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					     AUDIO                LICY
IN   THE E                UNION

             MARCH 1994
                                             This report was prepared by the audiovisual Think- tank set up by the
                                             Commission last November as part of the preparations for its
                                             Green Paper ' Strategy options to strengthen the European pro-
                                             gramme industry in the context of the audiovisual policy of the
                                             European Union

                                             It was felt appropriate that contributions from representatives of
                                             European professional organizations , those involved in the ad.
                                                                                     l Member State authorities
                                             ministration of the MEDIA programme,
                                             and any other interested organizations, selected individual profes.
                                             sionals with recognized status in the programme industry should
                                             also be given the opportunity to make their views known through
                                             their personal contributions to the analyses of the issues involved
                                             and their recommendations for strategic solutions.

                                             This Think- tank , chaired by Antonio Pedro Vasconcelos (film and
                                             television producer, former coordinator of the National Secretariat
                                             for Audiovisual Production in Lisbon) was composed of David Putt-
                                             nam (film producer, director of Anglia TV and Enigma produc-
                                             tions), Michele Cotta (journalist and television producer with
                                             France 2, former president of ' Ia Haute Autorite de l'Audio-visuel'
                                             and past head of news at TF1), Peter Fleischmann (film director
                                             founder of the European Association of Film Directors , director of
                                             Hallelujah films) and Enrique Balmaseda Arias- Davila          (lawyer
                                             former legal adviser to Spanish television and past director- general
                                             of the Institute of Film Arts in Madrid.

                                             The expertise of Gaetano Stucchi (RAI)            in the field of new
                                             technologies also provided valuable input.

1 Council Decision of 21.12. 1990 concern-                                         which it now seems appropriate to
                                             The resulting Think-tank   report ,
ing the implementation of the action pro~
gramme to develop the European               make widely available, contains a wealth of analysis and pro-
audiovisual industry (MEDIA) (1991- 95);
                                             posals. It does , however, only reflect the opinions of the authors and
Doc. 90/685/EC published in OJ L 380,
31.12. 1990 , p. 37- 44.                     is in no way an officially approved Commission document.

                                                         2- 3




      1. Economic dimension and impact on employment trends
      2. Sociocultural importance
      3. Sector of dear priority and strategic interest at EU level
      4. Decline of the European audiovisual industry: State of the situation and tendencies
      5. Main reasons on which this decline is based
      6. Seriousness of the situation from a future outlook





      1. The ' television without frontiers ' Directive
      2. Transparencies and guarantees
      3. Regulating the market- place

      1. A more effective market for our products
      2. Better products for our market
      3. Support for cinemas
      4. The new media forms
      5. New supply, new demand: The importance of catalogues

                                 tf- 5
 6. Copyright and other intellectual property rights
 7. Training
 8. Educational opportunity
 9. External markets: The importance of promotion
10. The role of public service broadcasting
11. National and European systems of aid

(on the eve of the first centennial of cinematography)


Michele Cotta

Enrique Balmaseda
Gaetano Stucchi

Peter Fleischmann

David Puttnam

Antonio- Pedro Vasconcelos


Annex 1 -      Questionnaire

Annex 2 -   Measures to increase the market share of European films in the cinemas and
on the television channels of the Community

Dear friend,

       You are no doubt aware of the importance the Commission
and I myself attach to the development of Community policy in the
audiovisual sector. At a time when technological developments are
making new types of communication possible, I am thoroughly con-
vinced that the sector should be rethinking its future and the Com-
mission should step up its support measures.

       At the meeting of ministers in Mons on 4 and 5 October last
year, I informed the ministers of the 12 Member States of my inten-
tion to present to Parliament and the Council a Green Paper on the
audiovisual sector in order to stimulate debate on various options
for the future.

       It is in this context that I am inviting you to chair the Think-
tank the Commission is setting up, in order to ensure the involve-
ment of several internationally renowned figures in the sector.

       The Think- tank will bring together a small group of in.
dividuals who, such as yourself, have a certain authority in this sec-
tor. Its job will be to come up with suggestions for guidelines for
audiovisual policy in line with the conclusions reached at Mons and
in the context of preparing the ground for the Green Paper on the
audiovisual sector with a view to the Conference that is to follow its
publication. Its deliberations should lead to the production of a
report, which is to be the basis of the Commission s Green Paper.
In addition, each member will be called on to chair a thematic
group at the Conference itself.

        In order to facilitate the Think- tonk' s proceedings, which are
to be conducted between 1 November 1993 and 30 May 1994 , it
will come under the MEDIA Business School , since this is the struc-
tore in the Community programme most involved in carrying out
forward- looking research on audiovisual matters. Among the other
members of the Think-tonk will be David Puttnam and Enrique
Balmaseda. The rapporteur will be Gregory Paulger, Head of DG
  S Audiovisual Policy Unit.

       I look forward to working together with you.

                                            Joao de Deus   Pinheiro
                                              Brussels, 3 March 1994

Dear Commissioner,

       I am pleased to submit to you the report of the Think.tank
which you were good enough to ask me to choir.

        As chairman , I would first of all like to underline the con-
siderable efforts mode by the members of the Think-tonk , not only
in replying to your call within very tight deadlines but also to over-
come their inevitable and healthy divergencies on many issues. I .
was able to appreciate the eiforts they made and I am grateful to

      Indeed , with different professional and notional back-
grounds, it seemed at times difficult, if not impossible, for all the
members to reach agreement as much on the issues at stoke as on
the recommendations for action. At all events , the seriousness of
the situation , the urgent need to supply answers and the necessity
for strong political support for the effort our industry must make to
overcome its colossal deficit and its lock of competitiveness lead
each of us to stress the consensus items rather than those which re-
main problematical.

        Therefore, although all the members of the Think-tank have
agreed on the text I am pleased to submit to you, this does not mean
that all the doubts in each of our minds have been lifted as regards
both the diagnosis and recommendations.

        Moreover, as you yourself will see, we do not pretend to pro-
vide definitive answers to all the questions , nor ready-mode solu-
tions to all the problems. We would not presume to do so, even if
we had hod the time and the means.
                              ~~~~         ("

        I am, however, convinced, and I believe the others share this
view, that what is important is to find the right questions and to put
them in the appropriate manner.

        A lot of ground remains to be covered . at the conference you
have decided to convene in the wake of the publication of the Com-
mission s Green Paper. It will then be up to the practitioners and
their representative bodies, the politicians and , I would even soy,
public opinion to toke a position.

       lastly, on behalf of my colleagues, I would like to thank you
for the trust you have placed        in   us, and which we have
endeavoured to deserve.

       Yours sincerely

                                        Antonio- Pedro Vasconcelos
                                                        The GATT negotiations highlighted the strategic importance
                                               of the audiovisual sector. What has become just as obvious is that
                                               the only two players that have remained in the competition are the
                                               United States of America and the European Union.

                                                        For a few weeks , politicians     and public opinion     were
                                               mobilized for a passionate debate where the rhetoric often hid the
                                               real stakes. The Americans wonted to ensure continued domination
                                               of the European market, which is today vital for the growth of a sec-
                                               tor that is their second- largest source of earnings from exports. To
                                               do this, the Americans were bent on eliminating, or at least putting
                                               a freeze on , the fragile . structure of European regulatory and aid
                                               systems, which were especially not to be extended to the new
                                               mediums of cable and satellite.

                                                        The Europeans, on the other hand, were determined to re-
                                               main totally free to regulate and support the audiovisual sector in
                                               all its aspects and in all its areas.

                                                        And yet, the Americans spoke in the name of free competi-
                                               tion (a system that in many countries has become distorted) and
                                               demanded the liberalization of a market that they had, in the mean
                                               time (as T. Guback explains very welP), ' shaped to ensure it would
                                               play in their favour ' while their market remains practically closed
                                               to imports.

                                                        Europe, in contrast, staunchly defending its cultural identity,
                                               gave reason to believe that the audiovisual sector was not of major
                                               economic importance and especially could not be considered a
                                               common activity, regulated by ruthless market rules: ' cinema is not
                                               a product like the others

                                                        This subtlety, unquestionably right, was nevertheless the
                                               historical source of a lot of misunderstanding. Andre Malraux, en-
                                               ding his prophetic ' Sketch of cinema psychology , said, ' Moreover,
1 Guback, T.   Nan-market factors in the in-
                                               cinema is an industry.
ternational distributian ofAmerican films.
Guback' s text is a decisive cantribution to
understanding the often overlooked im-
                                                        Until the 1960s, this double nature offilms - work and pro-
portance of    constc:mt support from the      duct -   did not pose any serious problems in Europe for those who
American Administration for their film and
television industry and especially the way     made them: popular art, European cinema was concentrated in
in which their diplomacy has always back-      two or three major production centres, the prestige of film stars
ed the effort of the MPAA (Motion Pictures
Association of America) to ensure domina-
                                               crossed borders, films enjoyed the public s favour, receipts largely
tion of the European and world markets.        covered production costs and investors did well.
                                                          This Was. a time, not so long ago, when cinema was still prac-
                                                   tically alone on the audiovisual market , before the explosion of
                                                   video and the deregulation of the hertzian waves which brought in
                                                   its woke a whole multitude of private stations , and also before the
                                                   proliferation of satellite and coble and the announcement of digital

                                                          Hoving at the some time reached its full artistic maturity,
                                                   with its best directors (American and European , but also from other
                                                   continents like India and Japan) controlling the forms offilm narra-
                                                   tion , cinema could be said to have become finally that total art, that
                                                   universal language - the ' seventh art' , which the visionary Canudo
                                                   spoke about at the beginning of the century.

                                                          This ' victory' of art over industrial constraints, artists over
                                                   businessmen       encouraged new generations of directors
                                                   everywhere in Europe to fight for the definitive ' liberation '        of

                                                   cinema from what they believed to be market constraints. toter we
                                                   see how and why this small revolution took place and to what extent
                                                   it contributed to making Europe, in the audiovisual field , a conti-
                                                   nent broken up into several small islands isolated from one another
                                                   without the ability either to finance themselves or to face the in-
2 There will never be enough said about
                                                   vading domination ofthe American products thatthey thought they
the historical importance of copyright ~           were fighting.
which still does not recognize directors as
the author of the film (the director s work
being considered as ' work made for hire                   An artistic activity, probably, to the extent that its consump-
- in the consolidation of the American in-
dustrial system c:md which has been for the
                                                   tion is not material but spiritual (factory, but of dreamsL cinema
producer one af the most powerfvl means            like the whole of audiovisual production, nevertheless obeys the
of control over his product and for the            lows that regulate the entire industrial production. Even if it
banks a solid guarantee that the industrial
spirit prevpils over any vague artistic desire     manufactures prototypes, the film and audiovisual industry must
on the part of the director.                       find the means in the market to finance them.
This battle, which has been going on since
the 1920s, has not to date succeeded in
changing the system , despite the recent                     Forgetting this obvious fact, Europe over these post few
canonization by Hollywood of its great
directors (with the grand tributes the             years has chosen what could be called on environmental approach
Academy made to Alfred Hitchcock, Billy            to its film and television production , acting as if it was a ' species on
Wilder,    John Huston , Frank Capra and
many others). It is being waged today at
                                                   the verge of extinction ' that hod to be protected from industrial
the head oftheDirector s Guilds by peaple          predators.
as important as Spielberg and Lucas and
has the support of the Associations of Euro-
pean Directors. It should be add"d , in any                It is not surprising, therefore, that intervention by the States
case, that the problem of American direc-
tors having control over their work has            and the Community in the audiovisual sector too often favoured this
almost disappepred. A director,          in the    attitude, which today enables the Americans to accuse us so easily
European sense of the word, like Martin
Scorsese admits that he has never had any          of protectionism. Yet quotas , specifications , subsidies and taxes
problems with his producer. It would,              have failed to stop the inexorable advance of American products
moreover, be interesting to one day tell the
story of this battle of the great American         on our markets, which in 15 years have risen from 35 to 80% on
directors to ensure control over their             overage in cinemas while European products today only account
works: Manckiewickz , Preston Sturges and
Richard Brooks winning the battle to have
                                                   for 1% of the American market.
the right to write the screenplays to their
films themselves; John Ford going to shoot
westerns in Monum"nt Valley, far from the                  In the USA ,   after the crisis of the 1960s, marked by the
           eye   of the producer, and only film-                                                                especially to
ing the shots absolutely necessary for
                                                    upheaval of industrial and business structures -      due
editing; Preminger filming sequence shots,         the advent of television - as well as corporatist demands and the
                                                proliferation of independent producers, worsened by the disap-
                                                pearance of the lost generation of pioneers and the crisis of con-
                                                fidence suffered by the notion after the traumatic defeat of Viet
                                                Nom , the Americans regained their vitality.

                                                       They were once again on the offensive, with the strategy of
                                                blockbusters ,   the rapid integration of   new marketing channels
                                                (video and television) andan increased concentration of the major
                                                companies throughout the world , while Europe devoted its
                                                energies to building a kind of Maginot line increasingly incapable
                                                of containing. the advance of the Hollywood war machine.

                                                       And now on the eve of the end of the century, with Europe
                                                groping around for a response to the technological challenge of
                                                high definition , the Americans surprise us with a leap forward.
                                                Stressing the development of research on the digital transposition
                                                of images and developing interactive technology, they are capable
                                                of covering the planet with their images through means that make
                                                obsolete the traditional forms of their consumption.

                                                       Even if films continue to be their      leading product and
                                                cinemas the privileged place on which the other markets depend,
                                                the combination of television , computer technology and telecom-
                                                munications is going to totally change the forms and concept of
which prevented any manipulation by the         entertainment as well as the traditional organization of its opera.
producer; Hitchcock starring on the same
level as the actors (' actors are like cattle   tions, investment priorities and especially the relationship between
Hawks including his signature in the credit     the consumer and the product.
titles and becoming himself producer etc.
Demands today from the directors of the
American Guild are       especially on the             Paradoxically, from on economic point of view, the model of
 moral right' thot enables directors to con-    the cinema theatre, that is to soy the model of the direct exchange
sider themselves the authors of their works
and thus to forbid any abusive intervention     (projection- ticket), remains profitable in the new reorganization of
on their work once the copy has been            telecommunications. All the most prominent market trends in the
established , which becomes a problem of
major importance, especially with the           development of the telematic and television product offering and
endless possibilities of manipulation           in audiovisual distribution show that at the centre of the system lies
created by new technologies. In this sense
it is important to quote an extroct from the    the direct choice of the public, its desires and buying power, its
speech by a producer- director as               needs and the available money and time to satisfy them.
prestigious as George Lucas (' Senate hear-
ing on Bern Treaty      People who alter or
destroy works of art ond our       cultural             Rother than the institutional or advertising resources on
heritage for profit or os an exercise of        which television has lived for a long time, what counts is individual
power are barbarians, ond if the laws of
the United States continue to condone this      spending, which tends to be growing and totally taking over the
behaviour, history will surely clossify us os   financing of the audiovisual industry. This shows to what extent the
a barbaric   society. ... The corporotions
which hold many of the copyrights ,       are   industry is once again dependent on the choice ofthe public , mean-
usable entities. They are bought and sold,      ing the individual, which some call the consumer and which we
ond corporate officers chonge on a              prefer to coIl the citizen.
regular basis. ... Supporting the moral
rights clause is good business. ... Artists
need 0 sense that the work they are doing              This is the new challenge. It has been calculated that in the
is meaningful. and that what they are doing
will last, complete with all the subtle         medium term (according to figures in the Commission s White
nuances they have struggled so hard to          Paper on growth ,   competitiveness and employment) household
                                                spending On audiovisual products is going to double. The problem
3 If we do not take into account British
films which account for about 2% of the
                                                is determining whether this rise in consumption is going to further
American market ,     but which are often       worsen our deficit, that is to say whether it is going to mean more
financed with American money or                 profits for Americ::an products or, on the contrary, be on opportunity
American films       shot in the United
Kingdom.                                        for us to get bock in touch with the public.
                                                      Only we have the answer, which is to modernize              our
                                            distribution structures ,   on which        will depend, as stated below,
                                            whether we have ' more      market for our products and     more products
                                            for the market'.   For this , we must first begin by creating solid com.
                                            ponies structured according to the dimension and future energy of
                                            the European market, adopting from the start a transnational and
                                            multimedia strategy.

                                                   This restructuring of distribution networks is of capitol im-
                                            portance, as important as the investment to be made directly in the
                                            production of new titles , which will constitute the basis for the
                                            machine to start up again and for new players to appear.

                                                   It is in the dysfunctioning of this interdependence that the
                                            key to our deficit has resided for so long. Creating a new distribu-
                                            tion network is also going to establish new kinds of demond
                                            because this network will be obliged to invest in projects that are go-
                                            ing to feed it. .In turn , the optimalization of .consumption that will
                                            result from this , in terms of time and money, may also open up new
                                            frontiers to the audiovisual market: more resources , more enter-
                                            prises , more European industry.

                                                      This is an optimistic vision. It is in keeping, moreover, with the
                                            conclusions of the White Paper. This market, which today employs
                                            1 800 000 people in software alone, can increase . its resources if we
                                            simply stop coming up with so many excuses. That is what the Com-
                                            mission seems to do: ' If we begin with the principle that we have a
                                            good chance of increasing our market share, if we devote the
                                            necessary efforts to it, it is not absurd to hope that the sector of
                                            audiovisual services can provide employment, directly or indirectly,
                                            to 4 000 000 people.

                                                      But to do that we must not limit ourselves to gaining on
                                            paper what others are gaining on the ground. Our systems of
                                            regulation , including the ' television without frontiers '       Directive
                                            which is to dote the only tool at Community level , must be expanded
                                            and improved with the sole aim that justifies them: helping create
                                            a competitive      industry where the European viewer recognizes
                                            himself and which opens other markets to us.

                                                   If we wont to go on talking forever about the American
                                            strategy, we must also accuse ourselves of a lock of strategy.

                                                      The situation has not miraculously changed after the
                                            positive outcome of the GATT negotiations. Europe has only won
                                            the first round , the Uruguay Round.

                                                   This first improvement nevertheless marks a decisive mo-
4 Commission White Paper ' Growth , com-    ment for Europe in the awareness of the strategic importance of the
petitiveness   employment            The
                                            audiovisual sector. But if this awakening is to contribute to develop-
challenges and ways forward into the 21st
century', 5 December 1993.                  ing a competitive industry, the trade balance between our two con-
                                                                     tinents must first be restored , which implies being able to overcome
                                                                     quite a few contradictions and misunderstandings.

                                                                           The Americans must be reminded that liberalism is not
                                                                     synonymous with the low of the strongest and that it is precisely
                                                                     because of strong protection from competition that their industry
                                                                     has developed so well there.

                                                                             Europeans must perhaps be reminded that Europe was only
                                                                     great when it was able to speak for the largest number: Cervantes
                                                                     like Shakespeare, Moliere like Mozart and Verdi like Picasso were
                                                                     able to make their notional geniuses universal. That is the great
                                                                     challenge facing our creators today. Europe must find its univer-
                                                                     salist vocation again. Like the Americans , if we want to reach a
                                                                     world audience, we must first recover our own public. If it were only
                                                                     a question of protecting our film culture, soon all we would have left
                                                                     would be the cinemas.

                                                                             For Europe, recapturing access to its own market is a right
                                                                     that .could be called natural. But Europe cannot wait for itto be sent
                                                                     from heaven. It has to move from a position of cultural resistance
                                                                     to one of industrial offensive if our culture is indeed to survive.

                                                                             I n a nutshell , it is not a question of protecting ourselves from
                                                                     the market but protecting the market.

                                                                             Must we break down the barriers and let the market alone
                                                                     toke core of restoring the balance and bring competition into play?
                                                                     Certainly not. We have seen elsewhere and in other areas the
                                                                     catastrophic results of this shock therapy.

                                                                             What has become obvious after the Uruguay Round victory
                                                                     is that defending Europe s cultural identity, forged over the cen.
                                                                     turies by the rich mosaic of its many languages but whose common
                                                                     trait has always been universality, is , in the case of the audiovisual
                                                                     sector, inseparable from recapturing the European market and
                                                                     therefore its audience. This implies consolidating on industry
5 The purpoSe of this report is not to paint                         capable of meeting and even anticipating demand , on industry
a comprehensive and detailed . picture of
the situation of the audiovisual industry in                         that has the political support and sufficient financial means to
each country and the EU as a whole. For                              become competitive on world markets.
this , publications such as the one by IDATE
(Marche            mondial            du cinema           et
                                                                             In Europe, over the post 15 years, only the audiovisual sec-
 audiovisue/),                   dlJ
                             Cerica       (Statistiques
cinema en Europe), London Economics                                  tor of all the large industrial sectors has not acquired a transna-
(ACE                  modules)         as well as the infor-
mation sheets published                        regularly by
                                                                     tional outlook.
Screen Digest ,          among many others,                    are
largely sufficient , even                  if they do not                   And yet Europe has talent , a market and sufficient money
always coincide.
                                                                     to create  this industry. But today, for lock of confidence and
The sole purpose of this report is to outline                        strategy, all these assets are of less benefit to it than to the USA.
the major trends in the                        indlJstry and
audiovisual policy in Europe, and to focus
the debate on the question confronting all                                   Analysing and understanding how this situation has been
those trying to find the answer: ' How can                           possible and proposing the means to change it is the objective of
the European Union create a programme-
making industry that is in keeping with its                          this report. 5
market , its resources and its ambitions and
that meets and anticipates the demand of
the public in order to become competitive
on the international market?'                                                                                  Antonio- Pedro Vasconcelos
A -- GLOBAL                           120 to over 500 and the number of
APPROACH                              programme- hours from 650 000
                                      to 3 500 000.

1. ECONOMIC DIMENSION AND             At least 1. 8   million people today
IMPACT ON EMPLOYMENT                  are employed            in the EU
TRENDS                                audiovisual sector and it
                                      estimated that a further two
The European Union is         the
                                      million jobs could be created in the
greatest developed audiovisual
                                      next 10 years if Europe makes
market in the world in terms of
                                      maximum use of the growth
consumers and the second in
                                      potential of its domestic    market
terms of value. As reported in the
Commission s White Paper on
                                      and of the outside         European
                                      markets. Most of these jobs will
growth  competitiveness and
                                      demand high levels of skill.
employment, the audiovisual
market of the EU today, including
                                      2. SOCIOCULTURAL
the production and distribution of
programmes (software) and hard-
ware, is estimated at ECU 257         !tis estimated that people in in-
billion. The programmes industry      dustrialized countries dedicate an
represents 54% of that global         average of three to four hours per
market. US industry exports to        day, to watching television. In the
Europe have increased surprising-     immediate future audiovisual
ly in the last 10 years , from ECU                  also be fun-
                                      technology will
330 million in 1984 to ECU 3 600      damental to kinds of teaching,
million ill 1992. In 1991 60%ofUS     education and occupational train-
audiovisual programme exports         ing sectors.
came to the European Union and
the EU trade deficit with the USA      Humanity will to a large extent be
stands at around ECU 3 500            educated by audiovisual means.
million per year.                     Audiovisual practice will invade
                                      everything in the coming decades,
In the European Union the de-         but this does not mean it will have
mand for programmes has risen         to be worse; this depends on how
from 200 000 hours in 1981 to         we do it. In all events, I do notthink
650 000 in 1992 (0 consequence        that any of the cultures in our con-
of the increase in the number of      tinents, whether large or small,
television channels: 40 in 1981       will be able to develop normally
and more than 100 today). The         unless their roots are nurtured in
demand for audiovisual produc-        the European context: These are
tions in the EU will go up from ECU   the words of a European, the
23 billion today to ECU 45 billion    Czech intellectual , Antonfn Lihen
by the end of this century; the       which summarize to perfection
number of channels will rise from     it is impossible to say more with
3. SECTOR OF CLEAR PRIORITY              4. DECLINE OF THE                      550 million. US audiences,
AND STRATEGIC INTEREST AT                EUROPEAN AUDIOVISUAL                   however, have remained quite
EU LEVEL                                 INDUSTRY: STATE OF THE                 stable at around 450 million,
                                         SITUATION AND TENDENCIES               while European audiences have
The declaration of priority and                                                 fallen in this same period from 600
strategic interest at EU level of a      The overall volume of European         million to 100 million.
given sector normally requires           audiovisual production is high:
the combination of three re-             public television alone produces       If we consider that the average
quirements: the defence of               more than 120 000 hours of pro-
                                                                                number of cinema attendances in
general interest targets; the im-        grammes per year. The basic            the USA is 4 per year, whereas in
possibility of reaching them from        problem is that the large majority     the EU it is 1.7, we can conclude
mere market play; and the targets        of these are fulJdamentally local in   that if there is a market    to be
that cannot be reached by the sole       terms of appeal and distribution.                        market for
                                                                                recovered, it is the
action of the Member States.             Because of this, and especially        European films. A reactivated
                                         because of the absence
                                                                                European industry might leave the
The audiovisual sector has enor-         transnational distribution     net-
                                                                                European market for American
mous potential to generate wealth        works, European audiovisual pro-       films unaffected.
and create jobs, as well as being        duction .is confined to its own na-
essential to Europe s cultural life.     tional markets and the single EU       The weakness of transnational
                                         market only operates effectively       distribution within Europe is evi.
The European audiovisual in-             for the non- European , specifically   dent from the data shown
dustry cannot at present compete         US industry.
                                                                                Graphs 1 ,   2 and 3.
under conditions of equality with
the world industry. To leave it in the   Paradoxically, in the last 15 years    The following conclusions can be
hands of the market would mean           the European audiovisual industry      drawn from the above and also
purely and simply condemning it          has been the only one among all        the data contained in the tables
to disappear rapidly.                    the major industries which has         that follow:
                                         retreated to national markets
The targets which are sought can-        rather than becoming more inter-       (i) European audiovisual produc-
not be obtained either from the          national in its orientation.              tion is    basically local pro-
mere action of the Member States                                                   duction;
because, as we will see later, the       Over the last 10 years, European
central targets to be achieved are       films have lost 50% .of the Euro-      (ii) transnational dissemination of
precisely to promote the develop-        pean film market in favour of the          European audiovisual produc-
ment of the domestic audiovisual         US industry. In 1968 ,   box-office        tion is extremely weak and the
market ofthe EU and to promote           takings for US films in Europe were        trend is downwards.
the integration in Europe of the         35% whereas European takings
national audiovisual industries.         represented 60%. At the end of
                                         the 1970s this percentage was split
The declaration of priority and          45% for the US industry and 50%
strategic interest     at   EU level     for the European industry. Today
however, cannot lie in mere words.       the share of the American film
On the contrary, it requires a           industry in the EU is on 80%
coherent reflection of this              average      France is the only
 strategic priority ' in the political   significant exception       and
action and in the assignment of          scarcely 20% for the European
public resources which are tem-          cinema. This hegemony of the US
porarily needed to reach the com.        industry is even more apparent in
mon- interest targets that .have         European countries which have a
previously been determined.              weak audiovisual production

                                         The decline in regularfilm- goers in
                                          Europe has only affected Euro"
                                          pean films. The number of regular
                                         film- goers in Europe in the last 15
                                          years is down from 1 200 million to
5. MAIN REASONS ON WHICH                   Council of Europe level , the Con-      The multiplication of the number
THIS . OECLINEIS BASED                     vention on Transfrontier Television     of channels has increased produc-
                                           and the Eurimages programme.            tion costs and the price of broad-
There are without doubt many               These programmes should be              casting fees of the most attractive
reasons which have provoked this           favourably assessed , regardless        programmes. It has fragmented
situation. Among them, the actual          of any reorientations which may         audiences and reduced advertis-
reality of the cultural and linguistic     be introduced in the future.            ing income and this has provoked
diversity of our continent.         This
                                                                                   a reduction in radio broadcasters
diversity is    an extraordinary           Policies of national or regional        production budgets. The search
source of wealth which must                scope will continue          to         for maximum audiences by all
always be preserved. The non-
                                           necessary, but, as the recent GATT      television broadcasters ,   whether
European industry,         however,
                                           negotiations have shown, the fun-       public or private, has steered
clearly shows us to what extent the        damental problems           of the      radio broadcasting purchases
worldwide dissemination of                 audiovisual industry cannot be          and production policies towards
audiovisual works ,   or rather cer-
                                           approached in an isolated way at        low-cost national products and
tain audiovisual works, has no             State level.                            towards US productions       which
cultural or linguistic frontiers.                                                  because of their amortization in
                                           (B) MARKET                              costs, first in the US home market
                                           Over the last 10 years, it has been     and then     in the   international
The audiovisual policy in Europe           thought that       the   European       markets, offer      better cost/au-
was, and still is, structured on a na-     audiovisual industry was going to       dience relations.
tional and regional basis. Over            benefit automatically from the ex-
the lost 10 years the problems and         traordinary increase in demand          In the audiovisual sector, as in all
challenges , even fundamentally            for audiovisual productions as a        sectors of industry, it is not enough
transnational ones, have been              result of the disappearance of the      to have good products. They must
confronted from notional or                State monopolies for       television   also be marketed. We say ' also
regional interests and pers-               services and the opening of             but the correct word would really
pectives.                                  markets to the private sector. This     be ' specially because the
                                           proved not to be the case. The          distribution networks in the
Consequently in Europe, national           European audiovisual production         audiovisual sector playa fun-
or regional demands -         is to
                           that            industry was not in a condition to      damental role not only in the pro-
say local ones - have more or less         compete with the transnational          motion and marketing of the pro-
been satisfied by the respective           markets, mainly because it lacked       duct, but in its financing, in the
local industries. However, Europe              and still locks ~ suitable          diversification of risks , in pro-
has abandoned the markets and              marketing and international             moting economies of scale and in
the demands of the European                distribution structures.                maintaining a balance between
transnational audiences which the                                                  supply and demand.
non- European industry has been
able to occupy almost without                                                      Transnational distribution net.
competition from the European                                                      works play an   essential and ir-
industry.                                                                          replaceable role in the economy
                                                                                   of the audiovisual industry, to the
Although this was certainly not the                                                extent that it can be said that the
intention, the audiovisual policies                                                construction of a European inter-
that were implemented in the last                                                  national distribution network is an
decade at European level have                                                      absolute precondition to reaching
particularly favoured hardware                                                     solid and sustained growth in the
and had very little favourable ef-                                                 European audiovisual industry.
fect on productive activities, the
programmes industry or software.

