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The EFTA Surveillance Authority Rue de Trèves 74 B-1040 BRUSSELS |
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Your ref |
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Date |
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99/4039 ME/ME2 ESH:ASB |
05.11.99 |
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Information to the Efta Surveillance authority on Aid schemes to support the film industry
In reply to your communication dated 12 October 1999 (Doc. No. 99-7559-D/Ref. No. SAM 051.400.001), please accept the following.
Norwegian film policy is an integral element of the Norwegian cultural policy. The purpose of public funding is to encourage the production of films in the Norwegian language, which reflect Norwegian culture, contemporary life, values and traditions. Public financing is an essential precondition for the continued existence of a Norwegian film sector.
Norway is a restricted language area. Hence, the market potential for cultural products based on the native language is restricted. The costs involved in film production, however, are the same as for larger markets. It remains a fact that, despite efforts to promote wider circulation of European films, few are circulated to outside markets because of language barriers. This also holds true for Norwegian feature film productions.
Without public funding, virtually no feature films would be produced in the Norwegian language for a Norwegian audience. In cultural policy terms, the feature film market is dysfunctional in that it requires support not only at the production stage, but also at the stages upstream and downstream to the production stage. Thus, in addition to the various incentives and funding schemes directed towards the production of audio-visual works, public support is also granted to the training of professionals and dissemination of such works.
The table below shows the total amount of public financing to feature film production in Norway the last five years:
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Year |
1995 |
1996 |
1997 |
1998 |
1999 |
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Public financing |
135.483 |
138.353 |
136.080 |
136.500 |
129.655 |
Amounts in 1000 NOK
In 1998 Ernst & Young Management Consulting did a thorough study of the Norwegian funding schemes. Please find enclosed this report, in which you will find a description of the Norwegian film market including different statistics of the market, production costs, financing and profitability (see chapter 3).
Financial support to feature film production in Norway is allocated to and administered by Audiovisuelt produksjonsfond (APF) and Norsk filminstitutt (NFI).
APF grants production support to film- and television co-productions. Production support is granted to selected projects based on a comprehensive evaluation and selection. The director recommends which projects should receive production support, while the Board makes the formal decision.
NFI administers two different aid schemes: production support and box-office bonuses. Production support is given to a limited number of productions, and may be granted after a comprehensive evaluation where artistic, economic, technical and market aspects are taken into account. A feature film consultant evaluates which projects should receive support and makes a shortlist of recommendations, while the Board of NFI makes the formal decision.
The box-office bonus is an audience-related financial support which all Norwegian films are entitled to. In order to receive the box-office bonus, the producer has to submit an application to NFI before the filming starts. The producer is entitled to a subsidy equivalent to 55 per cent of the film’s gross box-office receipts. The support for children’s films is equivalent to 100 per cent of the film’s gross box-office receipts. The support may not exceed the producer’s equity.
In ESA’s letter dated 12 October 1999, it is stated that the Authority has never been informed of the framework conditions regarding financing of film production through Norsk Film AS (NFA). This support is not considered a separate aid scheme for film production. NFA receives support through an allocation on the national budget, and this support is included in the original notification of the production support (ref. No. SAM 030.94.194)
The Authority enquires about the annual reports for the Norwegian aid schemes. The Ministry of Cultural Affairs has forwarded these reports annually to the Authority through the Ministry of Trade and Industry. The Ministry of Trade and Industry informs us that they have been in contact with the Authority regarding these annual reports, and that the reference to missing reports is due to a misunderstanding.
New guidelines for the above mentioned aid schemes took effect 20 August 1998. We would like to emphasise however that no new aid schemes have been introduced. The new guidelines only represent minor changes from the previous guidelines notified to the Authority.
The main content and purpose of the schemes have not been changed, and hence do not influence the market or the criteria for state support. The main difference from the previous guidelines is changes in the administration of the aid schemes, including a stricter policy on financial monitoring and following up by APF and NFI.
Please find enclosed the following guidelines:
As already mentioned, one of the main purposes of the aid schemes is to promote the production of Norwegian quality film. The main purposes are incorporated in the guidelines of 20 August 1998 (ref. article 2).
Production support is given to selected projects based on a comprehensive evaluation where artistic, economic, technical and market aspects are taken into account. Through this evaluation the cultural content of the film is ensured (ref. "Retningslinjer for tilskudd til norsk langfilmproduksjon" and "Retningslinjer for tilskudd til samproduksjoner mellom film- og fjernsynsmiljøene" article 9).
The film market in Norway is limited, and in order to ensure the Norwegian film production, it has been necessary to maintain a high level of aid intensity. The market in Norway is dominated by audio-visual products from outside of Europe, and Norwegian films only constitute 5-10% of the total box-office revenue. In comparison the national market shares in Denmark and Sweden are approximately 15-20%. The national market share in most of the small European countries is however very low. (For further information, please find enclosed statistics from the European Audiovisual Observatory showing market share according to the origin of the films).
In addition, language barriers prevent Norwegian films from receiving a broad international audience. This limited market for Norwegian feature films explains the lack of private investment in film production and the need for a high level of aid intensity.
While other countries have contributions to film (and television) funds from the film industry and private television companies, support schemes in Norway are mainly based on state subsidies. Thus, the public aid intensity is estimated to approximately 71% of the total production costs in the period 1994-1997. The production support constitutes 60%, while box-office bonus constitutes 11% of the public aid. Please notice that the box-office bonus holds only in the Norwegian market and thus does not influence on the competition in the EEA-market. Box-office bonus is a support to the producer with the intention of reducing the financial risk involved in film production.
The regulations governing the Norwegian aid schemes set no restrictions on spending abroad.
Need: Film production requires state support in order to ensure that Norway’s own cultural and creative capacity has the opportunity to be expressed. Without state support it would not be possible to produce feature films in Norway.
Proportionality: Aid is proportional to the total budget of the film and is given to selected projects based on an assessment of the cultural content. This is ensured by the feature film consultant when production support is granted.
Transparency: This is ensured on two different levels. First, the notification of the aid schemes and the annual reports to the Authority make sure that information about the aid schemes is known. On a national level, the Norwegian Act of 17 June 1970 concerning Public Access to Documents in the (Public) Administration, ensures the right for the public to have insight into relevant documents.
Coherence: On the level of the procedure, the Norwegian Act of 10 February 1967 relating to procedure in cases concerning the public administration and the above mentioned guidelines of 20 August 1998 make a clear set of regulations that holds for all applicants on an equal basis.
The Authority requests confirmation that the requirement of residence/establishment in Norway is not applied to applicants from other EU/EFTA States. Both in the guidelines approved by the Authority in March 1994 (Ref. No. SAM 030.94.194) and in the previously mentioned guidelines of 20 August 1998, a provision is incorporated, stating that should the EEA agreement or other agreements require so, the requirement of residence in Norway does not apply.
The Ministry of Cultural Affairs hopes the information above and that included in the enclosures fully answers your request. We remain, however, at your disposal, should you require further information on the aid schemes to support film industry. We are ready to meet with the Authority at short notice if further clarifications are needed.
Yours sincerely,
Helge M. Sønneland
Director General
Roy Kristiansen
Deputy Director General
Enclosures: