Notice of July 15, 2009 on the draft decree amending the system of contributions to audiovisual production by analog terrestrial channels

Notice no. 2009-8 of July 15, 2009 concerning the draft decree modifying the system of contributions to audiovisual production for television service editors broadcast by terrestrial hertzian means in analog mode.

The French Superior Audiovisual Council (Conseil supérieur de l'audiovisuel) has been asked by the French government, in application of articles 9 and 27 of law no. 86-1067 of September 30, 1986 on freedom of communication, to give its opinion on the draft decree modifying the system of contributions to audiovisual production by television service editors broadcasting by terrestrial hertzian means in analog mode. After deliberating in plenary session on July 15, 2009, it issues the following opinion.

I. General observations

In its opinion of May 9, 2001 on draft decree no. 2001-609, the French Superior Audiovisual Council recommended that the regulatory authority should leave more scope for the conclusion of inter-professional agreements between service editors and producers, considering that the decree could have defined general obligations while leaving the determination of their application to inter-professional negotiations.

The Conseil notes that this is the approach taken by the authorities, who did not impose regulation, but rather set the framework for it by transposing the agreements signed at the end of 2008 by audiovisual industry professionals.

The Council regrets, however, that the agreements were not reached following cross-industry negotiations involving all players, but were negotiated bilaterally. Some of them expressed their dissatisfaction on this subject during the hearings it organized with all industry professionals (service editors, producers, distributors and authors).

The Council also notes that the draft decree ratifies the overall reduction in the rates of investment obligations in the production of audiovisual works. It understands, however, that this is taking place against a difficult economic backdrop, affecting in particular the so-called "historical" service editors concerned by the text; these editors being the financial engines of the audiovisual production market, their economic health has a consequent impact on the vigor of the production and distribution sector.

Similarly, the Conseil believes that while the growth of audiovisual groups is a necessary condition for the development of the entire industry, it is nonetheless essential to have a strong, diversified independent production and distribution sector that can ensure the circulation and influence, both nationally and internationally, of audiovisual works.

The Conseil considers that the draft decree meets these two requirements, on the one hand by taking into account the economic imperatives of the major audiovisual groups, and on the other by maintaining instruments designed to preserve independent production and distribution.

In conclusion, the Conseil notes that while the logic of transcribing all the agreements necessarily results in a draft decree setting minimum obligations, retaining the provisions of each agreement that are most favorable to service editors, it will nevertheless use its regulatory powers to ensure that the agreements include commitments that are satisfactory for the sector's equilibrium.

II. Opinion on the proposed schemes

Basis for calculating obligations and catch-up TV

The basis for calculating audiovisual obligations should explicitly include revenue from the use of catch-up TV, which is essential for producers in exchange for the transfer of broadcasting rights for this exploitation method.

Expenditure taken into account for production obligations

The Conseil notes that the draft decree offers service editors the possibility, enshrined in the agreements, of counting expenses that were not previously included in their contribution to the development of audiovisual production: sums devoted to adapting declared works for the blind or visually impaired, to training authors, to financing festivals devoted to works and to promoting works, provided that this is not done on the television services of the editor or its subsidiaries.

Admittedly, these expenses do not correspond to direct investment in the production of audiovisual works, but taking them into account is an interesting incentive to optimize the value of the works.

On the other hand, he would like to see expenses devoted to the promotion of works defined, and limited to promotion designed to make works known to the public, such as the organization of press screenings, the purchase of press space or poster campaigns.

Bonus for certain expenses taken into account as part of the contribution to audiovisual production

The Board takes note of the possibility of multiplying the value of expenses incurred for writing and development commissions (when paid to authors and when they do not result in production) and for the production of series pilots (for which the characteristics and production conditions will be set by order of the Minister of Culture).

The Council shares the objectives of this measure, which it hopes will contribute to the renewal of original French-language audiovisual creation, and is in favor of implementing mechanisms to encourage service editors to take risks in favor of innovative projects.

However, he has doubts about the impact of multiplying the value of writing and development costs when they do not lead to production, fearing the perverse effects of a "failure bonus" that would encourage people not to produce.

As a result, the Board proposes to eliminate the over-valuation of the latter expenses. It points out that all expenses for writing and development agreements declared by service editors were already taken into account in the previous decree, and are still, in this draft decree, retained as part of their contribution, whether or not the project is followed by production.

Diffusion of new programs in the first half of the evening slot

The obligation for service editors to show an annual minimum of 120 hours of original European or French-language audiovisual works in the first half of the evening slot has always been a key regulatory point for producers.