In recent years action has started
to be developed at EU level ~ the
Directive on television       without
frontiers  harmonization of
copyright, the MEDIA pro-
gramme, the Action Plan and , at
(C) EXTRA-EUROPEAN                       6. SERIOUSNESS OF THE                   We must remember what is at
COMPETITION                              SITUATION FROM A FUTURE                 stake: it is not the right to play
                                         OUTLOOK                                 video games, but, apart from ex-
Finally, the European audiovisual
industry is today subject - and                                                  traordinary economic power and
                                         It is impossible to give a precise
will be even more so in future - to                                              employment growth potential
                                         definition of the future of the
competition from the non- Euro-                                                  which mayor may not capitalize
                                         audiovisual sector. However there
pean industry, and more                  are certain contributing factors:
                                                                                 to the benefit of      European in-
specifically from the US indu.stry.                                              itiatives, what is really at stake, we
                                         internationalization of markets
The latter is an industry which,                                                 repeat, is the access to informa-
                                         increase in outside European com-
throughout the last 15 years has                                                 tion, to culture and knowledge of
                                         petition; and the impossibility of
fol.lowed    a   strategy which                                                  the Europeans, as well as com-
                                         amortizing production costs, ex-
diametrically opposed to the                                                     munication between European
                                         cept for low- quality productions
European strategy: production                                                    people (an essential condition to
                                         in the tight European notional          reach a solid European Union).
with global ambitions; on ex.            markets.
tremely powerful and well-
organized international distribu-        In response to these challenges,
tion structure; and firm support by      there is the current European
the US public powers for their           reality: audiovisual production
audiovisual production industry.         which is mainly local , with local
                                         promotion policies; and almost no
                                         international distribution       and
The weaknesses of the distribution       marketing networks; and the need
networks and political strategies        to compete with a non- European
for a pan- European  level have          industry which is extraordinarily
provoked a deep decline in the           strong and well organized.
audiovisual industry of our conti"
nent and have prevented the in-          If the strict reality of the European
dustry from benefiting, over the         audiovisual industry is analysed
past 10 years, from the extraor-         without prejudice, only one
dinary expansion of the European         diagnosis is possible: the future
market. A coherent political             outlook is extremely serious.
strategy and a worldwide distri-
bution structure have allowed
the non- European industries,
especially the American industry,
to be the main beneficiaries of this
 first expansion     wave ' of the
audiovisual markets. The same
thing will happen; with the ' sec-
ond expansion wave' unless ade-
quate measures are taken to avoid
it, except that in the latter case the
consequences will be far worse,
perhaps even lethal, for the future
of the audiovisual industry in our
    - CHRONOLOGY                                       YEARS EUROPEAN
                                                1. IN 10                                     2. THERE IS AN INCREASED
                                                FILMS HAVE LOST 50% OF THE                   TENDENCY OF EUROPEAN
OF THE CRISIS                                   CINEMA THEATRE MARKET                        FILMS BEING CONFINED TO
                                                AND TWO THIRDS OF THE                        THEIR NATIONAL MARKETS
The European market has                         AUDIENCE
been among the fastest grow-                                                                 This already terrifying percentage
ing in the world with a current                 In the mid-1960s, an average 35%             does not tell it all. While the
market growth rate of 6% a                      of the box-office films in continen-         American films that come out
year in real terms, that is being               tal Europe2 were American while              everywhere and at the same time
sustained even in today                         60% were European (the remain-               in Europe are practically the same,
recessionary climate. The                       ing 5% corresponding to the other            only about20% of European films
has benefited                 most from         film industries). In the late 1970s,         (therefore 4% of the total) are
growth in Europe, increasing                    this percentage stood at 44% for             shown beyond their national
its sales of programming in                     the USA and 55% for Europe. To"              borders, and only a very few of
Europe from USD 330 million in                  day, in most of the 12 EU countries          these European films                    are
1984 to USD 3.                 billion in       over 80% of the films shown are              distributed throughout Europe, let
1992. In 1991, 77% of Ameri-                    American, and in some of these               alone the world.
can exports of audiovisual pro-                 countries that figure exceeds 90%
grammes went to Europe, of                      (Graphs 1 ,   2 and 3).                      Also, if the market share of
which nearly 60% to the EC,                                                                  American films is increasing, it is
this being the second- largest                  Therefore, in 10 years European              not because the number
US industrial sedor in export                   films lost 50% of their market               viewers has increased but fun-
terms, while the Europ.ean                      share in European dnemas , but               damentally because the number
Union s annual deficit with the                 they also lost two thirds of their           of viewers of European films has
US in              audiovisual trade            public. If this trend is projected to '      plunged. Since 1980 , the au-
amounts to about USD 3.                         the year 2000, there will be prac-           dience for American films                has

billion.'                                       tically no more European films on            practically remained the same (it
                                                our screens, which means that the            hCls gone from 425 million to 420
White Paper ' Growth                  com-      European market threatens to be              million) while the audience for
petitiveness and employment
                                                a copy of the one in the USA (95%            European films hCls fallen from
The challenges and ways           forward       American films compared with 3%              475 million to 120 million.
into the    21st   century                      European , 2% of which are
                                                English).                                    3. THE SINGLE MARKET ONLY
                                                                                             EXISTS FOR AMERICAN FILMS

The current picture of Europe
                                                                                             The first conclusion that must be
audiovisual industry in the 12
                                                                                             arrived at is that the European
                                                                                             mClrket is increasingly leaning
countries of the European Union
is, as seen earlier,      that of a situa-
                                                                                             towards a sort of bipolarization
tion that can be               considered                                                    (American films , on the one hand,
catastrophic: structural             weak-
                                                                                             national films on the other), a
nesses make it too vulnerable to                                                             bipolarization that television and
face the new challenges.                                                                     especially video only intensify,
                                                                                             and that there is less and less a
It can be characterized by a cer-                                                            common market for European
                                                                                             films: the single market only works
tain number of trends and symp-
toms that have accumulated                                                                   for American films.
more or less inexorable fashion
these past few years and that
should first be identified if we are
then to try and understand it and
more importantly to change it.
                                                2 We do not have precise data for the        3 The figures as well as the tables and
                                                United Kingdom , not only because we do      graphs of this chapter, I;!xcept when
lOur analysis can nevertheless be ap-           not know the distribution of receipts be-    specifically mentioned   were   specially pro-
plied, for the most part , to the other Euro-   tween American and British films, but also   vided by Michel Gyory of Cerica (Centrl;!
pean countries, particularly the EFTA           because most British films are in reality    europeen de recherche et d' information
countries, which essentially have the same      financed by an American agent or are         sur Ie cinema et I' audiovisuel) for this
characteristics.                                American films shot in the UK.               report.
The argument that the mosaic of          But if one considers that Euro"                rican films do not account for
languages and cultures forming           peons go to the cinema 1. 7 times a            more than 55% of the market
Europe prevent any attempt to            year while Americans go on                     share, in countries with a low pro-
achieve a uniform public therefore       average four times a year, it can              duction capacity (or which have a
becomes an excuse. With the ex"          be concluded that if there is an au.           large production like Germany
ception of the United      Kingdom       dience to be recovered               it is     and Spain but where the national
and Ireland, in all the other coun-      precisely the audience for Euro-               cinema no longer has an au-
tries of the EU, American films are      pean films, without affecting a                dience) the figures for the division
shown either dubbed (which               public that can be considered                  of the market are disquieting.
represents about 85% of the Con-         faithful to American films. This
tinent) or subtitled, placing them       means that if with a recovery of the           This is the case of Portugal, Ireland
in the same situation     as all the     European industry the Americans                and Greece where the average
other non-nationalfilms, where           risk losing market shares in per-              percentage of non-American films
the language of the film is also         centage, they will probably not be             does not exceed 5% and the case
foreign.                                 affected in their sales turnover.              of Germany and Spain where it
                                                                                        does not reach 10%.
Moreover, the fact that American         5. THE COUNTRIES WITH A
products encounter the same suc-         SMALLER PRODUCTION                             This means that wherever national
cess in all European countries , as      CAPACITY ARE MORE                              production is weaker . or has
well as in the rest of the world, for-   VULNERABLE TO AMERICAN
                                                                                        become detached from its au-
mally refutes this assertion. While                                                     dience, domination of the market
it is true that Coca-Cola and Mc-        The fact that we observe that in               by the films of the major American
Donalds have succeeded in stan-          most countries 80% of the                      film studios becomes stronger.
dardizing the taste of new genera-       market is token by the Americans,
tions, it is also true that cham-        whereas the Europeans have only                The first consequence is that these
pagne and spaghetti are a part           managed to keep 20% of their                   markets , becoming increasingly
not only of Europe s but the whole       market , hides another reality,                impenetrable to the products of
world' s gastronomic heritage.           much more dramatic and which                   the other European countries, end
                                         must be token into account. If in              up affecting, indirectly, the in-
4. THE FALL IN ATTENDANCE                the countries that have succeeded              dustry of the large countries , even
IN EUROPE HAS ONLY                       in keeping an audiovisual industry             those that are more capable of
                                         that resists, as is the case of France         resisting the American hegemony
The second conclusion is that the        (where a very effective system of              and that have always been the
drop in cinema attendance (which         aid enables the recycling of money             engines and mirror of European
has fallen in 10 years from 900          from the market for the industry),             production. Today, as in the case
million viewers to 550 million) is                                                      of the ' small' countries, it becomes
exclusively due to the loss of au"       4 This point is extremely important for it     increasingly difficult to make a
dience for European films, that is       not to be used qs an argument in the           French or Italian film profitable on
to say for non-American     and non"     negotiations with the Americans that will      the European market as a whole
national films (Graphs 4a, 4b, 4c
                                         inevitably follow the Uruguay Round. In-
                                         deed ,   recovering the qudience that
                                                                                        with the consequence         that its
5 and 6).                                wanted for European cinema will not            dependence on public financing
                                         necessarily be to the detriment of the         increases.
                                         Americans ' sales turnover in Europe but
                                         quite simply their share of the market. On
                                         the contrary, if Europe can hope that                 YEARS EUROPEAN
                                                                                        6. IN 15
                                         cinema- goers will see a film four times a     FILMS HAVE LARGELY BECOME
                                         year, like the Americans, and that the Euro-   MONEYLOSERS
                                         pean market is fairly divided up by our two
                                         filrn-makingindustries, the Americans will
                                         benefit in tUrn.
                                                                                        The 1980s      were marked in
                                                                                         Europe s main producer countries
                                         It is known, mareover, that the prosperity
                                         of Europeqn cinema hqs alwqys benefited         by a considerable increase in in-
                                         the Americans , not only be(:ause it enables    vestment in the production of
                                         retaining a group of healthy cinemas , but     films. Between 1980 and 1992, the
                                         also because the success      of European
                                         cinema has in the past enabled American        sums invested increased 4. 5 times
                                         cinema to reach a level of quality c:md        in France and quadrupled in Italy.
                                         sophistication that it is today losing (also    Meanwhile, during this period at-
                                         because of the culturol interbreeding that
                                         the exodus of European film-mqkers to the
                                                                                         tendance fell sharply, primarily to
                                         USA has accentuqted).                           the detriment of European film-
makers, and since 1985 in France        Without a market            capable of           8. THE SCATTERING OF
and 1986 in Italy, investment in        recouping the costs of increasingly              PRODUCTION LED TO THE
production has exceeded the total       personal films, most governments                 ATOMIZATION OF
gross receipts earned by the na-        increased subsidies to cover the                 DISTRIBUTION , CONTRARY TO
                                                                                         WHAT OCCURED IN THE USA
tional films in notional cinemas.       loss .of market. The distorting ef-
The gap has grown considerably          fect ofthese kinds of policies is that           The American Administration
over time, to the point that in         instead of giving directors the in-              political support of the MPAN
France the amount of investments        centive to seek as large an au-                  and the insensitivity, indeed the
in production has exceeded that of      dience as possible, they encour-                 lack of concern of most European
total cinema receipts since    1991     aged them to remain exclusive.                   governments, and even of the
(Graphs 7 and 8). While this com-
                                        European production
                                                                                         Commission           to
                                                                                                             ensure the
parison is solely based on notional                                       become         rigorous enforcement of competi-
earnings (which are         with TV     dispersed on several small islands               tion laws , enabled the major
earnings for films that have not        which in many cases only com-                    Americ::an film studios to       group
been financed by a station - the        municated with one another                       together in the           mean time in
main source of income for a large       through 0  multitude of festivals,               Europe. This was the case of UIP in
number of films), itis alsonecess-      which in turn fed a multitude of                 some countries/ but it is also the
ary to take into account the fact       critics who thus closed the small                case of other specific:: groupings
that only a fraction of the cinema      circle of insiders who complacent-               with strong horizontal and vertical
receipts goes to production (in         ly replaced the paying public.                   integration such as exists in Por-
general 10 to 20% depending on                                                           tugol, Itoly, Greece,           the United
the country; 25 to 30% in Italy).       This system has for a long time                  Kingdom and the Netherlands.
                                         fovoured the emergence of self-
7. THE BLOSSOMING OF                    justifying ideologies according to
NATIONAL, AND EVEN                      which only unsaleable films would
REGIONAL, FILM INDUSTRIES               be entitled to the stamp of high
AROUND THE lATE 19605                   quality

In the name of the right of cultural                                                     6 T. Guback, in   Non-market     factors   in the
and linguistic minorities to express                                                     international distribution of   American films
their identity, Europe, around the                                                       provides an impressive           quantity of
                                                                                         elements that prove the commitment of the
end of the 1960s, stepped up the                                                         American Administration, with the
centrifugal trend of an industry                                                         Western governments after the Second
whose economic rationale called                                                          World War, to support their industry.
                                                                                         It should not be forgotten either that the
for concentration. This demand,                                                          MPAA was precisely created on 5 June
where political motivations were                                                         1945 under the auspices of the Webb- Pro-
predominant (e.g. the famous                                                             merene Export Trade Act of 191B , which
                                                                                         enabled it to avoid any legal action for an-
Guevarrist theory that Godard                                                            ticompetitive practices, provided that its
applied to cinema: ' there    should                                                     activities were strictly limited to exporting.
be one, two, three Viet Nams                                                             7 UIP (Unitedlnternafional       Pictures) is a
contributed to the enthusiastic                                                          company operating under Dutch law that
springing-up of a multitude of no-                                                       groups together three major American film
                                                                                         studios (Universal , ParamotJnt and MGM)
tional ,   indeed regional , film in-                                                    and that operates throughotJtthe warld ex-
                                        5 Hans Gerd Prodoehl,
dustries where directors        were
                                        government of the    Land
                                                                     expert for the
                                                                    of Narth Rhine-
                                                                                         cept in the USA, Canada and Puerto Rico.
rarely able to overcome in                                                               UIP was authorized by the Commission on
                                        Westphalia, in ' Film-making policy and aid      12 July 19B9 , taking effect nevertheless on
dynamk: fashion the contradiction       to the film industry in Germany: Diagnosis       27 July 19B8 , and granted a derogation to
between the entrenchment of the         of a crisis and defence for a change of          Article B5 of the Treaty of Rome a deroga-
                                        parameters . Prodoehl' s study on what he        tion that expired on 26 July 1993 and
testimony and the universality of       calls (quoting Wolf Donner) ' the waes of        whose extension the Commission has not
the message, that is to say be-         German cinema ' is a merciless analysis of       yet announced.
tween the location of the subject       the atomization of aid systems in his coun-
                                        try thrOlJgh the policies of the Lander and      a Etude sur la politique de concurrence et
and the necessary transnational-        their catastrophic results on the situation of   de distribution des films dans l' Union Eura-
ity of the audiences.                   the film industry in Germany.                    peenne, by SCALE.
The result of this concentration                   These blockbusters rely on heavy                   9. THE DROP IN ATTENDANCE
strategy, linked to the worldwide                  investment in promotion (which in                  AND THE STRATEGY OF THE
presence of the major studios, has                 some cases approaches produc-                      MAJOR FILM STUDIOS HAVE
been the gradual weakening of in-                  tion costs). This promotion , which                LED TO A GROWING
                                                   is at world level,                                 CONCENTRATION OF
dependent distribution in Europe                                                   begins well
                                                                                                      ATTENDANCE ON A REDUCED
and also the increasingly greater                  before thousands of copies invade
                                                                                                      NUMBER OF TITLES
difficulty for cinema operators to                 the continent,      making it increas-
keep their programming freedom.                    ingly difficult, if not impossible, for            The result of this is that a growing
Block booking and blind bidding                    most European films to find the                    number offilms are not profitable
accompany the covering of the                      best cinemas and the best dates                    while a growing percentage of
European continent with block-                     or the best contractual conditions                 receipts is concentrated in a small
busters 10 whose timed release is                  for their relea se. An example is                  number of titles, most of them
agreed between the major                           that ofthe United Kingdom where                    American. Thus ,it is observed in
studios.                                           about 45% of American films are                    France (Europe s most successful
                                                   released simultaneously in over                    notional film industry) that the 10
9 Block booking is a very common practice          100 cinemas.                                       highest earners in 1975 were nine
that is done in explicit or disguised fashion                                                         French titles and one American
by the major US companies and that has             The scattering      distribution
                                                                             of                       title. In 1992, the 10 biggest box-
been going on for along time: it consists
making conditional the availability          of
                                                   (which also accompanies that of                    office takers were two French
copies of some of the most successful titles       production , based in most in-                     titles, seven American titles and
(generally blockblJsters) on the programm-         stances on a case- by-case policy)                 one English title, whereas in 1991
ing of a grOlJp of other titles whose market
value may be less certain.
                                                   considerably undermines the                        the top-10   hits were American
Blind bidding consists in programming
                                                   Europeans ability to impose                        films. In addition , whereas 18
films that the theatre operator has not seen       products on the public. Whereas                    French films were on the list of the
beforehand, thus having to trust the               there are seven major American                     27 titles with more them one million
prestige of the film s stars and the good
results already achieved on the American
                                                   film studios (Disney/Buena Vista,                  viewers in 1975, there were only 6
market.                                            Paramount, Universal,                 Colum-       (out of 28) in      1992. As for
In both cases, it is precisely the strength of     bia/Tristar, Warner               Fox and          American films, where atten-
the catalogues, due to the annual concen-          MGM), which therefore                      pro-    dance exceeded the one-million
tration of the major studios ' titles, which
allows these      anticompetitive practices,       gramme their films simultaneously                  mark, there were 6 in 1975 and 19
which c t the same time are very reassuring        for the entire world, there are                    in 1992.
for the distributors who represent the US          1 049 active distributors in the 12
companies and for the operators who de-
pend 0) them.
                                                   countries of theEU, plus those of                  This trend is accompanied by a
10 Blockbusters are large- budget
                                                   the EFTA countries. 11 It must                     redistribution of earnings to the
                                       films in
terms of production and promotion                  added that, contrary to the major                  detriment of European films
designed from the start by the major               American film studios , all these                  whose share in receipts has drop-
studios to be successes and thus to serve as       distributors have remained na-                     ped dramatically in all European
engines for their catalogues.
                                                   tional.                                            countries (Graph 1).
It was in the mid-1970~ that films like Jaws
and  Star  wars put Hollywood back on its
feet, beginning a series of super produc-                                                             Furthermore, this phenomenon of
tions which each year beat the record of                                                              concentration of receipts , which
receipts held for nearly 40 years by Gone
with the wind.                                     Spielberg that, through colossal in-               has repercussions on the distribu-
The word blockbuster          is   nevertheless    vestments in promotion and the perfecting          tion and production sectors,
                                                   of marketing techniques, combined with
almost as old as cinema itself: it was Grif-                                                          results, as shown above,      in the
fith who, inspired by an Italian film Cabiria      the covering of the planet with thousands
                                                   of copies, the blockbusters have became a          bipolarization of certain Euro-
made      The birth   of a nation in 1915 and
Intolerance     in 1916 which can be con-          very sure indispensable element in the             pean markets (see, for example,
                                                   strategy of the major studios.
sidered the first blockbusters in the history                                                         the Netherlands - Graph 3) and
of American cinema.                                 11 MEDIA- Salles                          year-
                                                                        European     cinema           constitutes a major obstacle to the
Since then , and each time the industry has        book: A statistical analysis    (AuglJst 1993).
had difficulties especially since the              This figure does not include the Greek,
                                                                                                      circulation of European films     in

development of television, Hollywood has           Icelandic     Irish and        Luxembourg           Europe.
continually tried to respond to the crisis         distributors (that can be estimated to be
with super productions that have not               about 10). Moreover, if we do not include
always been successful. A memorable ex-            the major American companies directly
ample of this was Cleapatra whose pro-             established or represented by national
 duction by 20th Century Fox lasted four           distributors in each country, and of which
 years and gobbled up USD 42 million , an          there are on average five, it can be said
 investment that the film s commercializa-         that there are about 950 50-called ' in-
 tion has still not recouped to this day. It was   dependent' distributars in the 1B European
 not until the generation of Lucas and             countries referred to.
10. THIS PHENOMENON OF                  11. IN ADDITION TO THE                  12. THE ABSENCE OF A
SUPPLY                                  VERTICAL CONCENTRATION OF               DOMESTIC CAREER
                                        ACTIVITY (PURCHASE OF
Because the market was designed         CINEMAS BY THE MAJOR                    After this decisive takeover of
to serve the interests of the large     STUDIOS), FORBIDDEN IN THE              distribution and management by
integrated groups with a strong         USA IN THE NAME OF                      the Americans, Europe now finds
production and distribution             COMPETITION, IS ALLOWED                 itself facing .a     contradiction for
capacity, i.e. the major American       IN EUROPE                               which apparently there is no solu-
film studios, while European pro-                                               tion. The cinemas no longer want
duction and distribution structures
                                        The emptying-out       of cinemas
                                                                                European films, because they
                                        caused by numerous factors -    the
were not suited for this new                                                    generally no longer have what
organization of the market, Euro-
                                        most important being the                draws audiences           to American
                                        development of      television and      films: solid stories, popular stars,
pean cinema operators became
                                        video - and the deterioration of
more dependent on the major                                                     production values ,   full- blown pro.
                                        the fabric of cinemas threatened
American distributors , the only                                                motion. But it is also because Euro-
                                        with the drop in attendance, to af-
ones capable of steadily pro-                                                   pean films no longer have the
                                        fect the American film industry
viding these theatre owners with                                                same easy access             to cinema
                                        too, which had always relied in
the quantity of films necessary to                                              theatres that they are less and less
                                        Europe on the popularity of the
operate at a profit. In virtually all                                           able to compete with American
                                        large national film industries (in
countries, even those with large                                                products.
                                        which American film companies
national distribution structures,       had invested for along time, tak-
these structures depend to a large                                              Tom Hohen sums up the problem
                                        ing advantage of local systems of
extent on the American films that                                               when he says, ' It's a chicken and
                                        aid), especially in France, Italy       egg  problem. Only a large
they distribute, as is the case, for
                                        and the United Kingdom, to en-
example, with Gaumontin France,                                                 distributor can offer substantial
                                        sure the prestige and prosperity of
which distributes     Disney/Buena                                              finances to make large- budget
                                        film entertainment.
Vista films.                                                                    movies with mass-appeal , but a
                                                                                major European distributor can
                                        The definitive capture of the Euro-
In Europe, the atomization of pro-                                              only emerge if there are plenty of
                                        pean market by the Americans
duction and distribution structures                                             European films with mass-
                                        beginning in the 1980s, can
excludes virtually all European         therefore be explained toa    large
production companies from the           extent by the general crisis       in
game of double       compensation
                                        cinema attendance in Europe
                                                                                13. THE CAREER OF
which constitutes the foundation                                                EUROPEAN FILMS IS
                                        which, even if it especially affected   INCREASINGLY SACRIFICED TO
of the balance and prosperity of
                                        European films, invited the major       THE INTERESTS OF THE
the major US studios.. A produc-
                                        studios (one could even say, oblig-     MAJOR AMERICAN
tion company whose film is not a
                                        ed them) to augment their power         DISTRIBUTORS
box-office hit generally is not able
                                        in Europe by investing in the con-
to offset the loss suffered with pro-
                                        struction of multiplex cinemas (see     The crippling    of independent
fits from another film ,    whereas                                             distribution, except in the large
                                        the case of the United Kingdom
films that are not successful at the
                                        where attendance has doubled)           countries where powerful groups
cinema do not sell at a high price                                              exist, has made access to the
                                        to stop the crisis of cinemas which
to the television stations and rarely                                           cinemas very difficult, if not im.
come out in video format. I n addi-
                                        was endangering         their own
                                                                                possible, for European films (i.
tion , even European films that are                                             those from a country other than
a success in theatres do not have                                               the one where the distributor is
the same results with video as do                                               established); and when these films
American films which have had                                                   manage to find a distributor
comparable or even less                                                         (often in 'Art       and Essay '   distribu-
favourable box-office results.                                                  tion channels), it is difficult for
                                                                                them to find the best theatres and
                                                                                best dates.
                                                                                 12 Coopers & Lybrand.      The distribution
                                                                                game: Can   Europe    even score?
There have been cases when a                         On the other hand, it is rather                 European actor (except for
European film, even if successful,                   symptomatic that today most films               Gerard Depardieu,       or Jeremy

has been token off the billing to                    put box-office receipts as a ' token            Irons, who the public     confuses

make room for an American film.                      entry' in their budget.                         with an American actor)
                            Indochine,       for                                                     capable of mobilizing significant
                                                                                                     investment upstream
This was the case of

example, whose projection was                        15. THE DISAPPEARANCE OF A
halted in a large cinema in Madrid                   EUROPEAN STAR SYSTEM IS                         distributors.
after two very successful weeks to                   THE MAJOR CAUSE AND
make room for an American film
                                                     CONSEQUENCE OF EUROPEAN                         And even the directors,
                                                     CINEMA' S UNPOPULARITY.                         themselves stars in the 1960s, no
that was a flop, forcing the theatre
operator to reschedule                   it a few    It should be adcJed thatdistributor
                                                                                                     longer attract European finance,
weeks later.                                                                                         except in a few cases (Almodovar,
                                                     credit was given on the basis of a
                                                                                                     Bertolucci, Frears, Wenders).
                                                      solid' sc:ript and especially the
14.  EUROPEAN DISTRIBUTORS                           nome of the stars. For example, a
HARDLY INVEST ANY MORE IN                                                                            16. THE LEVELOF EUROPEAN
                                                     film like   Ruffian     by Jose Giovanni
THE PRODUCTION OF                                                                                    FILM EXPORTS IS AT AN
                                                     was given FF 15 million worth of                ALL-TIME LOW
                                                     distributor credit based on the
This atomization and the ensuing                      name of Uno Ventura for a budget               The shrinking audience for Euro-
 weakening of national distribution                   of FF 40 million.                              pean cinema, which       is also

 structures , when they do not de-                                                                   reflected in video, and the retreat
 pend directly on the major                           This leads us to another dramatic              of films and TV produc:ts to their
 c:ompanies, combined with the ex-                    observation: there are no pan-                 national markets, has in turn led to
 plosion of the video market and                      European distribution structures in            a gradual decline in exports. To-
 the wholesale offering of films on                   the face of the power of the major              day the market share held by
 countless television stations (since                 US companies and also in the face               American products in European
 the 1980s, the two together ac-                      of growing internationalization of              countries stands at over 80%, with
 count for 70% of the earnings of                     the multimedia marketing chan-                  the exception of France, while
 American films) have led to                          nels, enjoyed almost exclusively                European products acc:ount for a
 disinvestment by distributors in                     today by the American products.                 mere 1% of the American market
 local production and even more so                    This condemns European films to                 (or 2% in the c:ase of British films.
 in products from other European                      further retreat to their national               At the end of the 1960s American
 countries.                                           markets and, as we have seen, to                films held about 35% of the Euro-
                                                      depend more and more on public                  pean market      while European
 There has              mainly been a                 aid and also television financing               films, in their best years , gained a
  widespread disappearance of                         (often publictoo).                              7 or 8% share of the US market.
  distributor ' credit' or a reduction
  to derisory percentages confined                    The first consequence is the disap-
  to a few strong films , whereas until                pearance of European stars , who
  the 1980s they were decisive for                     until the late 1970s were decisive
  the financial deal of productions.                   not only for the financial arrange-
                                                       ment of films in their country but
  As an example, distributor credit                    also to ensure their distribution on
  which in France accounted for                        most European markets and even
  about 30% of the financing of the                    in the USA. Stars like Sofia loren,
  French film industry in 1980, today                  Alain Delon, Romy Schneider
  barely represents 4% on average                      Jean- Paul          Belmondo, Catherine
      and is exclusively concentrated on               Deneuve, Marcello Mastroianni
      a few titles.                                    Jeanne Moreau and a whole host
                                                       of others were at the time as well
      13 ' La distribution en salles des films de
      cinema au sein de l' Union europeenne
                                                       known , if not more so, than a lot of
      (First impressions). Study by Unifrance for      American stars, whereas today no
      MBS and SCALE (working process:
      February 1994).
      14 Cluzel, Jean- Paul       and Cerutti
                                                       15 Jose Giovanni , in ' SlJnlight ou ...
      Guillaume. ' Mission de reflexion et de pro-
      positions sur Ie cinema fran~ais , generally     lumiere ' (copy of the debates organized by
      referred to as the Cluzel report (December       ARP during the Beaune Conference of
      1992).                                           1992).
In addition, the fall in popularity     That is why the Americans prefer                 Other European groups go even
of European stars,    closely linked    to buy the stories (the soul of the              further and invest directly in
to the small circulation of films in-   film) and make new versions                      American cinema. This is the case
side Europe, also makes     their       themselves with stars known to the               of Credit lyonnais which has in"
penetration of the American             public and then distribute them all              herited MGM and in which the
market difficult. Although never        over the world             through their         French State wants to inject FF 12
significant, this represented a         powerful distribution             networks.      billion. It is also the case of Francis
steady audience in the 1950s and        This phenomenon, which is always                 Bouygues s Ciby 2000, Studio-
1960s which European cinema             one-way, obviously has negative                  Canal +, Polygram (subsidiary of
failed to exploit.                      consequences on the economy of                   Philips), Kirch' s Neue Constantin,
                                        the European film industry.                      Berlusconi' s de 10 Penta, and the
For example,    Ana   with Sylvana                                                       Berliner Bank which, through its
Manganno in 1951 and         Et dieu    Ten remakes were made of French                  subsidiary in london, invests USD
crea 10  femme with Brigitte Bardot     films in the 1940s, 14 were made in              100 million every year
in   1956 , the films that launched     the 1980s.                                       American films.
the two new European sex sym-
bols, had careers in the USA (in        18. EUROPEAN INVESTMENT                          The lesson to be drawn from this
dubbed version) that today would        IN AMERICAN CINEMA GREW                          imbalance of power is that
be unthinkable. lattuada s film re-     FROM THE tATE 19805                              American investments in Europe
mained 14 months at the box of-                                                          are concentrated on distribution
                                        Today there is a new and rather
fice, taking in USD 4 million , the                                                      networks (cinema and television),
                                        symptomatic phenomenon: Euro-
same amount that Vadim s film                                                            thus creating outlets for their pro-
                                        pean producers are deciding to
made five years later, despite the X
                                        shoottheir films directlyin English
                                                                                         grammes while European in-
rating that doomed it to the ' hard'                                                     vestments in the USA are geared
                                        the only way, they believe, of
circuit.                                                                                 towards production and thus con-
                                        reaching the American market
                                        while at the same time benefiting                tribute to fuelling the crisis of our
17. THE STORY DRAIN AFTER                                                                programme-making industry.
                                        from the advantage of the
USA WEAKENS FILM AND                    language as a label of quality with
                                        the European and world au-                       19. THE ABSENCE OF A
TELEVISION PRODUCTION                                                                    DISTRIBUTION NETWORK FOR
                                        dience. This is the case of l'Amant
                                                                                         EUROPEAN FILMS PUTS A HALT
The drain of European talent (ac-       by Jean-Jacques Annaud or
                                                                                         TO ANY EFFORT TO CREATE AN
tors, directors, photo directors        Damage        by luis Malle.                     INDUSTRY
etc. ) is not a recent phenomenon.
It is part of the story of the rela-                                                     This gradual weakening of the
tions between the two continents                                                         European film industry, which like
and has been a decisive contribu"                                                        the cinemas remains the engine
tion to the universalization      of                                                     and mirror of the entire pro-
Hollywood cinema.                                                                        gramme-making industry, has
                                                                                         resulted     in its
What was not new nevertheless                                                            dependence on public funds
became too . common a practice in                                                        whose role is more to cover the
the 1980s. It is what could be call-                                                     market deficit than to create con-
ed the ' story drain , that is to say                                                    ditions to integrate it.
the purchase by the Americans of
scripts of films shot in Europe
which had difficulty entering the
US market because of the in-
dustry's resistance to dubbing,
which generally doomed them to
the limited network of original         16 Source:   Film Francais.
                                        Wha would have th~wght that       Some like it
versions.                               hot,   the masterpiece by Billy Wilder, a Ger-
                                        rnan exiled in the USA in the 1930s, was in
                                        reality the adaptation of a film by Richard
                                        Pottier Fanfare d' amour shot in 1935? This
                                        enqbles us to qualify somewhat our bitter
                                        observation: it must be admitted that while
                                        Ewrope often has good stories, it does not
                                        always have the best scripts.
Until now, support for production                   20. EUROPEAN SUCCESSES                           21. THE SYSTEMS OF AID HAVE
has mobilized virtually all                         DO NOT BENEFIT THE                               TURNED OUT TO BE POWER-
available funding, without EU                       INDUSTRY AS A WHOLE                              LESS IN STOPPING THE CRISIS
Member States and especially the                    The increasingly rare successes                  Nationol assistance funds, never
Community thinking about in-                        that manage to overcome these                    hdving touched distribution . chan-
terveningin the market to create                    limitations and achieve interna-                 nels, have, for the most part
conditions for a real circulation of                tional distribution within Europe                turned outto be powerless in stop-
European films. This would imply,                   tend only to benefit their own pro-              ping the crisis.
on the one hand, a very firm at-                    ducers and directors. They do not
titude towards compliance with                      contribute to a       more secure in-            Selective aid , based in generol on
competition lows, ond on the                        dustry capable of taking risks            in
                                                                                                     considerations of           on
other hdnd , the creation of incen-                 further production or distribution.              noture, introduces an element of
tives to create a world distribution                                                                 judgment outside            the morket
network for European films, a sine                  Once agoin , the exceptions only                 which tends to protect the pro-
quo non  condition to make an in-                   confirm the rule and if in some                  ducer s risk instead of encourag-
dustry vioble.                                                                                       ing him (' there are producers who
                                                    countries, particularly France, in-
                                                    tegrated groups are beginning to                 make money from films that are
Unlike the Europeans, the                           form with a coherent production                  financiallosers '18
Americans have long recognized                      philosophy, they never exceed the
that the hazard of an industry                                                                       Automatic aid , even if it rewards
                                                    size of their        national markets
                                                                                                     success, does not deol with the
making one-off prototypes can be
minimized by concentrating pro-
                                                    where, poradoxically,                 they
                                                                                                     absence of a European distribu"
                                                    sometimes find themselves in a
duction on powerful compdnies                                                                        tion network able to      intervene
                                                    dominant, or even          monopolistic,
which enjoy real economies of                                                                        upstream in the      production of
scale. Such companies can aquire
                                                                                                     films. Automatic              aid
the criticol mass necessary to build                                                                 downstream     (we could at least try
worldwide distribution networks                                                                      to      adjust this type of aid,
and       occumulate valuable                                                                        distributing the benefits ofsuccess
                                                                                                     between the producer, distributor
                                                                                                     and the cinema operator).

