.
3.  StImulation of financial investment                                 15
    Encouragement for the establishment and development of structures
    designed to mobilize and stimulate investors (risk-capital fund,
    guarantee fund, investment pools, etc.).
4.  Other measures                                                      30
    Continuing to explore new areas in order to adapt the action
    programme to developments in the European audiovisual sector.   For
    example, in the following fields:
    - promotion of new audiovisual programme services using new
      broadcasting technologies (development of experiments in fields
      such as interactive communication, subject channels, etc.);
 ---pagebreak---                              - 33 -
   - development of potential in Community countries and regions with
     smaller audiovisual capacity or limited language area;
5. Promotion of cooperation with professional circles In Central
   and Eastern European countries.                                  p.m.
   Part of the financial allocation for each of the lines of action
   (1 to 4) will be devoted to this type of cooperation.
                                                     TOTAL            235
                                              #'
 ---pagebreak---                                 - 34 -
                                    ANNEX II
                  Community Involvement in Audiovisual EUREKA
Both Community policy and Audiovisual EUREKA are pursuing the same general
objective, i.e. to boost Europe's audiovisual capacity In accordance with
the conclusions of the Rhodes and Strasbourg European Councils. In this
connection, Annex 2 to the Joint declaration signed in Paris on
2 October 1989 concerning Audiovisual EUREKA states that the European
Community may take part in Audiovisual EUREKA projects, particularly
through Its programmes, but that these projects are not designed to replace
the existing cooperation frameworks, their objective being rather to extend
or supplement them as appropriate. In practical terms, the Community will
be involved in two ways-, the opening-up of Community projects to
professionals of non-member countries (on contractual terms to be defined)
and Community involvement in Audiovisual EUREKA projects which fit into the
 lines of action described in Annex 1.
The concept of Community "added value" will determine Commission action in
Audiovisual EUREKA.
The positive complementarity between the Community action programme and
Audiovisual EUREKA is helped by the difference in their nature:
       The action programme Is a coherent set of incentive measures acting
       upstream and downstream of production proper with an effect of scale
       deriving from the participation of the twelve Community countries-,
       Audiovisual EUREKA offers a host structure (based on the original
       Technological EUREKA) for helping professionals to devise and execute
       transnational projects by the multiplication of initiatives
       especially in the production field, with the flexibility afforded by
       the involvement of private and public partners in varying
       proport ions.
The specific characteristics of these two instruments can produce synergy
of two types:
 1.    The Community action programme extended to include new partners
The Community gain will be enhanced by the effects of geographical,
economic and creative enlargement.
The professionals of the signatory countries to the "Joint Declaration" are
 invited to participate in the initiatives of the action programme
Accessions will be formalized in agreements between the new non-Community
participants and those responsible for the project in question within the
 framework of the action programme. The new participants will make a
 financial contribution calculated on the basis of the operational and
management costs of the project.
 ---pagebreak---                                 - 35 -
The action programme is a Community instrument and will be managed by the
Commission assisted by the Advisory Committee provided for In Article 7.
However, extending it to non-Community participants will give it much
greater commercial and economic potential.
2.     The Community as a partner In Audiovisual EUREKA projects
The Community stands to gain from EUREKA projects, where the broader
dimension could have a positive impact on the activities of the audiovisual
programmes Industry In Europe.
The Community will be able to take part in Audiovisual EUREKA projects via
 its action programme. In each case the arrangements will be specified in
an agreement.
Participation will be designed:
       to increase the overall coherence of the various initiatives of the
       action programme by means of participation In projects which build on
       the measures already undertaken;
       to generate synergies between projects which, when Joined together,
       could have a propulsive effect;
       to stimulate the independent production sector;
       to help in creating a second market for the distribution of European
       works;
       to provide projects with the extra finance they need in order to use
       and derive maximum benefit from the European new technologies applied
       to programmes (notably HDTV);
       to ensure, by means of support for a project, that the potential of
       regions "with lesser audiovisual capacity" is used to best effect-,
       to contribute to the success of Audiovisual EUREKA in order to attain
       the general objective of boosting Europe's audiovisual capacity.
The projects which will receive Community support may come under any of the
 lines of action of the programme described in Article 3. Such support will
be determined by reference to the specific features of each project and
according to whether the Audiovisual EUREKA instrument is suited to the
objectives. The Advisory Committee of Member States' representatives will,
as provided for in Article 7, give its opinion on the Audiovisual EUREKA
projects to be supported by the Community.
 3.    Other forms of participation in Audiovisual EUREKA.
The Community will make a contribution - according to the percentage rate
 agreed within the Coordinators' Committee - to the operating costs of the
Audiovisual EUREKA Secretariat and to the preparatory work for the
establishment, should this be so decided, of the European Audiovisual
Observatory.
