A few days ago, the German Bundestag adopted a revision of the federal Film Funding Act (FFG) which will come into effect on January 1, 2017.One of the landmark changes does not immediately catch one’s eye but it has painful consequences: producers may lose access to what was “their” success related funding. To cut a long story short: in the past producers got credit for repaying the funds they received from the Film Subsidy Agency (FFA) as a loan for the financing of production cost -and could claim the repaid amounts as a grant for a second production. Such “success loans” have now been abolished by the changes of the FFG and if producers do not repay their FFG loans by the end of this year they may lose such monies…Want to know what to do and what else the new FFG has in store?
The new FFG, which will be valid until the end of 2021, was passed with the objective of increasing transparency when granting funds, streamlining the funding bodies, improving the quality selection and to achieve a closer interlinking of secondary exploitation measures.
Repaid loans which could be used as a grant for the financing of a new production have been a great help for successful producers for many years but will shortly be nothing but a memory from the past. The so-called "success loans" have been abolished. Repaid project film funds will now be allocated to the overall pot of funds from which project film loans and reference film grants (the FFA’s automatic subsidy) will be available in equal shares. The new FFG provides for a transitional arrangement which states that “subsidies in form of repaid project film loans […] can be utilised as grants for new projects in accordance with the Film Funding Act as applicable until December 31, 2016 and must be drawn down no later than December 31, 2018.” Thus, repayments of FFG loans made on or after January 1, 2017 can probably no longer be utilised as success loans unless the Administrative Board of the German Federal Film Agency should pass smoother transition regulations which, however, will only become clear by the end of January. It is therefore highly advisable to repay any outstanding project film subsidies – even those maturing only in 2017 – no later than by the end of this year.
Other notable changes of the new FFG relate to the project film loans for which now a general minimum funding amount of EUR 200,000 (EUR 100,000 for documentaries) has been established, however, funds already received for development must be set-off. Furthermore, producer’s equity contributions may now, under certain circumstances, be financed through monies received from pre-sales. The financing of producer’s own contributions through equity or borrowed capital does no longer need to meet a minimum threshold of 2% of all FFA-accepted costs as reflected in the budget. Also, good news for producers who receive reference film funding: it can now be drawn down within a period of three instead of only two years following the allocation of the grant.
In regard to labor law, producers must now inform the FFA whether there is a collective agreement applicable to the staff employed during the production of the film or if compliance of the appropriate social standards was agreed to by other means. This, however, is solely a duty to inform and comes without any obligation to actually enter into such collective agreement. It may, however, have a possible effect on the decision of the FFA commission deciding about which projects will be receiving project funding.
As for exploitation measures, the new FFG provides for possible subsidies for the distribution and exploitation of a film (including DVD and VOD) of up to EUR 1.2 million as a so-called “overall measure” supporting companies who exploit their films theatrically as well as via secondary exploitation measures. And whilst the window holdbacks and their shortening options remain unchanged, the new FFG provides for a clause pursuant to which holdback periods shall not apply at all if a theatrical exploitation of the produced film shows no potential for success. Both the producer and distributor must declare vis-à-vis the FFA prior to any exploitation measures that no theatrical release shall take place.