CELEX: 51993PC0462
Language: en
Date: 1993-10-29
Title: Proposal for a COUNCIL DECISION amending Council Decision 90/685/EEC concerning the implementation of an action programme to promote the development of the European audiovisual industry (MEDIA) (1991-1995)

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                                   COM(93) 462 final
                                                                   B r u s s e l s , 29 October 1993
                                 COMMUNICATION FROM THE COMMISSION
                            on the action programme to promote the development of the
                                       European audiovisual industry (MEDIA)
                                                     (1991-1995)
                                                    Proposal for a
                                                COUNCIL DECISION
                              amending Council Decision 90/685/EEC concerning the
                        implementation of an action programme to promote the development
                                   of the European audiovisual industry (MEDIA)
                                                     (1991-1995)
 gtJ3ïf*pj
                                           (presented by the Commission)
rat a?Sy»rafajm, *
W>"1&/
 ---pagebreak---                                      - A ~
                                      Contents
    1.    INTRODUCTION
    2.    SUMMARY OF THE EVALUATION OF THE MEDIA PROGRAMME
          2.1   Operations affecting industrial structures
                2.1.1  Setting up crossfrontier structures
                2.1.2  Balancing market forces
                2.1.3  Stimulating new financing structures
                2.1.4  Promoting structural coherence in the audiovisual
                       chain
          2.2   Lines of action in different branches of the industry
                2.2.1  Scale of operations
                2.2.2  Quality of operations
                2.2.3  Relevance of projects
                2.2.4  Sectoral impact of operations
          2.3   Effects of the economic context
    3.    BUDGET IMPLEMENTATION
    4.    COLLABORATION WITH NON-MEMBER COUNTRIES AND AUDIOVISUAL EUREKA
          4.1   General context
                4.1.1  EEA countries
                4.1.2  Europe agreements
                4.1.3  Bilateral agreements
          4.2   Consequences of the involvement of non-member countries for
                the future of the programme
          4.3   Collaboration with Audiovisual EUREKA
    5.    COMMISSION PROPOSALS FOR STRENGTHENING THE PROGRAMME
          5.1   Guidelines
          5.2   Proposals
                5.2.1 Proposals involving amendment of council
                       Decision 90/685/EEC
                5.2.2  Adjustments to the programme falling within the
                       Commission's executive powers
                       5.2.2.1 - Structural operations
                       5.2.2.2 - Recentering sectoral activities
                       5.2.2.3 - control of project management
    6.    GENERAL CONCLUSIONS
    -  Proposal for a Council Decision
(2)
 ---pagebreak---                                         •Vo -
1. INTRODUCTION
On 21 December 1990 the Council adopted a Decision1 on implementation of an
action programme to promote the development of the European audiovisual
industry (MEDIA) over the years 1991 to 1995.
Article 8 of the Council Decision requires the Commission to produce an
evaluation report on the MEDIA programme after the first two years. The
Commission based the evaluation on an audit conducted by an independent firm
and on discussions with the industry, in consultation with the Advisory
Committee which assists the Commission in implementing the programme. On
23 July 1993 the Commission adopted the evaluation together with guideline
remarks,2 to be referred to the Council, Parliament and the Economic and
Social Committee.
The conclusions of the evaluation have led to the present proposal to amend
the Decision of 21 December 1990 with a view to improving the budgetary and
organizational aspects of the MEDIA programme. Due regard for the principle
of subsidiarity entail that the purpose of the Community's measures in this
area should not be to replace but to complement what is being done by the
authorities in the Member States.
2. SUMMARY OF THE EVALUATION OF THE MEDIA PROGRAMME
A short summary of the evaluation will underline the main trends of the
conclusions from three points of view:
-   the impact of Media on the general structures of the industry in
    accordance with the objectives laid down by the Council;
-   the impact of Media on the various sectors of industry identified by the
    Council;
-   the impact on Media of developments in the general economic context.
2.1   Operations affecting industrial structures
The programme supports the economic development of the programme industry in
expectation of the European audiovisual area. The prerequisite for such
development is to reinforce industrial structures in line with the
requirements of the new area.
1   Council Decision 90/685/EEC, OJ L 380, 31.12.1990, pp. 37-44.
2   COM(93)364.
 ---pagebreak---                                     - 2 -
In many areas the programme has launched industrial structure operations
directed towards this goal. According to the audit, these are the most
visible effects of Media and are clearly seen to have the most potential.
In line with the basic aims of the Council, the structural operations mainly
entail:
2.1.1   Setting up trans-frontier structures
To promote the enlarged market Media fosters cross-frontier cooperation
between national audiovisual operators. By setting up such networks the
programme achieves one of its fundamental aims which is to overcome the
fragmentation of the industry.
But networking is only a first step towards setting up genuine pan-
Community structures. By re-grouping enterprises Media has already brought
about a significant increase in the turnover of those concerned.
There is a general will to achieve restructuring throughout the industry,
but although this is vital for the European audiovisual industry it requires
launch capital on which the returns will only be gradual.
2.1.2  Balancing market forces
The programme gives priority to independent firms, especially small
businesses, which compensate for the absence of large companies in key
areas such as distribution. It practises positive discrimination in favour
of small businesses in countries with less widely known cultures and
languages.
The lion's share of the programme's budget was allocated to these firms and
their groupings. Priority was given to operators with a genuine development
potential, in terms both of the ability to innovate and of human resources,
with a view to developing a solid industrial fabric. The audit clearly
underlined the advisability of such a selective approach.