 ---pagebreak---                                     - 36 -
                                      Proposal for a
                                     COUNCIL DECISION
       concerning the implementation of a Community vocational             training
                      m e a s u r e in the audiovisual sector
THE COUNCIL OF THE EUROPEAN C O M M U N I T I E S ,
Having regard to the Treaty establishing the European E c o n o m i c C o m m u n i t y ,
and In particular A r t i c l e 128 thereof,
Having regard to the proposal from the C o m m i s s i o n , 1
Having regard to the o p i n i o n of the European P a r l i a m e n t , 2
Having regard to the o p i n i o n of the Economic and Social C o m m i t t e e , 3
                           ••#
1   OJ
2   OJ
3   OJ
                           tVft
 ---pagebreak---                                - 37 -
Whereas the Heads of State and Government meeting In the European Council
In Rhodes on 2 and 3 December 1988 underlined the vital               Importance of
stepping up efforts, including cooperation, to develop Europe's audiovisual
capacity, In matters such as the free movement of programmes, the promotion
of the European high-definition television system or of a policy of
encouraging creativity, production and broadcasting so as to provide an
opportunity of demonstrating the wealth and diversity of European culture;
Whereas the Community already possesses certain instruments designed to put
such a policy into practice;
Whereas on 3 October 1989 the Council adopted Directive 89/552/EEC on the
coordination of certain provisions           laid down by      law, regulation or
administrative action In Member States concerning the pursuit of television
broadcasting     activities, 4    and   that    Directive    contributes    to   the
establishment of a large audiovisual market which must benefit both the
audiovisual    industry and ordinary citizens and which has yet to be
consolidated;
Whereas between 30 September and 2 October 1989 the Commission and the
French Government jointly organized the European Audiovisual Conference in
Paris; whereas the experts attending the meeting stressed the need for
stronger Community     action, particularly        in the field of        vocational
 training-,
Whereas the Joint Declaration of 2 October 1989 approved by             26 European
 countries and the Commission established a transnational                cooperation
 structure entitled Audiovisual Eureka;
Whereas the Heads of State and Government meeting in the European Council
 in Strasbourg on 8 and 9 December 1989 indicated that a Community action
 programme   following on      from   the Media     (Measures    to encourage    the
 development of the audiovisual industry) programme should be endowed with
 the necessary financial resources and that the necessary synergy with the
 Audiovisual Eureka initiative should be ensured;
 Whereas on                    the Council favourably received the Commission
 Communication on audiovisual policy setting out the priority objectives and
 lines of action of a Community policy to provide an overall approach to
 regulatory, technological and industrial questions in the audiovisual
 sector and establishing a timetable for the submission of the specific
 proposals required for its implementation;
 Whereas the development of the industrial aspects of this overall policy
 will have to be based on the experience acquired and the positive results
 achieved by the Commission in applying the pilot phase of the Media
 programme; whereas the evaluation of that phase carried out by the
 Commission and by a group of independent experts has demonstrated the need
 for   more   transnational     cooperation    on   vocational    training   in   the
 audiovisual sector;
 4   OJ No L 298, 17.10.1989, p. 23.
 ---pagebreak---                               - 38 -
Whereas for this purpose encouragement should be given, via the appropriate
Instruments and In the spirit of the Joint Declaration of 2 October 1989,
to the development of additional links between Community schemes and those
carried out within the framework of Audiovisual         Eureka relating to
vocational training;
Whereas, in this context, special attention needs to be given to small and
medium-sized   businesses and    to the Community    regions with     smaller
audiovisual capacity, when organizing market structures; whereas action
must therefore be taken to ensure all appropriate coordination with the
Community initiatives now under way in these fields;
Whereas the primary aim of financial input from the Community must be to
arouse Interest and contributions from additional sources of financing
supplied by interested parties, thereby having a multiplier effect on the
development of the audiovisual industry;
Whereas a measure concerning vocational training needs to be added to the
other Community measures designed to promote the development of the
European audiovisual industry; whereas these measures must be conducted in
para I lei -,
Whereas the estimated requirement in terms of the Community's contribution
 to the proposed measure is for 15 million ECU, to be spread over five years
 from 1991 onwards; whereas the allocations will be determined on the basis
of the financial perspectives and within the limits of the amounts
available for each year's budget,
HAS DECIDED AS FOLLOWS:
                                  Article 1
A Community measure for the development of      vocational  training in the
 audiovisual programmes industry covering a     period of    five years from
 1 January 1991 is hereby adopted.
                                   Article 2
 The aim of the Community measure shall be to help, In particular by
 improving the skills of audiovisual professionals in the Community in
 economic and commercial management, to establish conditions in which
 undertakings in the sector can derive maximum benefit from the dimension
 offered by the single market.
 ---pagebreak---                                    - 39 -
                                  Article 3
To attain the objective referred to in Article 2 transnational vocational
training schemes In economic and commercial management shall be developed
in the sectors of film and audiovisual programme production and
distr ibut ion.
                                  Article 4
The implementation of the measure may also involve Community participation
 in Audiovisual Eureka projects which complement or extend the measure.
                                  Article 5
The resources allocated to the measure shall be determined In the framework
of the budgetary procedure.
                                  Article 6
As a rule, parties to contracts with the Commission for the implementation
of the measure must provide a substantial proportion of the funding,
representing at least 50% of their total cost.
                                  Article 7
 1. The Commission shall be responsible for implementing the measure and for
    ensuring coordination with other Community measures to promote the
    development of the European audiovisual industry.
2. The Commission shall be assisted by a committee of an advisory nature,
    consisting of the representatives of the Member States and chaired by
    the representative of the Commission.    The committee shall be the one
    provided for in Council Decision 90/ /EEC5- to assist the Commission
     in Implementing the action programme to promote the development of the
    European audiovisual industry (1991-1995).
