Industry Report: Financing
Panorama of the film financing in Germany I: Introduction and national support
by Julio Talavera Milla
14/06/2010 - 1.- Introduction
The public film funding structure of a country is linked to the structure and organization of the State. It is especially true in the case of Germany, where the task of supporting the cinema industry is equally shared by the national and the regional Governments, with an overall allocation of Euro 308M in 2009. At a regional level the regions (Länder) have set up individually or in partnership with other regions different regional cinema boards fostered by their respective regional broadcasters and local Governments. At a national level there are two main institutions: the Federal Cinema Board (FFA) and the Federal Commissioner for Culture and Media (BKM). Also at a national level we can find the Kuratorium Junger Film, with a marginal budget of Euro 750k a year for new talents. The usual funding applications’ chronology begins with the regional funds; after which national support is to be applied for. The TV channels’ mandatory investment is regulated by the Agreement on Broadcasting among the German regions (Rundfunkstaatsvertrag), that transposes the rules established by the AVMSD as a general framework, without concrete specifications on the proportion of investment out of the annual income of the channels.
2.- FFA. German Federal Film Board
The Filmförderungsanstalt is the German Federal Film Board. It is a public independent institution established in 1968. The rules governing FFA and the cinema regulation and support in Germany are established every five years by the Cinema Support Act (Filmförderungsgesetzt). FFA has three different income sources, each of which contributes approximately a third of the yearly income, estimated in Euro 72,7M in 2008, out of which 68,62M went to film support schemes. The cinema theatres are obliged to contribute with between 1,8% and 3% of the revenues of each cinema ticket -depending on the overall income volume of the theatre(s). The law also fixes a similar contribution of the video industry. Depending on the volume of sales of the company, between 1,8% and 2,3% of the turnover goes to FFA. The third income source are the private and public broadcasters, with each of which FFA signs agreements on a four years basis for financing the cinema industry.
|Breakdown of the main schemes:|
|SCHEME||GRANTED (in €)|
|Cinema Theatres selective support||3.725.000|
|Cinema Theatres automatic support||2.718.000|
|Festivals, promotion, training, others||6.900.000|
|Source: FFA 2009|
There are schemes for screenplays, short films, distribution, advertising of feature films on TV…, but the two main programmes are for film production support:
The selective support (Projektfilmförderung) generally represents 10% of the budget of a film and is to be granted up to Euro 1M. The allocated amount for this scheme is around Euro 15M and it has the form of a repayable soft loan -without interest- to be reimbursed during the ten years following the first release in Germany depending on the revenues of the film. The producer is free of repayment up to a revenue equivalent to 5% of the production cost of the film. After this point 50% of the producer’s share on the income will be used to reduce the debt until it has been fully repaid.
FFA establishes some ceilings to the qualifying budget: The overheads cannot exceed 7,5% of the budget, the financing cost has a top of 8% of the budget; the same percentage applies for the security reserve. The producer’s fee has a ceiling in 2,5% of the budget up to Euro 125k. In addition, the producer’s own investment must be at least 5% of the qualifying budget. The money given back is automatically (without evaluation of any kind) at disposal of the producer to be invested in a new project within two years following the granting of the loan.
The automatic support (Referenzfilmförderung) is granted to producers depending on the success of a film (film of reference) for the development or production of a new film. Two ways are used to determine said success: from one side the reached amount of theatre attendants; from the other side, the nomination or awarding of prizes at international festivals (Cannes, Berlin, Venice…) as well as of Film Awards (Oscars, German Film Prize, European Film Prize…). According to these two parameters each film obtains a final amount of points that will determine the percentage of the allocated amount (around Euro 15M) granted to each film.
3.- BKM: Beauftragter der Bundesregierung für Kultur und Medien
The Federal Government Commissioner for Culture and Media is a member of the Parliament appointed to coordinate the few national actions in the fields of culture and media that are competence of the Federal Government. There are two action lines: the culture-oriented film support schemes and prizes and the economy-oriented DFFF. BKM’s overall allocated amount for cinema in 2009 was estimated at Euro 90M.
DFFF (Deutscher Filmförderungsfonds) is the German Federal Film Fund. It was created in 2007 with an annual allocation of Euro 60M for a period of three years. A couple of months ago an extension was approved for another three years. Even if it is not named a tax relief and it is not managed by the Federal Treasury, it has the same philosophy as other European tax reliefs. As a matter of fact the launching of the fund was the response to the calling off of the former German tax shelter (the so called German stupid money).
The measure was set up to foster Germany as a film location, to develop cinema industry facilities and to create and guarantee jobs within the industry, by attracting local and foreign productions to shoot or post-produce in Germany. Nevertheless the application has to pass a cultural test to guarantee a minimum of creative participation. Up to 20% of the qualifying production expenditure in Germany is to be granted. In order to apply the producer has first to achieve at least 75% of the budget and involve a German distributor that guarantees a national release with not less than 30 prints. Furthermore, at least 25% of the budget must be spent in Germany (20% for big productions, with budgets above Euro 20M). The minimum film budget is Euro 1M, nevertheless this requirement has been derogated for the 2010-2012 period. The applicants must have either a German production company or a European one with a branch office in Germany, and have produced at least a widely released film in the last five years. A German language version is to be delivered.
By July 2009 DFFF had supported 221 productions. The budget was almost completely exhausted, with euro 136M granted to productions with an overall qualifying spend in Germany amounting to roughly Euro 850M.
In addition to the DFFF expenditure, Euro 30M go to the different support schemes, prizes and fostering of institutions and foundations. There are BKM’s support schemes for film production, promotion, distribution, children’s films, screenplays… These schemes are clearly culture-oriented measures. For instance, the film production scheme is conceived for low budget projects (up to Euro 2,5M), with a ceiling of Euro 250k and an allocated amount of Euro 2,5M shared among 32 films in 2008. BKM also awards different cinema prizes for the best distribution strategy, screenplay, programming of a cinema theatre, short film, feature film, etcetera. The German Film Archive is granted every year with roughly Euro 9M and several national or international institutions are participated and co-financed by BKM (European Film Academy, European Film Promotion…). Actions linked to the preservation of the cinema heritage or the organization of festivals and symposia complete the list of fields backed by the BKM.
Julio Talavera Milla