17 In April 196B, in the ' Symposium on the         consequence? Well, when the decline in           network of distribution of European films
Ways and Means of a Common Policy for               the cinema- going public began some 10           could rely, assuring in turn the stability of
the Film Industry in the Common Market              years ago in Europe, to erode the                national productions and the authenticity
organized by the Institute of Sociology of          economic bases ofthe industry, when the          of their works. This base, especially if it
the Free University of Brussels in conjunc-         attendance crisis worsened - European            were one day to be extended to Great Bri-
tion with the European Commission , and at          cinema lost some 45% of its audience over        tain and some of the countries of the Free
a time when the European Economic Com-              the past 10 years   - European   distribution    Trade Area, reaches the critical size enabl-
munity only comprised six States, Jean-             companies, too weak, too fragmented, too         ing the growth of companies adapted to
Claude Batz presented a communication               closely limited to the regional framework,       the new international competition.
where he developed t~e idea, visionary for          these companies therefore             found      Gradually, a European distribution net-
the time, that there had to be a leap ' from        themselves prevented from supporting the         work could then gain a foothold in foreign
the national scale to the European scale, a         line of financial needs of production.           markets and engage in            cycle of
correlative change in our objectives, that is                                                        cumulative growth:
                                                        Already for several years (the large
to say to focus our efforts now on organiz-         American companies) had been downsiz-                 It is recommended, now that the
ing markets and developing structures.              ing their own production activity to focus       markets are being       departitioned and
We cannot resist quoting more lengthy ex-           on the financing and distribution of films       assuming the continental dimehsion, that
tracts from the text by Jean- Claude      Batz      which it paid for from independent pro-          priority in State intervention go to fostering
since they appear so much like a premoni-           ducers who played the role of contractors        the development of a multinational net-
tion today:                                         for their account:                               work offilm distribution, which should and
                                                                                                     colJld be the cornerstone of a European
 The distribution strlJcture has been forgot-           As for the strlJctures specific to ElJro-    film industry:
ten and disregarded by national policies.            pean distribution, eroded by the crisis, they
                                                                                                     This was written in 196B, apparently when
DistriblJtion is the " big missing element" in       now continue to break apart under the ac-
the governments ' film promotion systems.            tion of American competition.                   European cinema was doing well, when it
This omission is less slJrprising than it seems
                                                                                                     still had a majority of our markets and
                                                         What is the meaning of this change?         when the United Kingdom and Spain,
at first glance. It is explained by the fact
that distribution makes no obvious sense
                                                     Between the audience of our planet and          among others, were not members of the
                                                     the various national productions offilms ...    European Community!
 and does not truly fulfil its role lJnless it is
                                                     gradually we are seeing the development         Itcanbe added asa matter oFcuriositythat
 structured on an international basis, or at         of an international distribution and financ-
 least on a multinational territorial basis:                                                         Jean- Claude Batz is usually the producer
                                                     ing structure under American control and        af Andre Delvaux films.
 (This explains why) ' the financial interven-       acquiring a world hegemonic power ac-
 tion of governments has been confined to            cording to the snawball cumulative- growth       18 Dimitri Balachoff, Permanent Secretary
 supportihg production activities, short- liv-
                                                     process.                                         of the European Academy of Cinema and
 ed by nature, and has refrained from seek-
 ing to organize markets or develop perma-              The European Community provides the           Television (letter      to Antonio- Pedro
 nent distribution structures. What was the          territorial base on which an autonomous          Vasconcelos).
22. DESPITE THE                        23. THE ATOMIZATION OF                  between the numerous small Euro-
UNPRECEDENTED LEVELS OF                EUROPEAN CINEMA IS                      pean distributors and the major
AID, THE CRISIS OF EUROPE'             CONTRARY TO THE CREATION                American distributors,        which
FILM INDUSTRY WORSENS DAY              OF THE SINGLE MARKET                    enables the latter to have power-
                                       The situation of the film industry in   ful cotologues (whereas Euro-
In spite ofthe oid (Hans Gerd Pro-     Germany can be transposed for           pean films , as seen earlier, ore
doehl even goes so far as to say,      the most part in the EU, with the       generally distributed by different
referring to the crisis of German      Lander       being replaced       by    small distributors and national
cinema, ' precisely because of it'),   countries.                              publishers), has meantthatthe ex-
the situation of European cinema                                               plosion of video has had repercus-
(ond the audiovisual sector, in        It is worth quoting another             sions on the .crisis of the cinemas
general) is worsening every yedr.      paragraph from the Prodoehl             and instead    of   increasing film
                                       report which beautifully sums up        receipts has further worsened the
In 0 report commissioned by the        the negative effects         of the     deficit of European cinema.
government of the German       Lond    otomization of Europe s television
of North Rhine-Westphalia , Pro-       and cinema industry:                    Findlly, the box-office success of
doehl paints a catastrophic pic-                                               films and the strength of their pro.
tureof the German film industry         Film has a peculiar economic           motion have a    decisive leverage
and puts his finger on the .struc-     aspect: its production costs are        effect for the hiring and sole of
tural reasons for this crisis: a       largely independent of the pos-         videos (ond later for TV ou-
system of aid atomized by the dif-     sible proceeds from the sole, they      diences) which exponentially in-
ferent funds of the     16  Lander,    do not increase in proportion to        crease the       profitability of
 where the economic imperotives        the scale of distribution. That is      American films:      today, video
defined by the management and          why, once the level of profitobility    receipts for American films ac-
attendance of dnemdS no longer         is reached (the break-even point),      count for 47% of exports whereas
play an adjusting role indicating in   profitability increases in exponen-     box-office receipts do not exceed
what direction to take action but      tial fashion with the increase in       32%.
constitute 0 foreign factor,      a    sales turnover.     This economic
source of irritation                   peculiority explains why the na-
                                       tional and international film
The result is that, between 1985       market will always remain the do.
and 1991 nearly half of German         main .of the major distributors. In
films did not make it to the box of-   the film industry, more than in
fice; 90% of the films had an          other economic sectors, the rule is
attendonce of less than 130 000;       that the power in the market and
in 1998, outofo total of 1 994 pro-    therefore cultural hegemony are
duction companies, only 76 had         variables of the quantity ond
participated in the production of a    dimension. Whoever only has an
film released in the cinemas i.e.      atomized porcel with which to oct
   8%; and most of the distributors    will constantly be at the service of
in Germany employ on average           the others.'
  7 people (and this figure in-
cludes the four largest subsidiaries   24. THE EXPLOSION OF VIDEO
of the major US companies).            HAS INTENSIFIED AMERICAN

                                       The 1980s witnessed an explosion
                                       of the video market, which has to.
                                       day become the leading source of
                                       income for the major American
                                       companies in the world market:
                                       52% of the volume of total earn-
                                       ings (cinema , video, television).

                                       The combined effect of the drop in
                                       cinema attendance for European
                                       films and the disparity of power
25. THE LIBERALIZATION OF               To face the need to fill growing                 26. COMPETITION BETWEEN
TELEVISION IN EUROPE HAS                time slots with programmes , all the             THE STATIONS CONTRIBUTED
WORSENED THE DEPENDENCE                 operators turned to Hollywood                    TO INTENSIFYING THE
OF THE STATIONS ON                      which was the only one with                      BIPOLARIZATION EFFECT
AMERICAN PRODUCTION                     catalogues capable of           satisfying       The liberalization of terrestrial
Contrary to what occurred in the        this demond. Blocked by the sta-                 broadcasting without           protecting
USA , where three powerful net-         tions   already established,                     the resources needed to maintain
works and a market of syndica-          adapted to the sole needs ofthese                strong public services (which was
tions in the beginning established      stations, frozen by the absence of               justified by the need to ensure
a market logic for audiovisual pro-     distribution structures, European                pluralism), therefore led the public
duction, in Europe, television was      programmes were not able to take                 services to       CI competitive logic
created in the shadow of the na-        advantage, of this trend.'19                     which reinforced , onthe one
tionol public services, dependent                                                        hand, the retreat to national
on broadcasting fees.                   This phenomenon was accom-                       strategies , and on the other hand
                                        panied by a massive consumption                  their dependence on American
With the introduction of advertis-      of American products (films , and                products.
ing in the economy of the public        also series , television films , situa-

stations (with the exception of the     tion comedies and soap operas)                   The rise in the number of broad"
BBC) and the demond for the             which      in the case of films,                 casters (and also the number of
liberalization of terrestrial broad-    benefited. from promotion in                     broadcasting hours), while in-
                                        cinemas . and , in the case of televi-
casting, a private sector, more                                                          creosing the         demond for pro-
often than not fragile, grew and in     sion products , from prices thot in              grammes, also increased produc-
turn weakened the public stations       certain instances could be con-                  tion and broadcasting costs (with
and prevented the establishment         sidered dumping: with their cost                 often fierce competition between
ofa real continental market for         already recouped in the USA , the                broadcasters for the best stars and
European products.                      American products were sold to                   programmes). But this increase in
                                        the stations often in botches and at
                                                                                         costs was not offset             by higher
Bernard Miyet very clearly ex"          obsolutely unbeatoble prices.                    advertising revenue, which
plained the origin and effects of                                                        resulted in lower production
this phenomenon:                                                                         budgets for the broadcasters
                                                                                         (public Clnd private).
 The public stations initially block-
ed the rights of programmes that
                                        19 Bernard Miyet, in ' Etude for the SEA'
they owned , in order to bor occess
                                        (Societes d' etudes sur I' audiovisuel),
to the new private     competitors.     specially pnapared for this report.
The lotter were consequently            We believe that it is interesting to quote
faced with the double handicap          Bernqrd Miyet again on a problem that is
thot burdened any newcomer to           almost never brought up -    the problem of
                                        frequencies: ' The granting of broadcasting
the market: the absence of a pre-       lic~nces or the assignment offrequencies is
existing fabric of                      still th~ responsibility of the authorities of
producers and scarce financial          each country, which naturolly tend to
                                        favour purely national interests, despite
means.                                  the apparent legal equal opportunity for
                                        any national of th~ European Union.
                                        B~cause of this, is it Q pure coincidence if
                                        the major private operotors are contralled
                                        by French entities in France, G~rman anes
                                        in Germany, Italian ones in Italy or English
                                        ones in Great Britain?'
                                            In this respect, it can b~ suppos~d that
                                        if a broadcaster     controlled stations in
                                        s~veral countries, he cauld be more easily       20ln Portugal in 1991 ,   the RTp, which runs
                                        tempted to take a risk on making program-        the two public service stations, bought a
                                        mes intended from the start for s~veral          batch of 500 films from the U I P represent-
                                        markets .... Probably already difficult to       ative (th~ Lusomundocompany), under the
                                        impl~ment in an environment that would           pretext of buying titles before the arrival on
                                        b~ totally deregulated , one can imagine         the market of two private stations. It must
                                        th~ additional handicaps of the institu-         be added that the U I P representative took
                                        tionalized frogmentation of European             advantqge of this to get rid of his ~ntire col"
                                        markets and the regulatory constraints in-       lection of titles, most of them of poor quali-
                                        tend~d to protect th~ purely national crea-      ty, under the cover of a few very attractive
                                        tion and production.                                       ET,
                                                                                         titles like     for example.
Moreover, the search for a max-        And yet, here too, Europe hos an        the fact that quotas for European
imum audience oriented         the     enviable but totally under utilized     products can be entirely filled by
broadcasters production and            potential. Between  1929 when           national products has reinforced
purchase policy either to national     sound films began and today, it is      the trend          of bipolarization
products or to American products       estimated that the 12 countries of      (American products/national
whose cost/audience       perform-     the European Union combined             products) which, as has been
ances are better (since costs ore      produced about 30 000 films,            repeated so many times , remains
already recouped     on their          which is quite likely more than the     one of the most negative symp-
domestic market) and easier to         number of films produced in the         toms of the .change in the
obtain (because of a concentra-        USA.                                    audiovisual market in the EU.
tion of rights and catalogues) thon
the performances of non-national       28.THE TELEVISION WITHOUT               29. EUROPEAN PROGRAMMES
European products.                     FRONTIERS DIRECTIVE RISKS               AND FUNDS HAVE ALSO BEEN
                                       BEING INEFFECTIVE IF IT IS              POWERLESS TO STOP THE
27. THE COMBINED EFFECT                NOT DEFINED IN MORE                     CRISIS
                                       REINFORCED                              Beginning in 1987, both the Com-
                                                                               mission and the Council of Europe
                                       Born of a compromise between            began to         worry about the
                                       the desire of certain countries to
                                       liberalize                European
                                       audiovisual area and a concern
                                                                               dramotic loss of competitiveness
                                                                               of European products and the
                                                                               consequent domination of the
The slow but steady introduction       for regulation on the port of coun-     market (cinema, video and televi-
of satellite and cable in Europe       tries afraid that free trade would      sion) by American products.
has increased the supply of            only serve to increase the massive
American productsj and the new         invasion of American pro-               In 1987, the MEDIA programme
forms of consumption of television     grammes on Europeon channels,           was created in its pilot phase
progrommes (pay-television,            the television without frontiers        followed in 1990 by the approval
pay- per-view, video-on- demand)       (TWF) Directive, adopted in 1989        of a five-yeor programme:
threaten to intensify American         hos had different effects depend-       MEDIA- 95.
domination in the consumption of       ing on whether the various
households.                            governments transposed it in their      In 1988, in Rhodes, President
                                       national laws and enforced it in        Mitterrand launched the idea of
While it is   possible to   impose     practice with a certain amount of       on audiovisual Eureka which ,             like
quotos of European products in         rigour.                                                        was to
                                                                               the technological Eureka ,
the catalogues of broadcasters of                                              provide new impetus to a real
video-on- demand , the consumer        leaving too much room to                competitive programme-making
cannot be prevented from seeing        discriminatory interpretations,         industry on the world market.
mostly or even exclusively             such as the definition of a work,       From this idea came the
American products.                     the choice of time slots , ond even     Audiovisual Conference which
                                       the judgment on the possibility of      was held in Paris in 1989.
Once again , the weak perform-         fully enforcing it (the expression
ance of Europeon films , the            whenever possible' invites non-
otomization of catalogues, and         compliance with Articles 4 and 5,
the absence of a significant           especially for new broodcasters),
number of dubbed films (dubbed         the Directive does not explicitly
versions account for about 85% of      foresee its application to stations
the receipts of American films in      that broadcast by cable         and
continental Europe) deny them the      satellite to theme stations or to
possibility of fully benefiting from   those that will use digital
these new forms of consumption.        technology and new delivery
                                       systems (pay- television, pay-
                                                                               21 It should nevertheless be recalled that in
                                       per-view, video-on- demand).
                                                                               1962 the Commission had already
                                                                               prepared a memorandum relative to the
                                       Finally, despite positive results for   Community action programme for the
                                       production in countries like France     second phase (1962- 65) where it was pro-
                                                                               claimed that ' a common policy would be
                                       where legislation . has defined and     adopted forthefilm industry with construc-
                                       reinforced its regulatory systems       tive solutions at the CommtJnity level'
Meanwhile, in April of the same                   Nevertheless ,      even if one con-            As for the Eurimages fund created
year, the Council of Europe                       siders that the MEDIA programme                 in 1989 by the Council of Europe,
created a European co- produc,                    was barred from intervening                     its aim was to make up for theim,
tion fund , (;ounting on the volun-               directly in production;
                                                                                 22 that its      possibility for MEDIA to intervene
tary participation of the different               annual budget (ECU 40 million) is               directly in production. Yet this
member countries which today                      too limited to have any significant             initiative, despite its very positive
number 24: Eurimages.                             effect on a usn 4- billion market;              encouragement for alliances be-
                                                  that Eureka-audiovisual has re-                 tween European producers, has
In 1993 , an action plan to support               mained at the level of project                  not been able to solve the crucial
the creation of high- definition                  labelling; and that after much                  problem of the movement of films
television programmes and new                     hesitation to adopt the European                inside Europe, aid for co- produ(;-
16/9 screens was approved and                     HD-Mac standard , Europe prac-                  tion not being (;onditional on a
allocated ECU 228 million in fund-                tically abandoned research in this              guaranteed minimum, ensuring
ing. These are, to dote, with the                 area torally to the American                    the release of films at least in the
TWF Directive, the only large-                    strategy of developing the                      countries of the co- production.
scale European initiatives in the                 technology of image- transmission
audiovisual field.                                digitalization: it         has to be            The fact that most of the films sup-
                                                  acknowledged that all these pro-                ported by Eurimages have disap-
                                                  jects have done nothing but gloss               peared without trace and that the
                                                  over the crisis when they were sup-             re(;overy of loans has been all but
                                                  posed to deal with it. They have                impossible means that                      full
                                                  only ' cared for the sick person                analysis of its role must be under-
                                                  when they were supposed to heal                 taken if it is to contribute to a
                                                  him                                             recovery of European film-making
                                                                                                  in the future.

22 It seems useful to recall the   political      (ii) no European support fund; therefore        They shared the view that at the budgetary
context in which the MEDIA programme                   autonomous structures, providing in-       level reached in 19B9 by MEDIA (ECU 10.
came about as well as the obstacles and                centives to a series of octions deemed     million), it could no longer fall under the
pitfalls encountered by its development in             priority by the professionals.             Commission s right of initiative but re-
order to draw the necessary lessons. The                                                          quired a legal base. This resulted in 1990 in
                                                  This latter optian could have laid the bases
goal is first to warn the Governments of the                                                      the institutional negotiation to move on to
                                                  of the structuring of a Europeon distribu-
Member States , then the Commission itself,                                                       the so-called main phase of MEDIA and to
                                                  tion network, butthatwos not the choice of
ond finally the professional circles, to avoid                                                    launch a five- year programme.
                                                  the professionals , who came together for
repeating errors - born of political cir-
                                                  numerous sectoral meetings, during a con-       Because the Council' s unanimity was
cumstances - which would sign away the
                                                  sultation phose launched in 19B7 by the         necessary to establish such a progromme,
proposals made in the present report.
                                                  Commission , by virtue of its right of in-      the Commission was compelled to increase
Actually, the programme is the result of          itiative.                                       the number of lines of action to satisfy the
political failure: the rejection in 19B5 by the                                                   specific demands of each of the Member
                                                  This consultation phase was therefore go-
Council of Culture Ministers of a proposal                                                        States.
                                                  ing to lead to a series of pilot experiments,
by the Commission to create a Community
                                                  with relatively limited financial means, but    It is in this way that political pressure led to
fund to support co" production. (Refused by
                                                  still making it possible to experiment on 0     the adoption of     specific measures,     even
Germany, Denmark and the United
                                                  small scole with the solutions recommend-       before a global strategy was clearly defin-
Kingdom , each acting for different
                                                  ed by the professionals.                        ed. It olso led the programme to repeot
reasons, the idea and structure of this fund
                                                                                                  because of the atomization of the projects
were   to be taken up by France in the            In the minds of the MEDIA promoters, it
                                                                                                  each having in the end insufficientfinancial
framework of on intergovernmental                 was only offer this pilot phase (which for
                                                                                                  means, the fragmentation that negatively
negotiation and give birth to Eurimages.          each project was to lastat least three yeors)
                                                                                                  characterizes the economy of Europe
Nevertheless, in the course of the discus-        that conclusions could be drawn and be-
                                                                                                  audiovisual sector.
sion, some Ministers, particularly Martin         tween six ond ten priority actions recom-
Bangemann , then Germon Minister for the          mended , with adequate means , assessed.        The merit of MEDIA, hindered by a small
Economy, suggested that they could be                                                             and fragmented budget, will have been to
                                                  Butthe movement was accelerated in 19B9
open to Commission proposols, in por-                                                             take stock - sometimes in a shallow man-
                                                  for two reasons: the Audiovisual Con-
ticulPr to encourage the movement of                                                              ner - of a certain number of problems, to
                                                  ference, organized in Paris upon the pro-
works and to fovour multilingualism.                                                              initiate pragmatic solutions ,     create net-
                                                  posol of President Mitterrand to define an
                                                                                                  warks of relations between professionals of
For the Commission ,            were
                       the limits      drawn,     audiovisuol Eureka based on the                 the 12 countries , identify actors likely to
if it wanted to begin 0 policy of support for     technological Eureka      overwhelmingly
                                                                                                  operate at European level and help in this
the programme-making industry:                    came out in favour of the MEDIA pro-
                                                  gramme, indicating that it simply needed
                                                                                                  sense begin changing mentalities.
(i) no direct aid for production; therefore                                                       Whatever the programme s future, it will
                                                  to be given more financial meons.
   oction remained upstream and                                                                   have been the basis           of a growing
   downstream and on the environment of           The other reoson had to do with the posi-       awareness and mobilization indispensable
   production;                                    tion of the UK and French Governments.          for Europe.
30. THE SYMPTOMS OF THE               (ii) the increased trend towards      31. IN SHORT
CRISIS WILL CONTINUE TO                   bipolarization between            ... Another reason for the
WORSEN                                    American products and na-
                                          tional products, which has in-
                                                                            weakness of European producers
All our programmes, funds and                                               was the fragmentation ofthe large
                                          tensified the autarkical spirit
regulations have failed to deal                                             European market into much
                                          of European production;
with the disease     that afflicts                                          smaller national markets, which
Europe s audiovisual industries.                                            eliminated the       potential for
We seem to be unable to meet the      (iii) the fragmentation    of ini-
                                                                            European market- product specia.
                                          tiatives , catalogues, markets
challenge of changing market                                                lization.
                                          and decision-making centres;
structures and of new technology
due to:                                                                     Ironically, market fragmentation
                                      (iv) the absence of integrated
                                          pan- European groups suffi.       was encouraged       by national
(i) the commercial deficit of                                               po~icies thatdiscouraged coope-
    European products due to the
                                          ciently powerful to be com-
                                                                            ration between companies from
                                          petitive on the world market
    combined effect of their                                                different European nations while
    inability to gain access to           (absence of critical mass and
                                                                            dt the same time      encouraging
    cinemas, especially transna-
                                          economies of scale), par-
                                          ticularly because of the non-     them to cooperation with
    tional, and to their loss of                                            American firms. As a result,
    popularity, which in turn has         existence of a world network
                                                                            companies were able to operate
    led to a fall in cinema attend-
                                          of distribution for European
                                                                            in most of the major European
    ance with consequent knock-                                             countries , capturing benefits of
    on effects in video and                                                 scale that were denied to their
    television;                                                             European competitors.

                                                                            (laura D'Andrea Tyson , President
                                                                            of the Council of Economic Con-
                                                                            sultants under the Clinton     Ad-
                                                                            ministration , on ' Managing trade
                                                                            and competition in the semicon-
                                                                            ductor industry   , 1992.
                                                  The . audiovisual   sector is the most powerful instrument                  of culture of our
                                           It emerges from     the    discussions of       the Audiovisual Ministers          of the   European
                                        Community the unanimous            conviction      that Europe must         be able to support and
                                                                                develop the creation          of   the audiovisual industry:

                                                                                                     Conclusions of the Presidency
                                                                                                                      (Mons       October   1993)

Any action        to     improve the    But another aspect to be kept in                       The role of the public authorities
dramatic situation that has been        mind is that if these are notaccom-                    would then be, as in the USA ex-
described must obey a very              panied very quickly by incentive                       clusively a regulatory, stimulating
precise objective and a clearly         measures for the creation of pan.                       and promotional one. As Vice-
defined strategy on which all           European distribution companies                         President Gore said so well: (the
initiatives will be based.              and products capable of taking                          role of the State is to) ' promote
                                        advantage of the single market                          and protect competition
The objective is that of creating an    the former will risk creating a for-
audiovisual industry in       Europe    tress which is empty on the inside.                     We must give ourselves time to
that projects     its imdge in the                                                              achieve this.
world , embracing         the largest   As long ago as 1978 , Rene Bonnell
possible audience, which medns          reminded us that ' the impossibility                   But in the mean time, we will have
creating a   self-sustaining and        of breaking with the protectionist                     to live with what we have. It is not
competitive industry in an interna-     model reinforces the Malthusian                         going to be possible overnight to
tional market, acting in the new        behaviour of the profession and                         invent a number of films and other
framework of the          digital and   increases its economic weak-                            programmes capable of drawing
interactive revolution.                 ness                                                    the crowds into European cinemQs
                                                                                                or retaining the attention of every
The strategy must first take into ac-   If the competitive side of Euro.                        kind of television and video au.
count the    structural imbalance       pean production is not streng-                          dience.
between Europe and the USA              thened to meet the challenge and
which translates into an uhsus-         sustain ambition, protection                            Nor can we create overnight stars
tainable trade deficit between our      measures will only serve to                             we do not hove, stories we have
two audiovisual powers. It must         weaken it, because protected                            not scripted , or produc:ers with the
also toke into account the provi-       from the market , it will lose its                      means to regain the taste for risk.
sional outcome of the Uruguay           vitality and even its ability to resist.                But we must begin to think about
Round.                                                                                          rewarding success.
                                        That is why we say that we must
In order to rebalance these rela-       move from a policy of resistance to                     That is why, in defining a new
tions and be able to negotiate with     a policy of success.                                    policy, we must be able to answer
strength with the Americans to                                                                  the question which is at the heart
gradually reduc:e, or even              The final goal of any policy must                       of the strategic transformation we
eliminate, the structural obstacles     be to arrive at a stage where the                       propose: how is this transition to
and advantages on both sides , it       market, is self-sustaining to the ex-                   be managed , that is to say how do
will have to be made clear from         tent that it meets the demand of                        we go from a subsidized economy
the start that protection measures      the widest possible audience.                           to a self-sufficient economy?
(quotas      financial and tax
assistance, taxes , specifications,                                                             let us state on obvious truth: no
regulations ,   etc. )   are not only                                                           profound change will be made by
necessary but legitimate.                                                                       laws alone. But without dny laws
                                                                                                there will be no change.

                                                                                                This means thatthepolitical role
                                        1 Rene Bonnell in Le cinema exploite      p. 2B2        the Commission , which has to
                                        (ed. Ramsay/poche/cinema).                              mobilize the politicians, public
opinion and the professionals is                   The Commission must therefore          All this implies,      legislative and
essential. It must create the legal                design instruments to act.             regulatory action ,     firm and flex-
and institutional frameworks to                                                           ible monitoring, an ability             to
restore the            confidence that             Europe must invest strongly in         adapt to the technological revolu-
generates the                 energy and           training- a war    is not won with     tions that very quickly are going to
stimulates investment, which                       old generals. But it is of no use      chonge the organization of the
turn restores confidence.                          teaching the trade to new genera-      audiovisual sector and its methods
                                                   tions if there are no opportunities    of consumption. The American
It is essential that the creators                  to practise it.                        Federal Communications Com-
themselves believe that a stronger
                                                                                          mission (FCC) offers us a clear
industry and a wealthier market                    It is of no use to encourage the       example.
are not a threat. They mean more
                                                   creation of a worldwide distribu-
opportunities and better working                   tion network for European films if     But at the same time, inc:;entive
conditions, not the contrary.
                                                   at the same time a major effort is     measures must change too.
We have lived too long with the                    not made to enforce c:;ompetition
idea that the director was not only                laws that are today often ignored      Firstly, they must gradually lose
the centre of the creation but also                by the major American companies        theirfeoture of.subsidies: a type of

the only creator and the only                      (or by their   notional represen-      support, which has dominated the
judge of his own talent. We have                   tatives) on our continent without      last 20 years , at national and

forgotten that cinema is also an art               us thinking about intervening, or      Community levels and has made
of collaboration where a lot of                    we fail to invest in cinemas so that   us lazy and powerless.             Today,

elements contribute to the film                    the only way to keep film enter.       even the most prestigious directors
succ:;ess. It is vital that in cinema , as         tainment alive in Europe is for the    like Wim        Wenders have
in the other audiovisual industries                Americans to build comfortable         understood this: ' In Europe we
creative producers, inventive                      and high- performing multiplex         have fallen more and more into a
scriptwriters and actors with stor.                cinemas.                               kind of" subsidy lethargy , whose
potentiol take bock their place                                                           symptoms are frequently artistic
and importance in the industry as                  Our actions must therefore be          self- indulgence, indifference
a whole.                                           coordinated in the same way that       towards the audience or disregard
                                                   protection measures must         be    of economic laws:3
European directors won the right                   defined with   incentive meosures
a long time ago to be recognized                   under the umbrella of strong and       Secondly, they must reinforce
as the authors ofthe film , like musi-             determined institutional and           more and more their European
cians , painters and writers. It is a              political interventions.               nature. This does not mean that
victory thot the authors on the                                                           the EO policy is going to replace
other side of the Atlantic envy.                   At present the protection              the policies of individual States
                                                   measures, which worry the              which have a crucial role in
But we must at the same time give
                                                   Americans, are centred on the          defending language ond cultural
up the idea that money is the                      TWF Directive. It must be improv-      identity. Governments are free to
enemy of art and that the need to
                                                     , made more flexible and effect-     choose their own policy for the
 make receipts , i.e. to reach the
                                                   ive, taking into      account the      development of the           audiovisual
public , is a shameful obstacle to
                                                   necessary coordination between         industry. They can decide to sup-
the freedom of authors) Racine
                                                   national interests and Community       port an industry based on the
could not be suspected of betray-
                                                   policy, between the needs of           specific needs of their country ot
ing his muse when he wrote in his
                                                   broadcasters and those of in-          their regions while at the same
preface to        Berenice,      The main
                                                   dependent producers.                   time encouraging the access of
rule is to please and to touch'
                                                                                          their creators to the single market.