    The representative of the Commission shall submit to the committee a
    draft of measures to be taken. The committee shall deliver its opinion
    on the draft within a time limit which the chairman may lay down
    according to the urgency of the matter, if necessary by taking a vote.
 5. OJ No
 ---pagebreak---                                   - 40 -
   The opinion shall be recorded in the minutes; In addition, each Member
   State shall have the right to ask to have his position recorded In the
   minutes.
   The Commission shall take the utmost account of the opinion delivered by
   the committee. It shall inform the committee of the manner In which its
   opinion has been taken into account.
3. The matters on which the Commission consults the committee shall include
   the fol lowing:
   - the criteria for selecting contractors;
   - financial contributions within the meaning of Article 4;
   - exceptions to Article 6;
   - the evaluation of the programme for the purpose of drawing up the
     report provided for in Article 8.
                                 Article 8
After the measure has been in operation for two years, the Commission shall
present a report on the results achieved to the European Parliament, the
Council and the Economic and Social Committee.
At the expiry of the measure, the Commission, In accordance with the
procedure laid down in Article 7, shall send a report on the implementation
and results of the programme to the European Parliament, the Council and
the Economic and Social Committee.
Done at Brussels,                               For the Council
                                                The President
 ---pagebreak---                 ~Ll4-
ENCOURAGING EUROPE'S MEDIA INDUSTRY
       A Review of MEDIA 92
                  by
  a Committee of Experts appointed
     by the European Commission
                                    March 19')0
 ---pagebreak--- ENCOURAGING EUROPE'S MEDIA INDUSTRY
A Review of MEDIA 92
Preface
We were invited in January by the European Commission to carry
out an evaluation of the MEDIA 92 Programme, to be delivertîd by
the middle of March.   This required us to work intensively if
we were to make what we regarded as the necessary inquiries
into each of the projects, and the impact of the Programme as a
whole.
The Committee held seven formal meetings.    In addition, each
member carried out a number of personal inquiries into the
 impact on users of the various projects.   We met the Directors
of MEDIA 92 on three occasions and the co-ordinators of each
project at least once.    Members of the Committee paid visits to
projects located in Hamburg and Paris.
We would like to express to all those concerned with MEDIA 92
 and its projects our appreciation of their co-operation.   We
would also wish to put on record the valuable research and
drafting assistance we received from Mr Hanno Fry, our
 editorial assistant.
 Sir Ian Trethowan  (Chairman)
 Mr Bo Christensen
 Mr Enrique De Las Casas
 Mr Massimo Fichera
 Mr Hans Tijssen
 ---pagebreak---                                  kl
TABLE OF CONTENTS
       Preface
1.     Introduction
1.1.   The Role of MEDIA 92
1.2.   MEDIA'S Financing
1.3.   The Committee's View of MEDIA 92's Performance
2.      Summary
 2.1.  General Recommendations
 2.2.  Specific Recommendations
 3.     EFDO
 4.     European Script Fund
 5.     EAVE
 6.     CARTOON
 7.     MEDIA INVESTMENT CLUB
 8.     MEDIA VENTURE
 9.     EURO-AIM
 10.    BABEL
 11.    EVE
  12.   Comments On Matters Outside The Immediate Remit
  13.    Epilogue
 ---pagebreak---                                         M
  MEDIA 92 REPORT
  1.   Introduction
  The European film and television industries reflect both the
  benefits and drawback's of the Community's diversity - a rich
  and varied creative and cultural tradition, but a fragmented
  distribution system and a lack of a common language.             More
  films are made each year in Europe than in the United States,
  and many win international awards, but 80% of them never cross
  the frontiers of their country of origin.
  The Community has affirmed its intention to take positive
  action to foster a distinctive European audio-visual industry,
  most recently at the Strasbourg summit, and in the Commission's
   statement to the Council of Ministers which proposes an action
   programme.
   From our own individual experiences, we can say that the
   Community's positive approach has been a strong encouragement
   to the European film and television industries.            The crucial
   role played by television in recent events in Eastern Europe
   has provided a timely reminder of the unique power of the
   media, and of the fact that any society must be actively
   concerned in ensuring that :.ts audio-visual industries develop
   beneficently, and provide a true and distinctive reflection of
   the peoples it serves.
   1.1.    The Role of MEDIA 92
   The MEDIA 92 Programme was «et up to try and create more
   co-operation in the European audio-visual industry, (cf.l
   below).   Even the longest-running of its nine projects is still
   in its infancy, but it is already clear that MEDIA has
1. Programme d'action en faveur àe. la production
audiovisuelle européenne, cormriinication de la Commission au
Conseil, COM (06) 255 final
 ---pagebreak---                                -</i'
demonstrated the potential to create the coherence and
co-ordination which the European film and television industry
needs so critically, and which the Commission seeks.
Through MEDIA 92, the Community can try to ensure that, as its
economic and political initiatives draw closer together, its
constituent national and regional groupings are encouraged to
maintain their individuality and diversity, while at the same
time contributing to a strong and distinctive European identity.
Film and television are where culture and economics cross.    At
present the European industry is strong in creative talent and
professional skills, but it is relatively weak economically.
