A quick overview on the french funding system for audiovisual content within the context of DTT. Focus on the "Cultural exception" concept and on the organization of french speaking countries in Africa. Slides realized with the kind support of Eve-Lise Blanc-Deleuze

1. SESSION FOUR :
Global perspectives on funding models and commercialization of local content production
The ‘cultural exception’ stance in the DTT context :
the French policy and regulatory framework that supports the development of local content
By Séverine LAURENT, Media Consultant
DTT Roll-Out and Local Content Development Workshop
28 May 2014
CSIR Conference Center, Pretoria

2. In France, DTT is totally operational since the
30th of November 2011.
Today, France has 32 national TV channels
which are terrestrially distributed, on 8 multiplex :
7 public TVs, 17 private plus 8 paid TVs. France has also 48 local TV channels on DTT.
On Satellite and ADSL, we count up to 205 national TV channels and 106 local TV Channels.
According to the Public Accounting Court (Cour des Comptes) ,
audiovisual production has mobilized nearly 800 million €uros
in 2012 invested by television channels and
332 million €urosof public subsidy
This investment in culture is unique in Europe
in terms of the extent of public support, the diversity of indirect support
and the scope of the regulatory framework.
Sources : csa.fr, senat.fr, ccompes.fr
French production in the DTT context

3. The cultural exception
Cultural exception (in French l’exception culturelle) is a political concept
introduced by André Malraux in France since the early sixties. It has been introduced in
General Agreement on Tariffs and Trade (GATT) negotiations in 1993. Concretely, it can
be seen through protectionist measures limiting the diffusion of foreign artistic work
(quotas) or through subventions distributed according to the country cultural policy.
Objectives:
• To treat culture differently from other commercial products ;
• To consider cultural goods and services as exceptions in international treaties and
agreements especially with the World Trade Organization (WTO).
Examples :
• The law of audiovisual implies for instance that "radio have to broadcast 40% of
French songs and, within this quota, 20% of new talents."
• Between 2005 and 2011, from 45% to 55% of film products were American imports,
compared to 60 to 90% American imports in other European film markets.
Production of French local content is based upon
an industrial politic serving cultural exception

4. French Audiovisual Law deals with DTT new TV channels in the same
way as analogs but adapts their obligations to their fragile economy
Priority for public service
» Publics channels are supposed to reach all homes. French
legislation enforces this, by specifying that all publics channels
must be received via DTT, including for the operators of commercial
packages, along with the right of priority or pre-emption for future
services. Same obligations on DTT than on the analog versions
Must-carry rights for analog channels
» The transition to “all digital” and the arrival of new competitors can
be compensated by must-carry rights for commercial analog
channels. Should they so wish, these channels have the right to
continue broadcasting in digital without encountering state
opposition, and without it being an obligation either (unlike for
public channels). Same obligations on DTT than on the analog
versions

5. Obligations regarding the promotion of local production
» Since it is authorized on the universal network and accessible to all homes
nationwide, the DTT service must fulfill obligations relative to the
promotion of local production from Europe or from France.
» Two types of obligations are imposed: broadcasting quotas or obligatory
investments in production. Investment are made in proportion to turnover.
Smaller quotas with increasing % per year and derogatory mode as far as
peak hours are concerned
» In this case it is necessary to define what the legislative body means by
audiovisual and cinematographic works. These promotional obligations for
local production can distinguish between two levels: strictly national works
and those from the sub-region. (eg France and Europe or South Africa and
African continent)
» To foster the emergence and development of a local market for content
production, these obligations regarding local or sub-regional promotion can
also be agreed at sub-regional level. (idem)