2 In a dialogue between Manoel
Oliveira and Jean- Lu!: Godard, published
in Liberation   of 4 and 5 September 1993,
we can read these extracts: J.- L. G.
you know the definition that Jules Renard
gave of the critic? " The critic is a soldier in
an army put to rout , who deserts and goes
over to the enemy. And who is the enemy?
The audience." ... I think that films are
made for one or two people.' M. 0.          But
that's enough' . J.L. G. Exactly                                                          3 Wim Wenders, in   Felix   (January 1994).
The Community policy is not                  The European funds necessary for        For this - and this is our central
aimed either at uprooting artists            the development       of such a         recommendation                it is im-
or creating European products                strategic industry which today ac-      perative to help create a distribu-
which , with the increased number            counts for 1. 8   million jobs in the   tion network for European prod-
of co- producers       become a              EU (and with the potential of aC-       ucts that provides new and better
hotchpotch of initiatives and cul-           counting for at      least twice as     opportunities for our creators.
tures, devoid of originality.                much), must be considered a pro-
                                             fitable investment and not as sub-      Bernardo Bertolucci said it better
On the contrary, if the originality          sidies to cover an eternal deficit.     than anyone: ' One of ourfirst ma-
and ambition ofthese projects is to                                                  jor targets should be the iden-
be retained for the producers and            These funds must therefore pro-         tification and creation of a Euro-
directors, it is imperative that they        mote financial responsibility while     pean distribution (system), which
have adequate means to finance               at the same time creating more          could allow room for our many dif-
them. And this financing can only            favourable conditions    for risk.      ferent cultural experiences.
come from energizing           a Euro-       taking: tax advantages, system of
pean ,   indeed a world, market              loan guarantees, low- interest
which      through a successful              loans so as to enable companies
distribution network           enables       to increase the volume of produc.
marketing our products and mak-              tion and the spectrum of the
ing them profitable:       the stories       market that they occupy.
can remain local , but not the au-

Finally, we must,       as Giuseppe
Richeri states so well      go from a
logic of the product toa logic of
the market'.
               4 This means that the
financial aid and other Commun-
ity incentives , instead of interven-
ing on a case- by-case       basis , i.
film by film , product by product,
must seek to stimulate the creation
and consolidation         of powerful
and integrated companies which,
through the quantity of their prod-
ucts and the extent of their ter-
ritorial and multimedia presence
can become in time the major
energizers of the audiovisual in-
dustry which Europe needs.

                                                                                     5 Bernardo Bertolucci in   A dose   af   reality
                                                                                        The State of European Cinema     (publish~
4 Giuseppe Richeri, in answer to the ques-                                           ed by the European Film      Academy and
tionnaire. (see Annex 1)                                                             Screen I nternational).
                                             (The Think- tank)   will have the task    of   making     recommendations

                                             audiovisual policy guidelines, in keeping with the Mons cone/usions
                                                    and in the context of the preparation  of the Green Paper on

                                            audiovisual policy and the audiovisual conferences that will follow its

                                                                                                     Joao de Deus Pinheiro
                                                                           European Commissioner in charge of DG X
                                                                                                                               11. 1993

    STRATEGY AND                         Coordination could extend suc-                              THE LEGAL AND
                                         cessfully to relationships with the
COORDINATION                                                                          REGULATORY
                                         Council of Europe (as encouraged
                                         in the Maastricht Treaty) and EFTA           FRAM EWORK
A strong coordination drive from         countries (which are signatories of
the centre will be indispensable in      the European Economic Area                   The overall objective is to devise
order to successfully implement          Treaty), and , in particular, with the       incentive measures to create
the strategy outlined in this report.    audiovisual support mechanisms               new market- place for audiovisual
The European Commissioner with           already in existence in those coun-          products and new audiovisual
responsibility for       audiovisual     tries (such as the Nordisk fund in           products for the market- place as

policy and his      administration
                                         Scandinavia).                                the indispensable                  tenets of a
Directorate- General X, are uni-
quely placed to fulfil this coor-        Also, in order to toke full advan-
                                         tage of the new opportunities that
                                                                                      to withstand
                                                                                      strong audiovisual industry able

                                                                                      pressures. In order to attain this
dinating role.
                                         the technological revolution will            however, we must raise the issue of
The reinforcement of their power         bring, the coordination must be              what would be the most ap-
and resources in all software-           extended to bodies such as the               propriate regulation and legisla-
related areas would permit the ef-       European Structural Funds , the              tion in support of those objectives.
fective implementation of the            European Investment Bank and
policy recommendations which
                                         others. They too can help seize the          A climate of trust favourable to
will be contained in the forthcom-       chance that the development of               new investments cannot be
ing Green Paper. It will also allow      new audiovisual services allied              created if the legol framework is
                                         with telecommunications will                 both unclear and unfair. The ideal
the other Directorates involved in
the policy (Internal Market Exter-       bring     in   reducing chronic              framework should be flexible
nal Trade Relations, International       unemployment, revitalizing areas             enough to permanently accom-
                                         hit by industrial obsolescence and           modate new developments in the
Relations, new Technologies , In-
dustrial Policy, Regional Develop-       odd to the rejuvenation         of inner     environment. In order to be fully
ment, Competition , etc                  cities and the tourist trade.                effective, it should also be occom-
                                                                                      panied by monitoring and polic-
enhance the impact of their own
action in this field. The success of a   The EBRD (European Bank for                  Ing measures.
new audiovisual policy will rely         Reconstruction and Develop-
largely on the ability of the Com-       ment), which plays a vital role in           It is therefore of crucial import-
                                         cooperation with the countries in            ance, as preliminary to action ,              to
mission to coordinate all action in-
to a coherent whole.                     East and Central Europe, should              define the role and responsibilities
                                         also play its part in the new policy.        of DG X.

                                                                                      Stefano Rolando says: ' The grow-
                                                                                      ing economic complexity of the
                                                                                      sector makes it necessory to har-
                                                                                      monize regulation. Without it,
                                                                                      laws    regulations and the

                                                                                      1 Letter addressed to the members of the
                                                                                      Think- tank.
authorities which supervise and                  . Enlarging the scope of im.                     New services will burst on to the
implement them, will remain no.                  plementation;                                    scene and new markets will be
tional. This means there will be no              . Applicable law;                                created. These changes will
legitimacy for a Europe-wide                         Definition of              European          rendertraditional forms ofregula.
initiative.                                      works                                            tion, particularly quotas, very dif-
                                                 . Monitoring;
                                                                                                  ficult if not downright impossible
let us start byanalysing the fun!:-                                                               to apply. Increasingly, the con.
                                                 . Chain of      exploitation.
tioning and current relevance of                                                                  sumer will be in control of his own
the one regulatory            instrument
                                                 As a preliminary, it must be em-
                                                                                                  choi!:e: the future of the combined
under DG supervision                    the
                                                 phasized that the Directive cur-
                                                                                                  audiovi.sual and telecommunica.
television without frontiers                     rently constitutes one of the key
                                                                                                  tions industries    will therefore
Directive.                                                                                        hinge on their ability to offer pro-
                                                 elements of EUaudiovi.sual policy,
                                                                                                  grammes at competitive rates car-
                                                 particularly with regard to quotas.
1. THE ' TELEVISION WITHOUT                                                                       ried by efficient services.
                                                 The review of the Directive is tak-
                                                                                                  We must therefore look at in how
The EU Commission has started a                  ing place against the ba!:kground
                                                                                                  for the Directive is compatible with
review of the Directive and though               of the recent condusion of the
                                                                                                  these objectives.
its condusions are not known at                  Uruguay Round. In the GATT con-
the time of writing, 3 some critical             text, Europe managed to preserve                 (A) IMPLEMENTATION CRITERIA
comments can be made based on                    its freedom to regulate the                      The regulatory objective      of the
the experience to dote. We could                 audiovisual sector in view of the                Directive is frequently undermined
then propose some adjustments                    changes in the market- place.                    by the ambiguities of the drafting:
and darifications as well as an                                                                   where, for instance, it reads
extension of the scope of the                    Governments and professionals                     wherever practicable , Member
Directive.                                       alike are fully aware that, in order             States have tended to interpret
                                                 to adequately address the threats                that as a derogation rather than a
We propose to cover the following                to the audiovisual industry, other               constraint, because of a lack of
issues:                                          initiatives must be taken, in                    definition as to method or proper
                                                 parallel with regulatory ones,
                                                                                                  strategic guidance on imple-
. Implementationcriteria;                        such as ' television               without
. Programming quotas;                            frontiers
  Definition of audiovisual                                                                       (B) DEFINITION OF ' WORK'
work'                                                                                             The absence of a definition of
                                                                                                   work' in the Directive has allowed
                                                                                                  broadca.ster.s to fulfil their quota
                                                                                                  mostly by using low-cost pro-
2 Stefano Rolando, Head of Communica-
                                                                                                  grammes with no shelf-life. They
tion with the Presidentofthe Council of the
Italian Government in answer to the ques-                                                         could therefore attract both the
tionnaire (see Annex I).                                                                          public and advertisers ,      while
Like many other people with whom we                                                               focusing their acquisition of
spoke, Stefano Rolando suggests that ' the                                                        drama products on US imports, at
time has come to form the "operational"
arm ofthe European institutions, atthe ser-
                                                                                                  prices more competitive than that
vice of   this renovated policy    ,a    tool                                                     of European drama.
responsible not only for legal matters but
also for analyses of the international
market and for assistance and financing
proiects. This tool , he suggests, could be a
 European Audiovisual and Communica-             3 Considering the often vague and not
tion Agency, whose modalities         of im-     very binding nature of the Directive, it is to
plementation and operating should be             be wondered whether a real evaluation
studied.                                         will be possible.
 Even if the suggestion seems to have its        Moreover, it is quite improbable that it will
 supporters, we do     not   believe it ap~      be possible to determine, in the case where
propriate here to propose the instrument         there has been compliance with the Direc-
or the instruments which the Commission          tive (and this depends a lat on how each
will provide to apply its new policy. We         country has transposed it in its legislation
think that it is more useful to clearly define   and the specifications imposed on the dif-
the areas of action and the concrete             ferent   broadcasters), whether any success
 measures that it must adopt to succeed in       of Articles 4 and 5 is due to its merits or to
 its programme.                                  the spontaneaus demand of the market.
This model has reinforced the ex-            We believe, therefore,     that the     (C) THE QUOTAS
isting polarization between                  definition of ' work'     must be       There are three problems sur-
and national products , in a pat-            tightened. The definition should        rounding the issue:
tern which resembles that of                 put the emphasis on works with
cinema exhibition. This evolution            shelf- life (i. e. those, like some     (i)   Theconcept ofthe quota must
has hod two negative conse-                  documentary drama, which retain               be refined and specified in
quences:                                     a ' value-added' or which pro-                relation to schedules.
                                             mote cinema, TV production or
(i) the focus on acquiring             US    European culture in general.                  A broadcaster s schedule is
   drama has devalued the offer                                                            divided into periods to which
   of European drama and con-                We stress that the distinction be-            different values are attached
   sequently the purchase prices             tween these types of work implies             according to the           potential
   for programmes bought by                  no value judgment on our part as              audience, and the value          at.
   one Member State from                     to the relative merits of drama and           tached by advertisers to
    another have decreased;                  documentaries versus studio-                  specific audiences.
                                             based programming. The latter
(ii) European programming has                plays a vital role in building up au-         Our first recommendation is
     been focused particularly in            dience loyalty and attracting                 that it is absolutely necessary
     the smaller countries - on              advertisers. They are therefore               to define the quotas in rela.
    works with no shelf- life:               essential to the financial strength           tion to those time periods in
    because these works have no              of a channel: however, we are                 the daily schedules.            The
    secondary value in ancillary or          convinced that the Directive,     no          quota would be wasted en.
    foreign markets, this focus has          matter how stringently it is ap-                               allowed
                                                                                           tirely if it simply
    contributed to the under-                plied , will only have a marginal             broadcasters to show
    capitalization of the industry.          impact on this type of pro-                   American drama during the
                                             gramming.                                     prime-time and to dump
Furthermore, a        preference for                                                       European material into the
talk shows and studio- based pro-            What is at stake with the Directive           more marginal segments of
grammes (which do not compete                is our collective ability to                  the schedule.
head-on with US imports)4                    strengthen a European pro-
penalizes those broadcasters in              gramme industry, to make it com-        (ii) The notion of ' European
Member States where they have                petitive against the USA and                  work' must also be redefined
been obliged by regulation to sup-           Japan and to help it regain control           in relation to the quota to ac-
port the creation of home- grown             over its own internal        market-          count for the need for na-
drama.                                       place. To achieve this , Europe has           tional content.
                                             no other solution but to develop a
This . effectis   more pronounced in         critical mass . of programmes with            We have just seen how the
the smaller countries which have             secondary resale value. Only then             ambiguity of the Directive in
less capacity than the larger coun-          will it be able to take full advant-          another area accentuates the
tries to fulfil their European quota         age of the explosion in demand                polarization between US and
with shelf- life works. They are             that interactivity and other                  European programmes (the
therefore obliged to buy ' Euro-             technological innovations will                latter often being dominated
pean '   (despite the fact that ac-          generate at the consumer end.                 by low-cost          programming
quisition prices are not com-                                                              with no shelf- life.
petitive and that European im-
ports generally perform less well                                                          In the some way, we must
with the audience), or to bypass                                                           define, within            the quota
the . objectives of the Directive by                                                       system ,    a quota for national

programming more home- grown                                                               works and one for non-na-
 programmes with no shelf- life.                                                           tional works , in order to strike
                                                                                           the right       balance: it will
                                                                                           strengthen the European pro-
4 Often these studio programmes (game                                                      gramme industry            by
shows , contests , tolk shows) or" adapta-                                                 stimulating the circulation of
tions of American productions       whose                                                  programmes across national
 licence the broadcasters buy and which
 hav" the advantage of olready having
                                                                                            borders, within the European
 been tested on the American market.                                                        Union.
However, a tighter definition           At present, bearing in mind       tion to programmes made by
of the ' work' in relation to the       that programme costs are still    independent producers. This
quota will generate an                  mostly amortized at national      option should be turned into
automatic discrimination                level, the smaller countries      two complementary obliga-
against smaller      countries          are not profitable for Euro-      tions    progressively em-
unless this effect is specifically      pean sellers: prices paid         phasizing the obligation to in-
addressed: those       countries        often barely cover the cost of    vest in the production or pre.
may find it difficult otherwise         sales. By contrast, US owners     purchase of European works.
to fulfil their notional quota,         of large back-catalogues can      This is a safer formula than a
because of their more limited           sell programmes profitably to     quota based on broadcasting
resources.                              those markets, even at what       hours , which .is far more dif-
                                        one might' consider, in effect,   ficult to apply and control
This represents a structural            to be dumping prices.             with new technologies, par-
imbalance by contrast with                                                ticularly video-on- demand.
the larger countries       which        It is essential therefore that
have no difficulty in fulfilling        compensatory measures be          It would also be advisable to
their European quota with               implemented during a transi-      play on the principle of a
home- grown programming.                tion phose, to help the smaller   quota of notional works and
The    Directive therefore              countries face the market            quota of non-national
already discriminates against           situation and adhere to the       works to encourage broad-
countries where the offer of            quotas.                           casters to invest (as co- pro-
local programmes is more                                                  duction or pre- purchase)     in
limited; should the Directive
                                        Another possible solution         non-notional European
be applied more rigorously,             would be to consider the          work.
broadcasters in the smaller
                                        European majority propor-
countries would be forced to            tion quota not as a function of   The obligation to focus a pro-
import more programmes                  the total volume of hours         portion of the quota on non-
from the larger countries in            broadcast (most works with        national works would
order to comply.
                                        no shelf" life are mode na-       demonstrate to decision-
                                        tionally), but as a function of   makers in Member S~ates
Faced with no alternative               the hours of shelf- life works    the advantages of opnning
other than to increase
                                        scheduled by the broad-
                                                                          their financial support
acquisitions of European                                                  mechanisms to productions
works with shelf-      life, the                                          originating from outside their
economic equilibrium of                                                   country: they need to under-
                                        Whatever the solution , com-
those smaller        countries
                                        plementary measures of in-
                                                                          stand that by relinquishing
broadcasters may be com-                                                  some of their exclusive
promised , unless a set of
                                         dustrial development     must
                                                                          privilege, they will in turn gain
                                         accompany the Directive.
safeguards is adopted                                                     access to a vastEU market.
                                         These measures should aim to
                                         generate a demand for Euro-
                                                                          Investment in     non-national
                                         pean works with shelf- life at
Without such       safeguards                                             projects will have a beneficial
                                         prices which can compete         effect on the costs of notional
bock-catalogues of Euro-
                                         with those of US imports.
pean programmes with prices                                               production and will increase
which are often incompatible                                              the competitiveness of na-
with the purchasing power of             Creating new opportunities       tional producers.
those smaller        countries           for the production and cir-
broadcasters will be less com-           culation of works with au-
petitive than US imports and             dience appeal is the only way
low-cost domestic pro-                   to   make       the  Directive
grammes with no shelf- life.             substantial and consistent in
                                         the long run.

                                     (iii) At present     broadcasters
                                         have a choice between on in-
                                         vestment quota or a quota of
                                         broadcasting hours in rela-
(D) ENLARGING THE SCOPE OF               This distortion     is   particularly   (F) DEFINITION       OF ' EURO-
IMPlEMETATION OF                 THE     damaging in the context of our          PEAN WORKS'
DIRECTIVE (TO ENCOMPASS                  worsening trade deficit with the        There is no point in enforcing corn-
NEW SERVICES)                            USA and the dumping practices of        pliance with the quota if European
                                         some of the US distributors , which     works are not defined with preci-
The issue of applying the Directive      makes their product as much as 10       sion. The points system used by the
to new broadcasting services must        times less expensive to acquire         Council of Europe within the Con-
be addressed.
                                         than home- grown European pro-          vention on Tripartite Co- produc-
                                         gramming.                               tions could serve as the basis for
It is a complex problem ,      which
                                                                                 this definition. Alternatively, the
cannot be covered   exhaustively
                                         It contradicts the objective of rein-   definition could be bosed on the
here. Two factors should be con-
                                         forcing the European industry as a      number of jobs, with the creotive
                                         competitive force in both Europe        ones having to be filled mostly by
                                         and the rest of the world.              European nationals (a limited
(i) investment obligations are                                                   number of derogations would be
    easier to monitor and apply
   than broadcasting quotas;             Another negative effect is that it
                                         allows broadcasters to      transfer    The most important consideration
(ii) new services must be assessed       their operations to a       Member      is that the definition of ' European
   in relation     to   where their      State where regulation       less
                                                                       is        works ' should notbe subjectto dif-
   resources come from (licence          dernanding, to reach viewers out-
   fee, advertising, subscription,
                                                                                 ferent interpretations. It must be
                                         side that Member State.                 clear ond unequivocal. The in.
   etc.     and the profile of the
   broadcaster (specialist         or
                                                                                 vestor must rest assured thot he
   general entertainment).               The current definition of ap-           will be able to rely on financial
                                         plicable law does not take into ac-     support and incentives prior to the
                                         count the issue of cable relay, a       investment decision being made.
                                         growth area of great significance;
The Directive establishes the prin-      nor does it address the issue of the    (G) MONITORING
ciple that the law of the Member
                                         electronic ' superhighway . A legal     It should not be necessary to ern-
State in which the broadcaster is
                                         vacuum is being created which           phasi;ze the      importance of
established is the only one ap-          leaves Europe vulnerable and            monitoring the Directive. Efficient
plicable.                                unable to regulate either the           enforcement mechanisms should
This principle distorts the situation:
                                         market or      the
                                                          technological,         be estoblished, with a ronge of
                                         economic and social evolution of        penolties and fines available to
broadcasters established in coun-
                                         the audiovisuol sector.                 the relevant authorities.
tries which take a lenient        ap"
proach to the Directive have com-
                                         The Directive must be clarified.        The role of the Commission in this
petitive advantages over those
                                                                                 instonce should be reinforced.
which operate from countries with        Control and penalty procedures
a more stringent approach and            must be established at national         Equally, national outhorities
                                         level to help level the regulatory      should be able to quickly mobili;ze
cultural policies    (for instance
                                         playing field between Member            the Commission or local tribunals
France forbids the broadcasting
                                         States, thereby reducing the ot-        as soon as breaches of com-
of films on Saturdays).
                                         tractiveness for broadcasters of        pliance have been detected which
                                         relocating to Member Stotes with        con be proven to have a distorting
                                         the most ' favourable' rules. The       effect on the market.
                                         Directive should also be sup-
                                         ported by a system ollowing the
                                         Member State in which the broad-
                                         cast is received to take a case to
                                         arbitration at Union level, in cases
                                         where there is a flagrant breach .
                                         regulatory obligations. The ar-
                                         bitration procedure should be
                                         able to lead to policing measures
                                         including the temporary cancella-
                                         tion of a licence to broadcast.
(H) CHAIN OF EXPLOITATION                         Such transparency demands a             The Commission will also have to
 WINDOWS'                                         permanent market analysis               regulate other aspects of the

The traditional order in the chain                mechanism: this role may be ful-        modus operandi       of those consor-
of exploitation of audiovisual soft-              filled adequately by the Eureka         tia: the field of activity of those
ware is going through radical                     Observotory. However, it must           companies must be defined. In the
change. Soon ,   the market will be               be(:ome operational very soon so        currenttransition , the Commission
dictating      new modes of ex-                   as to be able to hdrmonize data         must reconcile the creation of
ploitation.                                       and provide credible information        larger pan- European operators
                                                  to operators in the industry.           with the strict application of
The imposition of a (:hronological                                                        competition rules.
order of use in the Diredive                      A public register of audiovisual
stemmed from             the
                    lack of                       dnd cinema works should also be         Problems may chiefly arise where
coherence in the produdion and                    set up, .as should an EU-wide           vertical integrotion between pro-
distribution sedors in Europe:                    me(:hanism for the monitoring of        duction, distribution and mul.
rights on programmes are scat-                    cinema box-office ticket sales ~ a      timedia exploitation is occurring.
tered across many territories and                 monitoring exercise whi(:h will also    Can the historic decision by the US
different medid. This situation ex-               largely benefit the US majors.          Supreme Court in 1948 to prevent
plains why a regulated chrono-                                                            the US studios from owning
logy of uses exists in Article 7.                 3. REGULATING THE                       cinema chains be applied to
                                                  MARKET-PLACE                            Europe s current situation? In fact,
However, new modes of exploita-                                                           it would be counter- productive to
                                                  For the audiovisual     industry to
tion will upset this           traditional
                                                                                          deny the new consortia we wish to
                                                  conquer its own market anew ~ as
chronology and the concentration                                                          create from also hdving film ex-
                                                  is mentioned in the introduction
of rights in the hands of one holder                                                      hibition interests. What is needed
                                                  it must be able to consolidate and
- which is the solution we wish to                                                        therefore are booking rules based
                                                  respond to demand and eVen to           on the strict dPplication of com-
promote will demand complete                      anticipate it. In order to do so, it
freedom in this area.                                                                     petition law in order to avoid the
                                                  must be sufficiently well finan(:ed.
                                                                                          generalizotion of          US majors
                                                  This is the only way it will maintain
As long asit is in the Diredive, Arti-                                                    practices such as tie- ins ,        blo(:k
                                                  d competitive edge.
cle 7 must be interpreted as mean-                                                        booking and restricted access to
ing thatrevenues generated byex-                                                          prints.
                                                  This objective implies - as we ex-
ploitation should be maximized                    plain later ~ devising    incentives
and not as an abstrad discipline                                                           In considering the integrotion be-
                                                  for the formation of powerful and
which may again be detrimental                                                            tween production           and broad-
                                                  integrated businesses able to sus-
                                                                                          casting (many advocote a separa.
to the industry.                                  tain a permanent production slate
                                                                                          tion of interests), we mustalso take
                                                  and      guarantee widespread            into account the different
                                                  multimedia distribution.
GUARANTEES                                                                                 historical circumstances in which
                                                                                           television started in the USA and
The monitoring of the Diredive                    In encouraging the emergence of
and the framework required to en-                 su(:h large componies, the Com-
sure its enforcement will be similar               mission must ensure that they
to the regulation of industrial and               operate on a pan- European basis
commercial policy in other areas                  rather than being allowed to build
of industry: it must ensure the kind              up monopoly power in a single na-
 of transparency which helps free                 tional market.
 access to the market- place by all
the players (:oncerned.
                                                                                           6 The American example is often cited as
                                                                                           the model of separation between broad-
                                                                                           caster and producer and as the example to
                                                                                           be followed in Evrope, without taking into
 5 Consumer rights must nevertheless be                                                    account the     specific historical and
 taken into account with regard to certain                                                 economic aspects of this decision. In addi-
 local cinemas that are less profitable and                                                tion to the private nature of the American
 for which distributors do not take the time                                               networks and the     dimension of their
 ta send copies , a practice that can be an in-                                            market , this measure was aimed to com-
 fringement of competition laws, because                                                   pensate the major companies for the ban
 they prefer to launch the product faster                                                  imposed on them to have cinemas, instead
 the video market.                                                                         enabling them to produce for television.
Contrary to the     USA European              - A       MARKET FOR                Key features of this scheme would
television started life as a series of                                            be:
                                           PRODUCTS AND
national public               service                                             (i) a small     number of consortia
monopolies.                                PRODUCTS FOR
                                                                                        would be chosen by com-
                                           MARKETS                                      petitive bid;
It is important to establish a                                                    (ii) each consortium could be
                         relationship      We arrive finally at what can be
charter defining the                                                                    made up of existing distrib-
between independent producers              considered the central point of our
                                                                                        utors or new .entrants   to the
and terrestrial broadcasters. A            recommendations: the creation of
minimum investment obligation by           a fund operating like a low- in-
broadcasters in independent pro-           terest rate lending system   to help   (iii) they would have access to
                                           establish pan- European distribu-            soft- loan finance in order to
grammes should be implernented
                                           tion consortia.                              promote the Europe-wide
(15% of turnover is the target
recommendedby some; in the UK
                                                                                        distribution of European pro-
                                           Such an approach would not be                ducts (films, television and all
there is a quota of 25% of broad-
                                           new in Europe. This type of loan             forms of    software) and to
cast hours, excluding news and
news-related current affairs).             has already been granted to the              seek new markets outside
                                           former mining regions, for exam-             Europe;
                                           ple, to help restructure their         (iv) they would be expected to
At the same time, the preservation         economy and has been for a long              raise the overwhelming bulk
of some public service tradition in        time now on effective instrument             of their capital on the open
Europe means that some in- house           of European policy to stimulate              market;
broadcasting productions should            private investment in the sector, at
be maintained.       These produc.         levels several timeshigherthanthe
                                                                                  (v) loan agreements would         last
tions, particularly the higher cost        value of the loon, which must be
                                                                                        for 10 years.

prestige drama (BBC or RAI are             reimbursed over a period of eight      (A) HOW WOULD THE SCHEME
two examples of such fine tradi-           years.                                 WORK?
tions), are today in a strong posi-
tion in bock-catalogues.                   1. A MORE EFFECTIVE MARKET
                                                                                  The agreements we propose
                                           FOR OUR PRODUCTS                       would be made with consortia on
                                                                                  the basis of competitive tenders
All these adjustments must not be          We believe that the Commission         judged on a rigorous appraisal of
made to the detriment of cornpeti-         should give serious and urgent         business plans.
tion law. One of the weaker points         consideration to a scheme offer-
of European policy over the past           ing publicly. funded soft- loan sup.   Application for loans would be
years has been the tendency with           port to pan- European distribution     open to all existing distributors,
which those lows have been ap-             consortia.                             exhibitors , production companies
plied particularly to the film
                                                                                  and television companies, as well
distribution sector and its relation-
                                                                                  as groups from any other market
ship with exhibitors. (We refer
                                                                                  sector, although the expectation
here in particular to the deroga-
                                                                                  would be that groups representing
tion to Article 85 of the Treaty of
                                                                                  an already established range of
Rome which allowed the forma-
                                                                                  interests in the market would be
tion of UIP. ) Such complacency
                                                                                  most likely to form a consortium to
has led, particularly      in smaller
                                                                                  bid for one of the agreements
countries , to the atrophy of the in-
                                                                                  bringing with them their existing
dependent production and distri-
                                                                                  catalogues of European and non-
bution sectors , with catastrophic
                                                                                  European products. This 'consor-
effects on the supply of national
                                                                                  tium ' approach would allow ex.
films to local audiences.
                                                                                  isting distribution and production
                                                                                  companies, no matter how small
This latter point isa delicate, albeit                                            to pool resources and expertise as
highly important one. The Com-                                                    part of larger and more effective
mission would therefore be well                                                   pan- European groups. One ofthe
advised to commission extensive                                                   greatest benefits of this arrange-
research in this field , in order to in-                                          ment would be the accumulation
form its policy choices.                                                          of growing and varied catalogues
which , over a period of 10 years,     agreement before the expiry of         The fund would enable and en-
would help to create in Europe the     the 10-year period. A proportion       courage European producers to
kind of financiol security currently   of the loon fund might only be         plan - and budget for ~ their
enjoyed and exploited by the ma-       made available subject to the bid-     productions from an early stage
jor US studios. Application rules      der s performance during a pro-        with transnational markets in
would require consortia to be          bationary period.                      mind , affording them a viable
multimedia and multimember                                                    means of raising their ambitions
making it impossible for any con-      Rother than a single agreement         beyond merely national markets.
sortium to be dominated by one         several might be drown up,             Conditions of loans could be
existing company or group,             thereby creating the benefit of        altered, perhaps , for example by
however powerful. It will, of          competition between consortia          giving preference to drama over
course, be importont to ensure         without losing . the advantage of      non-fiction work. We recognize
that the relatively small specialist   each of them having the capital        that it would not be commercially
distributors who are vital to the      and management to he asignifi-         realistic, in any sense, to promote
continued vitality and variety of      cant force within the European         all products in all markets. Never.
European film-making are .safe-        and world markets.                     theless, the thrust of the distribu-

guarded by whatever regulatory                                                tion system , and the conditions im-
regime becomes appropriate             A further advantage in limiting the    posed on the loan fund, would
and, in this connection, we an-        number of agreements would be          tend to maximize pan- European
ticipate that the Eurimages pro-       that while individual consortia        distribution. A proportion of the
gramme will have on important,         might be expected to build up          fund should be identified for in-
ongoing role to play, The distribu~    specialization in particular           vestment in the exhibition sector,
tion consortia which we propose        markets or geographical areas          perhaps by making soft loans
would at last bring the power of       they would all be required to he       available with repayment benefits
secure finance and high- quality       genuinely pan- European in their       tied to the proportion of European
management to the service of in-       operation.                             products played.
dependent producers in Europe.
                                       (B) WHAT WOULD IT DO?                  loan capitol might also be made
Non- European holdings might be        The fundamental requirement            available for the development of,
limited to 2.0 to 30% of each con-     placed upon successful bidders         and training in , new technologies
sortium.                               would be:                              if they were relevant to improving
 Bidders for the loans would have      (i) to promote       and enhance
to submit detailed business plans          genuinely Europe-wide distri-
demonstrating how they would               bution of films, television pro-
use the publicly-funded loan               grammes and software, and
capitol to generate additional
private capital on the commercial       (ii) to promote the more effective
market. The business plans would             marketing and distribution of
also need to set out clearly the           films and other audiovisual
 means by which bidders proposed           products in non- European
 to increase the distribution of           markets.
 European products in European
 and global markets. We return to
 this point in our section below en-
 titled ' The cost of implementing
 this strategy'. Successful bidders
 would be offered lO- yearloan
 agreements subject to regulation
 by a body with powers to
 periodically review and
 necessary, terminote the loan
It would be reasonable to expect                  A portion of the loan fund being        (A) HOW WOULD THE SCHEME
that by the end of the 10- yeor                   specifically reserved to under-         WORK?
period substantial ond potentially                write the refurbishment of Euro-        The basis of the system would be
valuable cotalogues would have                    pean cinemas on commerciolly at-        the roising of production and
been built up by each consortium                  tractive terms                          development capital by me(:1ns of
ond that the distributors would                                                             levy on every sector of the
have achieved sufficient ' critical               More re-origination of products         audiovisual industry, in effect
mass ' to trode commercially                      for interactive use, giving software    recycling part of the    industry's
without the benefit of               further      creators larger markets and lower       revenues as future capital. Most
public support.                                   unit costs while protecting existing    European countries already have
                                                  moral rights.                           or have hod in the past, such an
Repoyment of the loan might be                                                            approach in a more or less
effected by offering on equity in.                2. BETTER PRODUCTS FOR                  sophisticated form. Our proposal
terest in the consortium (effective-              OUR MARKET                              would have the effect of develop-
ly a share of the library of pro-                                                         ing and extending it, particularly
                                                  Such a distribution system should
grammes and rights), by refinonc-                                                         to the new media , making it the
                                                  be complemented by a system of
ing the consortium, by conversion                                                         recognized basis of support for
                                                  direct production support oper-
into preference shores in the con-                                                        all European oudiovisual pro.
                                                  ating with a maximum degree of
sortium or by other means.                                                                duction.
                                                  subsidiarity and would comple-
(C) WHAT BENEFITS WOULD IT                        ment our European- level distribu-
BRING?                                            tion proposals and make a               It would be the responsibility of
The creotion of substontiol and                   positive contribution        to   the   eoch government, in cooperation
valuoble pan- European                 cota-      regeneration of a truly diverse         with its domestic industry,      to

logues                                            and creative industry.                  resolve the means by which its
                                                                                          share ofthe European total should
More Europeon products with                       Key features of this scheme would       be met, what its domestic priorities
more internotional appeol                         be:                                     should be and its method of
                                                                                          allocation. As already noted , we
The opportunity to develop a
                                                  (i)   it would be levy- bosed - in      recognize that in the shift from
more competitive edge in major                          effect the industry recycling     cultural protection to a      more
markets such as the USA                                 part of its revenue;              market-oriented approach there
                                                                                          will be casualties and national