 Strengthening the media in Europe will strengthen both European
culture and European economies; both will suffer if some
 strengthening is not implemented.   We have no doubt that an
 expanded MEDIA programme wh:.ch pays especial attention to those
 regions and aspects of the Industry which are at present
 relatively weak, is crucial if the European audio-visual
 industry is to provide employment and maintain a distinctive
 European presence on the screens.
 1.2.    MEDIA'S Financing
 We attach great importance to the underlying financial
 philosophy of MEDIA 92.   It is, in their own words, "not a
 subsidy machine".   On the contrary, they would aim, over a five
 years action programme, to bring their operations to financial
 autonomy.   With regard to the administrative costs of the MEDIA
 92 projects, these at the moment are usually paid partly by the
 Commission and partly by the host country.   We feel that in
 future these should be borne» in their entirety by MEDIA 92, and
 should be regarded as repayable loans.
 With most of the projects, MEDIA 92 offers seed money, which
 has to be matched by money from other, frequently commercial
  sources.  Commercial participation is important, alongside^ that
 ---pagebreak---                                  H
of public broadcasters.    If the European film and television
industries can evolve more co-operation and co-production, they
should become more financially viable.
1.3.    The Committee's View of MEDIA 92's Performance
We shall in our report suggest that some of the projects would
benefit from increased fundLng by the European Commission, and
we shall also make a few criticisms of the existing programme
and suggest some changes.    3ut we have been impressed by the
efficiency and the realism of the small MEDIA Programme central
unit and most of the project teams.
Our review of the MEDIA 92 projects has been largely ad hoc.
We have made ourselves acquainted with some of the plans
MEDIA 92 has been developing for an expanded programme but we
 have not been in a position to consider them in any detail.    We
 note that many, but not all of the recommendations of the
 Commission's 1986 programme have been implemented; several new
 features have found our explicit approval, e.g. the creation of
 CARTOON.   In other cases we have re-emphasised points made in
 the original document but not implemented, e.g. the close
 association between distribution in film, television, and
 video.   We have not, however, in the relatively short time
 available to us, made a sysiiematic assessment of the whole area
 We believe that the time has come for MEDIA 92, and indeed
 other European initiatives, to be placed clearly in a wider
 context.   We recommend there should be a systematic and
 thorough study of the entire; audiovisual industry to establish
 the specific needs which have to be filled in Europe and to
 co-ordinate the various initiatives aimed at meeting those
 needs.   With this as background, and mindful of the rapid
 changes that some of the projects may be expected to undergo,
 we recommend that MEDIA 92 should be assessed again in about
 two years' time.   With this we couple the immediate
 ---pagebreak---                                 -te
recommendation that all projects should establish targets and
criteria for assessment.
Before turning to the separate projects, there is one general
point we would make. The MEDIA Programme is, we understand,
precluded from supporting individual productions directly.
This is justified since the Commission should not itself choose
programmes. There should ba no restriction, however, on
support of production by the projects of MEDIA 92. Most film
and television productions nowadays are based on a financial
package which includes an agreement under which the
distributor, for film, or the broadcaster, for television,
advances a substantial .sum of money to the producer before
production begins.
Since the central reason for creating MEDIA 92 is to encourage
much greater co-operation between the national audiovisual
 industries within the Community, it is essential that the
 relevant projects should be free" to foster co-production based
on partnerships between producers and distributors.
 One further general point: If expanded MEDIA 92 is to be fully
 effective across the Community, we believe that it should take
 stronger steps to publicise not only the umbrella organisation
 but each individual project.
 ---pagebreak---                                  k*
2.   SUMMARY
2.1.   General Recommendations
1.     The work of MEDIA 92 should be expanded into a five year
action plan according to established targets and methods of
assessment;
2.      All major MEDIA 92 projects should aim to be
self-financing within that five year term;
3.      Efforts should be. made to harmonise the roles of MEDIA 92
with those of other European audio-visual projects;
4.      MEDIA 92 should take steps to make its individual
projects more widely known within the European industry;
 5.     The work of MEDIA 92 s;hould be reassessed in two years'
 time, after a systematic and thorough study of the European
 audio-visual industrv as a whole;
 2.2.   Specific Recommendations
 1)    EFDO should be given a substantial increase in funding.
 Its basic limit to production budgets should be raised to
 3 million ecu and it should take special steps to encourage
 production in very low budget countries;
 2)    The European Script Fund should expand substantially, and
 should be given extra -funding to take its approved projects to
 the production stage;
 3)    EAVE should be continued, but subject to its courses being
 inter-disciplinary, to consideration of cost effectiveness and
 duplication, and to MEDIA 92 promoting additional
 ---pagebreak---                              -^5-
inter-professional advanced training in connection with
existing film and television institutions;
4)    CARTOON should be given a substantially increased budget,
and encouraged particularly to form links with Eastern Europe;
5)    The MEDIA INVESTMENT CLUB should continue to be supported,
but the extent of MEDIA 92's financial involvement should be
reviewed;
6)    MEDIA VENTURE does not require the continued involvement
of MEDIA 92;
7)    EURO-AIM should be encouraged, but producers should be
charged for using its services;
 8)   BABEL is potentially a very important project, but
MEDIA 92 will need to introduce a new and expanded structure;
 9)    EVE should be merged with EFDO, or at least work very
 closely with it.
 ---pagebreak---                                     So
3.     EFDO - European Film Distribution Office
Considering that so many films are made in Europe and yet not
distributed, we consider that this is one of the central
projects of the MEDIA 9-2 Programme.
