MAY 1994





America & Europe-

A Partnership Made in Hollywood


Published in the Special 1994 Cannes Edition of Business of Film, this article discusses how a thoughtful nurturing of the American and European independent film partnership, rather than restrictions on it, will lead to greater freedom and film making expression, and to creative and economic benefits to both the American and European film, financial and economic communities.

Greg S. Bernstein

GATT? Quotas? Subsidy Programs? Balance of trade? Politics! Despite what the politicians may think best for our industry, and, in the process, hamper it, the partnership between American production companies and foreign distributors, banks and financiers, is stronger than ever and continues to nurture and grow at an ever increasing rate.

For the American independent producer, Europe often accounts for between 60 per cent and 70 per cent of a film's ultimate sales, and more importantly, its presales. Without such commitments from European distributors, American independent production might be part of Spielberg's Jurassic Park.

Is this simply a desire by Americans to exploit foreign interests? Not at all. It is a symbiotic relationship with mutual costs and mutual benefits. European distributors have found that American filmed entertainment, for many reasons, is more widely accepted, marketable and profitable than local product or product indigenous to another EC member. Without American independent productions, foreign independent distributors might be out of business, and vice versa.

American producers have had to rethink their production strategies, orientating their films not only to American audiences, but to European audiences as well. This trend must continue to expand in order for American and European production and distribution to survive. American producers must, more than ever, consider how the story and the critical elements impact on European tastes and markets. For example, is the particular actor recognized overseas (as opposed to whether a US theatrical release is possible by using one actor or another)?

American producers have, until now, very rarely paid attention to the recognition of the director as a marketable element in the European market, as opposed to simply can he or she get the job done. The European focus on the director and/or cinematographer as a principal creative element in a film has led to a significant increase in European filmmakers combining their efforts with American producers.

The symbiotic relationship between America and Europe has not stopped at the independent distribution and production level. As American banks have restructured and become less global in their thinking, opportunities for European banks to lend to the filmed entertainment industry have become increasingly available. For that matter, European financial backing of independent films has become crucial in many instances. While some European banks have recognized this transition, many opportunities remain unexploited. American banks unfamiliar with the European industry and lacking either foresight or regulatory freedom, have not significantly participated in and, for that matter have retreated from, the discounting of foreign distribution contracts not backed by letters of credit.

What can be done to strengthen independent film making on a global basis? Government and financial institutions should consider the following:

1. Eliminate Quotas - The quota system hurts the independent film industry, both American and European. It does not stabilize or preserve the European film industry. Economically speaking, quotas are only necessary in situations of inferior product or a lack of demand by the buying public.

Why does one European country or another seek quotas to preserve its film industry? Do American productions cut their prices or costs to destabilize the market? The only reason American productions dominate are the tastes and demands of the people for such product. If there are films that the European community deems worthwhile to make because there is a demand in the community for such product, such product will be made notwithstanding quotas or subsidies.

Quotas have reduced prices for American independent film product in some territories, as well as reduced the number of American independent films exhibited in European markets.

Quotas have hurt the European community in that European distributors are not able to acquire product that generates the kind of revenues beneficial to them and necessary for their continued growth (and sometimes, survival).

The European public is hurt because it is denied the right to see films it wants to see. In some respects it's censorship. If politics require support of a film community, or for cultural or other reasons, then a European independent film cable or broadcast channel or additional government support may be more appropriate and effective than quotas. Cable channels, such as those being created in the United States, that provide a forum for independent film, would provide a much stronger and broader benefit to the European film community without de facto censorship, Stalinist controls or the destabilization of the free market.

2. Expand Subsidies - Subsidies should be expanded to include "American product." Obviously, certain parameters must be met, such as a certain percentage of the budget being spent in the European community. However, subsidies such as I propose, without regard to content or "points" for native talent, have worked extremely well in British Columbia and other parts of the world. There is an estimated three to fivefold benefit to the local economy from independent film production for every film budget dollar spent. Moreover, most of the indigenous crew and lesser talent interests that are employed on such "co-productions" are given opportunities to work on films that have a worldwide appeal and, thereby, give them greater experience, opportunities, and money, than local productions alone.

3. Banking Expansion - European banks have an opportunity to dominate the financing of motion pictures, both American and European. By making themselves more accessible, and responding expeditiously to requests by American producers, not only could there be a boom to the banking business, but more independent films will be made. If such entrepreneurial efforts were combined with policy considerations, such financiers might offer better rates or terms for projects that provide a local benefit, such as a project filmed in Europe.

4. Government Loan Guarantees - Local government can help their local film industry and the local economy by guaranteeing distribution contracts of indigenous companies. Government-backed guarantee programs help reduce the costs of such production loans and/or enable loans against such contracts to be made. Banks may not be willing to take contracts of fledgling European distribution companies as collateral on production loans without such government support. This support can help expand the distribution base in Europe, as well as bring productions to Europe. There could be two types of programs: one that supports local distribution without regard to the situs of production and one that supports distribution of local production.

5. Reduce Co-production Requirements Which Inhibit Creative Freedom - Eliminate or reduce content and other requirements which have resulted in "Europudding" rather than creative, and financially successful, films. European subsidy and co-production benefits that American independents have been able to avail themselves of have certainly led to more productions in Europe. However, these "marginal" productions, in which elements have been put together in a way that meets the co-production requirements, without regard to the impact on the film, have not always led to commercially viable production, let alone the best productions. American and European producers and distributors should be permitted to package a film based on the film's creative and financial requirements, rather than the politician's view of how a film should be made.

In summary, a thoughtful nurturing of the American and European independent film partnership, rather than restrictions on it, will lead to greater freedom and film making expression, and to creative and economic benefits to both the American and European film, financial and economic communities.





Reprinted with permission by The Business of Film

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