More funding availoble for dubb-                  (ii) it would be operated with     a    governments will quite properly
ing ond internotional marketing of                      maximum degree of sub-            wont to manage that transition in
European products                                       sidiarity;                        a way most beneficial to their own
More varied and competitive pro-                  (Hi) it would allow production
gramming for independent cine-                        companies to develop pro.           Our proposed distribution system
mas                                                   jects adequately, or even to        creates on opportunity for na-
                                                      consider a whole ' slate' of        tional policies to become more
                                                        projects;                         commercially-oriented and itssuc-
                                                                                          cess would , to some extent, de-
                                                  (iv) it would encourage produc-         pend on nationol governments
                                                        tion both for national and        sharing and emphasizing this ap-
7 The multiplying         effect of credit
                                                        niche markets, and produc-        proach. Our proposals are unlike-
guarantees is known. They make the real
entrepreneurs responsible   something                   tion with international and       ly to be effective if the underlying
the European audiovisual sector vitally                 multimedia distribution am-       thrust of notional support policies
needs - and encourage private capital to                bitions.
become involved in the          financing of                                              pulls in the opposite direction to
audiovis\.lal prod\.lctions. EMG is involved                                              commercial policies implemented
precisely in this area, but until now the lack                                            at European level.
of Financial credibility of the E\.Iropean
audiovisual industry, especially cinema
has not enabled it to attract the necessary                                               Our choice of a levy system is
contributions to have the required means
that would enable it to have a real impact                                                                 emerging en-
                                                                                          deliberate. In the
on   the industry.                                                                        vironment of interactive com-
In any event , it is the start of an instrument                                           munications, the technologies of
on which the new strategy can be based.                                                   encryption and dissemination
upon which pay-television, video-       petitiveness and employment                     (C) WHAT BENEFITS WOULD IT
on- demand and all forms of in-         argues, there is the prospect of up             BRING?
teractivity are based will rely prin-   to two million new jobs in the                  Such a system would begin to com-
cipally on billing systems in which     audiovisual sector in the next 10               bine the virtues of large-scale in-
individual consumers pay for            years , then significant investment             dustrial strength with the flexibility
what they use from the broadest         in training will be c:rudal, as we              to allow, indeed encourage, in-
possible spectrum of choice. Such       argue in our section on training                dividual States to develop par-
a new market environment lends          below.                                          ticular and complementary
itself naturally, and efficiently, to                                                   strategies for their audiovisual in-
the implementation of a levy            The balanc:e of the revenue raised              dustries.
system.                                 would then be put into ' production
                                        c:redits , the bulk of which might be
                                        specifically allocated for produc-
                                                                                        The system of production credits
levies are an essentially   positive
                                                                                        would mean that any production
spur to continuity of production        tionin the language or languages
                                        of the country itself, whilst the               company of any nationality would
and employment sinc:e;
                                        balance could be specifically                                          pari-passu
                                                                                        be entitled to receive a

                                                                                        share of subsequent earnings aris-
(i) they build on suc:cess; the         allocated to enc:ourage commer-
                                        cial European joint ventures. 8 We
                                                                                        ing from that production , to be
    greater the revenue, the                                                            spent solely on European produc-
                                        firmly believe that the majority of
   greater the capital available;                                                       tion, however defined. Such pro-
                                        c:reative production will, and
                                                                                        duction credits could include an
                                        should, remain nationally and
(in they are flexible: money can be                                                     adequate element of develop.
                                        culturally specific. The point .is that
   drawn from every sector and                                                          ment costs , allowing production
                                        he more our production support
   ploughed bac:k into every .sec-                                                      companies a longer-term view of
                                        system can improve the quality of
   tor, promoting a more balanc:-       such products , the more will be
                                                                                        their future with a level          of
   ed industry in which produc-                                                         overhead permitting them to plan
                                        available for the distribution
   tion , distribution, exhibition                                                      projects,   or even a slate of pro-
                                        system to confidently promote in
   training, research and               transnational and global markets.
                                                                                        jects, over an extended period of
    development can all be ac:-                                                         time. Combined with an             im-
    corded a place. In addition                                                         aginative system of tax write-offs
                                        We would also argue that a signifi-
    shifts in the balance of total                                                      and other fiscal incentives, this
                                        cant proportion of these produc:-
    revenue can be organized '                                                          would help to create a radically
                                        tion credits, perhaps 10%, should
    reflect changes in the opera-                                                       different climate for many Euro-
                                        be specifically allocated for invest-
    tion of the market.                                                                 pean production companies. At
                                        ment in relatively high-risk pro-
                                        jects    innovative and experi-
                                                                                        present too many of them are
(8) WHAT WOULD IT DO?                                                                   overdependent on only one pro-
                                        mental work, or projects being
Our concern is that this support                                                        ject at a time, leaving them trap-
                                        developed by young and untried
system, in conjunction with our                                                         ped in a cycle of erratic cash.flow
                                        talent. Such an approach would
distribution proposals     should                                                       and short-term      planning horizons.
                                        greatly enhanc:e the cultural and
help to create a more balanced          creative energy of the European
strategy for the whole audiovisual      industry overall.                               European television makes an
industry. It would be important to                                                      ever- increasing contribution to
decide whether to complement in-                                                        cinema , by means of direct sup-
ve.stment by the distribution con-                                                      port for film production (often
sortia in the exhibition sector with                                                    statutorily sustained) and by ac-
a proportion ofthe revenue raised                                                       ting as purchaser and exhibitor of
for production support. National-                                                       film products. This contribution
ly allocated funds might be of par-                                                     should be celebrated              and
ticular benefit to smaller inde-                                                        developed. We think it is logical
pendent exhibitors.                     8 We have decided to make a dear                and positively beneficial that
                                        distinction here between ' Community pro-       television companies investing in
                                        duction '   and co- production.   We believe    production would be as eligible as
It would also be important to set
                                        that all productions in which different Euro-
aside a proportion of the revenue       pean partners who are EU nationals par-         any other producer. It would need
for investment in     infrastructure,   ticipate should now be considered Com-          to be decided whether non- fiction
especially training and research.       munity productions, and the expression co~      projects should be funded on a
                                        production should be retained for produc-
If, as the European Commi.ssion         tions in which partners from outside the EU     par with fiction, but it is essential
White Paper on growth, com-             participate.                                    that documentary and animation
producers should be fully eligible     We would urge the Commission to         figure in perspective, it would
for support. (The submission to the    initiate a feasibility study with ap-   more or less double the level of
Think-tank   made by the MEDIA         propriate finandal institutions to      public support    , direct and in-
project for the . creative documen-    determine the likely gearing effect     direct, currently going into pro-
tary suggests that support for non-    between the publicly available          duction. Given the growth poten-
fiction documentary work would         loan capital and capital attracted      tial of the sector, it is reasonable to
be on important     element of a       through the commercial market.          assume that some notional
balanced programme to sustain          Assuming this would be of the           governments would want to set
European television s range.           order of three to one, then , when      more ambitious targets of their
                                       fully operational (a process that                   on a pro rota basis
                                                                               own. Indeed ,
Investment channelled in this way      might take some years and would         the French system of in(:entives
and on this scale should eventually    inevitably be linked to the success     and support is already running at
help in the establishment of           ofthe production support system),       a considerably higher rate. Each
strong, vertically integrated pro.     a small energetic group of pan"         Member State would be expected
duction and distribution com-          European distributors might be          to raise a proportion of that ECU
panies, with production (:entred in    expected to require something           1 billion related to its share of the
the EU and with the EU targeted        close to ECU 1 billion in soft loans    European audiovisual market. To
as their home market, although of      from the EU. At the end of the          base the figure on market share
course finan(:e could , and should     lO- year period, the total amount       rather than existing production
be attracted from anywhere in the      of the loan would be recoverable        strength would have the advant-
world, not just within theEU.          either in cash , as a share of the      age of generating money for ter-
                                       equity in the licensed companies        ritories in which little or no produc-
                                       or as a share in the very con-          tion currently takes place.
                                       siderable library of     rights and
                                       films which would have been ac-         Elsewhere in this report we sug.
   Distribution support                cumulated. The expectation              gest that the production support
                                       should be that at the end ofthe 10      system might be used for a variety
Finance for the distribution ele-      years this accumulated library,         of production-related purposes
ment of the strategy would             together with the expertise ac-         but it is worth noting that, devoted
necessarily have to be made            quired, and the stimulation of new      entirely to production , the sum of
available at the level of the EU and   European production and sales           ECU 1 billion could greatly in-
overseen by . a regulatory body        should have created the critical        crease the number of commerdal-
operating at EU level.       If the    mass necessary to allow the             Iy significant feature films made in
distribution network is to provide     system to become entirely self-         Europe. In addition it could
viable competition in the market       financing.                              finance the production of about
the consortia which we propose,                                                1 000 hours of high- quality televi-
when fully developed , would need         Production support                   sion drama.
to be capitalized    at a   level of
about ECU 1 billion each.              The other arm of our proposed           This would generate the
                                       scheme is direct production sup-        equivalent of 8 000 to 10 000 full-
                                       port, made available within in-                   produdng a net benefit
                                                                               time jobs ,
                                       dividual Member States , although       to the national exchequers of
                                       a significant proportion of such        Europe of about ECU 100 million
                                       support might find its way into           all of this before taking into ac-
                                       transnational joint ventures. We        count the     significantly greater
                                       propose that this scheme, too,          levels of indirect employment that
                                       should have an assured life oflO        would be generated.
                                       years - a sufficient period of time
                                       in which to change the nature of
                                       the production industry in Europe.
                                       We propose a target for the whole
                                       of the EU of ECU 1 billion a year
                                       recognizing that this figure would
                                       take time to achieve and would be
                                       dependent on the commitment of
                                       national governments to support
                                       their domestic industry. To put this
The essential feature of such      a    Identifying the exact level of in-       To put this support programme in
twin-track system must be its abili.    vestment appropriate to this             perspective, it is worth noting that
ty to create commercially attrac-       strategy could necessarily involve       the present value of the still-
tive avenues for the industry itself    an almost endless debate. What           emerging European pay-televi-
to exploit rather than     cumber-       , however, beyond debate. is that:      sion market alone is considerably
some and elaborate mechanisms                                                    greater than ECU 2 billion. With
of defence and control.                 (i) the growth potential of the          our collective experience in the in.
                                            audiovisual sector is un-            dustry we are         emphatically
We see the production       support         paralleled by any other Euro-        agreed that only an initiative on at
element of the scheme as the in-            pean industry of a com-              least this scale can begin to turn
dustry healing itself, directing part       parable size;                        the tide for Europe. The eco-
of its own revenues     to improve                                               nomies of scale that pertain in the
production ,   exhibition, training     (ii) the sums referred to in this        audiovisual industry inevitably
and marketing. We see the                   report are the likely minimum        make anything less            mere
distribution mechanism as part of           required if Europe is to ade-        tinkering.
a larger structural reorientation of        quately compete in the global
the European economy which                  market- place;                       3. SUPPORT FOR CINEMAS
should not be the direct respons-
ibility of the industry itself but      (Hi) when these sums are sub-            Even if in the future cinemas repre-
should be supported        through          jected to an objective      cost-    sent only a small part of the in.
general taxation. Of course,      the       benefit analysis based on            dustry's earnings, they will con-
support for distribution , being in         either employment or econo-          tinue to be of importance far
the form of loan capital , will be          mic potential ,    it becomes        beyond their immediate commer.
recoverable and ultimately of no            clear that such an investment        cial value. Cinemas will continue
cost to the public exchequer.               probably represents the very         to remain for a long time the real
                                            best opportunity that Europe         showcase of the product on which
With a commitment of ECU                    presently has to offer;              the success of the other media
billion of publicly- funded invest-                                              forms depends , in the same way
ment in distribution (stimulating       (iv) the bulk of the investment will     that feature films continue to be
commercial investment of many               be in the creation of commer-        the locomotive that drives the
times that value) and of about              cial copyrights (analogous to        whole industry.
ECU 1 billion a year in production          real estate and , as such, of a
support when the system is fully            quantifiable and ongoing             Indeed , not only does 35-mm film
developed , such a programme                value);                              continue to be the only truly world
would bring significant benefits to                                              standard of audiovisual produc-
Europe.                                 (v) the strategic   purpose of the       tion accepted on all markets and
                                             soft loans is to provide a rally-   has a remarkable capacity for in.
By far the most significant of these         ing point around which              formation (1 picture frame =
benefits in terms of the overall             dynamic European    com-            4 500 lines), butfilms are what still
European economy would be the                munications companies and           shape the collective imagination
creation of a large and growing              financial institutions can at       and will go on doing so perhaps
number of skilled jobs.                      last find a means of investing      for a long time.
                                             in Europe s future.
Other benefits would include:
                                                                                 Everyone saw how declining
                                                                                 cinema attendance lead to the
(i) a reduction  in the rapidly
                                                                                 deterioration of the conditions of
     growing USD 3. 5 billion au-
                                                                                 projection and comfort in cinemas
     diovisual trade deficit with the
                                                                                 and their closure          at
                                                                                 unbelievable rate in the 1980s.
(ii) the opening-up of world
     markets to European soft-                                                   Everyone also saw how the major
     ware; and                                                                   American companies decided to
                                                                                 invest in the construction of new
(iii) the stimulation     of a   more                                            multiplex cinemas providing high
     dynamic audiovisual market                                                  standards of comfort and projec-
     within Europe.                                                              tion as the only way to avoid a fur-
ther foil in ottendance, which in       (c) Finally, at the promotional          disseminating electronic impulses
turn reinforced their power in              level , an effort should be          in a myriad of interactive con-
Europe.                                     made, especially by the public       figurations through a variety of
                                            stotions (national or Euro-          cable and wireless systems.
This situation leads us to propose         pean), to promote Europeon
that porticular attention be given         films. Support should go to           What is clear is that the regulation
to the problem of cinemas , by             programmes on European                and ownership       of encryption,
starting up an ambitious pro-              production intended to make           dissemination and billing techno-
gramme to         support theotre           stars more popular (actors           logy will be a crucial factor in the
management linked           to the          and also directors and other         success or failure of the industry.
distribution of Europeon films              creative elements of the pro.
and this in parallel to forms of in-        duction) as well as to a             The European Union will need to
centive to create pan- Europeon             substantial reduction in the         give serious and urgentconsidera-
networks and to encourage pro-              cost of trailers for European        tion to safeguarding open access
duction as proposed obove.                  films.                               on the one hand ,      whilst simul-
                                                                                 taneously preventing the abuse of
This programme can act on three         4. THE NEW MEDIA FORMS                   the near monopoly powers which
levels:                                                                          such ' electronic gate- keepers ' ore
                                        The multimedia world is often            likely to possess. Almost by defini-
(0) regulatory,                         described as the product of a            tion , these gote- keepers will trans-
(b) financiol,                          technological revolution. The real       cend notional boundaries, mak-
(c) promotional.                        revolution however will lie not in       ing it imperative that any form of
                                        the technology itself but in its rate    regulation is effective ot European
(0) At the regulatory level, the        of application in the market and in      rather than merely nationollevel.
    French system could be ex-          the imoginative development of
    tended to Europeon television       software in all its forms. This report   Europe is olready falling behind
    stotions. This system consists in   seeks to make clear our belief that      the USA in developing a full
    limiting the number of films        the strategic shift in our industry      multimedia , interactive environ-
    broodcost onnually ond con-         must focus not on technology but         ment. US software manufacturers
    fining these films to certoin       on the product we make, not on           enjoy 0 for larger domestic market
    days of the week ond certain        the hardware but on the software         for their products in this area than
    hours.                              and the means by which it is             is the cose in Europe. The commit-
                                        distributed and , most important of      ment of the Clinton Administration
(b) At the finoncial    level , par.    all, on the only truly essential         to the creation of a national in-
    ticipotion in lowering rentol       capital asset needed in the cre-         formation infrastructure and to
    rates, in particulorfor non-na-     ation of software - human talent.        the unified regulotion of broad-
    tional European films ,    could                                             band operators            removing
    also be considered , while          The market for innovative soft-          regulatory duplication and ensur-
    direct or indirect support          ware is great . and growing. The         ing non- discriminatory access for
    measures such as fiscal             possession of     substantial cata.      service providers and consumers,
    benefits or lower lending rates     logues , the ability to operate flex-    demonds on urgent response from
    could help with the modern-         ibly in different media and dif-         Europe.
    ization of    cinemas and the       ferent markets - to use the unique
    construction of multiplexes, in     qualities of multimedia to the full
    conjunction with programmes            will be the hallmark      of suc-
    to   develop less-favoured          cessful competitors in the market.
    regions.                            I n this apparently free-flowing
                                        universe it may seem that our con-
    This financial aid should be        cern with    distribution as a key
    closely tied to the condition of    component is old-fashioned and
    showing a certain number of         misplaced. On the contrary, we
    European films.                     are conscious of the fact that in the
                                        new media environment 'distribu-
                                        tion ' will mean less and less the
                                        physical distribution of film and
                                        videotape and will become more
                                        and more          a question of
In addition to the economic con-          One thing is abundantly clear - if       The scale of investment required,
sequences, the cultural and social        European producers do not fill the       and the nature of the technology,
consequences of open access               market, others will. . In the USA, for   mean that it only makes sense to
would be immense. As US Vice-             example, the rapidly growing             understand the whole field of new
President AI Gore recently said,          base of installed hardware for CD-       media in international and Euro-
 This is not a matter of guarantee-       ROM is creating a large marketfor        pean, rather than national         or
ing the right to play video- games.       software, with some 1 000 titles         regional terms, whether we come
It is a matter of guaranteeing ac-        published in 1993. The conditions        to it as producers, consumers
cess to essential services.' We can-      are already in place for a repeat        advertisers or regulators. Already
not allow Europe to become a              of what has become a familiar            the industry is organizing itself into
society divided between those             pattern with film . and television       powerful, international and .even
with the economic power to be ' in-       production; namely the size,             global groups. We believe that the
formation- haves ' and those who          homogeneity and vitality of the          EU must give serious considera-
become ' information- have nots           US domestic market allows US             tion to speeding up the process of
In the interactive   environment it       producers to amortize their pro-         liberalization, creating open and
may be that entertainment                 duction costs at home and                non- discriminatory access to net-
merely the tip of the iceberg. The        therefore compete on cost with           works for all users, ensuring fair
possibilities that already exist for      devastating effect overseas. Only        and open competition in the provi-
data-access, public information,          by maximizing opportunities can          sion and supply of equipment,
advertising and retailing         are     Europe offer adequate competi-           programming, services             and
great.                                    tion to the American industry.           delivery, offering full interconnec-
                                                                                   tion between .networks. Such an
However, it is particularly in areas      The investment necessary to fully        approach, boldly pursued, would
such as education, training and           exploit these opportunities will be      maximize the market for products
public information that the imag-         enormous. For example, British           while minimizing the cost to con-
inative development of an open            Telecom estimate that to create a        sumers. It could, in other words,
access policy would have asignifi-        full broadband fibre network (cur-       work to the benefit both of con-
cant and potentially       profitable     rently the most likely means of of-      sumers and producers, although
impact.                                    fering full and genuine interact-       we recogni:ze that the European
                                           ivity and on- demand services),          Commission may decide, in the in-
Schools, news services, local com-         would cost ECU 18 billion for the        terests of social justice, that some
 munities, minority groups and             UK alone. Information on such a          support systems          would be
 public service information agen-          system will be by means of elec-         necessary to guarantee equal
 cies will create new markets, not         tronic servers, in effect very large     benefits to the poorer and disad-
 only for transmitted programming          computers or networks of com-            vantaged regions of the Union.
 but for every form of software, in-       puters , and it will be a matter of
 cluding electronic publishing, CD-        great concern if the majority of         5. NEW SUPPLY, NEW
 I and CD- ROM. We need bold               such servers are located outside         DEMAND: THE IMPORTANCE
 public policies to facilitate the pro-    the EU. Such systems cannot be           OF CATALOGUES
 cess. The opportunity for enhanc-         commercially viable on a national
 ing European cultural and social          scale. They will require,      at the    Mass communication, it seems, is
 values makes this a matter of par-        minimum, a truly European ap-            now a thing of the past. The cur-
 ticular significance for European         proach.                                  rent trend is now one of per-
 producers, including print-media                                                   sonalizing the television supply

 companies who are already at-                                                      and very individualized product
 tracted to the cross-media oppor-                                                  mixes. It is in this way that distribu-
 tunities which digitization offers                                                 tion can reach the most remote

 them. We think it important that                                                   potential viewer. It is in this way
 future consideration of        cross-                                              too that consumption is optimized
                                                                                    as are therefore the procedures
 media regulation within the
 should bear this in mind.                                                          for selling and commercializing
                                                                                    audiovisual products. The tele-
                                                                                    vision supply will have to start
                                                                                    seeking new formats. Instead of
                                                                                    looking for a product that is a mass
                                                                                    success on a national market,
                                                                                    there will be a move towards
extreme fragmentationlrestruc-         The     ma;or   catalogues        of   audio-   diversity, content and number of
turing of the market and therefore     visual products                                 hours , they ore probably the
towards speciolized products oim-                                                      richest at world level, because for
ed at well- identified audience        By onalysing the audiovisual sec-               years all European public televi-
niches on several national markets     tor from the point of view of                   sion stations had a very active
whose consumption will be dif-         technological innovations, it is                policy of producing their own pro-
ficult to ovoid.                       even easier to understand the                   grammes of all kinds (fiction
                                       chollenges awaiting the Europeon                news, art, sciences and human-
From the poin t of view of the         audiovisual industry.                           ities, sports, music, variety enter-
businessman , the profit-and-cost                                                      tainment, documentaries, etc. ) to
ratio becomes more satisfactory, if    New technologies are one of the                 the point that European TV pro.
not maximized.                         mairi factors that determine, in the            duction banks are .estimated at
                                       short-to-medium               term
                                                                      the              about 1 500 000 hours.
The high level of personalization      strategic importance of title pro-
and dialogue between supply and        duction. In the general market                  As for the cinema, European pro-
consumption leads to the ideo of       situotion that we have ottempted                duction represents from the begin-
interactivity. The viewer can deter-   to foresee for the next few years,
                                                                                       ning of sound films about 30 000
mine what he wonts to consume.         the winner is without any doubt                 feoture films whereas it
The individual act of consuming        the information provider or the                 estimoted that American produc-
thus ends up structuring the supply    programme provider. Among the                   tion does not reach this figure.
itself and therefore determining       audiovisual companies, only
production at leastto some extent.     those with extensive catalogues
                                                                                       This heritage remoins for the most
                                       will be successful.                             port unknown , since it has rarely
The notion of productive con-                                                          been shown       outside national
sumption thus includes in its                                                          borders.
                                       Naturally, this implies knowing
strategy the creation of supply,
                                       how to actively use the ' historic
with the consumer choosing what                                                        Yet this immense wealth has many
he wants , and how and when he
                                       catalogue' and               to invest con-     drawbacks. Not only are there no
                                       tinually in the redistribution of
wants it, among        the almost                                                      catalogues (once again we are
                                       already existing              products
endless possibilities of an almost                                                     faced with a    dispersal of titles,
                                       precisely the some way as the
unlimited catalogue.                                                                   copyrights and negatives among
                                       traditional publisher 'on paper
                                                                                       several countries and among
In this way, the overall number of                                                     severo I beneficiaries of copy-
                                       In Europe, there ore net large
television consumers is increased.                                                     rights), but the quality     of the
                                       catalogues, except for a few                    medium of most of the TV products
                                       specialized publishers such as                  makes them short- lived (contrary
                                       Rainer Moritz and the public                    to what has occurred in the USA
                                       television services such as RAI
                                                                                       where since the 1950s ,    70% of
                                       BBC, ARD-ZDF, France Television
                                                                                       prime- time production has been
                                       TVE ,etc. All the other large com-              shot in 35 mm). And finally, most
                                       panies -  in general privote com-               titles do not have dubbed ver-
                                       panies stockpile titles that they               sions , because, as observed, the
                                       buy on the other markets, and                   European products
                                       especially from the
                                                                                                                 that go
                                                               mojor                   beyond their borders are increas-
                                       American firms which remain in                  ingly rare and are generally
                                       this way in a dominant position on
                                                                                       shown in ' art- house' cinemas,
                                       our continent and at world level.               which makes it difficult to obtain
                                                                                       maximum use from them in the
                                       This is a major problem that must               new circuits.
                                       be dealt with as quickly as possible
                                       if this immense capital which is the
                                       European audiovisual heritage is
                                       not to be lost.

                                       In the case of television, the bonks
                                       of this heritage are exceptionally
                                       rich. Considering their quality,
To this must be added the lack of       It seems to us therefore that im.        6. COPYRIGHT AND OTHER
works of a truly international          plementation of specific actions         INTELLECTUAL PROPERTY
nature, considering the quantity        with the aim of saving ond max-          RIGHTS
of exclusively nationol products        imizing the potential of Europe          Recognizing and protecting
made these past few years. The          audiovisual heritage is extremely        copyright       both moral      and
moinly low- budget    shows that        urgent. These actions include:           patrimonial, oS well as the other
have been produced recently in                                                   intellectual property rights , con-
Europe, compared with the high-         (i) creating an integrated   net-        stitute one of the main contribu-
value productions which account             work and updating invent-            tions of Europeon civilizotion , this
for most of the American produc-            ories of Europe s audiovisual        being on essential tool to social
tion , reduce their market value.           heritage      indicating the
                                                                                 progress and an incentive for ar-
                                            holders of iritellectuol proper-     tistic and intellectual creativity.
                                            ty rights;
In contrast, what European pro-
ducts have going for them are the                                                Effective protection of these rights
                                        (ii) promoting concerted action          and the encouragement          of a
number, variety and olso the fact           toiointly utilize catalogues of
that they have been used so little.                                              powerful audiovisual industry
                                            audiovisual banks;
                                                                                 copable of producing and distri~
                                                                                 buting work which reflects Euro-
But another danger is awaiting          (Hi) tax advantages to favour the        pean culture on a universal scale
                                             conservotion and recovery of
these potential catalogues. The                                                  ore complementary rather than
profits from what can be on ex-              Europe      audiovisual heri-       contradictory goals.
traordinary source of wealth risks          tage;
being capitalized by non- Euro-                                                  It is a well-   known fact that the
pean companies. And this for the        (iv) classifying the European            development of      satellite broad-
                                             audiovisual heritage, or at
following three reasons:                                                         casting and cable tronsmission on
                                             least works of special interest,    a transnational scale had to over-
                                             as part of the historical or ar-
              European companies
                                                                                 come serious problems of a legal
(i) lack of                                  tistic heritage,   so that their
                                                                                 nature, particularly in Europe.
     with morketing structures and           protection can benefit from         These problems had to do with
     the necessary resources to              aid or fiscal benefits. These
                                                                                 copyright, or in particular the
     compete with non- European              works can thus constitute an        non-existence of 0 legal organiza-
     componies for the acquisition           exceptional capital asset           tion ofthese broadcasting systems
     of rights    to use Europe              which may be reproduced             on a transnational scale, and with
     audiovisual heritage for in-            and used in new catalogues          the various ways to tackle the mat-
     ternational markets. In other           as is the case today with the       ter through national legislation.
     words, one of the moin risks            classics of literature, music
     for the European audiovisual            and painting. limiting the ex-
     market is that non- European            patriation of originals of
     competition not only rein-              audiovisual works of an ob-
     forces its capture of European          vious cultural interest should
     markets through productions             also be considered;
     of non- European origin , but it
     also commercializes and uses        (v) implementing       specific voca-
     the most profitable bonks of            tionol training programmes
     the heritage of European                involving two aspects: con-
     audiovisual production;                 servation and restoration of
                                             the audiovisual heritage and
 (ii) control by
               non- European
                                             optimization of its use and
     componies of        the
                        main                 profitability;
     distribution and production
     networks of pre-recorded            (vi) implementing 0 specific pro-
                                             gramme in this area for Cen-
     audiovisual mediums;
                                             tral and Eastern Europe.