Today, support for small businesses seems all the more important given that
they tend to be particularly affected by the decline in the economic
situation. In this context Media should contribute to stabilizing
precarious situations, in particular by preserving and developing employment
in line with Community concerns.
 ---pagebreak---                                        3 -
2.1.3   Stimulating new financing structures
The programme is not a system of non-repayable subsidies. It provides seed
capital intended to attract fresh funds to the industry in the form of
investment structures associating private and public partners.
The evaluation shows that the programme has a considerable multiplier
effect: at present Media's contribution to the activities generated by the
projects is only 24% of the total financial volume, the remainder coming
from other sources.
After two years of operation, the average return on investment is still low,
but in some sectors it is nearly 20%. This shows the effectiveness in
market terms of cross-frontier financing structures.
2.1.4   Promoting structural coherence in the audiovisual chain
The programme seeks an overall approach to the industry and aims to be
coherent and cover all links in the audiovisual chain.
Consistency will enable it to ensure economic and commercial follow-up for
the products generated by the industry at all stages of development.
As an instrument to enhance the industrial aspects of programmes, Media
seeks to ensure the best conditions for success, from the drawing board to
the market. The audit underlines the importance of this aspect which should
be reinforced through a number of specific financial, economic and
commercial instruments.
In the long-term the aim is to make the industry more independent in view of
the budgetary constraints in the Community so that professionals -
especially in the smaller countries - can benefit fully from the new
conditions opened up by the single market.
2.2   Lines of action in different branches of the industry
Taking the objectives defined by the Council, 19 projects in five main areas
of action have been developed in the framework of Media.
 ---pagebreak---                                    - 4 -
These areas cover:
-  distribution, exhibition and promotion (eight projects): distribution
   and cinema exhibition of films; video distribution: support for
   multilingualism; presence on international markets; distribution of
   independent productions.
-  improvement of production conditions (seven projects): development and
   preproduction of fiction works and documentaries; support for the
   animated film industry; use of new technologies; establishment of a
   "second market".
-  stimulation of investment (one project): guarantee fund.
-  training in business and marketing for professionals (two projects):
   long courses for young producers; training for all categories of
   professionals with specific needs.
~  development of potential in countries which are small in terms of
   production capacity, geography and language (one project).
2.2.1  Scale of operations
In the two years since its inception the programme's potential impact on the
general structures of the industry can be seen, but it is difficult to make
a detailed evaluation at microeconomic level.
The audiovisual industry operates in long time-spans: it takes several
years to develop a product from initial idea to market release.
only since early 1993 have all the activities planned by the Council for
Media been fully operational. Half the projects were set up recently and
some are still in the launch phase. Funding levels vary considerably,
depending on the aims and context of the projects.
Given the differences in scale the impact of Media sectoral projects can
only be assessed with caution. However, certain aspects of industrial
strategy must be based on these assessments.
 ---pagebreak---                                     - 5 -
2.2.2  Quality of operations
The overall image is positive. On a scale drawn up by the auditor fourteen
out of eighteen projects1 were rated "excellent" or "very good", three
"good" and one "fair". This judgment is borne out by professionals who
perceive the programme as "an effective catalyst for improving the
competitiveness of the industry".
The projects are generally seen as an appropriate response to market
requirements. Most of the projects are perceived as achieving their goals
within the limits of available resources.
2.2.3  Relevance of projects
Although every sectoral project can be justified from the professional's
point of view, some reorganization seems advisable. Given the limited
budget of the programme, it would be wise to concentrate part of the effort
on projects to which more priority tends to be given in terms of industrial
strategy. They include the following:
-  in preproduction (development of fiction works, documentaries, animated
   films and programmes using new technologies);
   in distribution, dissemination and promotion (cinema, television, video,
   multilingualism, international markets);
   in vocational training, on which the Commission will place more stress to
   respond in terms of jobs to the development potential of the industry.
The concentration of effort, which it is anticipated will strengthen the
programme, must be accompanied by the integrated management of projects,
their activities and their impact on the market.
1  One project could not be assessed.
 ---pagebreak---                                      - 6 -
2-2.4   Sectoral impact of operations
After two years major changes in sectors of the European industry cannot be
measured by instruments for short-term analysis. According to the audit
such changes can be measured only after five to ten years.
-   Nevertheless, there have been developments in some areas that point to
    the potential impact of the programme. For example, in the film sector it
    can be seen that the incentives provided by Media enable it to influence
    a significant segment of European production. The same holds true for
   measures to promote television co-productions, development of animated
    films and exploitation of audiovisual works on the "second market".
    Training measures, especially in the economic and marketing areas, were
    rated very highly by the audit.
By contrast, in many other areas, especially video, the resources available
to the programme do not allow it to develop sufficiently to attain the
critical mass needed to have an impact on the market.
The worsening economic situation is hitting the audiovisual industry hard
and the problems facing the programme are more difficult than initially
anticipated.
2.3   Effects of the economic context
The trend in this context is all the more marked now that the audiovisual
industry is confronted by more intense competition from outside the
Community.
Also affected by the crisis, the North American industry in particular is
adopting a more aggressive approach to the European market where the profits
are essential to its survival. The US industry already needs to make 30% of
its film sales on the Community market, and up to 60% of its video sales.
This growing aggressiveness is subjecting the European industry to pressure
which the small businesses - one of Media's priority targets - are finding
it increasingly difficult to resist.
 ---pagebreak---                                     - 7 -
In some sectors small businesses have little room for manoeuvre; for
example, in Germany film distribution is 98% dominated by the US, and on the
UK video market, the figure is nearly 99%.
In television the outlook is equally worrying. Besides the numerous
American programmes seen on European channels, whole channels of North
American origin are becoming established in the European audiovisual area.
New technologies - digital, interactive and multi-media - are being
developed, ensuring continuous expansion of the industry, but they will not
enable European small businesses to develop original programmes. If all
software is taken together, the United States has increased its audiovisual
exports by 50% in the last two years in readiness for future European
markets.
The fast expansion of the audiovisual sector could probably allow important
industrial developments with positive effects on employment. Nevertheless,
to preserve these potentialities, we have to encourage the professional
cross-boarder cooperations and take advantage of the single european market.
3. BUDGET IMPLEMENTATION
The last recital of Council Decision 90/685/EEC puts the budget for the
entire Media programme (1991-1995) at ECU 200 million and states that
allocations will be determined on the basis of the financial perspective and
within the limits of annual budget availabilities. Article 1 puts the funds
for Community participation in 1991 and 1992 at ECU 84 million.
Commitment appropriations of ECU 32.459 million and ECU 45.162 million were
allocated to the programme in 1991 and 1992 respectively, making a total of
ECU 77.621 million. For 1993 the figure is ECU 48.822 million. The
appropriation in the preliminary draft budget for 1994 is ECU 49 million.
From the conclusions in the audit, it emerges that once the programme
becomes fully operational in 1993 its annual budget requirements (to
implement the lines of action in the Decision) will be about ECU 50 million,
taking account of the general economic background.
At the end of 1994, the fourth year of implementation, Media will have used
ECU 174.841 million of the estimated ECU 200 million in commitment
appropriations required to implement the programme over five years.
 ---pagebreak---                                         - 8 -
    There are several reasons why annual expenditure exceeded the average of
    ECU 40 million.
    Primarily, as mentioned earlier:
    -  The difficult economic context affects the industry in general and in
       particular the fabric of small businesses which form the main component
       of the industry in Europe. The tougher competition from outside Europe
       increases the stresses, especially in the areas of exhibition and
       distribution.
       Returns on investment in projects did not match up to expectations. The
       audit points out that the development-production-marketing phase for
       audiovisual products must be assessed over five to ten years. This is
       why returns on investment, which vary from one project to another, cannot
       yet significantly refinance the project budgets.
       The massive response of industry to the Media projects, especially in the
       fields of training and development of production projects.
       This response is encouraging in that it favours long-term effects and
       makes it possible to act upstream of the industrial stage, the better to
       orient products towards the European market.
       But it means that the resources allocated to these projects were
       exhausted before the five years initially planned.
    In view of the above, the budgetary authority allocated annual amounts over
    and above the average ECU 40 million over five years provided for under
    Article 5 of the Decision.
    Since the audit estimates that the annual budget requirements of the
    programme stand at about ECU 50 million at the present stage of
    implementation, this level of financing should be maintained until 1995.
    Therefore a further ECU 30 million should be added to the initial estimate
    of ECU 200 million.
(3>
 ---pagebreak---                                      - 9 -
4. COLLABORATION WITH NON-MEMBER COUNTRIES AND AUDIOVISUAL EUREKA
4.1   General context
Involvement in the MEDIA programme is becoming more and more important given
the political impact of the audiovisual industry and the interest being
shown by non-member countries. The council Decision makes provision for
such involvement on three conditions (see Article 4 and Annex II):
-   the countries concerned must be members of Audiovisual Eureka;
-   they must have a formal cooperation agreement with the Community in the
    audiovisual sector;
    they must make a financial contribution in proportion to their
    involvement.
A further point, in the Commission's view, is that the community's
audiovisual policy is a coherent package of measures designed to strengthen
Europe's audiovisual capacity, the MEDIA programme being one element. This
being so, it believes that non-member countries wishing to participate in
the MEDIA programme must endorse the overall objectives of the Community's
audiovisual policy and be prepared to take the necessary steps to attain
them.
The situation differs for each of the three groups of countries:
-   countries belonging to the European Economic Area;
    countries that have a "Europe agreement" with the Community;
-   countries that have a bilateral cooperation agreement the community.
4.1.1   EEA countries
The EEA countries are Austria, Finland, Iceland, Norway and Sweden. Their
participation is governed by the EEA Agreement both in the case of the Media
programme (see Article 9 of Protocol 31) and the other aspects of
audiovisual policy (see in particular Annex X on audiovisual services which
relates to Council Directive 89/552/EEC - the "television without frontiers"
directive).
The contribution of EEA countries is covered by Article 82(1)(a) of the
Agreement (calculations based on GDP) and (b) (cover for the effective costs
of each party's participation).
 ---pagebreak---                                    - 10 -
Pending entry into force of the EEA Agreement, ad hoc participation was made
possible from 1992 through Audiovisual EUREKA, without however prejudging
the final arrangements to be decided when the time comes to implement the
EEA Agreement in this sector. For the moment, the EEA countries'
provisional contributions are paid direct to the projects via Audiovisual
EUREKA.
