access to finance for the european audiovisual sector: from media programme to creative europe

ec.europa.eu/culture/media

Olga Sismanidi Selection Coordinator

Access to Finance i2i AUDIOVISUAL

EIPA seminar on microfinance11 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 EUROPEAccess to Finance

€ 400 M

€ 755 M


The European Audiovisual Sector

Structural WeaknessesFragmentation of the markets Vicious circle of under-investment Under-capitalization of companies Micro-SMEs with little assets

Finance related Inherent high risksLimited access to / high cost of financeFew specialist financial institutionsDifficulty in raising private financeSMEs short term investment view


MEDIA Plus 2001-2006Growth 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 objectivesEuropean cultural and linguistic diversityCirculation 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 AudiovisualAims 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.

Average figures


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 valueeasy 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

http://www.audiovisualsgr.com/default.asp

http://www.ifcic.fr/


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 industryMedia 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 Europe2014-2020

Cross-sectoralFinancial Instrument (CCS Guarantee Fund)

€ 1.8 bn

Music, publishing, heritage, etc

Commission proposal

Cinema, TV, video games

55%

15%

30%

http://ec.europa.eu/culture/index_en.htm


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

http://ec.europa.eu/culture/index_en.htm


CCS Guarantee Facility – 2 pillars

Guarantee Rate on a loan by loan basis

FIFI

Guarantee Cap Rate

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: x5,7Example: 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 MANAGERMost probablyEuropean Investment Fund

Eu Level Funding

Eu Debt Platform

Debt Instrument

Financial Intermediaries

Final Beneficiaries

EUROPEAN COMMISSIONCreative 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

Capacitybuilding

programme

CAPACITY BUILDING

PROVIDERS

Risk sharing through loanguarantee

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”.

SMEsMicro, 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”.


Eligibility Criteria (2)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).


Eligibility Criteria (3)

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 Financei2i AUDIOVISUAL ec.europa.eu/culture/media/fundings/independent-producers/i2i-audiovisual/

index_en.htmMPGF ec.europa.eu/culture/media/fundings/production-guarantees/index_en.htm Creative Europe Programmeec.europa.eu/culture/creative-europe FAQs on Guarantee Facilityec.europa.eu/culture/media/media-content/creative-europe/

faq_ccs_financial_instrument_july2012_final.pdf


Questions?

European [email protected]

EACEA [email protected]

MEDIA Desks

access to finance for the european audiovisual sector: from media programme to creative europe

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