Its object is to stimulate the distribution of films with
budgets below 2.25 million ecu; the Office uses a loan fund of
2 million ecu and an administrative budget of 0.35 million
ecu.    It has 61 advisory members who pay 100 ecu per annum.    It
makes loans to distributors for one half the budgeted
distribution costs which include marketing, copies, dubbing
etc.    The criteria for making loans are exclusively
quantitative.    Distributors from 3 different countries must.
 a
   PPlyr and preference is given to films from countries with low
 production and to countries with low distribution capacity.    Of
 the total funds 40 percent are given to films with budgets
 below 0.7 million ecu.    Loans are repayable after distributors'
 investment and 30 percent overheads have been covered by box
 office takings.    An additional sum of up to 10 percent of the
 loan is also payable if the distributors go into overall profit.
 The project has been operating for 18 months.    Loans have been
 made to 107 distributors for 25 films.    Six months after the
 first loans had been made the supported films had been seen by
 an audience of 1.3 million.    By the present time, the audience
 is estimated at 5 million.    Up to the middle of 1989 there had
 been a return cash flow from the distributors of 0.24 million
 ecu. We have been given no later figures.
 The Report of the Assises Européennes de l'Audiovisuel (the:
 Assises) (p 130) acknowledged the action taken by EFDO to
 promote European works within and outside Europe and hoped that
  it would be sustained and strengthened.
 We are convinced that the value of EFDO to the European
  industry has already been established. We recommend that its
 ---pagebreak---                                 ~5<r
loan fund should be substantially increased so that it can make
a more significant impact on the distribution of European
films.   The total annual production of films in the Community
with budgets below 2.25 million ecu is about 500.    In the past
EFDO has had more applicants for loan funds than it could
satisfy.
We take the view that EFDO should raise its limit on production
budgets to 3 million ecu, with the exception of European
co-productions where a limit of 4 million ecu might be
suitable.   The present limit of 2.25 million ecu is too low for
many of the films that have some chance of success.    However,
in order to take proper account of the countries where all
 films have a very low production budget, a third category of
 low budget with a corresponding points advantage might be
 introduced.
We consider that the production of films of European interest
 would be stimulated further by including distribution
guarantees (presale) in the distributors' budgets for which
 EFDO can make loans.  Many distributors are involved in the
 production finance of films.   EFDO's loan fund would obviously
 have to be further increased substantially in order to be able
 to assume this function.
 Furthermore, we would point out that distribution deals for
 films nowadays include television and video rights.   It seems
 appropriate to us, therefore, that such deals should be
 supported by one rather than several organisations.   An
 amalgamation of, or at least a very close formal association
 between, EFDO and EVE therefore seems indicated to us, as well
 as the inclusion of distribution to television channels.
 We support EFDO's intention of opening offices in the United
 States as well as their efforts to include East European
 countries in their organisation.
 ---pagebreak---                                  -S2
Finally, we wish to stress the need for EFDO and EURIMAGES to
come to an agreement regarding their present and future
activities.    As things staid, there is a danger of a
duplication or competition which may not be in the interest of
the European public.
4.   European Script Fund
The object of the European Script Fund is to stimulate the
preparation of development packages for across-border fiction
projects.    This includes script, production budget, business
plan etc.    A novel method of selection has been developed.
Judgements are made on the basis of treatments - not of
 scripts - taking into account the characteristics of each
 country.   Loans amounting to one half of the development costs
 are awarded to applicants who submit treatments with a strong
 story line, good production potential, and likely appeal to
 European audiences.    The Fund has received over 1100
 applications in the first year of operation and has awarded 83
 loans totalling some 1.7 million ecu so far.    Loans are
 repayable when production starts plus 15% per annum commission.
 One half of the administration budget of about 0.45 million ecu
 is provided by British industry, the other half by the European
 Commission.    Non-EC countries are preparing to join the Find by
 contributing to both administration and loan accounts.
 Switzerland has recently jcined the Fund; Au.stria has applied.
 The Assises gave "unqualified support to the following proposed
 extensions of the Fund: adding the responsibility for
  (creative) documentary productions and arts programmes;
 extending the geographic range to all countries willing to
 contribute, providing essential support to writers, directors
 and producers during script development and pre-production and
 adding responsibility for incentive funding of production
 companies" (p 6 8 ) . Further, "the initiative of the Fund is
 ---pagebreak---                               -53-
considered to have achieved undeniably positive results.    Its
effectiveness can be extended only on the express condition
that the financial resources are increased.    The Fund has
provided a not inconsiderable launch for screen writing for
such countries as Portugal, Ireland, Greece and Denmark."
The Committee welcomes the objects of the Fund; our enquiries
have shown that its selections have been recognised as wicls
ranging and realistic.   The work of the Fund can only be fully
evaluated after it has existed for a number of years, but we
conclude that it is performing a very valuable function in the
development area of European fiction.    In order for the Fund to
achieve this and in order for it to make sufficient impact on
the level of quality, and on the range of choice, available to
 investors in European fiction over a period of five years, we
consider that the Fund should concern itself increasingly with
 bringing the projects it hoj; helped to develop up to the
 production stage.  We recommend .that the Fund's financial
 resources should be increased substantially.
