Access to Finance for European Audiovisual Sector

ec.europa.eu/culture/media
Olga Sismanidi
Selection Coordinator
Access to Finance i2i AUDIOVISUAL
EIPA seminar on microfinance
11 December 2012
Access to Finance
for the European Audiovisual Sector
from MEDIA to Creative Europe

Outline
 MEDIA Plus Programme (2001-2006)
 Growth and Audiovisual: i2i Audiovisual
 MEDIA 2007 Programme (2007-2013) –
Access to Finance
 i2i AUDIOVISUAL
 MEDIA Production Guarantee Fund
 Creative Europe Programme (2014-2020)
 Cultural and Creative Sector Guarantee Facility

MEDIA to CREATIVE EUROPE
Access to Finance
€ 400 M
€ 755 M

The European Audiovisual Sector
Structural Weaknesses
Fragmentation of the markets
Vicious circle of under-investment
Under-capitalization of companies
Micro-SMEs with little assets
Finance related
Inherent high risks
Limited access to / high cost of finance
Few specialist financial institutions
Difficulty in raising private finance
SMEs short term investment view

MEDIA Plus 2001-2006
Growth and Audiovisual: i2i Audiovisual

MEDIA 2007 Implementation
EACEA set up in 2006
 Preparing and launching Calls for Proposals
 Evaluation and pre-selection of applicants and projects
 Contracting and signing project agreements
 Monitoring of projects and communicating with and
providing information to beneficiaries
 Contribution to European Knowledge and expertise.

MEDIA 2007
General objectives
European cultural and linguistic diversity
Circulation and viewership of European audiovisual works inside -
outside the European Union
Competitiveness of the European audiovisual sector
Access to Finance: i2i Audiovisual
 Cross cutting activity
 Spreading of business culture
 Facilitating private investments
Facilitates access to film financing for independent
EU production SMEs by supporting the side costs
of private financing and/ or guarantees required by
credit and/or financial institutions against the risks
associated with the (co) production of audiovisual
works.

MEDIA 2007
Access to Finance: i2i Audiovisual
Aims to accelerate the financing of the production and to reinforce the
rights of the independent European production companies on these
projects, and as such to facilitate their exploitation into the future.
easy and improved use of financial products
reduction of access barriers to financing
encouragement of financial institutions
to participate in the production process

i2i Audiovisual – level of support
 Annual Call for Proposals
 2 opportunities for
submission
 € 3M
 50% or 60% (low audiovisual capacity
countries) of the eligible financial costs
 min € 5,000, capped at € 50,000 per
project
 € 100,000 per company

I2i Audiovisual – Annual Output
 Co-financing 80-85 projects
with production value of €
500 M
 65 co-productions with 260
country participations
Or
 Benefits 340 SMEs, directly
80-85 SMEs & indirectly 260
SMEs
 € 1.5 M grant awards, co-
financing the side costs of
€ 80 M credits
 € 1.5 M for associated
insurance costs and
completion bonds.
Averagefigures

Grant allocation 2007-2011
 M3: 53% or € 7.7 M
for the financing
costs generated
by € 416 M of
credits
 M1+ M2: 47% or €
6.7 M for
associated
insurance costs
and completion
bonds
i2i Audiovisual added value
easy and improved use of financial products

Split-down of grant awards 2007-2011
Direct support to AV
SMEs
reduction of access barriers to financing

Type of projects 2007-2011
Transnational cooperation – cultural diversity

Objectives
 To support and facilitate the access of European
film producers to bank credits
 Encourage banks to grant loans to producers by
discounting contracts in view of cash-flowing
productions
Instrument
 Guarantee fund
 Share with banks the risk related to loans made
to producers
 Leverage effect
MEDIA Production Guarantee Fund

MPGF - How it works
EU Budget
MPGF
€ 8 M
Audiovisual SGR
IFCIC
Producer 3 Producer 4
Film X
€ 2 M
Producer 5 Producer 6Producer 1 Producer 2
Film Y
Film Z
€ 10 M
European independent producers ask for a credit to their local
bank who in turn applies for MPGF guarantee

 Guarantees: 18
 Value of guarantees: € 10 M
 Value of credits: € 18 M
 Producers in 7 different countries (4 banks)
MPGF activity to date
Indirect support to AV SMEs

The EU Cultural and Creative Sectors
 1.400.000 SMEs in the EU (7% of SMEs)
 € 566 billion turnover (4.5% of EU GDP)
 8,500,000 jobs (3.8% of EU workforce)
14% annual growth 2002-2008 in the world
creative industry
Media and Entertainment industry will be
injecting $ 2,200 bn in the world economy in 2012
(PwC)

Creative Europe Objectives
General Objective
 Foster the safeguarding and promotion of the European cultural and
linguistic diversity
 Strengthen the competitiveness of the CCS with a view to promoting
smart, sustainable and inclusive growth
Specific objectives
 Support the capacity of the European CCS to operate transnationally
 Promote the transnational circulation of CC works and operators and
reach audiences in Europe and beyond
 Strengthen the financial capacity of the CCS (SMEs)
 Support transnational policy cooperation in order to foster policy
development, innovation, audience building and revenue streams

Creative Europe 2014-2020
MEDIA Culture
Market Intelligence, Cultural and Media Literacy, etc
Creative Europe
2014-2020
Cross-sectoral
Financial Instrument (CCS Guarantee Fund)
€ 1.8 bn
Music, publishing,
heritage, etc
Commission proposal
Cinema, TV, video
games
55%
15%
30%

