MEDIA Production Guarantee Fund
The MEDIA Production Guarantee Fund aims to facilitate access to private sources of financing for independent audiovisual producers, by guaranteeing part of the loans granted by financial institutions. Guarantees are available for up to 55% of the amount of the loans granted by European credit institutions to independent film or TVproduction companies in view of cash flowing during the production phase.
The MEDIA Production Guarantee Fund has been established for a period of 4 years (2010-2013) and a total budget of EUR 8 million until the current MEDIA 2007 Programme expires. The management of the Fund is entrusted to two national guarantee schemes, IFCIC in France and Audiovisual SGR in Spain. Each receives an annual contribution of EUR 1 million to provide guarantees to banks granting loans to European independent film and TV producers in view of cash flowing during the production phase of their audiovisual projects.
To date, 28 bank loans have benefited from this guarantee, representing a total loan amount of over EUR 38 million, for the production of 21 films in 9 different countries.
The public consultation carried out by the Commission in preparation for MEDIA 2007 identified areas where changes were required. Amongst others, specific needs were identified for targeted action in the field of digitisation and measures to facilitate access to credit for small and medium-sized businesses. As a result, Decision No 1718/2006/EC establishing the MEDIA 2007 programme includes financial intermediaries as possible beneficiaries.
Due to the financial crisis it has become even more difficult for producers of audiovisual content to access bank credits. Indeed, this sector has always suffered from structural fragility and under-capitalisation due to its specificities, i.e. a high risk business from the point of view of financiers, carried out mostly by micro-SMEs with few tangible assets. The film production sector is therefore particularly affected by the credit crunch.
In order to have a better understanding of market conditions the Commission carried out a study in 2009 on the role of banks in film financing. The study concluded that following the crisis, banks were indeed more reluctant to have an active role in the sector and that one way of encouraging them to make credits available to audiovisual producers would be through a guarantee mechanism.