EUROPEAN FILM FORUM: Peter Dinges has said the industry is still suffering the after effects of the 2008 financial crisis; execs call for ‘European Netflix’.
At a time when banks are increasingly risk averse when it comes to film production, Peter Dinges, CEO of the German Federal Film Board (FFA), has called for new approaches to film financing within Europe.
Speaking today at a European Film Forum panel in Brussels titled How to Leverage Investment, Dinges suggested that the film industry is still suffering the after effects of the 2008 financial crisis.
The seminar explored what role Creative Europe’s Cultural and Creative Sectors Guarantee Facility can play in attracting more financing towards the sector.
“I have never seen banks withdrawing that fast from an industry as the banks after the financial crisis,” Dinges noted of the banks’ stampede away from film after the 2008 downturn.
Dinges welcomed the “guarantee umbrella” now provided by the European Investment Bank to enable those in the creative sector to take more risks. Even so, he cautioned, financiers remain wary about the sector.
The problem is not with films failing to be completed. That, panelists pointed out, very rarely happens - almost every film that goes into production is likely to be completed.And compared to other asset classes, film isn’t “volatile.”
The challenge, though, comes in monetising rights in an increasingly complex and fragmented marketplace and in convincing investors there will be an upside at the end of the process.
European producers, Dinges noted, aren’t generally in the same position as SME’s (small and medium-sized enterprises) looking for “millions and millions in gap financing.” Instead, they need “project financing” to help them make their movies.
Dinges acknowledged that new soft money and tax credit systems were springing up all over Europe, “like mushrooms out of the floor.” Even so, producers continue to struggle to finance their films.
One solution Dinges (also President, EFADs) floated is to extend the SOFICA (The Film and Audiovisual Industry Financing Companies) system which has proved so successful in France.
The SOFICA companies currently invest around €63m a year in film and television, supporting both development and production. SOFICA was launched in 1985 and is supervised by the CNC and the French Ministry of Finance. The system backs work from first-time and second-time directors and also films with budgets under €8m.
Almost all its films are independent. Investors are from the private sector and they receive a tax break up front. The system also helps producers build up portfolios of rights.
Speaking on the same panel, Danielle Kadeyan, CEO, Media Finance Partners (which has raised several investment funds whose sole activity is the financing of European films and TV series, among them Sofica SOFITVCINE) warned that a continuing problem when it comes to “driving the value” of European film rights is that building up a new business model for SVOD is “a ten year project.”
“No private equity fund goes and looks in terms of investment on a large scale on a 10 year basis. It is a horizon which is way too long for a private equity sector,” Kadeyan said.
“Getting money to securitise a catalogue - that has been in existence for many years. It is not very complicated. The issue is to try to get private equity and private investors to come in at a very early stage.”
There were calls among several panelists for a major European VOD platform on the scale of a Netlix or Amazon.
We are still quite fragmented on VOD and we don’t have that economy of scale,” Kadeyan commented of the situation facing the European film sector.