 (iii) problems related to the legal
     system of intellectual pro"
     perty and copyright.
The development of new audio-          7. TRAINING                              potential for at least a million new
visual technologies can lead to a                                               jobs in the audiovisual sector in the
                                       The most evident paradox con-
similar phenomenon ,     thus wor-                                              foreseeable future, then we must
sening the situation of competition    fronting the European audiovisual
                                                                                recognize that the training im-
from the industry outside Europe       industry concerns the quality and
                                                                                plications are vast. A commitment
                                       quantity of its workforce which
which will be greater than in the                                               to growth cannot be taken serious-
                                       can be summed up as ' too many
past. In short, if problems    of a                                             ly without a comparable commit-
                                       and not enough' ; - too many
legal nature prevent the distribu-                                              mentto training. In our proposals.
                                       talented technicians with skills. and
tion of Europe          audiovisual                                             for production support we suggest
heritage via the new media forms
                                       working practices which have
                                                                                that a significant proportion of our
it is the non- European cornpetition
                                       been marginalized         or simply
                                                                                proposed support package be set
that is going to reap the primary      bYP9ssed by         the
                                                           pace of              aside specifically for training.
benefit, namely the American           technological change, and too
competitors.                           few writers, directors and pro-
                                                                                8. EDUCATIONAL
                                       ducers with a so. und instinct for the   OPPORTUNITY
                                       needs of the market- place.
Probably most of the problems
                                                                                In a peculiar sense, Europe has
resulting from the application of
                                       Throughout this century superb           allowed itselfto become fixated by
new technologies will be resolved
                             prin-     skills have been developed in            its apparent failure to compete
according to the general
cipleslaid down by the interna-        Europe, in fact some 50% of              with the USA in the relatively
                                       post-war Oscars have been won            restricted province of the feature
tional conventions and legislation
                                       by European artists and techni-          film. We all too easily ignore the
on copyright already adopted by
                                       cians. However, with the decline         fact that European television
the EU and the Member States.
                                       and fragmentation       of Europe        (thanks in part to regulatory pro-
Nevertheless, it will probably be
                                       film and television industry, this       tection) remains in relatively good
necessary or at least appropriate
to adapt, on the European scale        traditional skills base is looking       health. Common sense dictates
                                       seriously inadequate, certainly in       that when competing in a growing
and with regard to the impact of
                                       respect of its ability to respond to     market the weaker force should
the new technologies,     not only
legislation but also the contractual   the opportunities afforded by the        atternpt to outthink and out-
                                       new technologies and the very dif.       manoeuvre the opposition rather
or conventional practices and uses
                                       ferent market. place they open up.       than attempt to compete head-on
(e.g. the management of rights by
                                                                                in the very area where the
collective establishments) which
                                       In this connection , we believe the      discrepancy is greatest.
are currently structured on a na-
tional scale according to the tradi-   European Commission should
tional systems of audiovisual cre-     consider ways of bringing                With this in mind, the global future
ation , production and broad-          together film and television             for the audiovisual industry con-

casting.                               schools in the EU with represent-        tains several sectors which are
                                       atives from industry to jointly plan     remarkably underdeveloped yet
                                       ways in which the schools might          contain a potential for growth
Our objective should be to en-
courage the                            better serve an industry with such
                                                                                which could come to dwarf the
                  distribution of
                                       rapidly changing needs.                  feature film industry. It is worth
Europe s audiovisual heritage via
                                                                                noting that video- games alone
the new technologies     in accor-
                                       The key to a demand- led industry
                                                                                already constitute a bigger gross-
dance with the fundamental prin-
                                                                                ing industry than feature films.
ciples of       European legal         of the sort we advocate in this
traditions.                            report is a constant supply of
                                       creative and sensitive       profes-
                                       sionals with access to training op-
                                       portunities throughout their work-
                                       ing careers. The broader the
                                       talent base within the industry, the
                                       more cost-effective and efficient it
                                       becomes; good training has as
                                       great an impact on costs as it has
                                       on quality and, of course, on the
                                       job satisfaction of those who
                                       benefit from the training. If the
                                       European market creates           the
If Europe s education systems            A distinction will now have to be       distributed there in 1991,      96 were
decided to take the possibilities of     made between      three    types of     American, 63 European and 25
audiovisual technology seriously         markets:                                notional. Nevertheless, the atten.

as a teaching tool they could,                                                   dance figures for these films gave
almost overnight, create an inter-
                                         (i) the internal market;                the following results: 84. 8% for
nal market of enormous size, with        (ii) the rest of the European           the American films; 10. 5% for
the potential to establish a world           market in the geographical
                                                                                 European films and 2. 2% for
lead in one of the largest and most                                              Hungarian films. As for box-office
                                             and historical sense,    i.e. all
reliable growth industries of all.           the EFTA countries and those
                                                                                 receipts, American films              ac-
Interactivity offers the prospect of         of Central and Eastern              counted for 90%.
personally tailored teaching by              Europe;
means of on- line data services                                                  These figures        lifted from the
and by means of CD- I and CD-            (iii) the external markets,     from    scarce data available, paint a suf-
ROM to any students, at home as              the richest to the poorest.         ficiently vivid picture of the cap-
well as at school, however remote                                                ture ofthese markets by American
their geographical location and          To each of these markets must cor-      products. Furtherin this report, we
however advanced or obscure              respond a different strategy.           will look at a very           important
their interest. The possibilities this                                           aspect in a market occupation
creates to revolutionize learning,       The role and position of the Cen-       strategy whose commercial value
and teaching, are almost in-             tral and East European countries        is derisory. In the countries of
calculable.                              for example, which are port of the      Central and Eastern Europe,
                                         some cultural sphere as ours , must     distributors have access to
In a Europe     in which regional        be given particular attention.          American subproductions for
identity and regional culture is felt                                            ridiculous sums. These come from
to be under some threat partly           The collapse of the Iron Curtain        pirated copies bought for USD
because of the globalization of          has enlarged the potential of the       2 000 in Hong Kong or sold at a
the audiovisual market      the          European market. But it has also        cut-rate by American exporters
possibilities of using the strength      weakened the    production and          themselves for        less than USD
and sophistication of that market        distribution structures in these         10 000'
to enhance cultural diversity and        countries. The situation being seen
wealth should not be ignored.            today inside our borders is being        Despite the rampant piracy in
                                         repeated there on a greater scale.       these countries, Europe will
9. EXTERNAL MARKETS:                                                              therefore have to think strotegical- .
THE IMPORTANCE OF                         For example, the number of              Iy about occupying these markets
PROMOTION                                 viewers in Bulgaria plunged from        too. This is what Giuseppe Richeri
                                          2 174 000 in 1990 to about              quite rightly underlines in the text
Just as the expression co- produc-
                                          235 000 in 1992. Another exam-          quoted above when he draws at-
tion must be retained exclusively                                                 tention to the ' importance ofoccu-
                                          ple is the former Czechoslovakia,
for works where non- European
                                          where the bipolarization found in       pying systematically all the ac-
 producers participate, the word
                                          countries of the EU is even             cessible market spaces with one
 export should not be used unless a                                               own products, taking into account
                                          stronger. In 1991- 92, of the 10
 European product goes beyond
                                          films that earned the most, six         the economic volue of each
 the borders of the single market.
                                          were Czech-made, of which two           market but also its geographical
                                          were at the top of the box-office       value. The United States has
 This distinction is not simply of a
                                          list, and four came from the USA.       adapted the selling prices of its
 political nature; it must also have                                              products according to the buying
                                          But a closer look reveals that of
 on operative aspect.
                                          the 40 leading films ,     34 were      power of each buyer, with the aim
                                          American films compared with the        of being present on each market,
                                          same Czech films. And of the 100
                                          top box-office   films, there were
                                          only six European films        (four
                                          Italian and two French films, in-       9 Source: ' Donnees generales sur
                                          cluding Nikita which was in 100th        Europe de I' est', a document prepared by
                                          position).                              the SEA containing proposals from Euro
                                                                                  Media (EMG) I:md Societe d' investissement
                                                                                  dans I' audiovisuel (SEI) for a Community
                                          Another example is         that of      intervention in the countries of Central and
                                          Hungary where, of the 190 films         Eastern Europe.
however rich or poor, and cashing              In contrast , capturing the US                 This leads us to underscore the
in on what each situation had to               market is perhaps the greatest                 importance of promotion         ina
offer                                          challenge facing the European in-              strategy to capture markets. A fine
                                               dustry. It is not sufficient to say that       example of this is the lobbying
That is what Richeri calls '                   this immense market is closed to               force which represents the power.
strategy of encirclement: if the               European products under the sim-               ful MPAA. It could be seen in ac-
American market remains im-                    ple pretext that American au-                  tion recently during the GATT
penetrable foro certain time,           ef-    diences do not like dubbing or                 negotiations.
forts will go to consolidating posi-           subtitles. It is certoinly a structural
tions on the "easiest"           markets,      advantage due to the one                       The European industry           must
even if less profitable . 10                   language of their market. But it               therefore think about organizing
                                               our belief that developing a strong            itself also in corporate and lobby-
This aspect is too important to                audiovisual industry in Europe will            ing terms. An association . of Euro-
overlooked. There will therefore               sooner or later open the doors of              pean producers, receiving strong
have to be a voluntarist policy to             their markets.                                 backing and playing the role that
help European producers and                                                                   the major American companies
distributors export their products             In both the case of the USA            and     play, could serve as an instrument
to the countries of Central and                the case of the countries of Central           for the promotion of European
Eastern Europe (which at the mo-               and Eastern Europe, a heavy in-                production throughout the world,
ment only France seems to do)                  vestment in dubbing is necessary,              which Europe needs to establish its
combined with a cooperation                    even if it requires different          (we     image and impose its products.
plan for these countries , taking              could even say                 opposite)
advantage, as stated earlier, of               strategies , if we are to reach a              10. THE ROLE OF PUBLIC
thePHARE and TACIS program-                    popular audience. With respect to              SERVICE BROADCASTING
mes , in order not only to occupy
their markets but also to help their
                                               this , it would be useful to recall , on
                                               the one hand, that about 85% of
                                                                                              In the       rapidly changing
                                                                                              audiovisual environment national
film-making industries to become               the box-office attendance for                  public service broadcasters, until
integrated in the        community of          American films in Europe (with the
Europe which is their natural,                                                                recently the dominant force in
                                               exception of the United Kingdom
                                                                                              European television and radio
cultural and historical area. Their            and Ireland) corresponds to                    feel under threat as potentially
infrastructures, experiences and               dubbed versions 11 and on the
                                                                                              underfinanced and marginalized
talents as well as their immense               other hand, that in the 1950s and
                                                                                              players. In comparison with the
catalogues and archives truly                  1960s, some European films and
deserve this effort of solidarity,             stars were enormously successful
                                                                                              new commercial          cable and
which in the future will have a con-
                                                                                              satellite operators their future as
                                               in the USA.
siderable market value.
                                                                                              conventional terrestrial broad-
                                                                                              casters seems bleak. However, it is
                                                                                              perhaps too easy to be alarmist. If
                                                                                              we look to the USA, we see a
                                                                                              market in which, despite relatively
                                                                                              long-established cable and
                                               11 Regarding this ,   two important   points   satellite systems, the big terrestrial
                                               should be underlined.
                                                                                              networks retain the major share of
                                               1. The Americans have always been very
                                               careful and spent a lot for the dubbing of     the audience (55%) and it
                                               their films. For the most important ones,      equally clear that national ter-
                                               European directors sometimes are respon-       restrial networks , many of them
10 Giuseppe Richeri     (member of the         sible for the dubbing and , in all countries
                                               there are actors under exclusive contract to   operated by public service broad-
governing board of the      Institute of the
Economy of Medias of Milan and professor
                                               dub the main stars.                            casters, will be a vital part of the
at Unesco with the Autonomous University          ln contrast, in most of the countries of    European audiovisual        environ-
of Barcelona) draws our attention to the       Central and Eastern Europe, dubbing (?) is     ment for many years to come.
fact that the Americans ' have always          often by an off-vaice, often alone male
adapted the selling prices of their products   voice. Sometimes for important films, they
according to the buying power of each          use a female and male voice. Multivoice
broadcaster, with the aim of being present     dubbing is expensive: abovt ECU 3 000
on each market, however rich orpaor, and       (source: general data on Eastern Europe).
to cash in on what each situation has to of-   This means that an effort to finance quality
fer: they therefore sold an episode of         dubbed versions for some of these coun-
Oaf/as   at the same time in Italy for USD     tries, for films with a strong commercial
50 000 and in Albania       for USD 150'       potential, could make European cinema
(answer to the questionnaire).                 popular and open these markets.
We see the continued health of the      11. NATIONAL AND EUROPEAN                  In this perspective, the proper
public sector as vital to the range     SYSTEMS OF AID                             functioning ofthe principle ofsub-
diversity and quality of the broad"                                                sidiarity should be ensured in
casting environment as a whole.         (A) NATIONAL SYSTEMS OF AID                order to ovoid the often perverse
We consider there are two fun-          Throughout this report it has been         effects of irrecoverable subsidies

damental issues which must be ad-       seen how too often national                in the case of aid to the industry.
dressed in the immediate future if      systems of aid have perverted
that prospect is to be fulfilled.       their objectives and wasted their          As stated earlier,each State will be
                                        resources. Instead of promoting            responsible for making its choices
Firstly, the broadcasting market is     the image of their countries and           and determining the amount of
becoming increasingly interna-          their regions, public funds have in-       national aid that it plans to devote
tional in terms of audiences,           stead shut up their production in a        to discover .and cultivate new
marketing and finance.       In the     cultural logic that has accentuated        talent, to support the production
same way that commercial                its autarkical      aspect, depriving      that it wants to favour to assert its
operators see their future in inter-    them of any possibilities of con-          national or regional identity or to
national alliances and networks,        tributing to their underlying ob-          fulfil objectives that are particular
so the public service broadcasters      jectives.                                  and specific to it.
of Europe must give urgent con-
sideration to pooling their             The result of this was that their best     But it will have everything to gain
resources and coordinating their        creators hod to go into exile        in    if a large part of its efforts focuses
strengths at European level.            other neighbouring markets or              on participating in the creation of
                                        left directly for the USA. Those           real European companies that will
Secondly, as is stated at a number      who remained more often than               be able to help create a world net.
of points in this report, entertain-    not had to content themselves with         work of multimedia distribution
ment is only one, albeit crucial,       mediocre careers where any                 that ensures the widest dissemina-
part of the emerging audiovisual        talent was not always used to its          tion for the different             national

world. The possibilities for public     full. As Prodoehl said, in the study       products.
service broadcasters to develop         quoted above, when referring to
 new and imaginative forms of           the policy of the      Lander   but that   The States will thus contribute to
 genuinely public service in terms      can very easily be transposed on a          renewing the        inspiration of the
 of information, news, education        national scale, ' a policy of aid for       European creation, preserving its
 and leisure interests, and to reach    cinema designed and practised on            roots which will             ensure the
 new audiences through satellite         a regional level according to self-        originality.
 and cable    channels, are     vast.    interested calculations           must
 However, they must be allowed a         necessarily remain inefficient and
 more entrepreneurial stance and         powerless in face of structures and
 adequate access      to finance         problems that have an interna-
 there are to realize such oppor-        tional dimension:
 tunities. In this .connection it is
                                                                                    12 Until now, the principle of subsidiarity
 worth noting that many of the                                                      has been reduced to the. status of a positive
 public service broadcasters have                                                   norm. The governments have used this      too
 substantial and valuable cata-                                                     often to take the authority to decide in their
 logues which are inadequately ex-                                                  own favour and to limit the Commission
                                                                                    scope of intervention.
 ploited either directly in the com-
                                                                                    A global strategy for the audiovisual sector
 mercial market, or as an attractive                                                requires a more complex and more
 inducementto alliances with other                                                  dynamic concept of this principle. It must
 producers and distributors.                                                        no longer be limited to defining roles but
                                                                                    also to defining the division of tasks.

                                                                                    If, from the point of view of positive law, the
                                                                                    principle of subsidiarity acts on the roles,
                                                                                    the definition of strategic objectives implies
                                                                                    a definition of the programming tasks and
                                                                                    priorities, in contrast to this positive and
                                                                                    neutral concept.
                                                                                    This principle must especially be used in a
                                                                                    dynamic manner to continue program~
                                                                                    ming objectives and be an instrument to
                                                                                    optimalize the division of functions rather
                                                                                    than a passive cost of the division oflabour.
The pooled European public aid         . The   Eurimages   fund                . The   MEDIA    programme
must also adopt renewed forms
and mechanisms that favour a real      In the case of Eurimages, if the        likewise, the MEDIA programme
market economy and that are            goal to be achieved is to support       would have to dearly decide
adapted to the nature and si:ze of     productions that should reach the       whether it wants to remain the
the pon- European networks.            market, it seems reasonable to          ambulance programme
These in dude tax incentives, soft     foresee the replacement of the          whether it wants to assert its role
loans or credit guarantees with        rule of three co- producers with the    as an instrument of industrial
financial backers (bonks, capitol.     possibility of one or even two of       policy, without that requiring the
risk funds, etc.      covering a       the partners being     distributors     long procedure of amending the
reasonable share of the investors      covering different territories. The     decision of the    Council of
risks. 13
                                       percentage of aid that would be         Ministers.
                                       granted to him or them (50% of
(B) THE EUROPEAN PROGRAM-              the ' credit' for ~xample) would co-    The programme could then go
MES AND FUNDS                          finance the production but in the       beyond its centre of gravity
In addition to the TWF Directive       form of a 'guaranteed minimum           towards the creation of pan- Euro-
Europe has three other in-             security for the supported film         pean networks of distribution and
struments for its audiovisual          projection in dnemas.                   commercialization capable of in-
policy: the MEDIA programme                                                    tervening upstream in production.
and the Action Plan , which are        In addition to the advantage of         It could also accentuate a trend
initiatives of the Commission, ond     ensuring from the beginning the         already demonstrated by several
the Council of Europe s Eurimages      distribution of films on several        of its projects , of giving priority to
fund.                                  markets (which is not the case to-      the structural reinforcement of
                                       day), this logic would enable the       companies and the conditions of
If there is real political will, the   producers to retain as much as          their rational management so as
rapid development of program-          possible the originality and ambi.      to favour on their part a more in-
mes like Eurimages and MEDIA           tion of their projects, resorting to    tegrated activity, instead of pro.
to accompany the necessary             European financing without              ductions on a case- by-case     basis.
strategic chonges should not raise     necessarily having to go through
major objections.                      the cumbersome agreements of
                                       co- productions which pushes
                                       up the cost price of the products
                                       and increases       the division of
                                       rights. It is indispensable for the
                                       producer and the director (who
                                       together form an inseparable
                                       whole) to be able to choose freely
                                       the people with whom they want
                                       to work, regardless of their coun-
                                       try of origin , instead of being
                                       obliged to take them there where
                                       the logic specific to the co- produc-
                                       tion imposes them.

13 See footnote 7.
Strategically, MEDIA could               As for training actions, they could    It is of course too eorly to assess. its
prepare the ground for the im-           take into greater account the          impact. Nevertheless,          it can
plementation . of the new policy         value-added' to the industrial ac-     already be noted that it has en-
that should be devised       now to      tivity of the beneficiaries.           abled breoking the political taboo
coordinate the actions of the ex-                                               which existed for a long time and
isting 19 projects in the sense of the      The Action Plan                     which said that the Community
new strategy proposed. It would in                                              must not directly provide aid for
this way be the ideal instrument '       Finally, there is, at the European     the production of programmes.
                                         level, a third progromme of aid for
manage the transition
                                         the audiovisual sector that has a      It will also be noted that the
In particular, greater attention
                                         higher budget than the first two       objectives that justified this direct
                                         mentioned: ECU 228 million. This       intervention by the Community
could go to reinforcing semi- bonk.
ing practices by specifying in a
                                         is the Action Plan for the Introduc-   are essentially of an industrial
more demanding mannerthe con-
                                         tion of Advanced Television laun-      nature. It remains to be hoped thot
                                         ched in 1993.                          the aid of the Action Plan will ac-
ditions for the repayment of loans
and advances on receipts , using                                                tuallybeused in order to help en-
also in a more . systematic manner                                              sure the continuation of European
credit guorantees. These reduce                                                 catalogues by . significantly .sup-
ovaiIable funds while making the                                                porting the production of ' stock'
beneficiary of the        guarantee                                             programmes ond not only the pro-
responsible in a   more effective                                               duction of ' flow ' programmes
manner ond involving the private                                                which are         necessarily more
financial sector more in the financ-                                            transient.
ing of audiovisual productions.
                                                                (On the eve   of the first centennial   of cinematography)

Cinema was born in Europe 100           The authors of this report, profes-       We have taken as the subject of
years ago. In the course of this        sionals working directly or in-           analysis the audiovisual industries
century, our countries put their        directly in the European film and         as a whole. We are convinced that
creative talent and capacity of in-     television industries, were asked         it is only by adopting this global
vention to the service of the mo-       by Commissioner Joco de Deus              approach that we will be able to
tion picture industry. Currently,       Pinheiro to ' make recommenda-            find solutions adopted to the new
with 350 million inhabitants, the       tions on the audiovisual policy           challenges. It has become obvious
European Union has the largest          guidelines ... that can foster the        over the past few years             and
audiovisual market in the world in      debate on a few options for the           according to the experience of
terms of consumers and ranks se-        future                                    other markets, that in terms of
cond in terms of sales turnover. If                                               industrial logic and consumer de.
we add that it is a market whose        We agree on one point: it is our          mand, the film must          adapt and
consumption , between hardware          firm belief that the European             integrate the power of television,
and software, according to the          policy that has been followed has         and in turn , television must adapt
projections of the White Paper is       not succeeded in detaching itself         and integrate the power of the
going to double by the end of the       sufficiently from national policies       telecommunications and com-
century, increasing from ECU 23         that have tended to place more            puter industries.
billion to ECU 45 billion, one can      emphasis on supply rather than
see the size of what is at stake if     demand, on producers re-                  In this report, we have tried to
these two words are successfully        quirements and not enough                 establish a global strategy in
combined: Europe and audio-             what the consumer wonts , instead         order to better link these new com-
visual.                                 of adopting, as was proclaimed in         ponents in the future. For this, the
                                        1962 in a   memorandum on the             art of images and sounds must no
Yet our film production is in crisis    Community action programme for            longer be exclusively linked to the
our television stations in a state of   the second phase, ' a common              cinema, in the same way that the
confusion and our telecom-              policy containing constructive            film is no longer exclusively linked
munications companies are com-          solutions at the Community level'         to the cinema theatre. For this, we
plaining that they cannot begin                                                   must see the creation of powerful
competing as they would like with       Our industry has become defen-            companies, based in Europe and
an expanding world market. How          sive and inward looking whereas it        no longer isolated inside their na-
could this apparently paradoxical       should have shown itself confi-           tional borders , capable of in-
situation have come about? And,         dent, innovative and open. If we          tegrating the various components
what is even more important, how        learn to consider it as an invest-        at the     level of production and
can it be remedied?                     ment vital for the future both            marketing, the only way for them
                                        from the economic and cultural            to be able to adapt with success to
                                        point of view    it can become a          the formidable revolutions loom-
                                        gratifying source of success.
                                                                                  ing on the horizon.

                                                                                  Without this European dimension
                                                                                  that is lacking, our millions of small
                                                                                  companies will be at the mercy of
                                                                                  the major upheavals that are to
                                                                                  come: weak and fragmented , they
will not be ableto meet the             Commission recognizes, following       We have therefore          assigned
planetary challenge of com-             the White Paper,     that it is also   ourselves the task of suggesting
munication.                             aware of the need forthis strategic    woys for         the Europeon
                                        transformation.                        audiovisual industry to go from a
                                                                               policy of resistance to a policy of
We are proposing here a series of
                                        The decision to prepare a Green        suc:cess. And according to       this
measures to be implemented
                                        Paper on the audiovisual sector        analysis, it becomes clear that:
the course of the next 10 years to
                                        which will serve as a basis for
arrive at a strategic   transforma-
                                        widespread consultation of Euro-       (i) the nature, kind and quality
tion of the European industry. The
dimension of the investment re-
                                        pean professionals and agents,             of production will chonge in
                                        coming offer the GATT negotia-             the new world of multimedia;
quired is considerable, but the
                                        tions and the Mons declaration             and
consequences will be even more
                                        gives us hope.
so. What is at stake is the potential
                                                                               (ii) the means of distribution will
value of a dynamic industry
                                        In spite of this ,   we note    that       change too.
c:apable of providing a new range
                                        despite itsimportanc:e as a major
of services and creating a large
number of highly qualified jobs on
                                        industry which is capable of           In the immediate future, two
                                        employing two million people in        strategies are needed. These are:
a continent that is suffering from
                                        the European Union until the year
profound structurol unemploy.                                                           make more commercially
                                        2000 - ond which according to          (i) to
ment. What is also at stake is one
                                        the White Poper con easily double           successful products and in
of the most powerful rneans to
                                        this figure ' provided that growth          particular, with a power of
reinforce our cultural identity,
                                        translates into jobs in Europe and          pan- European and interna-
made up of a rich linguistic variety.
                                        not into financial transfer from            tional attraction;
We believe that this unique com-
                                        Europe to other continents - the
bination of economic and cultural
                                        audiovisual sector has until now       (ii) to facilitate their distribution.
imperatives makes the audiovisual
                                        only deserved very little attention
sector one of the rnostimportant                                               A two- dimension proposal ,
                                        in terms of public sector invest-                                        the
of our time. We believe that the                                               result of our debates, is nec:essary:
                                        ment policies.
free expression of European talent
                                                                               a system of incentives for the cre-
and its energy can bring aboutthe
                                        Analysed nevertheless in the light     ation of distribution networks
rebirth of an industry whose                                                   which , in practice would help put
market potential will make it a
                                        of costs and benefits and par-
                                        ticulorly in terms of impact, it of-   more European productions on
world leader and enhance the im-
                                        fers a lot more possibilities than     the market, a system that would
mense diversity         of   European
                                        other industries, such                 go hand in hand with a system of
                                        ogriculture or automobiles , and it    direct support for production to
                                        has a much greater potential for       help put new products on the
We sustain the view . in this report    growth. Furthermore, our sector        market. Our intention      is to res-
that our industry must undergo a        is undergoing      rapid structural    pond to a vital need of any in-
strategic tronsformation to make it     changes and being reoriented ot        dustry: more market for our pro-
more competitive and above all          both the cornrnerciallevel and at      ducts ond more products for our
more attentive to consumer ex-          the level of research , and even       markets.
pectations. But we also believe         more important at the level of
that the European Commission            vocational training and retraining     One of the great weaknesses of
also needs to change its approach       of its manpower.                       film and television produc:tion in
to the audiovisual industries , giv-                                           Europe results , as already stated
ing rnore attention to the changes                                             repeatedly, from the fact that of
needed at the fiscatlegislative                                                the 500 films produced eac:h year
and regulatory level to encourage                                              only a small percentage is com-
its development. We are convey-                                                petitiveon the European market
ing in this report our observations                                            and virtually does not exist outside
on the present and future role of                                              Europe. Nevertheless , with its 350
 DG X in this respect, but we                                                  million inhobitants , Europe is the
rec:ognize that by asking us to                                                largest market in the industrialized
analyse the entire audiovisual sec:-                                           world. An industry that succeeds
tor, and particularly its potential                                             in generoting a production going
for the creation of new jobs, the                                               beyond national       borders and
reaching at   least 350 million       In a year s time, more precisely on     Between that day long ago        ond
viewers transforms the dimension      28 December 1995 , cinema will          the world of today where inter-
of its own economy. Further, in a     be celebrating its first centennial.    activity and ' virtual reality' make
market currently dominated by         It was in Paris that the lumiere        possible all Utopias, it is never-
American productions, the conse-      brothers for the first time showed      theless the same desire that
quences atthe cultural level would    an amazed audience the re-              presides over the manufacture of
be immense: if today only      the    production of the moving world.         images: to tell stories, to take whot
American products have succeed.                                               is imaginary for reality.
ed - and     that is the greatest     This invention, which they called
                                                                              Europe has excelled in this for cen-
paradox      in bringing together     cinematography', and which they
                                                                              turies, but todoy it looks like it has
the European     audience (with       predicted would be short- lived
                                                                              lost its energy and ability to creote
cinema, it can be said that if        hos become a century later, with
                                                                              myths and share them.
Europe has a common film culture      the folly of a Melies or a Griffith
it is that of Americcm films), one    the most wonderful machine man          The first centennial of cinema has
can imagine to what extent the        has ever invented to tell stories. It   a challenge for us: it is up to us to
audiovisual sector could become       has made generations dream for          decide whether we are sadly go-
the ideal instrument to consolidate   a century on all continents.            ing to relegate it to the museum or
the process of European integra-                                              whether, on the contrary, we are
tion.                                                                         going to celebrate the rebirth of
                                                                              an art thot, though it has changed
                                                                              means, has not change its nature.
MICHELE COTTA                           2. Aid for the film industry and         different regulatory authorities in
                                        production is not a substitute for       Europe should mainly concern
                                        everything. It does not give talent      themselves with compelling the
                                        to a creator who has none. And it        different operators to produce.
In a brief presentation below are a     sometimes leads to the opposite
few ideas which I believe are the       goal sought, namely by keeping           The problem of prime-time televi-
most important in the inquiry that      some producers artificially alive or     sion would virtually be solved if
we conducted into.thefuture ohhe        by increasing the shortcomings of        this were done. The broadcasters
audiovisual industry and the cir-       a local film or television produc-       would quite naturally programme
culation of works in Europe. These      tion, without     universality and       during the most important viewing
ideas are all found in the joint text   therefore incapable of reaching a        hours the productions that have
that we prepared. The differences       transnational audience. It has           cost them the most. This is the case
between .us are apparently subtle.      sometimes encouraged a disper-           in   France where production
                                        sal of production , the self-cen-        obligations have in a way played
1. Television and cinema are in-        tredness of      creators and an         the role of regulating prime time.
dustries, even if the directors,        atomization of distribution, thus
creators, the ideas people, their       creating or reinforcing an addi-         4. Generally speaking, I believe
trade unions and their defence          tional difficulty of circulation.        that our text examines the pro-
groupings do not want to take this                                               blems posed by audiovisual pro-
dimension of the problem into           3. What I believe is most impor-         duction and its     dis.tribution in
account.                                tant in the TWF Directive is to          Europe, which is normal because
                                        organize the effect of any profits       that is what our group of experts
The fact remains that while this        from the different          channels     was asked to do. But these pro-
aspect is given priority in the USA     (general , specific, coded, hert-        blemsare never,    or almost never,
Australia and South America and         zian, cable or satellite as well as      addressed from the viewpoint of
while Europe refuses to accept this     future pay- per-view or video-           the broadcaster. Yet broadcasters
elementary phenomenon , Europe          on- demand channels) on produc-          are the ones responsible for
is losing out and perhaps faster        tion. For this, it seems necessary to    preparing the         programmes,
.than it thinks.                        define a   minimum proportion of         balancing budgets,       managing
                                        the station   s sales turnover, or, if   countless production and pro-
                                        one prefers,     the station s pro-      gramming constraints, and they
                                        gramming budget, for investment          do all this with a view to satisfying
                                        in production.    Compared with          television viewers, which is after
                                        these vital and necessary obliga-        all their main purpose. Were an
                                        tions of fresh production, it seems      audiovisual conference to
                                        to me that setting broadcasting          organized between the report and
                                        quotas is no longer relevant,            the publication  of the Green
                                        although it may be preferable to         Paper, it would not be a bad idea
                                        leave them for an interim period.        to find out the point of view of
                                                                                 some of       these broadcasters
                                        In my view, instead of bending           without considering that they are
                                        over backwards to enforce a              against regulation.
                                        regulation which the broadcasters
                                        go out of their way to disobey, the
ENRIQUE BALMASEDA                         courage social integration and          GAETANO STUCCHI
                                          communication between their
                                          peoples , and, at this historic time,
                                          to consolidate the process of
In addition to personal talent, the       building a united Europe. And we        The only industry that does not
history of European culture is the        should not      forget that     the     tend to the future is one that has no
result of the balance between the         audiovisual sector is today, and in     future.
market or free competition and            the future will be even more, a fun-
encouragement by the State.               damental means of achieving             But that is not the case of the film
                                          these ends, which are so obviously      industry and television, which on
That the non- European audio-             of common interest.                     the contrary have a great future in
visual industry has . a dominant                                                  common , at the heart of this
position in the       transnational                                               universe of communication which
distribution sector in this conti-                                                technological innovation is going
nent, and throughout the world, is                                                to  revolutionize in the years
indisputable. And a dominant                                                      ahead.
position implicitly carries the risk
of that dominant position being                                                   The numerical networks that are
abused. The European Commis-                                                      going to cover the plonet (the
sion and the Member States                                                        mythical ' information highways
should certainly pay special atten-                                               bring us closer every day to
tion and vigilance to the defence                                                 Utopian science-fiction stories;
of competition in the oudiovisual                                                 human beings will live increas-
sector. However, defining the                                                                            celestial
                                                                                  ingly less in a physical
specific cases of action and con-                                                 body and increasingly more in a
duct thot should be prohibited is                                                 virtual double of earth where the
the job of the organizations or                                                   natural environment will be com-
bodies that are legally responsible                                               munication , language, represen-
for that purpose, and I therefore                                                 tation and whose matter will be
do not consider myself qualified to                                               the infinite circulation of messages
give general opinions that might                                                  in numerical form.
prejudge actions or conduct con-
trary to free competition by                                                      The quantity and quality of each
specific sectors or companies.                                                    individual' s symbolic consump-
                                                                                  tion will be regulated by the
At the same time, much of the best                                                availability of time, money, needs
in the history of cinema                                                          and temptations. But at the centre
throughout the world is the result                                                of this new personalized         and
of cooperation between the film-                                                  perhaps interactive communica-
makers and industries on both                                                     tion are the image and imagina-
sides of the Atlantic; it produces                                                tion which are going to retain their
the interrelation between their dif-                                              role: one as a basic     unit of the
ferent cultures. Recovering and                                                   planet's only real universal
strengthening that long and fruit-                                                 language (what Pasolini       called
ful tradition should be a priority                                                 real language ), the other as the
objectiveforthe immediate future.                                                  superb and unique machine of
But the European Union and its                                                     dreams and knowledge which
Member States must not under                                                      takes us beyond the limits of
any circumstances reject one of                                                    physical experience.
the most unmistakable European
signs of identity; making available
without imposing externallimita-
tions the public resources and
means necessary to encourage
equality of opportunity in terms of
access to culture and education
for all their citizens, in order to en-
The apocalypse will be the day           PETER FLEISCHMANN                        The members of the Think- tank
when on the virtual globe                                                         have shown a great deal of com-
 highways ' only anonymous bits                                                   mitment in their search for
and functional inputs travel; but                                                 possibilities to get the   flagging
this kind of nightmare still appears     Unlike the Europeans, the                European film industry up and go-
far off,   like the silence of the im-   Americans have never forgotten           ing again.
aginary world or the death of            that the feature film is the heart
poets.                                   and motor of the audiovisual pro.        Personally, I believe that the
                                         gramme industry. Without the             measures proposed by the report
I believe rather in the industrial       training machine of cinema ,        a    of the Think-tank require an addi-
and political protagonists of this       country can neither reach the top        tional element if they are to be
future when they talk about the          form of its pr~grammeindustry            realized in order to help all of
competitive edge of the product,         nor the constant innovation that is      those who can or will not par-
content, software, and therefore         also necessary. It is only in the film   ticipate in the planned consortia.
of the players      (over the gate-      industry that myths are created
keepers) who have the carriers of        which become collective dreams           Measures to increase the market
bits and images, on the one hand,        and enter into the history of a          share of European films in the
and (over      the service- provider)    people. When we have solved the          cinemas and television channels
the organizers of the supply of          problems of the feature film , the       of the Community is an Appendix
products and services , on the           rest of the problems dogging the         to the report.
other.                                   audiovisual programme industry
                                         will resolve themselves almost on
Audiovisual works and those who          their own.
know how to invent and manufac-
ture them (creatures and en-             As European films in recent years
trepreneurs, the last jobs that will     did not have a large enough ex-
remain for people in the third           ploitation market, European film
millenium) will have everything to       production was only possible on
gain from the establishment of a         the basis of subsidies. We agree
real audiovisual industry at world       with the economic incentive finan-
level such as in our     European        cing    in the form of complemen-
market. ' ihe magic word                 tary measures - with the goal
market' , but there are no markets       creating a pan- European market
without companies , the main             for our projects and thereby
players and factors of any market.       gradually cutting back on the sub-
What we need in Europe are               sidies.
audiovisual companies capable
of stimulating the     movement of       The European market became,
European works      . at continental     potentially, the largest film market
level , in all the profitable distri-    in the world after the fall of the
bution channels        possible (net-    Iron Curtain. The markets of other
works and mediums), and in all           continents will also have to open
communication formats             and    for us if we are to win this market
technological standards (services        back for our films.
and products),         maximum
                     for a
number of recipients and income.