4.1.2  Europe agreements
The multi-sectoral "Europe agreements" make express provision for
collaboration in the audiovisual sector. The countries whuch have concluded
"Europe agreements" are Hungary, Poland, Slovakia, the Czech Republic,
Romania and Bulgaria. The provisions are similar in each case and cover the
legislative framework (the "television without frontiers" directive), the
Media programme and advanced technologies. There was no significant
involvement of these countries during the reference period (1991 and 1992)
pending entry into force of the framework agreements. Since January 1993
Poland has been participating in one Media project, and from January 1994,
Hungary will be fully involved.
4.1.3  Bilateral agreements
Exploratory talks are in progress with Switzerland and Cyprus.  Applications
have been received from Slovenia, Turkey and Israel.
4.2     Consequences of the involvement of non-member countries for the
        future of the programme
Media is not a cooperation programme according to the terms of Council
Decision 90/6 85/EEC. The principle of proportional funding applied to
non-member countries wishing to participate in the programme is consistent
with this. The participation on an interim basis (total or partial) of
non-member countries in the programme presents problems.
The programme and its lines of action as approved in 1990 set out to
establish a balance between the five Member States with a population of over
30 million and the seven Member States with a population of less than
20 million. The operation of projects attaching special importance to the
second group of countries and the creation of a specific project (SCALE) for
these countries reflect the concern for balance.
 ---pagebreak---                                    -li-
lt now appears that the balance of the programme might be disrupted by
admitting the countries referred to above, which are all in the second
group.
Opening up admission to the programme also presents considerable budgetary
problems.
In the case of the EEA countries experience has shown that the proportional
contribution to the programme (calculated on the basis of Article 92(1) of
the EEA Treaty) by these countries is well below the additional burden their
participation places on it. The operating costs of projects and new
requests for assistance entail an exponential increase in requirements.
Before finalizing the agreements with the EEA countries it is essential to
envisage a supplementary basis for contribution to the programme, namely
Article 82(1)(b) and submit it for approval to the Joint EEA Committee.
Participation by countries which have a Europe agreement with the Community
will raise two types of problem likely to increase budgetary strain: the
technical difficulty of objectively calculating their proportional
contribution, and the financial difficulty they may encounter at the time of
making the contribution. Although most countries expressed the wish to
participate in the programme, their cooperation is bound to be very limited
in practice.
Accordingly, the Commission considers that alternative means of financing
should be found to cover admission to the programme of the countries which
have a Europe Agreement.
Following recommendations of the Copenhagen Europeann Council in June 1993,
the Commission is preparing a communication to the Council on the
participation of non-member countries associated with Community programmes.
Opening up admission to the Media programme will be discussed in this
context. The Commission proposes to carry out an impact study of any
enlargements of the Media programme. In the meantime existing agreements
will continue to be provisional.
With respect to any other bilateral agreements (for example, with
Switzerland or Cyprus) the Commission will present to the Council
negotiating briefs based on the twin conditions of acceptance of the overall
objectives of Community audiovisual policy and full cover by each partner of
the real costs of participation.
 ---pagebreak---                                      - 12 -
4 «3   Collaboration with Audiovisual EUREKA
Collaboration with Audiovisual EUREKA continued throughout the reference
period. It contributed to the establishment of a European Audiovisual
Observatory in 1993, in cooperation with the council of Europe, and the
opening-up to non-member countries for which EUREKA served as a stepping
stone.
The Commission also participated in the "labelling" of 15 EUREKA projects,
four of them under the Media programme. This involvement entailed no
additional financial contribution over and above the aid already granted to
the Media projects. The appropriations available under the Media programme
were allocated in accordance with the rules applicable to the programme.
Generally speaking the commission considers that the labelling scheme is of
limited value.
The community's annual contribution to the budget of Audiovisual EUREKA
(Secretariat and Observatory) under Article 4 of the Council Decision is
ECU 450 000 at present. Once the Observatory becomes operational, the
Community's contribution (under the annual budget for the Media programme)
will have to increase.
Certain amendments will therefore have to be made to Articles 4 and 7 of
Annex I to the Decision.
5. COMMISSION PROPOSALS FOR STRENGTHENING THE PROGRAMME
5.1    Guidelines
The Commission presented the conclusions of the audit to the Advisory
Committee, the representatives of the professional organizations and those
in charge of Media projects.
The following options emerged from their discussions:
-    ensure the continuation of the Media programme generally appreciated by
    industry by maintaining the present level of financing at least until
     1995. The results of this assessment should be taken into account in
     1995;
-   promote closer coordination, or even alignment of certain activities, the
    better to concentrate available resources on priority objectives;
-   reinforce project management by more systematic monitoring of their
    operation;
 ---pagebreak---                                     - 13 -
    study closely the impact of opening up admission to the programme to
    non-member countries before enlargement is finally established;
    in a second stage, envisage extension of the programme beyond 1995 after
    consultations with those concerned while adapting priorities and
    procedures to changes in the audiovisual industry.
5.2   Proposals
5.2.1   Proposals involving amendment of Council Decision 90/685/EEC
The Commission considers that, given the positive results of the progamme in
a number of areas, and to enable it to continue to develop within the
timeframe set by the Council (1995), annual expenditure should be maintained
at the present level.
Accordingly, the Commission takes the view that the amount considered
necessary for the programme should be raised by ECU 30 million.