 As for the Fund's mode of operation, wc endorse the practice of
 selection by 2 or 3 people backed up by advisors, but recommend
 that there should be a chancie in the selectors every 3 years.
 Amongst the various aspects of fiction already covered by the
 Fund we wish to place specicl emphasis on the development of
 television series and serials, where Europe? is especially weak,
 and on the collective writing of such projects.
 ---pagebreak---                               -bh-
5.   EAVE - European Audio-visual Entrepreneurs
This project commenced operations in June 1988.   Its object is
to train entrepreneurs in the audio-visual industry.    Using
national organisers as selectors of applicants it has an intake
of about 20 participants and 20 observers a year.   They tcike
part in, and observe, respectively the comprehensive review by
experts of the projects brought by the participants.    These
progressive reviews are held throughout one year at 3 one-week
residential courses.
The project has an annual turnover of about 1 million ecu.
MEDIA 92 contributes 0.325 million ecu, French and Belgian
ministries and the Brussels film school together about the same
amount and 0.2 million ecu are contributed by the participants
and observers.   As an extension, business seminars are planned
 in Spain.
The Assises, on page 130, acknowledged the action taken by EAVE
 and expressed the hope that the initiative will be sustained
 and strengthened.
 We have studied the literature put out by the project and the
 extension of the project proposed quite recently by the ME:DIA
 92 Programme.  EAVE argues that its courses are a significant
 addition to the work of the national schools, by making young
 entrepreneurs more familiar with the realities of the market
 place, and encouraging associations between entrepreneurs'* from
 different countries.  We support this objective but we see two
 risks: of duplicating work already done effectively in the
 various national film and television schools, and of
 over-specialising, separating creative and managerial
 disciplines.
 MEDIA 92's initiatives should concentrate on teaching media
 professionals how to co-produce in Europe and instructing
 managers who want to become active in the media in the
 ---pagebreak---                                   - & -
essential characteristics of the industry. We judge there is a
place for EAVE, provided it brings together all professional
disciplines, and concentrates its courses on those relatively
inexperienced in the audio-visual industry. Alongside this,
MEDIA 92 should help to promote the expansion of advanced
teaching based on the already existing film and television
schools combined in the European CILECT. We recommend that the
cost effectiveness of the- EAVE project should be reviewed, that
a time-table be developed for making the project
self-financing, and that MEDIA 92 should take note of the fact
that the inter-disciplinary nature of this particular project,
and its geographical spread, require sensitive and effective
management.
 6.   CARTOON
This project has been operating for 2 years. It is primarily
 designed to encourage European co-operation in the production
 of animation programmes and the industrialisation of studios.
 Two groups of studios have oeen formed, 2 more are about to be
 formed, and several others are in the negotiating stages.
 CARTOON is also helping to develop a European training scheme
 for animators as part of a 3-year emergency plan. Furthermore
 the project helps to develop scripts for animation programmes
 using an adapted form of th«* one used by the European Script
 Fund. The making of pilots is also supported.
                                                           t
 The project has an annual administration budget of 0.25 million
 ecu provided as to 40 percent by the European Commission. The
 cost of encouraging co-operation, - including the preparation
 of a 'technical bible' - has been 0.1 million ecu per annum on
 average from MEDIA 92 funds, far less than the amount invested
 by the studios themselves; the turnover of the 2 newly formed
 groups for current productions is anticipated to amount to a
 total of 38 million ecu in 2 to 3 years. 0.1 million ecu have
 been contributed from MEDIA 92 funds to the training scheme,
 ---pagebreak---                                 -y* -
about 20 percent of its total cost. About 0.5 million ecu out
of MEDIA funds has been provided as loans for the development
of scripts for 23 projects out of 84 applications in 2 years.
This represents.some 20 percent of the full development costs.
Scripts are selected .by a committee of five experts. The
developed scripts are estimated to generate a total production
budget of 25 million ecu in the next 3 years. In 1990, 0.15
million ecu will be available from MEDIA 92 as conditional
loans for making pilots as part of pre-production, representing
some 25 percent of the cost.
The Assises expressed support for the work of CARTOON in the
area of the training of trainers (p 68).
We are conscious that, on tae one hand, animation lends itself
admirably to be a pan-European project, and that on the other
hand, the European industry is particularly weak in this area.
We are impressed very favourably with the achievements of the
project so far, and strongly favour its further development.
We welcome the project's intention to encourage state-of-
 the-art technologies in this field.
 We consider that the project is underfunded, not least because
we feel that in this project, above all, MEDIA 92 can help to
 promote a highly desirable «expansion into eastern Europe, where
 animation has reached a higii artistic and technical standard.
 We recommend therefore that the project should have
 substantially increased funding.
 ---pagebreak---                                   s*~
7.    Media Investment Club
The Media Investment Club of 10 members including MEDIA 92 is
just over a year old.    The other members are industrialists,
financial establishments, communications groups, and television
companies.    The Club exists to stimulate the use of advanced
technology in audio-visual productions and it is also concerned
with training, information, and export in the same area.
It is intended to recruit- additional members to the Club, the
medium term aim being to have 50 members, 30 of which will be
small to medium sized companies.     This will make it easier for
the Club to raise its share of the investment in appropriate
projects.    The Club also intends to become active in initiating
new projects.
