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Overcoming the Incoherent ‘Grand Maneuver’ in the French Film and TV Markets: Lessons from the Experiences in France and Korea

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In 1989, the Member States of the European Union integrated their TV markets together in order to create a larger and more open ‘single TV market’ through the Television without Frontiers Directive. The French film industry used this opportunity to extract additional revenues by implementing TV quotas and strengthening the chronologie des médias. This paper examines the impact of these two measures on the French film and TV industries and shows how they were incoherent. In contrast to the expectations of the French film industry, these measures have induced it to produce less attractive films and burdened the TV industry with increased regulatory costs. While the government poured massive subsidies into the filmmaking sector, this endeavor has not been able to significantly improve the attractiveness of French films. In this regard, the Korean film industry offers valuable lessons. Since the late 1990s, the Korean government has significantly reduced its level of protectionism and scaled back its intervention in the industry. Crucially, business has been the main engine to produce attractive films that can compete with Hollywood films in the open market. For the French film industry, the findings in this paper suggest which direction its Grandes Manœuvres should pursue. If the French film industry truly wishes to enhance its competitiveness, it needs to broaden its view and look at other parts of the world where competitive film industries have emerged and enjoyed more success. It is clear what the future direction of Grandes Manoeuvers should be, progressive liberalization and globalization.
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Overcoming the Incoherent Grand Maneuver
in the French Film and TV Markets: Lessons
from the Experiences in France and Korea
Jimmyn Parc
Sciences Po Paris and
Seoul National University
Patrick Messerlin
Sciences Po Paris
Abstract
In 1989, the Member States of the European Union integrated their TV markets together in order to create a larger and more
open single TV marketthrough the Television without Frontiers Directive. The French lm industry used this opportunity to
extract additional revenues by implementing TV quotas and strengthening the chronologie des m
edias. This paper examines
the impact of these two measures on the French lm and TV industries and shows how they were incoherent. In contrast to
the expectations of the French lm industry, these measures have induced it to produce less attractive lms and burdened
the TV industry with increased regulatory costs. While the government poured massive subsidies into the lmmaking sector,
this endeavor has not been able to signicantly improve the attractiveness of French lms. In this regard, the Korean lm
industry offers valuable lessons. Since the late 1990s, the Korean government has signicantly reduced its level of protection-
ism and scaled back its intervention in the industry. Crucially, business has been the main engine to produce attractive lms
that can compete with Hollywood lms in the open market. For the French lm industry, the ndings in this paper suggest
which direction its Grandes Manœuvres should pursue.
In the 1980s, the television (TV) market emerged as an
important source of revenue for Hollywood often making up
for the losses brought on by lms that had opped at the
box ofce. Even successful lms could earn additional rev-
enues which made home entertainment a win-win situation
for the Hollywood studios. By the late 1980s, this industry
had become well developed in the United States as the
price of videotapes had come down and cable TV subscrip-
tions were increasing among households. Soon, TV became
the dominant force in the US audiovisual landscape; in
1990, it represented 43 per cent of the global earnings for
Hollywood studios, compared to 29 per cent for movie the-
aters (Epstein, 2010). In fact, this revolutionchanged the
management structure among Hollywood studios as new
executives with backgrounds in the TV industry began to
replace the lm moguls (Epstein, 2010).
In Europe, this transformation was seen as inescapable
and there were fears that this would also lead to the contin-
ued dominance of Hollywood in their markets. As a result,
the Member States of the European Union (EU) sought to
mirror this trend as quickly as possible in order to enhance
their competiveness. Although they recognized the TV
industry as a potentially lucrative source of revenue, their
efforts were restrained by the fact that in the late 1980s
many TV stations in Europe were state-owned and/or con-
trolled by outdated national regulations. Given the compli-
cated bureaucracy associated with these institutions, it
would take a full decade for this process of privatization
and modernization to be fully implemented. In the mean-
time, the idea of creating a single European TV marketwas
pursued as a way to speed up change in this sector and the
Television without Frontiers(TVWF) Directive was imple-
mented in 1989. It is notable that this process was largely
led by the state and not by business as had happened in
the US.
Thirty years have passed since the launch of this initiative
in the European TV market which makes for a good time to
assess its results and understand its true impact. Did this
policy initiative help to improve the situation for Europes
lm industries? And to what extent did it enhance the com-
petitiveness of these lm companies in their home market
vis-
a-vis Hollywood? Such an appraisal though is difcult to
approach from a broad European level given that each
Member State has had a signicantly different view on how
to interpret and implement key provisions of the TVWF
Directive.
Given this challenge, it would be more effective to
explore the case of France, a country which adopted an
Global Policy (2020) 11:Suppl.2 doi: 10.1111/1758-5899.12836 ©2020 University of Durham and John Wiley & Sons, Ltd.
Global Policy Volume 11 . Supplement 2 . June 2020 31
Special Issue Article
extreme position during the negotiations on the TVWF
Directive by insisting on strict quotas for the broadcast of
EU and non-EU lms on TV. It is noteworthy here to men-
tion that since 1989 successive French governments have
also reinforced three main domestic policies toward its lm
and TV industries: increasing the level of subsidies, strength-
ening the existing chronologie des m
edias or the mandatory
lm exhibition period which extends from movie theaters to
streaming platforms, and tightening regulations on broad-
casting slots for lms on TV.
1
This paper seeks to analyze
the impact of these measures upon the French lm industry
over the last thirty years.