The evaluation has clearly shown that failure to maintain the annual level
of expenditure would result in:
    sub-critical funding of all projects, leading to a fall in the
    programme's overall effectiveness; or
-   the interruption of certain projects; this would mean that investment
    already approved would be wasted and would leave gaps in the coverage of
    the audiovisual industry.
To take account of the consequences of the participation of certain
non-member countries described under 4.2, it is proposed that Article 4 of
the Decision be amended. The Commission believes that it is advisable not
to finalize the agreements before carrying out a study on the impact of
enlargement on the programme.
Certain amendments to Articles 4 and 7 and Annex I of the Decision are
necessary in the light of comments on Audiovisual Eureka (see 4.3). They
relate in particular to the "projects" concept, for which the mechanisms
have proved inoperable. In addition, provision must be made for a Community
contribution to the European Audiovisual Observatory of the European
audiovisual industry.
These amendments render Annex II of the Decision obsolete.
 ---pagebreak---                                     - 14 -
To give effect to the measures described at 5.2.2 it is proposed that
Annex I be amended and a new Annex II be added to the Decision, containing
the operating procedures of the associations responsible for the management
of the Media projects.
5.2.2-   Adjustments to the programme falling within the Commission's
         executive powers
The consolidation of Media's resources proposed by the Commission will be
accompanied by reinforced strategic priorities and improved project
management.
5.2.2.1   Structural operations
According to the conclusions of the evaluation (see pp. 2-3), three
priorities for industry stand out and should be developed through the
projects:
   stepping up the economic promotion of the industry•s initiatives
   throughout the audiovisual chain;
-   reinforcing and encouraging cross-frontier groupings, particularly in the
   areas of production, distribution and exhibition;
-   increasing the "mobilization effect" of the programme by diversifying
   incentives.
5.2.2.2   Recentering sectoral activities
To step up their impact available resources should be concentrated on
certain priority objectives (see p. 5), including training, preproduction,
distribution and marketing.
Therefore, a two-tier coordination procedure should be established:
    strategic coordination in the framework of the standing control exercised
   by the Commission over its projects. The aim will be to strictly
   delineate project activities and the areas of cooperation between them;
 ---pagebreak---                                     - 15 -
   structural coordination between projects operating in the same sector. In
   some cases it could lead to the integration of various structures in a
   common framework; in others, it would involve a transfer of activities
   between projects.
5.2.2.3   Control of project management
The Commission will ensure transparency of the projects' management
structures.
It will set up a computerized central control system to monitor the
operation, activities and market impact of projects more closely.
6. GENERAL CONCLUSIONS
The Council is invited to approve the Commission's proposals requiring
amendment of its Decision of 21 December 1990 (90/685/EEC) creating the
Media programme, by adopting the attached proposal for a Decision following
consultation of Parliament and the Economic and Social Committee.
Since promotion of the European audiovisual industry is necessary  for the
operation of the single market, and since the EEC Treaty does not  provide
the necessary powers, the amendments must be based on Article 235  of the
Treaty, as was Decision 90/695/EEC.    The proposed amendments are as
follows :
-  an ECU 30 million increase in the budget (last recital);
-  changes to certain provisions on Audiovisual EUREKA projects (Articles 4
   and 7 and Annex I);
-  changes to certain provisions on the participation of non-Community
   countries (Article 4 ) ;
   amendment of lines of action (Annex I ) ;
   inclusion of details regarding operating rules for associations
   responsible for the management of projects (new Annex II).
 ---pagebreak---                                 AG
                                 PROPOSAL FOR
                               COUNCIL DECISION
                                 of
                     amending Council Decision 90/685/EEC
       concerning the implementation of an action programme to promote
        the development of the European audiovisual industry (MEDIA)
                                  (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 Committee,3
Whereas the Commission has presented the evaluation report^ on the first
two years of operation of Council Decision 90/685/EEC,5 as required by
Article 8 of that decision;
Whereas the findings of this evaluation and the results of subsequent
consultations with the industry have highlighted the need for a number of
amendments to Decision 90/685/EEC;
Whereas changes on the audiovisual market also call for amendments to
Decision 90/685/EEC;
Whereas it appears necessary, notably in the light of the findings of the
evaluation, to step up the programme by improving management;
Whereas, if the objectives of the Community as set out in Article 2 of the
Treaty are to be achieved, promotion of the European audiovisual programme
industry is necessary for the operation of the single market; whereas,
since the Treaty has not provided the necessary powers, recourse must be had
to Article 235;
1  OJ
2  OJ
3  OJ
4  COM(93) 364 final.
5  OJ No L 380, 31.12.1990, p. 37
 ---pagebreak---                                    11-
HAS DECIDED AS FOLLOWS:
                                   Article 1
Decision 9 0/6 85/EEC is amended as follows:
1.   Article 4 is replaced by the following:
     "In implementing the programme, the Community may also contribute to
     promoting cooperation with professionals in the audiovisual industry in
     member countries of the Council of Europe. To this end, these
     professionals may be invited to participate in initiatives under the
     action programme within the framework of agreements on cooperation in
     the audiovisual media signed by the Community with the non-member
     countries concerned.     Participation in projects shall be formalized by
     agreements with those responsible for the project concerned; new
     members shall contribute to the project in proportion to their
     participation.
     The Community shall also contribute to the operating costs of the
     Audiovisual Eureka Secretariat and to the operation of a European
     Audiovisual observatory."
2.   The words "participation in Audiovisual Eureka projects", the "second
     paragraph of" and "and agreements provided for in Annex II" are deleted
     from Article 7(3)(c).