6. Created in 1982 then with a new name in 1986 & 1989, the High Audiovisual Council (CSA) role is
“to ensure the freedom of audiovisual communication in France”
In addition to all traditional tasks, the CSA is responsible to ensure
"the defense and representation of the French language & culture"
on the airwaves .
The CSA is in charge of controlling quotas for film and audiovisual :
» Television stations to invest 3.2% of their annual turnover in the production of French
and European cinematographic or audiovisual works.
» Amongst those 3,2%, 2.5 % should be allocated to works in French (EOF) . Exception : 9% for Canal +.
» Broadcast quotas require TVs to devote 60% ​​of their transmission time for European
works , 40% for works EOF).
Quotas are decided by decrees
CSA has the power to give and to take back broadcasting authorization
TV Regulatory framework and control

7. INTERNAL FUNDING
» Contribution of the production company in film financing :
• Cash
• Support Fund producer
• Participations
• Crowdfunding
Challenge of funding local contents SOURCES
Evolution of funds invested in french cinema
2002-2012 (in M€)
Publics
Private
Private from producers
TV Channels contributions
MAJOR EXTERNAL FUNDING
•Regional grants & subventions
•CNC
•The advance on receipts from CNC
•Other institutional supports
•Eurimages
•The pre-sales of television
•The co-producer funding
•International coproduction
•SOFICA
•Minimum Guarantee ( commonly called " MG" ) :
Rooms MG : advance on the revenues of cinemas in
France
MG Video : advance on receipts from operation DVD , Blu
-ray and VOD in France
MG International ( or abroad) : advance sales to foreign
territories.

8. CNC
TST
Tax on Television Services
Applied since 2008, the TST has
become the main source of funding
for the CNC. It is planned to raise up
to € 537 millions in 2014
TSA
Tax on Cinema Tickets
VOD / DVD
Tax on VOD services
OTHERS REVENUES
Special Tax
One of the major funding source
for local contents
Total net
€700
millions
TSA €134 M
TST (editors)
€266 M
TST (distrib.)
€270 M
VOD/DVD
€28 M
OTHERS
€28 M
Estimation 2014

9. How does COSIP work ?
To benefit of the COSIP, programs must meet several
requirements:
» Fall into 5 categories only : fiction, animation, creativ
documentaries, live shows and cultural magazines;
» Most artistic & technical staff either French or European;
» Financing : Cosip funds cannot exceed 40% of the full cost of
the program and TV channel fundings has to reach a minimal
amount ;
» Screening jury is meeting up once a month.
Focus on CNC

10. Challenge of funding local contents
The TST – Taxe on Television Services -,
a special tax created in 2008 to support the funding of local contents
in the context of DTT and convergence of the media supports.
WHO PAYS IT ?
• All TV editors
• Telecom operators distributing mobile television services
• Internet Service Providers distributing television services
Source : cnc-tst.fr/
Focus on TST
WHO MANAGES IT ?
• The CNC – Centre National de la Cinématographie

11. Challenge of funding local contents
HOW IS THE TST CALCULATED ?
• TV editors : the tax is based on the amount of advertising and sponsorship revenues, on
paying SMS and phone calls linked to the programs transmitted and on connections linked to
telematics services. All amount excluding VAT and the total sum benefits of a 4% tax abatement.
Source : cnc-tst.fr/
Focus on TST
• TV distributors : the tax is based upon the total amount of subscriptions dues to provide
television services. This amount benefits of a 10% reduction. It is also based upon subscription
of all communication services given access to telephone or Internet. This amount benefits of a
66% reduction.
HOW MUCH DOES THE TST COST ?
• TV editors : 5,5% of the total amount declared for all traditionnal TV editors. France
Télévision benefits of a 50% discount on this amount. Television services broadcasted
terrestrially in HD and those wich provides mobile TV are subject to a respective increase of 0.2
and 0.1%.
• TV distributors : the applicable rate is progressive in terms of sales Business: the
threshold of taxable sales is set at € 10 million per year, the rate of evolving
0.5% to 4.5% tax bracket of 65 million euros.