It is of the utmost      importance
therefore, that the image people
tend       to the   future. New
technologies are our chance and
DAVID PUTTNAM                             We have gone some way in on at-         governments of Europe. last but
                                          tempt to sketch that picture of the     not least, we have to convince
                                          future and only time will tell with     those who work in our industry.
                                          what degree      of success. The
This independent Think-tank,              report now passes      out of our       Perhaps we have been guilty of
established by the European Com-          hands and into the hands of the         allowing ourselves to fall back into
mission , has offered a unique op-        European governments and of the         our old habits     examining the
portunity to sketch out a strategy        industry itself.                        reasons for     past failure, in
for the future          of Europe                                                 preference to the challenging op-
audiovisual industry. To have the         We have concluded that we have          portunities for future success.

privilege of being one of           its   a gpod story to tell. But doe.s our
members has been to gain a new            script do justice to it? Perhaps the    What is clear is that those oppor-
perspective on the challenges that        plot is not as clear as it might be.    tunities exist and so too do prac-
face us. At our first meeting we          Possibly the narrative lacks            tical policies which can help us to
agreed that our task was to point         energy: the conclusion may not be       make the most of them.
the way forward from ' cultural           strong or clear enough to suffi-
defence to industrial success             ciently inspire and excite our au-      Here, at least is a workable draft
                                          dience. Perhaps we have been in.        script. It is a script which in 20
I n that   context we have attempted      sufficiently rigorous in identifying    years timesorneone will take out
to set out a . series     of coherent,    exactly who that audience should        of a dusty drawer and say, ' Why
mutually supportive proposals             be, and have failed to give the         didn t we do something with this?
which might, over a 10-year               marketing and presentation ofthe
                                                                                  Maybe it could      have changed
period, achieve fundamental               project the priority it so desperate-   everything.
shifts in our industry.                   ly needs.
                                                                                  Or is it a scriptthat Europe has the
                                                                                  commitment and confidence to
We want to see:                           All of these concerns are painfully     put into production now?
                                          familiar to the European film-
(i) An industry   driven by an ob-        makers.
      jective commercial logic, free
      from what Wim Wenders               Have we created something which
      calls the ' lethargy of subsidy';
                                          will only play to a minority au-
                                          dience on the fringe circuits of
(ii) an industry   which is genuinely     Europe or have we a story which
      responsive to the choices           will reach the audience we need to
      made by European con-               attract if we are to achieve real
      sumers, and which they feel         success? I n addition to the power-
      reflects their lives, their ex-     ful multinationals that       control
      perience and their aspira-          much of Europe               existing
      tions;                              audiovisual industry, that au-
                                          dience necessarily includes the
(Hi) an industry          which can       bankers and financiers who
      challenge .and       inspire the    already invest     heavily in the
      creative ambitions of those         American industry        but not
      who work in it; and                 Europe. It would be ridiculous not
                                          to take account of the telecom-
(iv) finally, and most importantly,       munications companies with the
      the audiovisual sector must         investment potential to wield in-
      be placed, once and for all,        creasing influence in the
      at the very heart of the Euro-      audiovisual markets of the future.
      pean economy - recognized           We must also reach those
      as a key industry of the future     Hollywood majors who already
      as well as a priceless cultural     dominate many sectors of our in-
      asset - a source of millions of     dustry and have the power to at-
      skilled jobs and of substantial     tract the best talent that Europe
      earnings, both within Europe        has to offer. It goes without saying
      and in wider markets beyond.        that our audience must include the
ANT6NIO- PEDRO                         Batz was wrong to be right too           Being by definition transnational
                                       soon. Thetimewasnotrip~forthis           whereas production must remain
VASCONCELOS                            kind of reformist talk. Today one        the domain of individuals and
                                       realiz~s that by identifying the         preserve its cultural references,
                                       universal message of American            distribution must b~ the priority of
In 1968, following the Langlois af-    films with its imperialist model of      public investm~nt by th~ EU:
fair in which Andre Malraux (who       domination, the film-makers who          distribution of all kinds of
in the m~an    time had become         had come from all parts of the           audiovisual products on all kinds
Minister for Culture under             world to demonstrate in favour of        of m~diums and on all kinds ofter-
Gaulle) had opposed the                Langlois at the Palais de Chaillot,      ritories, even if films and cinemas
manag~ment of the found~r ofth~        refusing to hand over their films to     remain th~engine that arouses all
Cinematheque franc;:aise,      Truf.   anyone but him~ had found a fam-         th~imaginations and opens all th~
faut, Godard , l~louch and many        ily. But, by wanting to break the        markets. A European distribution
oth~rs boycotted the Cann~s            American model, preventing it            network is the only way for the in-
Festival which they accused of.ser-    from being applied to his future         dustry to achieve the necessary

ving the industry and not the          works, they threw out the baby           critical mass and economies of
directors.                             with the bathwater.                      scale indispensable for becoming
                                                                                comp~titive and for European
In May 1968, the Viet Nom war          I belong to that generation and          creators to have an int~rnational
protest Gu~varrism and the             for a long time shared his illusions.    marketing instrument      that can

Cultural Revolution were in the air                                             mak~ their messages universal.
and the film industry also seemed      Yet, a quarter of a century later,   I

to hav~ chosen the road of             must recognize that the events           The Americans did it better than
freedom by identifying the enemy       show that Batz was right. What is        we did , to the point of taking ad-
in American imperialism.               most important is that today we          vantag(i;, of it. However, it is not
                                       see that his proposal was the one        by making them the eternal
That same year,      Jean- Claude      that would have given creators the       scapegoats of our powerlessness

Batz, in a symposium organized in      most opportunities.                      and our frustration but by r~ward-
Brussels, ~xplained the European                                                ing talent, merit, risk and success
deficit with American     cinema       It is my profound belief that only       that European cinema will once
which he     attributed to the dif-                                 of a
                                       by contributing tothe.creation           again regain its energy potential
ferenc~s in our distribution           multiple network of transnational        and wealth of creativity.
systems, with a concentrated and       and multimedia distribution for
planetary system in the USA and a      our products will we be able to
dispersed and local system in          turn around the catastrophic
Europe. He went on to say that         situation of our industry and put
that was where the Community           an end to the growing unpopular-
(which at thattime was made up of      ity of our audiovisual production.
six member countries) had to
focus its efforts and means.

Heproposed , that national aid for
production in the form of subsidies
gradually be phased       out and
replaced by a system of  credit
guarantees which instead would
play an inc~ntive role.
ANNEX 1                                It is for this purpose thot we would   In fact, the lack of economic ra-
                                       like to set forth a few elements of    tionolity ofthe Europeon system of
                                       onolysis and ask you a certain         production and distribution,
QUESTIONNAIRE                          number of questions. Your con-         which is too spreod out and pro-
                                       tribution and your opinions ore        tected from the market instead of
Aware of the extent of the prob-       very importontto us, regordless of     being integrated in it, leods
lems confronting the European          the guidelines olreody laid down       economic agents        producers,
audiovisual industry at the end of     by the working group.                  distributors , cinema operators,
this century, Commissioner Pin-                                               broadcasters - to prefer investing
heiro has decided to prepare a         1. Nobody will contest the fact        in American production or in the
Green Paper on the crisis currently    thot Europe needs to project its       purchose of its products.
facing this sector. A lorge-scale      own image, which means creating
                                                                              This flight of copital , but also of
consultation of those concerned           self-sustoined audiovisual in-
                                                                              ideas (the sale of scripts replocing
by this situotion will also be         dustry that is popular and com-
                                                                              film exports) and talent worsens
organized.                             petitive.
                                                                              the trade deficit with the USA,
A working group hos been ap.           With its morket of 350 million in-
                                                                              which                 has
                                                                                              today become
pointed to droft the document. Its     hobitants ,   0 production volume
members include David Puttnam,         larger than that of the world'         What                concrete           measures ~
Enrique Balmoseda , Peter Fleisch-     lorgest film"making power,       the   financiat                 fiscat      reg. ulatory
mann, Michele Cotta , Gaetano          USA, a long trodition of non-          do       you suggest to                     establish

Stucchi ond myself os President.       documentory films ond a great          coherent system                        at      European
                                       wealth of talent, Europe enjoys in-    level that has                       stimulating ef-
The group      tosk will be to         calculable potential for the cre-      fect        for      the development                    of

diagnose the crisis and propose a      ation of 0 powerful and com-           audiovisual industry that
new strategy of intervention by the    petitive oudiovisual industry.         rationally organized                                         that
European Union in this area that                                              satisfies public demand .and
restores the confidence of the sec-    Nevertheless      the European         that           is     again         competitive

tor s economic agents ond allows       public is consuming more    and        world               level (making it possible
them to ochieve all their potentiol    more Americon products, with the       to      keep          our  talent and restore
in the prospect of the single          commerciol system inevitably nor-      investor confidence)?
market.                                rowing its freedom of choice
                                                                              2. The non-existence of 0 Euro-
                                       becouse of the inobility to imple-
The first phose of work will consist   ment on adequate common policy         pean production industry of world
in toking stock of the key problems    and an industriol strategy copoble     dimension prevents the creation of
which enable the identificotion of     of responding to the dispropor-
                                                                              pon- Europeon distribution net-
the oudiovisual sector s areas of      tionote growth of demond for           works. But in turn , the absence of
chronic weakness.                      products which followed the policy     transnotional marketing channels
                                       of deregulotion , and which will
                                                                              makes the                          large-scole ap"

                                       grow even more with the increose       pearonce of products for the inter-
                                       in the number         of
                                                              television      nationol morket difficult , increas-
                                       stations.                              ing fragmentotion and further
                                                                              weakening the Europeon audio-
                                                                              visuol industry, 0 prisoner . of this
                                                                              vicious circle.
In this context,           what conditions      4. The  European audiovisual                             their markets and also         to   in-
must       be     satisfied and what            landscape is characterized, as                           tegrate the creative capa-
measures  have to be adopted at                 seen above, by a lack of large                           city, the industrial and pro-
national and Community level to                 marketing channels which                                  fessional structures and the
strengthen the European com.                    therefore makes it very difficult for                     experiences of these         coun-
panies and encourage them .to                   audiovisual companies to define                           tries into the European
develop pan- European strategies                integrated strategies to recoup the                       audiovisual industry?
of   production and    commer-                  cost of audiovisual works through
cialization?                                    different markets and the various                     5. The behaviour and attitudes
                                                mediums of distribution.                              towards the diversity of languages
3. Despite the public, national or                                                                    and cultures in Europe have more
Community systems of financial                  In this context, the companies are
                                                                                                      been factors of resistance and
assistance, Europe has shown                                                                          consolidation of the fortress men-
                                                strategically unable to consider
itself to be incapable of fighting              the ' European market', and not                       tality of national , and even
the crisis and stopping the .decline            the ' national market', as their ' in-                regional, identities than factors of
of the European film industry with
                                                ternal market , thus reducing their
                                                                                                      enrichment for the creation of a
the public. These systems of aid                ability to recoup costs ' domestic-                   single market.
have until now mainly been used                 ally' and          therefore to export
to offset market deficits and as a
                                                audiovisual products.
                                                                                                      Whereas American production
substitute for private capital in-                                                                    has standardized the European
stead of focusing on the develop-                                                                     public, European products are in-
ment, by companies, of pan- Euro-               When the products manage to                           creasingly confined to their own
pean structures and encouraging                 cross borders, this strategicinabil-                  national markets. This results in a
the improved competitiveness of                 ity generally leads them to                           further trend towards bipolariz-
European audiovisual works.                     marginal distribution channels of                     ation of the European market be-
                                                art and testing, thus preventing                      tween national             products and
However, the European audio-                    them from reaching the large dub-                     American products.
visual industry will not be viable              bing markets which can
until it is able to sustain itself              guarantee them                             greater    In terms of distribution , language
which is along way off at the mo-               distribution.                                         is not an obstacle to the univer-
ment. The problem facing                 the                                                          salizationof consumption. In face
public authorities therefore seems              (a)   What         conditions do               you    of a market divided by the large
to be that of redefining their            in-         think would enable Euro-                        number of languages spoken
tervention: how can a system of                       pean production                         and     American products are released
assistance be replaced by a system                    distribution companies to                       either dubbed (especially in the
of   support for growth and                           consider  at  the strategic                     so-called ' large' countries) or sub-
regulation?                                           level the European market                       titled in the national languages.
                                                      and noT national markets
What. do you think are the main                       the domestic             market?
side-effects positive or
negative       of the current
systems of support, whether na-
                                                (b) What          measures               should be
tional or European ,              in light of
                                                      taken now               to        encourage
the unification of the European
                                                      European               companies

market          and what          measures
                                                      want         to        capture inter-
                                                      national markets, especial.
need       to   be taken     to   boost the
                                                      Iy American and Asian?
ability of companies in the
audiovisual sector           to   compete?
                                                (c)   Considering the fact that the
                                                      countries of Central and
                                                      Eastern Europe are more or
                                                      less inevitably going to
                                                      become             part of the Euro-
                                                      pean audiovisual                       area
                                                      what forms of collaboration
                                                      or economic cooperation
                                                      must there be                to    assimilate
What           measures do you                  recom-            7. In the fromework of the trade                     (b) Whot do               you         think are the
mend           so that           languages and                    rules concerning the integration of                      economic                    or          structural
nationo/                      indeed regional                     audiovisual adivities, one of the                        obstacles             to    the        emergence
cultures          stop         being elements                     main problems focing the politicol                       of pan- European                          com-
resistance               to     the development                   ond regulotory                    bodies is com.         panies           acting           in the global
of a         European industry                  that        in-   pliance with the fundioning of the                        market?
corporates                all the cultures but                    various economic areas ond the
focuses          on the universality                   of   the   ottention given to the effects of                    (c) What          kinds         of     alliances

creation?                                                         distortion on trade through the                           incompatibilities do you
                                                                  practices of economic agents with                         believe should                   be    promoted
                                                                  so-called 'dominant' market                               or      ordered between the
6. The television without frontiers                               positions.                                                various sectors in order
(TWF) Diredive hos posed a cer-                                                                                             prevent horizontal                               or         ver-
tain number of problems , which                                   Sofeguording competition , which                          ticol concentrations                                   to    in-
mainly have to do with the dif-                                   implies the balance of morket                             crease competition                                   the
ficulties the Europeans themselves                                forces and the ability of operators                       single market and                           to    favour
have in applying the legislation                                  to ad with outonomy, is thus one                          the ba/onced development
(resistance on the part                         of non-           of the objedives of the European                          of         competitive European
Europeons is rather understand-                                   oudiovisual areo. This holance                            conglomerates                          at              world
able). Europe s public and private                                concerns the relationship of in-                          level?
stotions have shown difficulties in                               dependence of independent pro-
meeting the prescribed levels of                                  ducers with the forge                     economic   8. New technologies playa major
broodcosting of Europeon works                                    groups ond broadcasters, on the                      strategic role in the contemporory
ond of supply of progrommes with                                  one hand, and cooperotion bet-                       industrial system. They first of all
independent producers.                                            ween national companies and                          help mointoin                    high levels of
                                                                  multinational componies, on the                      employment, especially for the
These difficulties are dromatically                               other.                                               highest performing ond best poid
indicative of the problems facing                                                                                      jobs. They have very significant
European countries in defining                                    (a)   What regulatory measures                       collateral effects in the other sec-
policies aimed at strengthening                                         do you consider urgent                         tors and thus contribute to what is
the audiovisual industry on the                                         ensure the autonomy                            considered the ' welfare of no-
European level. The current crisis                                      operators on the markets                       tions . New technologies in the
seems to fovour centrifugal                                             and the rational                    coordin.   eledronic industry are going to
behaviour      where economic                                           ation oftheir activities with                  impose a revolutionary change on
agents , with a short-sighted view                                      regard to:                                     the industriol system , determining
to survival , prefer playing the card                                                                                  the obsolescence                           of today
of Americon produds and                                                 the         function         of    producer    materiols , the new industriol
Joponesecortoon films, which are                                        and broadcaster?                               policies ond constituting                                         the

more profitoble in the short term                                                                                      essential fador of employment in
but suicidal in the long term for                                       the status             of   distributor and    the coming years.
their independence.                                                     programmer                  of cinemas?

                                                                        multimedia groups and in-
How would you assess the TWF                                            dependent produce~?
Directive and what regulating
measures do you recommend                                               the ' European                    champions
to         better coordinate the in-                                    ofthe electronic industry
terests         of   the various sectors                                and SMEs throughout
the European audiovisual in-                                            Europe (raw materials re-
dustry   public and private                                             cruitment              of   skilfed labou~
broadcasters      independent                                           subcontracting, localiza-
producers, multimedia groups                                            tion)?
    and even the interests
distributors, video publishers
ond box-office circuits com-
pared with the chronology
the distribution?
To the extent that it directly          Nevertheless, while this      tech-    (a)   What do you think                    are the
responds to the critical alteration     nological progress increases                 main consequences                    of         the
in hardware, the audiovisual in-        supply and improves the quality of           technological transformations
dustry is one of the ' strategic sec-   distribution, it threatens to worsen         that are affecting the services
tors , closely linked to the develop-   the dependence of European pro-              industry in the                  audiovisual
ment of new technologies. The           duction on the outside instead of            field?
audiovisual industry will thus play     representing new possibilities
a determining role in the services      because of the lack of production      (b) One        of      the concerns             of    the
industries for   employment and         and marketing strategies incor-              Commission            being ' to manage
added-value activities.                 porating atthe European level the            the social             effects       of         the
                                        various distribution mediums.                technological transformation
Already magnetic tape and op.                                                        (see     Document15/88, Oc-
tical fibres     transformed the                                                     tober        1988),      see
                                                                                                            how do you
audiovisual economy in the 1970s                                                     the changes in the European
and        today, they are going
      1980Si                                                                         audiovisual industry with
to lead to a  new revolutionary                                                      regard to                   the
deregulation in this sector, with                                                    technological revolution and
pay- per-view,   video-on- demand                                                    what kind of regulatory
and interactivity.                                                                   measures do you propose to
                                                                                     ensure the so-called' manage-
                                                                                     ment     of     its social effects

                                                                                     Antonio- Pedro Vasconcelos
                                                                                                  Lisbon       December             1993
ANNEX 2                                We must therefore carefully           Admittedly, there are a    whole
                                       develop well-thought-out strat-       series of cinemas that      show
                                       egies to create a pan- European       40-50% European films (in Ger-
Measvres to increase the
                                       market.                               many, this is approximately 100
market share of Evropean films
                                                                             out of 3 600 screens), but these
in the cinemas and on the televi-
                                       These strategies should stimulate     screens are mainly in the worst-
sion channels of the Commvnity
                                       the development of trans- Euro-       equipped cinemas      that show
                                       pean distribution structures   for    European programmes in a kind
European films ' market share of
                                       European films as well as an im.      of market niche as they cannot get
the revenue from cinemas of the
                                       provement of the      inadequate      the top American films.
European Union has almost con-
                                       financing structures for European
tinuously declined in all of the
                                       film production; they should also
Member States over the last
                                       envisage measures for a better ex-
years, with the market share of
                                       ploitation of European films in
non-national European films faIl-
                                       European cinemas. Apart from
ing even more rapidly than that of
indigenous films (see Table 1).
                                       the frequent absence of popular
                                       appeal, the poor showing of Euro-
                                       pean films in European cinemas
Over the last decade, the States of
                                       can be explained, among other
the European Union had all tried
                                       things , by:
to protect their national industries
through support measures, with
                                       (i) the block-booking system to
the result that today, almost ex-
                                       which the major American com-
clusively, only indigenous and
American productions are pro-
                                       panies have made European
                                       cinemas agree;
grammedin the countries of the
European Union. The market
                                       (ii) the ever- increasing number of
share of non-national European
                                       release prints with which the ma-
films is minute in the European
                                       jor companies launch their films;
market. (The 22. 5%   share of non-
national European films in Spain is
                                       (iii) the lack of a marketing con-
an exception brought about             cept and inadequate budget for
through rigorous legislation. In
                                       the promotion of European films;
the .other countries of the Union
the share of non-national Euro-
                                       (iv) a lack of information for the
pean films amounts , on average,
                                       exhibitors and audience about
to 4.   5%.
                                       film-making in neighbouring
                                       European countries.
At the same time, the market of a
single European State has become
too small to recoup the increasing
costs of making a film. As a suffi-
ciently large home market (which
can only consist of the market of
several European countries) is ab-
sent, the financing of European
films has become extremely dif-
ficult without reliance    on sub-
Table I


(see 1993   Media Salles European Cinema            yearbook)

It should be noted when looking at          market for our projects and          (3) Our efforts are concen-
these statistics that a few suc-            thereby gradually reducing the       trated largely on the feature
cessful home-market films (mostly           subsidies.                           film.
unexportdble        local comedies)
make up a considerable percen-              (2) Our efforts will concentrate     Unlike Europeans , the Americans
tage of the indigenous market               initially on the       European      have never forgotten         that the
share.                                      market.                              feature film is the heart and driv-
                                                                                 ing force of the audiovisual pro-
The following proposals stem from           After the fall of the Iron Curtain   gramme industry. Without the
three theses:                               Europe became, potentially, the      training mechanism of cinema, a
                                            largest film market in the world.    country could neither reach the
(1) The proposed measures are               We need to export our films to       summit of its programme industry
incentive finandng.                         other continents if we want to       nor achieve the constant innova-
                                            widen the market for our films.      tion thdt is also necessary. It is only
As European films do not have a                                                  in the film industry that myths are
large enough market, European                                                    created which become collective
film production is only possible on                                              dreams and enter into history.
the basis of subsidies. We agree                                                 When we have solved the prob-
with the Americans that this must                                                lems of the feature film ,   the rest of
chdnge and thus drgue for a con.
centrated economic incentive
                                                                                 the problems dogging the
                                                                                 audiovisual programme industry
financing in the form of             com-                                        will sort themselves almost on their
plementary measures - with the                                                   own.
aim of creating a pan- European
        THE PROPOSED                       distribution guorantee share will          3. The European Union would
                                           have priority in recoupmentwould         stimulate such agreements         by
                                           have to be    discussed with the         enabling the reduction of the film
                                           distributor). The video revenue          rental chorges for these films in the
                                           would be used to cover                   form of   incentive financing. The
                                           unrecouped guarontee takings.            distributors . could then hire these
                                                                                    films out at a rate that is 7% below
                                           1.4. Packages consisting of several      the usual percentage goal (9% for
                                           film projects, in addition to in-        non-national European films). The
As a    transnational European
                                           dividual projects ,   con also be        difference would be met by
distributor for European films has
                                           funded.                                  coordination office of the Euro.
not existed until now, the following
                                                                                    pean Union.
measures are proposed to
                                            5. After two years , the minimum
stimulote the formotion of a group
                                           involvement of countries pro.            2.4. Producers of the        projects
of national European distributors:
                                           viding distribution guarantees           presented at previews should at-
                                           should be raised from four coun-         tempt to interest public and
 1. If at least four      distribution     tries to five; after four years to six   private TV stations in their territory
companies from different Euro.             countries. This should encourage         in a pre-sale     of the broadcast
peon countries (including at least         lorger national distributors to ex-      rights. The European TV stations
two countries with alorge produc-          tend their activities     to   several   ore called upon by their govern-
tion capacity) ore prepared to             European countries or to join with       ments to participate in this
give distribution guarantees for a         other national distributors.             measure to strengthen the Euro.
Europeon film project, the Euro-                                                    pean cinema to the best of their
pean Union will double these                                                        ability.
distribution guorantees.
                                           2. REDUCTION OF FILM                     In order to    stimulote such pre-
                                           RENTAL CHARGES FOR
                                                                                    sales the Union is prepared to dis-
1.2. The Union will olso give a            EUROPEAN FILMS
                                                                                    count these contracts until the
gront for prints and advertising to
                                                                                    broadcast of the film by the TV sta-
the distribution componies for the           1. Both film projects and com-
                                                                                    tion. The producer would bear the
films' supported under Section 1.          pleted European films should be
in each cose this will amount to           presented ot previews for Euro-
                                                                                    financing costs until the pro-
25% ofthe distribution guorantee           pean exhibitors,      with the costs
                                                                                    gramme material is delivered.
                                                                                    Then the Union will bear the costs.
provided by them (35% for non-             being shored by the Union.
                                                                                    The contracts must be honoured
notional European films), but no
more than 30% ofthe octual prints             2. National distributors should       by the television      stations two
                                                                                    months before the premiere, and
and advertising costs (50% for             attemptto obtain ploy guorantees
                                                                                    ot leost 30 months after delivery of
non-notionol European films).              from their territory s cinemas for
                                                                                    the progromme material.
                                           European projects before produc-
                                           tion commences.
  3. The distribution companies                                                     N B: Distributors, who have paid 0
should acquire the rights for                                                       minimum guarantee for a film pro-
theatricol and video production in                                                  ject, should possibly have the
their countries. The distribution                                                   chance to ocquire the broodcost
com ponies         should commit                                                    rights instead of a TV station , os a
themselves to launching the sup-                                                    forced division     of rights could
ported films in their country of                                                    hove a negative effect.
origin at the some time. They are
also required to coordinate pro-                                                    In this cose, however, there should
motional meosures to the greatest                                                   be a fixing of minimum percen-
possible extent so that the film                                                    tages      related to the project'
receives a unified ' imoge' (joint                                                  budget for distribution
front-of- house stills, joint press                                                 guarantees ond TV pre-soles.
stills, posters,   trailers, etc. ). The
distribution guarontees (private
ond public) will be covered from
the   box-office revenues (the
degree to which the privote
  5. An orgcmization .such as Euro      Table II
Media Garantie (EMG) must be
equipped with the necessary             FINANCING MODEl
means to be . able to provide:          Exomple: A film with a budget of ECU 6 million                   % of   budget

(a) interim financing of existing

(b) remaining financing in the
form of 0 minimum guorantee for
pending wodd rights;

(c) the conclusion of a delivery
guarontee which is adapted to
European financing structures.