The Club has an administrative budget of 0.44 million ecu, half
 of which comes from the EC.    Its investment budget was about
 0.9 million ecu last year; this year it will be 0.46 million
 ecu.   It is intended that MEDIA 92 will continue to match the
membership fees paid by the other members.      Projects are
 selected by a committee of 6 professionals in the fields of
 production, engineering, industry and finance.     We recommend
 that someone with editorial experience should be included.
 Applications are judged for innovation, content, and potential
 for earning a profit; projects can be supported only if they
 are sponsored by at least 2 members from different countries.
 Nearly 0.6 million ecu have been spent so far for 7 projects
 out of 76 submitted.    The remaining applications were judged
 not to satisfy the conditions of the Club.     In 5 of the
 projects in which the Club is looking for a return on
 investment it acted as co-producer.     The Club forecasts that
 some of its projects will be outstandingly successful.
 ---pagebreak---                                 -s  3-
The Club has also subsidised the training of new creators with
about 0.1 million ecu.
The new technologies working party of the Assises regarded the
MEDIA Investment Club as providing the basis for a solid
experiment.
We were concerned initially about two aspects of this project:
1.   the relatively small membership fee paid by each of the
Club's large enterprises; the small sums collected in this way
cannot affect the development of the technologies.
2.   why, when all the companies involved were quite large,
MEDIA 9 2 should be needed a:s a member.
We were persuaded to look a*: the present situation as part of a
medium term strategy which aims at strengthening the smaller
 and medium sized units of the industry.  In this light we have
 accepted that the Club has needed both the larger organisations
 and the initiative and participation of MEDIA 92 for its
 inception, and that it will continue to need the participation
of MEDIA 92 for reaching its medium term goal.   We came to the
 conclusion, on the other hand, that the level of financial
 participation in the future should be reviewed.  We were also
 satisfied that the Club represented a useful forum in which
 production and industrial developments could be discussed
 between producers and manufacturers and between different
 levels of industry.
 ---pagebreak---                               -S"?
8.   Media Venture
This scheme is expected to start up in a few months time under
Luxembourg law and taxation and is not yet fully defined.    Its
capital is expected to be batween 25 and 50 million ecu, v*ith 2
million ecu coming from MEDIA 92.   None of the associates will
hold more than 10 percent of the capital assets.    A number of
investors were said to have declared their interest in the
scheme; full claritv regarding individual investors could not
be reached in the time available to the committee.
Media Venture will invest primarily in    high-budget European
films and prestige television series with a good commercial
potential and in their distribution.    They will seek to be
involved in co-productions between European and US producers.
It is anticipated that the investment will be concentrated on
works costing at least 7 million ecu to produce.    The Committee
were told that Media Venture» would not be able to buy the
 producers' rights, as they were precluded from doing so if they
wanted to take advantage of the Luxembourg tax laws. This
 avenue, however, would be available to other financiers.
 Projects will be selected for financing by a subsidiary of
 Media Venture called Media Venture Conseil consisting of 2 or 3
 permanent staff and a network of advisors.
 Studies have been undertaken of all European film and     <
 television markets from both the legal and financial aspects.
 The report of these studies has not yet been published but a
 list of the participants has: been supplied.
 The Committee has some difficulty in commenting on a structure
 that is not fully defined.   Films budgetted at more than
 7 million ecu should, in our view, stand or fall as commercial
 ventures.  MEDIA 92*s participation is relatively small, and we
 ---pagebreak---                                  -t>Ù~
do not believe should be necessary.    We recommend that MEDIA 92
should not continue to be involved in this operation.
9.   EURO-AIM
Euro-Aim, which has been in operation for 2 years, is a support
structure providing a range of services to assist independent
producers in the marketing, promotion, and sales of their
productions.    It facilitates producers' attendance at existing
media trade fairs by creating large-scale "umbrella" exhibition
stands.   This is complemented by new marketing initiatives and
by its data bank.    Euro-Aim selects the companies it supports,
giving priority to companies new to markets, less experienced
companies, and those that aire judged to be original and
 creative.   To finance its 1M89 activities, 1989 Euro-Aim
 received 1 million ecu from MEDIA 92 and a total of 2.4 million
 ecu from other public and private sources.    Euro-Aim calculate
 that they have assisted European independent producers to sell
 nearly 2000 hours of programmes representing sales of 13
million ecu.    Over 150 buyers - including some from overseas -
 have requested searches from the database representing some
 30,000 data sheets being distributed.
 The Assises (p 130) acknowledged the action taken by Euro-Aim
 and expressed the hope that the initiative will be sustained
 and strengthened.                                          /
 Euro-Aim is launching a new database to help European producers
 find European co-producers. Euro-Aim is also starting to offer
 a year-round, free marketing and distribution consulting
 service to European independent producers.
 We consider that Euro-Aim - including its database - is a very
 useful project, which should be encouraged to concentrate on
 small distributors and small countries.    The project should be
  supported, and particularly should seek to increase the level
 ---pagebreak--- of effort devoted to selection and to follow-up the contacts it
has helped to make.    We suggest that this will require sone
increase in funding.
We feel, however, that the project is now sufficiently well
established for it to charge producers a fee for services
provided, with the object of making it self-financing in the
medium term.
