Building sustainable film businesses: the challenges for industry

Role of Broadcasters 

Until fairly recently, Brazilian broadcasters have 

not directly invested in film production. Globo 

Filmes, the film arm of broadcast giant Globo, 

mostly provides free TV publicity for the projects it 

backs, rather than financial investment, although 

its influence is credited in some quarters with 

the production of more commercial fare, and the 

crossover of high-profile TV stars to the big screen. 

It also supports the main festivals and events of 

national cinema.

However, the introduction of Article 3A in the 2008 

Audiovisual Law has resulted in a significant increase 

in broadcaster investment into films. This allows 

broadcasters to divert 70 percent of the tax levied 

on payments for foreign programming into local film 

or TV production. 2010 was the first year in which 

the law into full effect, raising about €17.6 million for 

production. 2010 being a Football World Cup year, 

Globo’s payments for foreign TV rights were higher 

than normal – ordinarily, the firm expects annual 

investment of around €5-6 million.

Key Conclusions 

The Brazilian system sustains a constant volume of 

production by providing tax incentives to attract 

finance from private investors and from industry 

partners, such as local broadcasters and foreign 

distributors. This combines with state regulation of 

the market, which is intended to protect investors 

rather than to drive an overt cultural agenda. The 

Audiovisual Sector Fund and the Funcines are 

designed to support production companies with 

sound business plans making films with widespread 

public appeal. The complexity of this system 

though is criticised, and the entire industry is highly 

dependent on state support, potentially leaving it 

vulnerable in the event of political change.

12.3 

France

Summary

Country indicators:

OUTPUT 

Production volume 2011 (€m) 

1,390 

Number of films 2011 

272

Average budget 2010 (€m) 

5.1

Domestic film share (%) 

41.6

Country Approach

Because of it’s overall commitment to film culture, 

France has developed a mature, stable and highly 

evolved system for the support of its film industry, 

with backing across the political spectrum. The 

most distinctive element of the French film 

support system is the mandatory requirement for 

broadcasters to make substantial investments in 

French films. There are no specific public support 

schemes for building company sustainability, 

but this is largely because the net effect of its 

interlocking systems of automatic and selective 

production funding, plus broadcaster finance, has 

been to create a robust community of production 

companies with significant capital to invest in their 

own projects.

National Level Support 

The Centre National du Cinema et de I’Image 

Animee (CNC), founded in 1946, is the state agency 

responsible for public funding, regulation and 

strategic support of the film and TV production 

industry in France. It provides two forms of automatic 

funding for French film producers, one based on the 

market results of their last film, and the other on their 

production expenditure in France. The Compte de 

Soutien gives producers and distributors a subsidy 

for their next film, based on the French box office, 

DVD and TV sales of their last film, and paid out €66 

million in 2010. The Credit d’Impot is a 20 per cent 

tax credit on eligible French production costs (up to a 

maximum of 80 per cent of budget), which is capped 

at €1 million per project; this was worth €40.4 million 

to French productions in 2010. The CNC has also 

introduced a new incentive for foreign productions 

shooting in France, known as the TRIP, which also

Section 12.0  

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Section 12.0  

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pays a 20 per cent rebate but has a higher cap of €4 

million per project.

The CNC also provides selective funding, in the 

form of the ‘avance sur recettes,’ or advance against 

receipts; this is an interest-free loan recoupable 

from income, which can be awarded either before or 

after production. The maximum loan is €75,000, or 

€150,000 for a first-time director. The CNC’s budget 

for the ‘avance sur recettes’ was €28 million in 2010, 

and is €30 million in 2011.

The CNC also runs various selective schemes to 

support development, co-production (German, 

Canadian), Third World cinema, or specific genres, 

including music and animation; these total around 

€4.5 million a year.

France also operates a system of private equity 

funds, called Soficas, which are limited companies 

for investing in film production. Investors in a Sofica 

get a tax break of 40-48 per cent, helping these 

schemes invest €48 million into French films in 2010, 

up from €35 million in 2009.

The IFCIC, a specialist lending institution for the 

cultural industry, supports two-thirds of French 

independent films by providing loan guarantees of 

up to 50 per cent for banks providing production 

finance. It is a partnership between the French state, 

and public and private banks, and has two active 

guarantee funds, totalling €75 million – the Cinema 

and Audiovisual Guarantee Fund is used for project 

finance, while the Cultural Industries Fund can be 

used for loans to companies.

Regional Support  

France has a wide range of regional funding for film 

production - 22 regions, five departments and one 

city have set up their own film funds, investing a 

total of €21 million into production in 2010.

Role of Broadcasters  

French broadcasters are legally obliged to invest 

a percentage of their turnover in French film 

production, according to a formula tailored 

specifically for each network. This accounts for 

a third of all investment in French films, and 

constitutes the single most important source 

of finance for French cinema. Total French TV 

investment in 2010 was €361 million (up from €301 

million in 2009), of which pay-tv network Canal+ 

accounted for €195 million. This money was mostly 

invested in the form of pre-buying rights, but also 

included €44 million in co-production finance from 

the free-to-air networks.

Other Current Issues 

The introduction of the TRIP – Tax Rebate for 

International Production – has caused some ripples 

in France’s otherwise stable ecosystem of public film 

support as it is more generous that the CDI. Foreign 

producers can access up to €4 million in rebates, 

significantly higher than the €1 million domestic 

cap; this has reduced the incentive for foreign 

projects shooting in France to structure themselves 

as minority French co-productions, thereby also 

avoiding the need to meet stringent French cultural 

qualifications. French producers are, as a result, 

lobbying for the CDI cap to be raised, also noting 

that the definition of eligible expenditure for the 

CDI is more restrictive than that of other countries, 

further restricting its value. Increasing numbers of 

French projects are shooting abroad, in Belgium 

or Canada, where tax breaks are supposedly more 

generous. Since inception in 2009, TRIP payments  

to large-budget films have totalled €30 million to  

31 projects totalling €132 million worth of 

production spend, with tax credit payments to 

large-budget films averaging €967,742 million  

per claim. 

Key Conclusions 

Despite agitation over the TRIP, the French system 

remains the most stable and well-nourished of all 

national subsidy regimes - it balances incentives for 

private investment and co-financing obligations 

for broadcasters with a system of automatic and 

selective public subsidies. This has a proven record 

of nurturing strong, well-capitalized production 

companies capable of investing equity into their 

own projects. 

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the challenges for industry and government

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