Martin Ajdari concludes the round-table discussion "The European cinema model, evidence by example".

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Mr. Managing Director, dear Olivier Henrard,

Ladies and gentlemen, dear friends,

I'd like to start by warmly thanking Olivier Henrard, Deputy Director General of the CNC, and the EFAD for inviting me to conclude these discussions.

We've had the pleasure of hearing " concrete accounts of the success of European cinema", to use the title of this second part. And since Arcom is the regulator of audiovisual diffusion (the second pillar of the cinema economy, along with cinemas), I'm going to take my turn in trying to tell you the story - a concrete one, I hope - of another success story: that of audiovisual and increasingly digital regulation at the service of cinematographic creation.

This success is based on three ingredients: firstly, a strong conviction that underpins the cultural exception; secondly, a principle of action (flexibility); and thirdly, a virtue (efficiency).

The conviction is the idea that, to invert Malraux's famous formula, cinema is an industry, but it is also an art form, which plays a major cultural role thanks to its power of diffusion and suggestion. And the regulation that applies to this industry is not only intended, as with any economic activity, to guarantee competition in the interests of the consumer (the best product at the best price); it must also make room for (effective) creative freedom, aesthetic diversity, respect for identities and cultural dialogue. The Cannes Festival is without doubt the most magnificent illustration of this ambition.

From this conviction stems the famous "cultural exception", which translates into a regulation that is also particularly ambitious, with two dimensions:

-Vertical, where the downstream, the link in the chain deemed to be the strongest, is subject to diversity obligations and finances the upstream; and where each link in the chain is protected, in particular independent producers and authors;

-Spatio-temporal, with the territorialization of rights and the famous media release chronology.

This cultural exception is part of a managerial framework defined at European level, that of the internal market, while at the same time taking on a plural form in each member state, depending on cultural traditions, collective ambitions and the dynamism of each country's productive fabric. Creativity is born of these variations and their emulation, both among themselves and with national audiences.

The second ingredient of successful regulation is flexibility and adaptability.

This is first and foremost the case with European legislation, whose two pillars - visibility of works on the one hand, contribution to funding on the other - were established as early as 1989 with the "Television without Frontiers" directive, which accompanied the development of cable and satellite TV networks at the time of the creation of the single market.

These principles were extended to the first non-linear services to emerge with the development of the Internet, under the first AVMS Directive adopted in 2007. And they were adapted again in the 2018 revision, to take account of the arrival of Netflix and streaming, which promised to be disruptive.

This revision led to three major advances: a 30% quota for European works in the catalogs of these services; the introduction of a derogation to the country-of-origin principle, allowing the country targeted by a service to impose financing obligations, even if it is located in another country; and finally, the extension of the scope of the AVMS Directive to video-sharing platforms such as YouTube.

Adaptation over time, then, but also flexibility in national transposition, which the use of a directive enables to adjust to the diversity of national ambitions.

And indeed, the transposition choices made in France in 2021 form a kind of "exception within an exception", with an ambitious contribution regime for new players, but no more so than it was and remains for the incumbents, which means it is non-discriminatory.

Thus, since 2021, SMADs subject to the law must devote 20% (or even 25%) of their sales to the production of European works and works of original EOF, ensuring that neither audiovisual nor cinematic works account for less than 1/5 of the total.

These levels are the highest among the sixteen countries that have applied this option to date. For example, it is 0.5% of sales in the Czech Republic; 9.5% in Wallonia; 16% in Italy. And before the elections in Germany, a draft decree made provision for a rate of 15 to 20%. In this way, we have set an example, even among some of our partners who were somewhat perplexed when the directive was being negotiated.

Finally, once this national regulatory framework has been established, the challenge for regulation is to ensure compliance with these obligations, of course, but to do so with discernment and pragmatism, taking into account the strategic projects of each player. The aim is to integrate and support development. Not to restrict or tax.

This is the role of Arcom, which intervenes at different levels: by issuing an opinion on the regulations; and above all by concluding agreements with SMADs, as it does with the chains, to set the terms and conditions of their contributions. As of December 2021, Arcom has signed agreements with Netflix, Prime Video and Disney +. Two of these agreements have already been revised to take account of professional agreements. The third is currently being revised.

The strength of the cultural exception lies not only in its adaptability over time and space, but also in its effectiveness. An effectiveness formidable enough for some - in Europe, but not only - to draw inspiration from it, and for others - outside Europe - to openly criticize it.

A few orders of magnitude: this scheme has enabled investment in film production to reach €430 million by 2023, with 80% coming from TV channels. The contribution of SMADs to film production has almost tripled from 2021 to 2023, reaching €163 million over 3 years, 2/3 of which for the pre-financing of 81 films. These levels should continue to rise as these services become more widely diffused, and in line with Disney's recent agreement.

We can therefore speak of a successful integration, not only in terms of the amount of investment, which has risen sharply, but also in terms of the massive recourse to independent production, with many first (17) or second films (12).

What's more, whereas 5 years ago these new players were often seen as the armed wing of the large-scale economic and creative domination of series, we can see that they are tending to reorient themselves towards the irreplaceable value of cinema.

As I mentioned earlier, the European manager has been able to adapt to changes in usage and markets, at a rate of one revision every 10 years:1st revision of the "Television without Frontiers" directive in 1997, second in 2007 with the first AVMS directive; which was itself revised in 2018.

As you know, the European Commission is due to review the AVMS Directive by December 2026 and make proposals for its revision. So we're on the same ten-yearly review schedule. Is a revision opportune, and for what purpose? I'll confine myself to a few thoughts, stressing that the answer lies with the European legislator (the European Parliament and Council, whose conclusions adopted this week are to be commended).

First consideration: the red line - absolutely avoid maximum harmonization, or regulation, under the guise of simplification, and preserve the principle of subsidiarity; leave it up to member states to calibrate the obligations and managerial framework of regulation to the size and characteristics of their market, and the maturity of their ecosystem.

The second area for consideration is that of improvement. It would not seem absurd to think about integrating video-sharing platforms a little further into the rules applicable to historical audiovisual medium services. For example, we could imagine harmonizing advertising rules, to ensure greater fairness with TV channels (and now streamers) and better protection for audiences.

On a completely different note, there are the avenues mentioned in the report submitted to the CNC at the end of 2024: the introduction of an exception to the country-of-origin principle for exhibition quotas of European works, and raising it to 50%. There's also the question of defining what constitutes a European work in a post-Brexit Europe. The logic of this is understandable, but it seems to me that the question should be tackled from a practical angle with publishers, without too much dogmatism or spirit of revenge.

My final point concerns the relationship between the various European texts: SMA, DSA, EMFA and the IA regulation. Despite their differences, they all share common objectives: to guarantee the sovereignty of the European cultural and information space; to strengthen the independence and diversity of its players; to enhance the value of professional content producers (whether news or drama). These texts are all about freedom of creation, expression and the circulation of ideas. They are also a safeguard against the standardization, manipulation, artificialization and even plundering of content.

In my view, the issue should no longer be to pit traditional and non-linear services, paid and free, public and private, or even European and American, against each other. The real frontier lies elsewhere: between the media that produce, edit and diffuse film and audio works, and information, and on the other hand, services that capture wealth they don't create and often don't redistribute. What's more, they expose us to systemic risks.

Thank you very much.