                                    Article 2
Annex I to Decision 90/685/EEC is replaced by Annex I to this Decision.
Annex II to Decision 90/685/EEC is deleted.
A new Annex II is attached to this Decision.
                                           Done at Brussels,
                                           For the Council
                                           The President
 ---pagebreak--- ^
  ANNEX 1
 ---pagebreak---                                  ^5>
                                   ANNEX 1
                       MEASURES TO BE PUT INTO EFFECT
1.   Distribution, exhibition and promotion infrastructures
1.1. Distribution and cinema exhibition of films
        Increased support for the cross-frontier
        distribution of European films to cinemas.
        Measures to promote European films outside
        the Community (group presence at festivals
        and fairs).
     -  Reinforcement of measures to promote the
        cinema exhibition sector.
1.2. Distribution on video cassette
        Stronger measures to promote the production
        and cross-frontier distribution of European
        films and programmes on video cassette.
1.3. Support for multilingualism in television
     programmes
     -  Stronger measures to promote the circulation
        of programmes by providing support for dubbing
        and subtitling, by providing research into ways of
        perfecting these techniques and by
        organizing training for audiovisual
        professionals working in a multilingual
        environment.
     -  Support for the development of multilingual
        television programmes and broadcasts.
1.4. Development of markets and support for the
     distribution of independent productions
        Intensifies promotion of independent European
        producers :
        . promoting the presence of producers
          at major international fairs,
        . organizing special fairs for producers,
          distributors and investors,
        . computerizing the compilation and
          dissemination of data on independent
          European productions,
 ---pagebreak---   Stronger measures to encourage the transmission
  by television stations of independent European
  productions.
  Stronger measures to promote the European film
  in general.
Improvement of production conditions
2.1 Development and preproduction
    - support for the development of screenplays
      and the preproduction of works of fiction.
    - Strengthening the capacity to develop
      screenplays and the preproduction of
      creative documentaries.
    - Development of the professional skills of
      European screenwriters.
2.2 Restructuring of the animated film industry
    - Stronger measures to promote the animated
      film industry by:
          encouraging the networking of studios and the
          industrialization of production
          methods ;
          supporting the production of series "pilots"
          and animated films;
          promoting contacts between producers and
          distributors ;
          computerizing the compilation and
          dissemination of data relating to the
          animated film industry.
2.3.  Use of new technologies in programme production
    - Developing the use of new technologies in
      programme production by:
          issuing invitations to tender to encourage
          innovative projects related to high-definition,
          digital and interactive television;
          promoting schemes to initiate professionals
          in the use of these techniques.
2.4 Contribution to the establishment of "a second market"
    using archive material by:
    - providing support for the development of archive-based
      television programmes and the compilation of
      archive inventories.
 ---pagebreak---                            -2 1
    - developing initiatives to catalogue,
      conserve, restore and rescue films.
3.  Stimulation of investment
  - Stronger measures to encourage the development
    of structures to mobilize and stimulate
    investment in the audiovisual industry.
4.  Training in business and marketing for professionals
  - Intensification of measures to provide training for
    young producers.
  - Further development of activities related to
    training in business and marketing in different
    areas of the audiovisual industry.
    Development of potential in countries with smaller
    audiovisual production capacities and/or with a limited
    geographical and linguistic area
  - Promoting development of the audiovisual
    industry in the countries concerned, beginning
    with independent production, by measures designed
    to improve the management and the structure of
    firms.
 ---pagebreak--- 2Z
 ANNEX 2
 ---pagebreak---                                   23
                                  ANNEX II
                       Operating rules of Associations
         responsible for the management of Media programme projects
1. The Associations shall be legally constituted, under the national law of
the country in which they are established, as non-profit-making Associations
(except for projects under the heading "Stimulation of financial
mechanisms"). Their articles of association shall appear in an official
publication.
In the event of the dissolution of an Association, its assets shall be
placed at the disposal of another Association active within the framework of
the Media programme. Provision for such an eventuality shall be included in
the articles of association of each Association.
2. The Associations shall be composed of nationals of the Member States. If
the programme is extended to non-member countries, professionals from those
countries may also be represented in these Associations.
3. As far as possible, a balance of nationalities shall be maintained on the
governing bodies of the Associations, in particular on the Board of
Directors.
4. The members of the managing bodies of the Associations shall rotate on a
routine basis.
5. Permanent staff members and consultants employed by the Associations
shall be recruited after the post has been advertised.   The Commission
shall be associated with the selection procedure.
6. The Associations' activities shall be open to European firms and
professionals in the Member States and non-member countries which may
subsequently be admitted to the programme.
7. An annual agreement shall be concluded between the Commission and each of
the Associations in the context of implementing the Media programme. The
agreement shall include the programme of the Association's activities for
the year in question and a budget estimate.
8. The persons in charge in each Association shall be required to give
notice in good time and obtain the prior agreement of Commission
representatives with respect to all matters affecting the implementation of
the programme, and in particular:
   (a)  the establishment of, and amendments to, the articles of association
        and rules of procedure of the Association;
 ---pagebreak---                                    2-H
   (b)  new initiatives or changes in the programme of activities;
   (c)  publications and advertising, and their content;
   (d)  public events;
   (e)  approaches to international, national or regional political
        authorities;
   (f)  negotiations or agreements concerning the participation of
        professionals of non-Community countries in the activities carried
        out;
   (g)  in general, any negotiations likely to have repercussions on
        relations between the Commission and the political authorities
        and/or professional organizations.