 Guarantee facility to share credit risk
 With banks investing in portfolios of loans
 To organisations operating in the CCS
 Transnational capacity-building / expertise for
banks: non-financial leverage
 Transition from grants to loans where possible
 Managed by the European Investment Fund
 € 200 million fund raising credits for up to € 1
billion to the benefit of SMEs in CCS (as per
current Commission proposal)
CCS Guarantee Facility

CREATIVE EUROPE
Training
• Finance
• Management
• Investment readiness
Networking
• Access to market
• Co-production forums
CCS SMEs and
professionals
•Capacity building
•Networking
•Technical support
Banks
Guarantee Facility
• Fund € 200 M
• Multiplier of 5,7
• Up to € 1 bn of bank
loans
• Capped guarantee
portfolios
CCS Guarantee FacilityMEDIA and Culture
Capacity Building Risk sharing
Dialogue
Creative Europe
2014-2020

CCS Guarantee Facility – 2 pillars
Risk retained by the
Financial
Intermediary
Guarantee coverage
of 70% on a loan by
loan basis
70%
25%
 Capacity Building to Financial Intermediaries, to
provide expertise on CCS financial specificities
 Credit risk protection to Financial Intermediaries
building portfolios of loans in the CCS.
 Guarantee Rate: 70% (loan per loan basis)
 Guarantee Cap Rate on the portfolio: 25%
 Leverage: x5,7
Example: A Financial Intermediary creates a new
portfolio of CCS loans of €10 m.
If a loan of an outstanding amount of 100.000€
defaults, the guarantee would cover 70%*100.000€=
70.000€.
The Guarantee Facility would cover losses of the
Financial Intermediary in the CCS loans portfolios up
to: 10m*70%*25%=€1,75m

CCS Guarantee Facility – Set up
FUND MANAGER
Most probably
European Investment Fund
Eu Level Funding
Eu Debt Platform
Debt Instrument
Financial Intermediaries
Final Beneficiaries
EUROPEAN COMMISSION
Creative Europe Programme
EUROPEAN
INVESTMENT BANK
€€
EU CULTURAL AND CREATIVE SECTORS LOAN GUARANTEE FACILITY
Bank 1 Bank 2 Bank 3 Bank n
CCS
SME
CCS
SME
CCS
SME
CCS
SME
CCS
SME
CCS
SME
CCS
SME
CCS
SME
Capacity
building
programme
CAPACITY
BUILDING
PROVIDERS
Risk sharing
through loan
guarantee
SET UP OF THE EU CCS GUARANTEE FACILITY
€

CCS GF Process

Eligibility Criteria (1)
CCS
“all sectors whose activities are based on cultural values and/or artistic and
creative expressions, whether these activities are market or non-market
oriented and whatever the type of structure that carries them out. These
activities include the creation, the production, the dissemination and the
preservation of goods and services which embody cultural, artistic or
creative expressions, as well as related functions such as education,
management or regulation”.
SMEs
Micro, small or medium-sized enterprises (“SMEs”) as defined in the
Commission Recommendation 2003/361/EC
“Enterprise with less than 250 employees and having a turnover of less
than EUR 50 million or total assets less than EUR 43 million; also not
belonging to a group exceeding such thresholds”.

CCS
At least one of the following eligibility criteria is met:
 Use of loan for the development of a CCS project evidenced by the
business plan, OR
 SME NACE
At least one of the following sub-criteria:
 Active in the field of the CCS.
 One or more CCS projects developed by the SME has(ve) received
grants/loans/funding/guarantees from CCS European or CCS national
institution or CCS association including those of the EU´s Creative
Europe Programme (MEDIA and Culture).
 One or more CCS projects developed by the SME and/or the project
promoter/team has(ve) been awarded a CCS prize.
 The SME and/or the project promoter/team have filed copyrights,
trademarks, distribution rights or any other equivalent rights in the field
of CCS.
 The SME falls under the eligibility criteria for the EU´s
Creative Europe Programme (MEDIA and Culture).

Loans
Collateral: no tangible collateral
 IPRs assessment and when possible as collateral.
Purpose of financing: (1) investment in tangible assets and investment in
intangible assets, and/or (2) business transfers, and/or (3) working capital.
Fixed repayment schedule.
Up to EUR 2 M.
Maturity of 12 - 84 months.
Currency: EUR and local currency.

CCS GF – Capacity Building
 Expert services to the Financial Intermediaries signing a CCS Guarantee
Facility Agreement.
 Culture related agencies, guarantee institutions, banks, experts or
consultants.
 “CCS Specialist Team” within Financial Intermediaries: risk specialists,
officers/managers/front-office employees dealing with CCS clients, and/or
other employees.
 CCS Business Development Package by EIF.
 Capacity Building periodic reviews for information sharing and best
practices.

Creative Europe – Next Steps
 Ongoing: Parliament and Council negotiations
on EU budget 2014-2020 and the Commission
proposals for future spending programmes
 2013: Planned adoption by the European
Parliament and the Council of the EU
 2014: Launch of the Creative Europe Programme

More information
 MEDIA Programme Access to Finance
i2i AUDIOVISUAL
ec.europa.eu/culture/media/fundings/independent-producers/i2i-
audiovisual/index_en.htm
MPGF
ec.europa.eu/culture/media/fundings/production-guarantees/index_en.htm
 Creative Europe Programme
ec.europa.eu/culture/creative-europe
 FAQs on Guarantee Facility
ec.europa.eu/culture/media/media-content/creative-
europe/faq_ccs_financial_instrument_july2012_final.pdf

Questions?
 European Commission
eac-access-to-finance@ec.europa.eu
 EACEA
eacea-P8-i2i@ec.europa.eu
 MEDIA Desks

Access to Finance for European Audiovisual Sector

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