The Conseil notes that the draft decree authorizes service editors to include up to 25% of this annual volume in reruns. Under these conditions, it regrets that the notion of new works is defined, in the draft decree, as works that have not previously been shown on the service, and not as works that have not been shown by any of the editors covered by the draft decree. Indeed, the Conseil considers it important to maintain the so-called "120-hour" scheme which, aiming to guarantee greater exposure for new audiovisual creation, implicitly imposes a minimum investment by service editors in new production.

Pooling

With regard to the possibility of pooling the obligations of the various services of a single audiovisual group, the Conseil deems it necessary for the applicable obligations to be specified in the decree, bearing in mind that these services are shown on different media (analog hertzian, digital hertzian, cable, satellite, internet, etc.).

In addition, given that the decree will be published after July 1, a transitional measure for 2009 will be essential to implement the scheme.

Support for independent production

The Conseil takes note of the simplification of the independence criteria, refocused on the absence of producer shareholding by the service editor and the reciprocal capital independence of the editor and producer.

The Conseil notes, however, that the criteria for capital independence set out in articles 4 and 8 of the draft decree (amending decree no. 2001-609 of July 9, 2001 and decree no. 2001-1332 of December 28, 2001 respectively) are not similar, nor do they comply with the provisions of article 71-1 of the law of September 30, 1986, as amended on March 5, 2009. It suggests that the criteria defined by law be reinstated.

Revenue entitlement

The inclusion of a right to revenues for service editors, when they have financed a substantial part of the total cost of the work, is a recognition of the important participation of these editors in the economy of the scheme.

This measure should have virtuous effects, as it is likely to encourage service editors to increase their investment in genres they finance the least, such as animation. Under the provisions of this measure, positive effects are also expected in terms of the circulation of works, insofar as these publishers will be interested in exploiting the work.

III. Schemes proposed by the Council

Guaranteed investment in first-of-its-kind production

The Conseil regrets the disappearance from the draft decree of a specific obligation to invest in new production, which is at the heart of audiovisual creation. This disappearance is all the more regrettable as the decree already ratifies a reduction in obligations and allows new expenses to be taken into account.

The Conseil therefore demands that the draft decree include a new production obligation. The rate of this obligation would be negotiated by the Conseil within the agreements of analog terrestrial service editors.

Improving the circulation of works

The Conseil has always insisted on the need for better circulation of works: it is essential, for the sector's equilibrium, that the secondary market for audiovisual works be as fluid as possible.

In fact, it's worth noting that the financial capacities of the so-called complementary channels are still weak, and their investment in new production is limited. It is therefore essential for them to have recourse to purchases in order to meet their obligations in terms of both diffusion and production quotas.

Fluidity in the supply of audiovisual works is therefore a prerequisite for the quality and renewal of the schedules of these service editors who, without extended access to catalogs, would have no choice but to massively rerun works already acquired in order to meet their diffusion quotas, which would be unattractive to viewers.

What's more, the proceeds from the sale of programs on the second market enable the producers concerned to reinvest the revenues generated in the production of new audiovisual works, thereby contributing to the renewal of the creative process.

The Council therefore proposes that the following two measures be included in the decree:

- Mandatory inclusion in agreements of the scope of rights assigned

The draft decree gives the Council the option of including in the agreements the scope of the assigned rights negotiated in the agreements. The Board would like this provision to be mandatory.

- Early termination clause

One of the measures likely to encourage the circulation of audiovisual works would be the inclusion in the draft decree of an early termination clause for diffusion rights at the end of the last effective diffusion. The Council reaffirms its wish to see this measure implemented.

Defining the resources of encrypted channels

For analog terrestrial broadcasting services summoning user fees, the Conseil suggests modifying the definition of total net resources used as a basis for calculating obligations to invest in the production of audiovisual works. The proposed change will enable all revenues from the various forms of audiovisual commercial communication to be taken into account.

The scope of heritage works

In the definition of heritage audiovisual works, the Conseil would like to see a provision introduced after the words "live performances", comparable to the one extending the scope of creative documentaries. This measure would make it possible to include artistic sequences, comparable to live performances, inserted into on-set programs, as part of investments contributing to the development of audiovisual production, provided that the latter have received support from the Centre national de la cinématographie as magazines of cultural interest.


To implement the above remarks, the Council proposes the editorial changes contained in the appendix (download above).
 

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