12. Results of the DTT launching – Market share
In the second half of 2011, about 26.6 million households, or 99% of households
with televisions have access to digital television (DTT, cable, satellite, ADSL ...).
There are 32,7 millions digital access including 50% in DTT.
Source : Mediametrie rapport 2013

13. Results of the DTT launching - Audience
Since 1995, two major
trends are emerging:
• Decreasing of the audience of
‘historical’ terrestrial channels ;
• The growth of cable and satellite TV
audience (+8 points);
• The strong growth in new free DTT
channels (excluding local channels)
reaching 22% audience in 7 years.

14. » Most of the television editors on DTT have already developed media services on
demand.
» Channels such as France 4 or Euronews are negotiating partnerships with video sharing
sites like YouTube or Dailymotion.
» According to a study made by the European Interactive Advertising Association (EIAA)
young Europeans spend now more time online than watching television. For television,
quality is one of the key to success!
» Fight against piracy and illegal downloading has borne fruits (HADOPI)
» French cartoons and documentaries are best-sellers on the international market
» Quality and cost of French fiction production is still a challenge in the context of
globalization
Source : Assemblée Nationale / Rapport Christian Kert
In France, to resist to the new modes of communication,
television takes its inspiration from them
Results of the DTT launching

15. Some DTT Tv channels are struggling for life
• Failure of pay DTT : eg. LCI and Paris Première are willing
to switch from a paid system to a free to air model. But
their competitors are fighting against it.
• DTT newcomers sold their channels to larger and historic
media groups => market concentration
Plus overall European and French economic crisis

16. These difficulties have consequences on content production :
» Between 2011 and 2012, the rights allocated by TV channels has decreased of 7%;
» In 2014, producers are complaining from an decreasing of investments in production :
minus 20% on some similar programs;
» Quotas are globaly respected but the production market is becoming more and more
competitive;
» DTT Channels , with their limited budget, have lower costs of production;
» The end of an « Golden Age » of the production market is profiling with a low cost
market emerging;
» All those difficulties link to a major challenge : quality of the programs.

17. Focus on French-speaking countries in Africa
• From 2007 to 2011, all local TV operators transformed their platform from analog to
Digital signal BUT still in the MMDS frequency;
• One big challenge for 2015 is to allocate them UHF frequencies wish implies loss of
channels as the bandwith allocated cannot welcome as many channels as they could
transmit on the MMDS frequencies;
• Trends on the market is to develop local languages contents;
• Local production in mainly financed either by TVs, either by private sponsorship
(bartering).
Significants figures

18. Regulatory Framework
• Under the pulse of the French CSA and the Organisation Internationale de la Francophonie,
all comitees of audiovisual regulation has been created from late 90’s to early 2000’s;
• Today, all French Speaking countries in Africa have their CSA/ ICASA equivalent. Those
institutions are mainly in charge of monitoring channels during elections times;
• So far, neither private televisions nor telecom operators pay taxes dedicated to local
production;
• To face the challenges of “All Digital”, Authorities in Western Africa (UEMOA + Guinea) has
setted up common platform. Tasks identified by this platform are, amongst others :
• To combine intelligence to meet the technological, cultural, sociological, political and economic challenges of
the audiovisual sector in West Africa;
• To strengthen cooperation and collaboration in controlling the Audiovisual Communication in West Africa, by
establishing a formal structure;
• To impulse studies on the audiovisual sector.
The platform is headed by Béatrice DAMIBA, President of the CSC in Burkina Faso and the
Technical Secretariat is headed by Ibrahim Sy Savanné, President of HACA in Ivory Coast.
Focus on French-speaking countries in Africa

19. DTT Switch over :
a wonderful opportunity for content creation
A very tight timing
A main cultural issue
Local content is a key success factor
Sub-regional cooperation strongly advised
DTT content: New usages and new contents
Strong potential of development of interactive services
Media and Telecom are emerging in Africa
French authorities and DTT specialists
willing to help and support

20. Thank You for your kind attention
Séverine LAURENT
Tel : +33 6 63 82 99 57 – Mail : severine@afrikakom.com
Medias consultant specialized in French Speaking countries in Africa
General Manager of Afrikakom - France & Mali
Former General Secretary of the MEDIAF – Network of French speaking Medias