9. Commission representatives shall be invited to attend all meetings of the
authorities of the Association (Annual General Meeting, Board of Directors,
Steering Committee and Experts' Committee). These authorities shall take
the fullest account of observations by Commission representatives.
10. The Associations shall undertake to participate in or arrange to be
represented at meetings and general events where their presence is required
by the Commission (in particular information days and seminars).
11. The Associations shall provide the Commission with any document
requested by the Community institutions, especially in the context of
central management control by the Commission, community financial
allocations may be made only if recipients declare in writing that they will
allow the Court of Auditors to verify the use made of the sum allotted to
them.
12. Every event or publication of the Associations shall state that it is
"an initiative of the Media programme of the European Communities".
13. The Associations shall undertake to require recipients of financial
allocations to include on the products of their activities the words: "made
with the assistance of the European Communities' Media programme".
14. The Assciations shall regularly make available to the Commission the
information required for central management control, particularly with
respect to:
   -operations in the following areas:
        -requests for assistance from firms;
        -expertise and project selection;
        -amount of allocations decided on;
 ---pagebreak---                            25"
     -monitoring procedure and if applicable, recovery of investment;
     -evaluation of projects supported;
-impact of these operations on the market:
     -effects of financial mobilization;
     -dissemination and distribution of programmes;
     -results in terms of audience;
     -visibility of Community intervention;
-internal management of the Association:
     -composition and activities of management bodies;
     -implementation of the annual agreements with the Commission;
     -observance of management rules laid down by the Commission.
 ---pagebreak---                                     z.6
                              FINANCIAL STATEMENT
I.   Title of operation
Proposal for amendment and extension of the action programme to promote the
development of the European audiovisual industry (MEDIA) (1991-1995)
II.   Budget heading involved
Item B3-2010     (part of former Item B3-3000)
III.   Legal basis
-   Article 235 of the EEC Treaty
-   Council Decision 90/685/EEC of 21 December 1990 concerning the
    implementation of an action programme to promote the development of the
   European audiovisual industry (MEDIA) (1991 - 1995)
-   Council Decision... of ... amending the MEDIA programme (1991 - 1995)
IV.   Description of operation
4.1.     Specific objectives of operation
The purpose of the MEDIA programme (1991 - 1995), an integral part of the
Community's audiovisual policy, is to support the economic development of
the audiovisual industry by providing funding upstream and downstream of
production. It contributes to the creation of a European audiovisual area,
balance between market forces and stimulation of investment. It covers all
industrial functions of the sector with five lines of action and 19 projects
run by decentralized associations of professionals in the Member States,
involving almost 20 000 companies and institutions.
The Commission provides coordination in four main sectors: distribution,
exhibition and promotion; improvement of production conditions; financing;
and training.
A recital to Council Decision 90/685/EEC put the Community's contribution to
the programme at ECU 200 million for the period 1991 to 1995. The amount
actually made available, in commitment appropriations, for 1991, 1992 and
1993 was ECU 125.912 million.
 ---pagebreak---                                  Z3
In the preliminary draft budget for 1994, the commission has entered
ECU 49 million in commitment appropriations. Allowing for the progress of
certain projects towards full operational status and the decline in the
value of money, forecasts for 1995 point to a requirement of the order of
ECU 54.450 million.
4.2.   Duration
4.2.1   Evaluation of the programme
The MEDIA programme covers the period 1991 - 1995.
Article 8 of the Council Decision requires the commission to present a
report on the programme to the Council, Parliament and the Economic and
Social Committee at the end of the first two years.
To comply with this requirement the Commission conducted an evaluation based
on:
-   the results of an independent audit carried out by Roland Berger
    & Partner, consultants selected following an invitation to tender;
-   observations by members of the MEDIA Advisory committee;
    comments by representatives of the main associations of professionals;
    remarks by project coordinators.
In the light of these elements, the Commission decided to make a number of
adjustments affecting the management and structure of the programme and
associated projects.
4.2.2   Justification for additional resources
It also decided to propose a partial revision of the programme, involving an
increase in resources (an additional ECU 30 million in 1995) deemed
necessary for implementation of the programme.
The increased funding is necessary to take account of four factors:
1. The harsh economic climate affecting the audiovisual sector in general
    and the fabric of small businesses which are the main component of the
    European audiovisual sector.
2. The massive response of industry to the programme, especially in the
    areas of training and development of production projects.
3. The decision to invest in restructuring operations of the industry given
    its increasingly precarious situation.
 ---pagebreak---                                   28
4. Inadequate returns on projects based on advances granted on the basis of
    receipts. The audit points out that the development-production-marketing
    phase for audiovisual products should be assessed over five to ten years.
    This is why in the first two years of the programme returns on investment
    are still marginal.
These proposed changes require amendment of Council Decision 90/685/EEC.
For details of the nature and financial impact of these amendments, see 7.2.
V.   Classification of expenditure
5.1   Non-compulsory
5.2   Differentiated
VI.   Type of expenditure
In most instances, the exception being training activities which are
subsidized directly, the Commission makes a financial contribution to the
associations that manage the 19 projects. These then make refundable
advances to the various companies eligible under the criteria laid down by
the commission.
Expenditure will be identical under the extended programme and the
additional resources.
