New Cinema Communication adopted

Following a protracted consultation process over a period of several years, the Commission has today adopted a new Cinema Communication. This replaces the 2001 Cinema Communication that was repeatedly prolonged and which expired, finally, at the end of last year. In the interim period, aid schemes have been approved by the Commission on the basis of the principles and criteria in the old Communication, but requiring the Member State to modify the schemes if required as a result of a change under the new Communication (see for example the decision on the UK’s high end television tax relief scheme, adopted in March 2013).

The new Communication closely reflects the revised draft published for consultation in May 2013. It will apply from the day after its publication in the Official Journal, and Member States are requested to bring their existing schemes into line with the Communication within 2 years of that publication date.

The main changes under the new Communication are described in the Commission’s press release IP/13/1074 as well as an FAQ document also published today to accompany the Communication: MEMO/13/993. In short:

  • The new Communication now covers all phases of production of an audiovisual work, from script-writing and development through to distribution and promotion. It also includes aid for the modernisation of cinemas (including digitisation), but does not include video games.
  • There are no limits, in principle, on the aid that may be granted for script-writing and development, or for difficult audiovisual works such as short films and low budget works. Apart from difficult works, the aid intensity must be limited to 50% of the production budget, increasing to 60% for cross-border productions funded by more than one Member State and involving producers from more than one Member State.
  • Territorial spending conditions may still be imposed. But the old rule allowing Member States to impose a requirement that up to 80% of the production budget be spent in their territory has been removed. In its place is a more complex provision that allows Member States to require that 160% of the aid amount to be spent in their territory, or (alternatively) to calculate the aid amount as a percentage of the expenditure on production activities in that Member State. In both cases, a minimum level of production activity may be required as a condition of aid eligibility, which can be up to 50% of the overall production budget. In all cases however the territorial linking is not permitted to exceed 80% of the overall production budget. 
  • In line with what seems to have become the Commission’s standard practice, the Communication introduces transparency rules requiring publication of details of approved aid schemes, including the names of aid beneficiaries and the aid amounts.

UKSALA is currently planning a seminar to discuss the new Cinema Communication and other aspects of State aid in the media sector. This is likely to take place early next year, and will provide a timely opportunity to reflect upon the implications of the new rules.

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