 1. All Europeon cinemos can
become members of this Euro-
pean cinema network.

A condition is that the exhibitor
                                        3.4. In addition, the members of         . description of the present stote

commits himself to progromming          the network can opply for credit         of the cinema;
                                        for the modernization of their
at least 35% European films (in-
cluding at least one third non-
                                        premises. This credit will be            . description of the     plonned in-
notionol European films within the      granted in porticular, for the           vestment;
                                        following investments:
next five years).
                                        . renovotion     of screen        and    . costs/finance plan;

This will be calculated occording       seating;
to the number of screenings in a                                                 . declaration of ogreement with
                                        . renovation of        projection ond
cinema (the screenings       in   011
                                        sound syst~rn;
                                                                                 the following conditions for the

screens will be calculoted for a                                                 repoyment of the credit:
cinemo with several screens).           .renovotion of heoting/air condi-
                                        tioning;                                 the credit will be granted ot a
Another condition is the obligo-                                                 fovourable rate of interest and is
                                        . renovation of           lobby   ond
tion to join a Europeon computer~                                                to be paid bock within three years;
                                        sanitary facilities;
elided informotion and accounts
system for the purpose of greater       . installation of subtitling or dub-     the payment of interest will be
transparency.                           bing system;                             suspended for eoch year the ex-
                                        . installation of      computer-elided   hibitor meets his obligotion (35%
  2. The cinemas will be members        box-office;                              European programming);
of the ' Stars of Europe' network os
                                        . installation of new technologies       where the cinemo con provide
long os the cinemos meet their
                                        in the film sector.
obligotions each yeor.                                                           evidence after four yeors of an
                                        The credit will be granted after the     overage progromme share of
 3. The members of the ' Stars of       applicotion has been accepted by         40% Europeon films, it will be
Europe' network will be provided        the coordination office. The level       relieved of the requirement to
with computer terminols for the         of support must not exceed 70% of        repay the outstanding credit.
computer-elided information ond         the total volume ond must not be
accounts system free of charge by       greater than ECU 100 000. The            NB: The criteria drafted by the
the coordinotion office for as long     applicotion should contaIn the           Council of Europe serve here for
as they are part of the network.        following information:                   the definition of 0 European film.
  5. A fund should be established      quarter, they will then receive a       4. MEASURES TO SUPPORT
for larger investments or for new      membership card to the ' Stars of       PROGRAMME VARIETY IN
building projects. Experts from the    Europe' club, which will entitle        EUROPEAN CINEMAS
coordination office should check       them to 0 reduction of 25% on the
                                                                               4.1. These measures include the
the investment plans on the spot       price of a cinema ticket. Then, if
                                                                               restriction of the number of prints
and advise those responsible for       they see at least eight European
the fund. The credit, which can be     films in the next quorter they will
                                                                               for theatrical release in the
                                                                               cinemas of the Union.
granted in this case, should not be    receive a silver club card with a
restricted but should not exceed       35% discount and then a gold club
70% of the volume of investment.                                               An upper limit should    be put on
                                       cord with a 35% discount for the
The granting of the credit should                                              the number of prints per film and
                                       cordholder and companion.
be dependent, among other
                                                                               per country so that the screen
things, on the level and duration of   The club cards                          capacity is not blocked by a  few
                                                             are chipcards
                                                                               large films.
commitment which the investors         which give the owner a discount
are prepared to undertake for the      for the next eight     performances
showing of European program-           and allow the cinemas linked to         In Germany, two yeors ago,        the

mes (Le. credits for 10 years for a    the coordinating office to invoice it   distributors promised to introduce
commitment to 35% European             for the discount.                       a self- imposed restriction not to
programme share; interest ex-                                                  strike more than 250 prints per
emption for the years where the         7. The members of the ' Stars of       film, but to date this has not
commitment is met).                    Europe' network receive regular         materialized.
                                       information from the coordination
When deciding      to grant   credit   office via their terminals about the    The Think-Tonk  therefore proposes
special emphasis should be given       range of European films on offer        that the Union sets upper limits for
to the use of new technologies         about the programming and per-          each Member State,           e.g. 250
(e.g. interactive cinema, etc.         formance of European films in the       prints per film for both Germany
                                       vorious countries ,        and about    ondFrance, and correspondingly
New constructions          or total    events , festivols, etc.                less for the other States.
renovations of cinemas in the
economically weaker regions of          8. The members of the ' Stars of         2. The financial support granted
Europe could possibly be under-        Europe' network con also fake           by France ond Germony to
taken with support from the Euro-      part in previews of European films      cinemas in small communities
pean Regionol Development Fund         that are specially    orgonized for     (20 000 inhabitonts and less) by
(ERDF).                                them.                                   subsidizing the release prints for
                                                                               small communities should be
  6. Members of the network can                                                maintained. The Think-Tank even
take port in a campaign for                                                    proposes thot the other Member
customer services.                                                             States should follow France and
                                                                               Germany      example to keep
Those coming to the cinemas in the                                             cinemas in small communities
network should be ohle to collect                                              alive.
discounts each quarter in the
same way that the big airlines                                                 It is true that a large proportion
reward foithful customers via the                                              these prints will be struck for
 Miles & More' campaigns.                                                      American films, butthis should not
                                                                               be 0 major obstacle since the
At the beginning of each quarter,                                              American films are also required
the cinemo- goers   receive a pro-                                             to pay cinema and television
gramme card ot the box-offices of                                              levies.
these cinemas with the names of
the Europeon films showing in the                                              The subsidized release prints for
region. The card will be date-                                                 small communities are not part of
stamped by the cinema each time                                                the restricted number of prints.
they go to one of these films. If                                              However, it must be guaranteed
they have seen at least eight Euro-                                            thot these prints are used ex-
pean films by the      end of the                                              clusivelyforthe intended purpose.
  3. The cinemas in small com-           SA. In addition ,   an information     3. The term 'co- production ' will
munities can receive grants for          office (possibly within DG X) could   no longer he applied within the
local promotion (advertising             collect and evaluate the data on      Union. If several producers pro-
hoarding above the cinema,               all the supported films and pro-      duce a film jointly within the
advertising material for the foyer,      duce a common professional press      Union, it will be known as a joint
adverts in the local press , advertis-   service providing information         European production, regardless
ing on local radio stations , invita-    about the supported projects and      of whether the producers are from
tions to directors and actors, etc.      their results.                        one or several countries.

A fund with ECU 4 million annual-          5. This information office          7 A. The holdback periods for the
ly, i.e. ECU 20 million in five years,   should, moreover, help with the       individual forms of outlet (cinema
should be made available for this.       creation and financing of a TV        pay-TV, video, TV, satellite, etc.
                                         magazine programme that will          must be standardized throughout
404. The possibilities of financing      report regularly about European       Europe.
new construction or reconstruc-          cinema and          be
tion of cinemas in       the poorer      throughout Europe by European
regions of the Union with the aid        TV stations (see Appendix 1: the      8. THE COST OF THESE
of the European Regional                  Cinemagazine' project of the
                                         European Audiovisual        Centre
Development Fund (ERDF) should                                                   1. INCENTIVES FOR THE
be explored.                             Babelsberg).
                                                                               GRANTING OF DISTRIBUTION
                                         6. OTHER MEASURES OF THE
                                         EUROPEAN UNION                        To support approximately 80 films
                                                                               per year with an average budget
5.1. Since, in recent years, a large
                                           1. In addition to the measures      of ECU 7. 5 million would give a
                                         proposed here, funds should he        production volume of ECU 600
proportion of theoffices of the
                                         made available for:
European film organization has                                                 million per annum.
proved to be both inefficient and        (i) the inclusion of Central and
costly, the implementation of the        Eastern Europe in the pan- Euro-      If we assume that distributors from
outlined measures should be con-         pean film market (see Appendix        several European countries will
centrated in two institutions.           2);
                                                                               each give a minimum guarantee,
                                                                               and that these            minimum
  2. A cinema coordination office        (ii) the development of program-      guarantees together cover .ap-
will be responsible for the com-         mes for the new audiovisual           proximately 25% of a film
puternetwork , the previews , the        technologies (see Appendix 3).        budget, then the European Union
modernization of cinemas , in-                                                 would double these        minimum
cluding new construction projects,                                             guarantees. Thus, 50% ofthe pro-
                                         7. NATIONAL MEASURES FOR              duction costs would be covered in
the club cord system and the pro-
                                         THE SUPPORT OF
motion costs for cinemas in small                                              return for theatrical and video
                                         PRODUCTION/HAR MON I ZATION
communities.                                                                   rights in approximately four Euro-
                                         OF HOLDBACK PERIODS
                                                                               pean countries.
  3. A film finance service could          1. The European governments
assume responsibility for all other      are requested to introduce the
measures as they have an                 French system of support funding
automatic character: increase in             which has an automatic
the distribution guarantees , pro-       character and has proved to be ef-
motion grants , reduction in film        ficient     throughout the Union.
rentals ,   interim financing of ex-     Moreover, the film levy which the
isting contracts, delivery               French Government imposed on
guarantee and world rights               Canal Plus should apply to all pay-
guarantee.                               TV stations in the Union.

                                            2. Regional and national fund-
                                         ing as well as funding from the
                                         Union can be spent throughout
                                         the Union.
25% of 0 production volume of              5.  INTERIM FINANCING,               The costs to be met here by the
ECU 600 million gives a totol of          DELIVERY GUARANTEE AND                European Union are:
ECU 150 million. Estimated losses         WORLD SALES GUARANTEE
of 40% of this total would give an-                                             (a) Interest discount
nual costs amounting to ECU 60            For these services , an organiza-

million, i.e. for five years a total of   tion like EMG would have to hove      With credits over five years and 0
5 x ECU 60 million.                       a stort-up finance of approxim-       rate of interest at 6%, the total in-
                                          ately ECU 100 million over five       terest would amount to ECU
  2. COSTS FOR PRINTS AND                 years for 0 production volume of      14 400. If we work under the
                                          ECU 600 million per annum.            assumption thot 90% of the bor-
                                                                                rowers fulfil the criteria foro dis-
30% of ECU 300 million:                     6. PREVIEWS FOR EXHIBITORS          count in interest, this would mean
               ECU 90 million                                                   1 800 borrowers x ECU 14 400 in-
                                          Contributions to the    costs: ECU    vestment discount, i.e. ECU 25.
  3. REDUCTION OF FILM                      million per onnum, i.e. ECU         million.
RENTALS                                   5 million over five years.

                                                                                (b) Cancellation of the last credit
The box-office revenue of 011 Euro-       8.7. COMPUTER NETWORK                 instalment of 20% from        ECU
peon films is currently about ECU                                               80 000, i.e. 16 000. If we ossume
600 million. Approximotely 12%            According to the Media Solles         that 75% ofthe borrowers fulfil the
of the films produced in the Union        yeorbook, there are approxi"          criteria for the cancellation of the
find 0 distributor in several Euro-       motely 10 600 screensin opproxi-      last credit instalment,     then we
peon countries. Assuming that this        mately 10 300 cinemas in the          reoch on amount of
percentoge will increose to 30%           Union.
thanks to the proposed measures,                                                1 500 borrowers x
the Union would be faced with             If we assume thot 2 500 cinemos       ECU 16000 ECU 24. 00 million
costs amounting to 8% of ECU 180          with approximately 4 000 screens
million, i.e. ECU 14.4 million per        will toke port in the ' Stars of      Totol costs for
annum or, within the period of five       Europe' campoign ond that the         these proposals ECU 25. 92 million
yeors, a total ofECU 72 million.          cost of a terminal can be set at                      ECU 24. 00 million
                                          ECU 3000, then we have 2500 x                           ECU 49. 92 million
8.4. INTERIM FINANCING OF                 ECU3 000, i.e. ECU 7. 5 million        + 10% ad-
PRE- SALES BY TELEVISION                  plus ECU 1 million for the soft-      ministration
STATIONS FOR EUROPEAN                     wore, for the central computer in     fee               ECU 4. 99 million
FILM PROJECTS                             the coordinotion office and for
                                          possible interstations, e.g. in the   Toto I costs      ECU 54. 91 million
A production volume of ECU 600            individual notional exhibitors
 million per onnum results in a total     ossociations.
volume of     ECU 3 billion for five
years.                                                         5 million ECU
                                                               0 million ECU
 If pre-sales controcts ore signed by
                                                Toto I costs 8. 5 million ECU
 Europeon TV stotions for an
 average 25% of the production
 costs , this would omount to con"
 tracts worth ECU 750 million.
                                             8. MODERNIZATION

 If the Union wants to stimulote ac"       If we ossume thot opproximotely
 tivity by providing interim financ-       2 500 cinemos with opproximote-
 ing for these contracts, then 0 bor-      Iy 4 000 screens will take port in
 rowing charge of 5% and term of           the ' Stors of Europe' network and
 30 months would result in 750 x           thot 80% of these, i. e.    2 000
 12. 5%, i. e. ECU 93. 75 million.         cinemas , will submit appJicotions
                                           for credits of an overage     ECU
                                           80 000    to modernize their
                                           buildings , 0 credit volume of ECU
                                           160 million emerges.
 9. NEW CONSTRUCTION                        1st year:             setting up the     11. PROMOTION COSTS FOR
AND COMPLETE RENOVATION                     system                                 CINEMAS IN SMAll COM-
OF CINEMAS                                                                         MUNITIES
                                            2nd year:              30 000 club
If we take an investment of ECU             cards x ECU 12 = ECU 3. 60 million     Expenditure of ECU 4 million per
500 million and borrowing .of 70%                                                  annum should be mode available
of this sum , this gives a total bor-       3rd year:             400 000 club     for this   , i.e. over five years:
rowing of ECU 350 million. If one           cards x ECU 12 = ECU 4. 80 million                                   ECU 20 million
supposes that 75% of the bor-
rowers will fulfil the conditions           4th year:              50 000 club     8.12. COSTS FOR THE REGISTRA-
outlined in Section 3 for a reduc-          cards x ECU 12 = ECU 6. 00 million     TION AND INFORMATION
tion in interest , then this will give us                                          OFFICE AND PRESS SERVICE:
a total borrowing of ECU 262.               5th year:             600 000 club     5 x ECU 800 000
million. With a credit over 10 years        cards x ECU 12   = ECU 7. 20 million
                                                                                                                ECU 4. 00 million
and reduction in interest of 4%,
the costs incurred would be ECU
                                            Total costs ECU 21. 60 million
                                                                                   Costs for ' Cinemagazine
57. million over five years for
                                            + 10% ad-                              12 x ECU 75 000
these reductions in interest. In ad-
                                            ministrative                           x five years                  ECU 4. 5 million
dition, there are administrative
                                            costs              ECU 2. 16 million                     Total ECU 8. 5 million
costs of 10% so that the Union
would be faced with costs of:
                                            + 10% materials!                       Total costs for the                proposed
                                            chipcards          ECU 2. 16 million   measures:
                  ECU 57. 60 million
+ 10% ad-                                   Total costs ECU 25. 92 million
ministrative                                                                       over a period of five years
costs             ECU 5. 76 million                                                              ECU 841. 94 million
Total costs       ECU 63. 36 million

                                                                                   Costs for the extension of the Euro-
                                                                                   pean market                  to Central and
DISCOUNTS                                                                          Eastern Europe over a period of
                                                                                   five years
If the cinema- goers see eight films
                                                                                                                ECU 260 million
per programme card in a quarter
                                                                                   (see Appendix 2)
they will then receive a discount of,
on average, 30% for the next eight
                                                                                   Costs for the support of program-
films. If we base our calculations
                                                                                   mes for the new technologies over
on an average ticket price ofECU
                                                                                   a period of five years
5, then the cost ,   i.e. of discounts
                                                                                                     ECU 300 million
for eight films will amount to:
                                                                                   (see Appendix 3)
eight films x ECU 1.5 , i.e. ECU 12
                                                                                                         Peter Fleischmann
The following costs would be in-
curred for the five years of the                                                                  Babe/sberg,         March   7994
    OTHER                                   The following people met at the                of European cinema which, half a
                                            Babelsberg studios:                            century ago, was the most impor-
MEASURES                                                                                   tant in the world;
                                            . Jean Rozard,             Hans- Robert
1. ' CINEMAGAZINE'          - A               Eisenhauer, ARTE                             (c) the first year of the magazine
TELEVISION MAGAZINE ON                                                                     (1995) should be closely      linked
EUROPEAN CINEMA                                                                            with the commemoration of the
                                            . Heinz Ungurcit,           Hans Peter
The Babelsberg European                       Kochenrath , ZDF                             first 100 years of cinema;
Audiovisual Centre suggested to
                                                                                           (d) film directors and officials from
ARTE ,   ZDF and other European             . JOQO Correa ,          Jacques Deray,
                                              Costas Ferris Peter Fleisch-                 ARTE and ZDF should cooperate
film-makers the creation of a
                                              mann , Denis Granier- Deferre,               closely on the making of each pro-
television magazine on European
cinema with a view to:                        Robbe de Hert, Pavellungin , Et-             gramme;
                                              tore Scola , European directors
(i) stimulating the interest of
                                                                                           (e) the programme should          be

                              cinemaj                                                      made on the . studio lot itself, in
      viewers in European                   . Martin Blaney, Screen Interna-
                                                                                           order to generate a creative
(ii) making film events, artists              tional.
      and directors of the various
                                                                                           framework around the meetings;
      countries better       known in       Unanimous           agreement            was
                                                                                           (f) under the direction of one ARTE
      neighbouring countriesj               reached on:
                                                                                           official, a different director or ac-
(iii) helping to rediscover           an
                                                                                           tor can take charge of each of the
      essential and glorious history        (i) the need for such a            maga-
      of cinema which is little known
      by the younger generation             (ii) its   length: 60 minutesj
                                                                                           (g) those who have participated in
      as preparation for 1995,              (iii) its periodicity: monthly;                making the programme will pre.
      when cinema will celebrate its        (iv) its start-up date: 1 January
      first 100 years;                                                                     sent the programme to viewers
                                                  1995 (a pilot film and two               themselves. They could be film-
(iv) and finally, to use this                     thematic films must be pro-              makers, actors, producers, jour-
     magdzine to help win back                    duced in 1994);
     the European market for our                                                           nalists, heads of film archives, or
                                            (v) its goal: to stimulate               the
                                                                                           members of comparable profes-
      films.                                      distribution of European films           sions such as writers, painters,
                                                  in Europej                               scientists, etc. but all of them must
At the Centre s initiative, a group         (vi) its content: to talk           about
of European directors, brought
                                                                                           be fired by the same passion for
                                                  cinema in an enthusiastic                the cinema;
together by the FERA, discussed                   way, focusing, but not
this project for the firsttime during             exclusively, on European                 (h) to give the programme a more
    meeting of film directors in                  cinema.                                  direct and dynamic chdracter, it
Viareggio from 1 to 3 October
 1992.                                                                                     would be good to have non- pro-
                                            The following proposals              were      fessionals in the round-table
                                             made:                                         discussion. It was proposed to go
On 2 and 3 October           1993 ,   the
                                                                                           to European secondary schools
Centre invited European directors
                                             (a) the magazine should be dif-               and select groups of pupils who
and officials from ARTE and ZDF
to discuss the possibility of carry-
                                            ferent from other film magazine                are particularly interested in
                                            programmes currently broadcast                 cinema and are prepared to
ing out this project as well as the
                                            by European channels which are                 broaden their knowledge of Euro-
 structure and content of such         d
                                            directly linked to the release of               pean cinema. These groups could
 magazine.                                                                  filmsj
                                             new (mostly American)                          be chosen through      competitions
                                                                                            organized by the film and tele-
                                             (b) the magazine should present                vision trade press;
                                             and make popular the work of ac-
                                             tors and creative artists; it should
                                             inform about current movements
                                             and trends in European cinema
                                             talk about one-off but significant
                                             film events ,           and   recall the
                                             historical importance and richness
(i) the structure of each individual     The prerequisite for this is transpa"   Funds amounting to approxim-
programme should be simple               rent accounts. Therefore,        the    ately ECU 20 million per annum
although thereoughtto be certain         cinemas of Central and Eastern          should be made available for this
permanent features          to help      Europe wonting to programme             programme, i.e. over a period of
develop a recognizable image.            European films should be linked         five years ECU 100 million.
                                         up to the European computer net-
For example, one proposal from           work of the cinema coordination
John Crome was:                          office. The computer terminals          3. NEW TECHNOLOGIES
10 minutes: ' News ' (What's new         should be made available to these       The new audiovisual technologies
in European cinema?)                     cinemas at no charge.                   are on the advance. The few Euro-
20 minutes: ' Off the wall' (round-                                              pean hardware manufacturers in
table interviews and/or program-         Funds needed: approximately
                                         ECU 10 million
                                                                                 this field are poorly equipped for
mes on selected themes)                                                          the impending economic competi-
lS minutes: ' Profile' of a move-        Moreover, European companies            tion , although they are, in part
ment, actor, film-maker, etc.            should receive support from the         the fore of technologkal develop-
10 minutes: ' Cinema s first 100         Union if they embark on joint ven-      ment with their prototypes. They
years                                    tures to   become co-owners of          should be supported in their
S minutes: on film politics (distribu"   cinemas in the countries of Central     efforts.
tion, finance, GATT, meetings)           and Eastern Europe.
                                                                                 The production of programmes
                                         As in Western Europe, the support       for these new technologies has
2. EXTENSION OF THE                      should be given in the form of
EUROPEAN MARKET TO                                                               been largely neglected in Europe
                                         credits for the   modernization of      until now. The professional pro-
                                         the cinemas, with a reduction in in-    gramme manufacturers -   largely
                                         terestforthe years where a. certain
The Amerkan majors provide the                                                   scattered and almost all, without
                                         percentage of European films was        exception, having to cope with
cinemas of Central and Eastern
                                         programmed. The same should             economic difficulties -          it is too
Europe with their best products.                                                                           feel
                                         apply for the reconstruction of
                                                                                 much for them to experiment in
                                         cinemas by the joint ventures.          this field.     Smaller    extremely
They pay for prints and advertis-
ing as well as the dubbing for           It is proposed that, as part of the     capable and highly         motivated

these films and offer the films at       modernization      the
                                                              European           high-tech programme manufac.
                                                                                 turers keep their heads above
    greatly reduced minimum              system lC Concept should be in-
guarantee.                               troduced for the cinemas which
                                                                                 water with contracts for industrial
                                         join the network of European            advertising and are not financially
There are hardly any large com"          cinemas, as the sound systems
                                                                                 strong enough to carry out ex-
panies in Europe that can make           these cinemas will have to
                                                                                 perimental productions.              The
similar offers. Therefore, the Euro-     renewed in any case and this            research ministers of most of the
pean Union should intervene with         system allows the     screening of      European countries do not con-
support measures to get access to                                                sider themselves responsible for
                                         prints in different language ver-
the markets       of Central and         sions. The versions could either be     the production of software.
Eastern Europe for European              produced in the country itself or at
films.                                                                           It is , therefore, a matter of urgency
                                         one of the West European produc-
                                         tion centres.                           that the European Union should
Funds needed: approximately                                                      provide funds to support the pro-
ECU 12 million per annum, i.             Funds needed for modernization          duction of experimental program-
over a period of five years              meaSures: approximately ECU 18          mes for the new audiovisual
                     ECU 60 million      million per annum , i.e. over           technologies.
                                         period of five years
                                                             ECU 90 million      According to our calculations, at
                                                                                 least ECU 60 million per annum
                                         It is proposed that a cooperation       i.e. ECU 300 million , forthe period
                                         programme for joint East-West           of the next five years    , should be
                                         productions be established in           made available.
                                         order to   stimulate the growing
                                         together of the film markets of
                                         Western, Central and Eastern
                          Figure 1

                BY ORIGIN
Aggregate results for six countries
(Denmark , France, Germany, Italy,
              Netherlands , Spain)
                          (point 1)



                                          1960   1965   1970   1975   19BO   19B5   1990

                            Figure 2    100

                            (point 1)



                                                 1965   1970   1975   19BO   19B5   1990
                                 Figure 3     100

                                (point 1)




                                                1960      1965          1970      1975          19BO     19B5      1990

                               Figure 4a 2 000
      (MilLIONS) BY ORIGIN OF 1 500
  Aggregate results for four countries
(Francf3, Germany, Italy, Netherlands)
                                 (point 4) 1 000



                   European     -.6.--
                                                1960   1961      1962    1963   1964     1965     1966   1967   196B      1969

                                Figure 4b 1 400
                                   FilMS 1000
   Aggregate results for six countries
   (Denmark , France, Germany, Italy,
                 Netherlands, Spain)
                                 (point 4)    600

                   National            III

                                                1970   1971   1972      1973    1974     1975     1976   1977   197B      1979
                             Figure 4c 1 000
Aggregate results for six countries       600
(Denmark, France, Germany, Italy,
              Netherlands, Spain)
                             (point 4)



                European         ..6.

                                            19BO 1981 1982 1983 19B4 19B5 19B6 19B7 19BB 19B9 1990 1991 1992

                              Figure 5    400

   (MilLIONS) BY ORIGIN OF                300

                             (point 4)


                   French                  100


                European         ..6.

                                            1960       1965   1970      1975      19BO     19B5    1990

                              Figure 6

                              (point 4)




                                                1960   1965    1970     1975      19BO     19B5      1990
                                   Figure 7

           INVESTMENT IN FilM
                  OFFICE TAKINGS
                     (LIT MilLION)
                                   (point 6)

       Box office takingsffotol

Box office tokings/ltalian films

              Production costs        J..

                                   Figure 8 5000

         INVESTMENTS IN FilM 4000
                  OFFICE TAKINGS
                        (FF MilLION) 3000
                                   (point 6)


       Box office takingsffotal                1000

Box office takings/French films

              Production costs
                                                  19BO 1981 19B2 1983 19B4 19B5 19B6 19B7 19BB 19B9 1990 1991 1992

                                    Figure 9    400

TELEVISION SETS AND VIDEO                       300


           Cinema admissions

                 Television sets

               Video recorders
                                                  1950    1955   1960   1965   1970   1975    19BO   19B5   1990
                       Figure 10 1000
TElEVISION SETS AND               800


 Cinema admissions                200

     Television sets

   Video recorders
                                    1950   1955   1960   1965   1970   1975   1980   1985   1990
                    TELEVISION (in

                    $olJrce:   Medio Business School. Analysis of main TV progromming at prime time.
                    Week 17- 24 May 1993.


         France 2                                    USA                   Europe                 France
                    Monday                            55.                                              44.
                    Tuesday                                                                            100
                    Wednesday                                                                          100
                    Thursday                          36.                                              63.
                    Friday                                                                             100
                    Saturday                                                                           100
                    Sunday                                                                             100

         France 3                                    USA                   Europe                 France
                    Monday                                                                             100
                    Tuesday                                                                            100
                    Wednesday                                                                          100
                    Thursday                                                 63.                       36.
                    Friday                                                                             100
                    Saturday                                                                           100
                    Sunday                                                                             100

                                                     USA                   Europe                 France
                    Monday                                                                             100
                    Tuesday                           52.                                               47.7
                    Wednesday                                                                          100
                    Thursday                                                 45.                        54.4
                    Friday                                                                             100
                    Saturday                          74.4                                              25.
                    Sunday                                                                             100

                                                     USA                   Europe                 France
                    Monday                            88.                                               11.7
                    Tuesday                           31.1                   41.7                      45.
                    Wednesday                         19.                                               80.
                    Thursday                          19.                                               80.
                    Saturday                          74.                                               25.
                    Sunday                            75.                                               24.4

            BBC                  USA    Europe
                     Monday                      100
                     Tuesday     30.              69.
                     Wednesday                   100
                     Thursday                    100
                     Friday      33.4             66.
                     Saturday    31.5             68.
                     Sunday      30.              69.

            BBC2                 USA    Europe
                     Monday                      100
                     Wednesday                   100
                     Friday                      100
                     Saturday    29.4     22.     47.
                     Sunday      24.              75.

     ITV (Carlton)               USA    Europe
                     Monday                      100
                     Tuesday                     100
                     Wednesday   58.              41.7
                     Thursday                    100
                     Friday                       92.
                     Saturday    28.              71.1
                     Sunday                      100

        Channel                  USA    Europe
                     Monday      23.              76.
                     Tuesday     36.              63.
                     Wednesday    14.             85.
                     Thursday    37.              62.
                     Friday      23.              76.4
                     Saturday                    100
                     Sunday       35.             64.

BSkyB(Sky One)                   USA    Europe
                     Monday      100
                     Wednesday   100
                     Thursday     80.     19.
                     Friday       89.             10.
                     Saturday    100
                     Sunday       65.     34.4

            TVE                  USA   Europe   Spain
                     Monday      22.             77.
                     Tuesday     24.             77.
                     Wednesday   19.             80.
                     Friday      19.             80.
                     Saturday                   100
                     Sunday      36.             63.

            TVE2                 USA   Europe   Spain
                     Monday                     100
                     Tuesday     59.             40.
                     Thursday    53.             46.
                     Friday      29.             70.
                     Sunday                     100

        Telemadrid               USA   Europe   Spain
                     Monday      47.             52.4
                     Tuesday     47.             52.
                     Wednesday                  100
                     Thursday                   100
                     Friday      43.             56.
                     Saturday                   100
                     Sunday                     100

            Tele                 USA   Europe   Spain
                     Monday                     100
                     Wednesday   53.             46.
                     Friday      49.             50.
                     Saturday    66.             33.
                     Sunday                     100

         Antena                  USA   Europe   Spain
                     Monday                     100
                     Tuesday                    100
                     Friday      22.             77.
                     Saturday    82.             17.
                     Sunday      38.             61.2

          RAI                  USA     Europe   Italy
                   Monday                       100
                   Tuesday     43.               56.
                   Wednesday                    100
                   Thursday             80.
                   Friday                       100
                   Saturday                     100
                   Sunday                       100

          RAI2                 USA     Europe   Italy
                   Monday                27.     72.
                   Tuesday                      100
                   Wednesday   44.4              55.
                   Friday                       100
                   Saturday    79.               20.4

          RAI3                 USA     Europe   Italy
                   Monday                       100
                   Tuesday     31.3              68.
                   Wednesday   37.               62.
                   Thursday                     100
                   Friday      41.2              58.
                   Saturday    58.       18.     23.
                   Sunday      66.               33.4

        Canale 5               USA     Europe   Italy
                   Monday                       100
                   Tuesday     76.4              23.
                   Wednesday                    100
                   Thursday                     100
                   Friday                       100
                   Saturday                     100
                   Sunday       82.               17.

         Ifalia                USA     Europe   Italy
                   Tuesday                      100
                   Wednesday    63.               36.
                   Thursday     62.               37.
                   Friday       55.               44.
                   Saturday     88.               11.
                   Sunday       46.4              53.
RETE 4               USA    Europe    Italy
         Monday      100
         Tuesday     100
         Wednesday   100
         Thursday     94.
         Friday      100
         Saturday     57.              42.

  ARD                USA    Europe   Germany
         Monday                       100
         Wednesday                    100
         Thursday                     100
         Friday                       100
         Saturday     28.              71.5
         Sunday                       100

  ZDF                USA    Europe   Germany
         Monday                       100
         Tuesday                      100
         Wednesday            39.4     60.
         Thursday                     100
         Friday                       100
         Saturday                     100
         Sunday                        100

 SAT                 USA    Europe   Germany
         Monday                        100
         Tuesday                       100
         Wednesday            18.       81.9
         Thursday     84.               15.
         Friday       44.               55.
         Sunday                        100

   RTl               USA    Europe   Germany
         Monday                        100
         Tuesday      22.               77.
         Wednesday    43.               56.
         Thursday     57.               42.
         Friday                        100
         Sunday                        100

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