Access to Finance for the European Audiovisual Sector: from MEDIA Programme to Creative Europe
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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
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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
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MEDIA to CREATIVE EUROPEAccess to Finance
€ 400 M
€ 755 M
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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
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MEDIA Plus 2001-2006Growth and Audiovisual: i2i Audiovisual
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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.
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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.
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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
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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
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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
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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
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Split-down of grant awards 2007-2011
Direct support to AV SMEs
reduction of access barriers to financing
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Type of projects 2007-2011
Transnational cooperation – cultural diversity
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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
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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
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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
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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)
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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
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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%
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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
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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
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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
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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
€
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CCS GF Process
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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”.
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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).
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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.
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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.
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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
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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
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Questions?
European Commissioneac-access-to-finance@ec.europa.eu
EACEA eacea-P8-i2i@ec.europa.eu
MEDIA Desks
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