VTI.   Financial impact
7.1   Method of calculating total cost of operation
The total cost of the operation during the initial period (1991 - 1995), was
calculated by multiplying the average Community contribution by the average
number of beneficiaries and then aggregating average costs for the
19 projects (details of these cost elements are given in the audit report
annexed to the Commission Communication on the evaluation of the Media
programme (COM(93)364)).
To this were added the running costs of project structures and miscellaneous
expenditure (promotional costs, participation in Audiovisual EUREKA) which
cannot be charged to specific projects.
The method of calculating costs is identical for the additional resources
requested.
7.2   Breakdown of costs
See Annex.
 ---pagebreak---                                     ^3
7.3   Indicative schedule of appropriations
See Annex.
VTII.    Anti-fraud measures
Financial contributions are subject to the production of detailed supporting
documents prior to disbursement.
Furthermore, the various authorities responsible for control (Court of
Auditors, Financial Control, authorizing department) conduct regular checks
on beneficiaries and the associations managing the projects.
Regular audits are provided for under the programme. The first, covering
1991 and 1992, has just been completed. A second is planned for the end of
1994.
IX.   Elements of cost-effectiveness analysis
9.1 The programme sets out to stimulate and reinforce the capacity of the
audiovisual industry to offer European products by contributing to the
creation of a European audiovisual area.
Five main lines of action have been developed under the programme since 1991
and will be developed further between now and the end of 1995.
1. Development of European distribution, exhibition and promotion
    infrastructures.
2. Improvement of production conditions upstream and downstream of
    production proper.
3. stimulation of investment.
4. Business and marketing training for professionals.
5. Development of audiovisual potential in countries that are "small" in
    terms of production capacity, geography and language.
The beneficiaries of these lines of action are to be found at various points
in the audiovisual chain: directors, producers, financiers, distributors,
exhibitors. Priority is given to independent producers and small
businesses.
9.2 The MEDIA programme is an integral part of the Community's audiovisual
policy, intervening to assist the programme industry.
 ---pagebreak---                                   3o
As required by the subsidiarity principle, the programme complements
national support measures.
It operates through ad hoc associations of professionals that ensure that
Community support is adapted to the real, changing needs of the media
industry. The associations managing projects, under permanent Commission
surveillance, usually provide refundable advances.
The multiplier effect is in excess of four: Community support for the MEDIA
programme represents no more than 24% of the investment generated for
projects.
9.3 The external audit carried out after the first two years' of operation
came to the following operational conclusions and made the following
suggestions (a summary of the audit is attached to the Commission's
Communication):
   The MEDIA programme has a high profile and is well-accepted in the Member
   States.
   The overall objectives of the Council Decision - industry potential and
   balanced variety - have been respected.
Industry potential
It is too early to expect the programme to have produced significant results
in terms of quantity but the qualitative approach is judged to be excellent.
Balanced variety
The impact on small businesses and the media industry, notably in the
"small" countries, is considerable and balanced between the different media
(television, cinema, video).
Concentration on efforts to improve competitiveness is regarded as
justified.
Main suggestions for changes and improvements
Budget and timeframe of programme:
MEDIA'S budget is small compared with total support for the audiovisual
industry.
 ---pagebreak---                                  30
The programme should be seen as an additional measure for promoting and
integrating the European audiovisual industry.
1993 is the first year that projects are operating with fully-fledged
structures and proper planning of activities.
It is therefore vital that the resources available for projects in 1994 and
1995 should be of the same order as in 1993.
Of those projects in hand that are subject to audit, nine need additional
resources if they are to continue (two subject to modification). Seven
could continue as at present, while two would have to be scaled down.
Budget allocations must be evaluated in the light of three main criteria
(critical mass of intervention, definition of target groups, and
verification of the value of all activities, present or planned).
In the interests of sound management, an early decision on MEDIA'S future
budget must be taken.
Main proposals for organizational and structural changes
The commission will establish a computerized central monitoring system so
that the functioning, activity and market impact of projects can be checked
more closely.
Project coordinators should be in charge of all the tools used by the
different projects and a management-by-objective system should be
introduced.
X.  Administrative expenditure
Not applicable.
 ---pagebreak---                      ALL AMOUNTS  ARE EXPRESSED IN CURRENT ECU (million) -     fl/s>A/£X
          BREAKDOWN BY
        LINE OF ACTION                                     PROGRAMME 1991-1995
                                        91         92         93         94            95   TOTAL
 1, Distribution, exhibition
    and promotion                    13,813     19,465     20,506     20,825       23,670  98,279
    infrastructures
 2. Improvement of production        12,188     17,175     18,064     18,375       20,500  86,302
    conditions
 3. Stimulation of investment         1,623      2,000      2,413      2,450        2,450  10,936
 4. Training of professionals         2,438      3,320      3,619      3,675        4,500  17,552
 5. Development of potential
    in ^small'1 countries             2,438      3,200      3,618      3,675        4,000  16,931
       GRAND TOTAL                   32,500     45,160     48,220     49,000       55,120 230,000 (1)
(l)  Including  the ECU 30 million  requested for 1995.
 ---pagebreak---                                                                      ISSN
                                            33                            0254-1475
                                                              COM(93) 462 final
                                                      DOCUMENTS
EN                                                                              15
                                Catalogue number : CB-CO-93-507-EN-C
                                                             ISBN 92-77-59607-4
Office for Official Publications of the European Communities
Lr2985 Luxembourg