Methodology, Skills and Professional Benefits Participants Participants' Comments MEDICI Head of Training «The 12 Labours of Hercules» Report of the Reports – Workshops 1 to 4

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Second Workshop Report – 7 to 9 November, 2012 – Retz (Austria)

Module 2 – Coproduction, Minority and Agreements

Some years ago, it was still possible to finance a project exclusively at the national level. Today, given the changes in the environment (less money from the market, and more competition to access public funds), financing a project through coproduction with more than one country has become unavoidable. This supposes that film funds of the minority partners are willing to finance films with a non-national director and less creative input. For producers, this increases the number of funding requirements to be met, and creates the expectation that their coproducers will be financing their next project.

Or, in other words:

• How can reciprocity among producers be reconciled with coproduction treaties having a legitimate need to favor national films? How can the creative and artistic quality of a coproduction be preserved?
• How can funds facilitate coproduction procedures?

Please also see Danny Krausz (Dor Films)’s presentation “(Minority) Co-productions, a gift, a burden, a must, a need” (PDF)

1. Reciprocity within the concept of coproduction

Eight reasons why reciprocity does not fit in with the concept of coproduction

1. Reciprocity has to do with money and not with content. Purely financial reciprocity schemes usually do not survive in case of cultural funds where evaluation is based on quality (the terminated agreement between the Austrian and Danish Film Institutes is an example).
2. Reciprocity means “obligation to coproduce” whatever the quality of the project. It may not help producers make better films. Reciprocity should be more about enabling easier access to composers, scriptwriters, etc. Such reciprocity does not impair the quality of projects, whatsoever.
3. Reciprocity means equality in the balance of support afforded projects by each partner. Should there be a disbalance, trying to restore the balance will counter the cultural objectives of the funds.
4. Reciprocity cannot be an evaluation criterion for funds or an argument used by producers to justify a negative decision.
5. For producers, it is easy to find the first project. It is more difficult to find a second project that offering the right timeframe and requirements.
6. Reciprocity is a concept more appropriate for production companies seeking long-term co-production deals with foreign partners in order to coproduce several projects.
7. Reciprocity would make sense if the majority producer’s main funder is made responsible for achieving and monitoring reciprocity, which is very difficult for small countries.
8. Long-term cooperation between co-producing countries is impaired and frustrated if one country keeps denigrating the other country's projects as not good enough.

2. Important coproduction issues

For minority coproducers

• Minority coproducers should avoid inadequate partner selection. The kind of projects should be acceptable for minority need be defined. Is the financial incentive all that matters for minority coproductions, or does creative input matter as well? Improved communication will facilitate making better choices.
• Minority coproducers need a kind of a pre-approval of the budget and finance plan. Minority co-producers should submit a solid package, with well-balanced requirements – both creatively and economically. But if cuts are made to a project after support has been agreed upon, it should be made clear that the proposal can be changed. It is better not to support the project, or else to ask what you have to lose if you do not support the project.

Between coproducers

• How the responsibilities are to be split between the parties during a film-making process should be better defined. It is easier for funds and producers to communicate and talk if the respective responsibilities are listed in the contracts.
• Tax laws in different countries should not be underestimated. For instance, to avoid serious tax problems, the split imposed on the official rights and foreign territoriesis compulsory for a co-production with a German producer to avoid serious tax problems.
• Each producer's share of copyrights due to the coproduction should be defined.
• Overexpenditures/underexpenditures are often not addressed by coproduction agreements. Responsibility for overspending usually lies with those producers taking the final decision on further investment. Minority co-producers should not be overruled, and should not be obliged to go back to their fund to announce that the contingency fund is gone and that they need more money. Only joint decisions should be effective. Only when minority coproducers are co-responsible for decisions, will overexpenditures be covered by their own money or contingency or any additional sources.
• Both funds and producers should take a closer look at the majority producer’s attitude towards a particular coproduction.
• The legally binding hiring of new staff from other countries, due to coproductions, prevents producers from working exclusively with the same personnel: this facilitates the safeguarding of the cultural and artistic elements of coproductions.
• Producers rely on bilateral, trilateral treaties, and the European Convention on Cinematographic Coproduction, but if they work with the UK, for example, IPA inter-party and CAMA agreements overrule coproduction agreements. What can the funds do in this regard?