 10.  BABEL - Broadcasting Across the Barriers of European
Language
This is an assocation between MEDIA 92, the European
 Broadcasting Union, and the Alliance Européenne pour la
 Television et la Culture.    It grants aid for dubbing and
 subtitling programmes to be broadcast by television
 organisations.   Since October 1988, 27 projects from 14
 countries have been supported with a view to 60 broadcasts in
 several languagues.    In addition 4 large multilingual
 broadcasts with live simultaneous translations were broadcast.
 The project has an income o: 0.22 million ecu, 0.1 million ecu
 coming from MEDIA 92.    The cost of administration amounting to
 maybe 30,000 ecu appears to be largely covered by the EBU.    All
 staff is part time.    It is not clear whether the cost of staff
 is included in the administration costs.                   .
 The Assises, while recognising BABEL's positive results, saw
 the need for an increase in its financial resources.
 MEDIA 92 intends to transform the project: to start to make
 advances on receipts instead of granting aid, and to create a
  permanent full time staff.
 ---pagebreak---                              -Cl-
We are convinced that the task of making programmes availcible
to audiences in the various European languages is one of the
major problems facing television in the coming years.
We support the continuation of BABEL on the revised basis now
proposed by MEDIA 92. We recommend in particular that its work
should be extended to encompass the new technologies available
to maximise multilingual transmissions (such as new television
standards and teletext). An increase in funding is required.
 ---pagebreak---                               -cl-
11.    EVE- European Video Area
The study phase of this project has been completed.   The
project is run in co-operation between The Irish Film Board and
Médiathèque of Belgium.   It is intended by the spring of 1.990
- to provide a system of advances on receipts for videotapes
when the issuer/distributor is reluctant to take the financial
risk.
- to arrange co-operation between existing European public
médiathèques and libraries to encourage the issue of
video-films that are at present unprofitable.
 It is intended that the project should have a loan fund of
 1 million ecu and an administration budget of 0.4 million ecu
 covering both the Dublin an! Brussels offices.
 Dublin is an interesting centre for a MEDIA project, but we had
 difficulty in seeing the ne=d for an independent existence of
 this project, since distribution deals nowadays include video
 rights together with rights for film and television.   We
 consider it should either be incorporated into EFDO or at least
 work in very close co-operation with it.   As for the proposed
 co-operation between médiathèques, we understand this already
 exists and we are not convinced that MEDIA 92 need be involved.
 ---pagebreak---                                 - 4 4-
12.   Comments on Matters Outside the Immediate Remit
During our inquiries into the various MEDIA projects, people in
the film and television industries raised with us certain
additional issues on which they argued that the Commission
could help to promote more European co-operation.
The most substantial handicap for European co-productions is
the different laws operating within the audio-visual supporting
systems, covering such matters as copyright, financing, trade
procedures, technical standards, quotas etc.    Many in the
industry believe - and we agree - that as a first priority, the
EC should work towards harmDnising the different laws and
systems in order to establish the best possible climate for
European co-productions.
Film makers and those responsible for helping the growth of a
European film industry urge that the Commission should
encourage cinema exhibition:? by ruling that cinema seats should
be taxed at the lowest rate of VAT.    The film industry argues
that it is in the cinema that their products are tested, and
that it is on its showing in a cinema that a film establishes
itself in the video and television market place.
We appreciate that these matters lie outside our terms of
reference, but we feel that there is considerable force in them
and that given the wish of the Commission to support a
distinctive European audio-visual industry, we should mention
 them in this report.
One issue on which we were not asked to comment but of which we
 became aware is the geographical spread of the individual MEDIA
projects.    As we see it, concentrating the projects in one or
 two centres could be cost effective and encourage interaction
 ---pagebreak---                               '(,&-
between them. If, on the other hand, it is felt desirable for
Community reasons that the projects should be spread widely,
then we must point out that at present several are based in
Brussels, and of the rest, not one is situated south of the
latitude of Geneva.
We hope, in any case, that individual member states will not
seek to extract strict proportional quotas from the MEDIA 92
funding. Apart from the practical difficulty of achieving
this, we believe that MEDIA 92's role, in addition to
stimulating the European, industry as a whole, is to give
particular support to the smaller countries, and regions, and
particularly those with low production. In the medium term, on
the other hand, such targeted assistance will benefit the
industry right across the Community.
 ---pagebreak---                              -u
13.   EPILOGUE
Subject to our reservations: about certain individual projects,
it is our judgement that MEDIA 92 has fully demonstrated that a
five year action programme would make a major contribution
towards developing a European audio-visual industry which would
offer a distinctive European perspective on the Community's
screens, and would be more internationally competitive and, by
no means least, would strengthen the film and television
industries in the smaller ctnd less prosperous areas of the
Community.
We also believe that several of the MEDIA 92 projects - EFDO,
ESF and CARTOON - could be powerful instruments in developing
co-operation between the members of the Community and what we
may hopefully describe as the newly re-emerging democracies of
Eastern Europe.    If the Community's action programme is
 implemented, is it fanciful to speculate that by the end of its
 five year term MEDIA 92 micht be providing an umbrella for
audio-visual co-operation from the Atlantic to the Urals?
 Sir Ian Trethowan
March 1990
 ---pagebreak---  ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM (90) 132 final
                                                      DOCUMENTS
EN                                                                              16
                                 Catalogue number : CB-CO-9Û-190-EN-C
                                                             ISBN 92-77-59855-7
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