3. A lack of knowledge

• Producers, even the experienced ones, are often unfamiliar with coproduction procedures. The funds expect the producer to know everything about coproductions, but that is a very high expectation. Many producers do not attend the European coproduction workshops. The funds also fail to clarify the coproduction rules.
• Coproduction companies usually are not able to offer legal departments or to hire somebody with all the necessary knowledge about coproducing. This is where film funds should step in and provide help. Coproduction seminars on treaties and the basics of coproduction agreements can familiarize producers with coproduction procedures. (The Danish Film Institute launched such seminars with a good feedback).
• Coproduction training sessions and seminars are also necessary because film schools do not offer enough c-production knowledge. Production students are often taught at no higher than the line producer level. However, such training sessions and seminars are more workable in smaller countries. In big countries with many regions, such initiatives could be very difficult to implement.
• The most successful projects are often the ones developed in teams.

4. How can the public funds facilitate coproductions and procedures

By improving communication with the producers involved in coproductions

• It is the producers who do the sales estimates. Maybe the funders should evaluate, such standard estimates annually, because the figures change year after year, and then exchange the results between themselves. It could enable a fair split of rights/territories and be used as an indicator among the producers.
• Is there a need for the funds to synchronize their deadlines to facilitate coproductions? (Austrian Film Institute and Croatian Audiovisual Center, for example, are synchronized with Eurimages deadlines).
• Eurimages proposed an initiative for the revision of the European Convention on Cinematographic Co-Production. The new version foresees, among other things, less than 10% for a minority co-producer as well as proportion between financial and artistic/technical element. Will this foster more films with bigger budgets? Will it make it easier for smaller countries to coproduce?
• By helping to decrease the necessary paper work.

By clarifying their guideline rules

• The allocation of MGs should be discussed more. How do different funds handle these MGs? Are these MGs accessible, eligible, non-eligible, eligible up to a certain extent, eligible only later on, etc. This holds true as well for the allocation of world sales and licenses.
• Estimates of overheads should be taken into consideration: there are different approaches and issues in this regard. German Federal Fund, for example, has a ceiling on overheads that causes problems for foreign funds that have no such requirement.
• The eligibility expenditure catalogue very often depends on the regulations of funds. Regional funds have special lists of what is eligible or not, according to their needs. Some kind of harmonization remains necessary here.
• Estimations of producer’s and line-producer’s fees should also be regulated. There is no final control of such fees.
• Estimation and definition of equity finance. What is equity? Is that the real money? Examination of some regulations can reveal that licenses, MGs, or pre-sales are eligible for equity financing.
• Estimation of deferments should be more precise.

By organizing coproduction training sessions and seminars for producers

• As described above, producers, even experienced producers are often unfamiliar with co-production procedures, and the funds also sometimes fail to clarify the coproduction rules.
• During workshops, young producers should be put into different environments and complicated situations to check if they can function under various circumstances. They should not be taught more than just the basics.
• Interaction is necessary at the creative level, and there is not enough of it in Europe. EAVE, ACE and MAIA are insufficient. Such interactive schemes are needed at various levels.

5. Shared questions

• Budget forms reflect regional needs and performances and they are part of a law in many countries. As a result, usually more than one budget is necessary: one for each co-producing country. Can more harmonization be achieved in this regard? Can a common form of budget for coproductions be established, where all legal and financial issues are taken into consideration?
• Can standardization of the budget be dangerous? Should reference budgets for certain genres, for example, be introduced?
• Are specific coproduction agreements with neighboring countries a good solution?
• Should a ‘mutual recognition principle’ be applied to film production?
• What is the role of the distribution support to the co-production? How can we cope with the fact that the available distribution money is not the same in every country?
• Should minority contributions be treated as a gap-financing, apart from creative and artistic quality evaluation, in order to achieve reciprocity more easily? Are slate projects another solution for achieving better reciprocity? Should the funds relinquish the standard legal regulations to facilitate reciprocity?
• A majority coproducer sometimes is simply after the money, and has no respect towards minority coproducers. This can also diminish zhr creative and artistic aspects of coproductions. How can this be prevented?

• Module 1 — The Role of Public Film Funds
• Module 2 — Coproduction, Minority and Agreements
• Module 3 — Financing Tools
• Module 4 — National Funds / Regional funds – Friends or Competitors?
• Module 5 — A diversity of voices… a real challenge
• Open Space Module
• List of Participants (PDF)
• MEDICI Second Workshop Full Report (PDF)

Illustrations by Rudi Klein, photos by Nora Friedel

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