Examining such a case by comparing France with a coun-
try that has a comparable size of lm market in terms of
lm production and admission numbers but without the
aforementioned measures would be more meaningful and
help provide important context to this assessment. In this
respect, the most suitable example would be Korea, a mar-
ket that meets all these conditions (Messerlin and Parc,
2014, 2017; Parc and Messerlin, 2018). It does not enforce
regulations on the broadcasting of lms on TV, rather it has
followed a similar path with the US home entertainment
industry. Thus, we see that the Korean lm industry is more
business-orientated and has faced little government inter-
vention since the late 1990s.
The comparison between France and Korea is all the
more interesting as the Korean lm market has grown very
fast and has even outperformed the French lm market
despite its smaller population: as of 2019, France has 67.0
million while Korea has 51.5 million. The numbers on these
two lm industries speak for themselves. Over the last three
decades the Korean lm market has caught up with its
French counterpart; it amounted to only 20 per cent in
1989, 50 per cent in 2000, 80 per cent in 2010, and 142 per
cent in 2018. Crucially though, until 2007, the Korean lm
industry did not receive any signicant amount of subsidies
which is in stark contrast to France. Even after this date, the
amount of subsidies has been signicantly smaller than
what the French lm industry enjoys (Messerlin and Parc,
2017). In this regard, the puzzling stagnancy of the French
lm industry under the TVWF Directive, particularly with the
aforementioned regulations, deserves to be thoroughly ana-
lyzed.
In addressing the differences between these two
approaches, this paper is organized as follows. The rst sec-
tion analyzes the main features of the TVWF Directive and,
more importantly, the way in which France has imple-
mented them. The second section examines the true effects
of the so-called TV quotasby comparing the long-term
evolution of the French and Korean lm markets. The third
section scrutinizes the regulatory costs of these TV quotas.
The fourth section analyzes the subsidies on the French lm
and TV industries and evaluates their nancial costs. The
fth section explores the core issue on how to enhance the
competitiveness of the French lm industry through a com-
parison with the Korean lm industry. Last, the conclusion
summarizes the key implications from the analyses.
The Television without Frontiers Directive of 1989
When launched in 1989, the ultimate objective of the TVWF
Directive was to create an integrated TV market across Eur-
ope and included the mandate to enable the mutual recog-
nitionof broadcasting licenses among EU Member States.
2
In other words, a broadcaster would not require an addi-
tional license to broadcast in another Member State as they
would be operating under the national laws of their home
country which are subject to the minimum requirements set
out by the TVWF Directive. Later, these basic principles were
extended to video-on-demand (VoD) services in 2010.
The TVWF Directive was a huge success. Attracted by the
enlarged TV market in the EU, large amounts of investment
poured into the related industries from both Member States
and non-EU countries. Since the launch of the TVWF Direc-
tive, the number of TV channels operating in the EU grew
from around 550 in 1990 to roughly 1,200 in 1995 and even
7,000 in 2014 while the market has increased on average by
18.5 per cent annually (OlsbergSPI, 2016).
The TVWF Directive was also seen as an opportunity to
enlarge the market for the lm industries. However, several
countries led by France were opposed to this approach
toward an open and integrated market which would entail
greater competition among an enlarged number of rivals.
France nally persuaded the other Member States that a
provision (Article 4) be included in the Directive to ensure
that channels in the EU are required to reserve for Euro-
pean works a majority proportion of their transmission time,
excluding the time appointed to news, sports events,
games, advertising and telex servicesthe so-called TV
quotas.Dening precisely the term majority proportionled
to more disputes among the Member States and even
within the countries themselves including France. It was
nally agreed that the TV quotas grant 40 per cent of the
lm transmission time to domestic works and 20 per cent to
the works from other EU countries, which leaves just 40 per
cent for works from the rest of the world (for further details,
see Grantham, 2003).
During these negotiations, many Member States, includ-
ing Germany and the United Kingdom, realized that their
domestic lm industries would be unable to meet such a
demand for lms on TV. Instead of seeking to articially
boost the supply of lms, they simply decided to ignore or
apply loosely the TV quotas. Eventually, these EU countries
negotiated an escapeclause in Article 4 stating that the
quotas should only be applied where practicable and by
appropriate means,and that the proportion of which
should be achieved on the basis of suitable criteria.
At the time, the TV quotas seemed to be a diplomatic
success for the French lm industry and were very much
celebrated. But thirty years on, the question needs to be
asked: how effective have they been? This paper shows that
they have actually led to three unexpected negative effects.
First, the French lm companies who distribute and even
produce lms from outside of either France or the EU began
to feel the strain as these quotas limited the additional
©2020 University of Durham and John Wiley & Sons, Ltd. Global Policy (2020) 11:Suppl.2
Jimmyn Parc and Patrick Messerlin
32
revenues that they would have expected from the unre-
stricted screening of their lms.
Second, the TV channels themselves began to suffer as
the chronologie des m
edias have only served to accelerate
the shift among French audiences away from the nations
TV stations to other international outlets in order to watch
US lms. This has been particularly noticeable with the
advent of the Internet and other digital platforms since the
late 1990s.
Third, French policy-makers hoped that by limiting the
access of US lms to French TV, the nationslms would ll
the gap left behind. However, the TV quotas have created
an articialshortage of French lms on TV screens as the
domestic lm industry has been unable to produce a suf-
cient amount of attractive lms. Thus, only a handful of
attractive French lms have been aired repeatedly over
years to the extent that French audiences are losing interest
in domestic lms.
TV quotas: a pyrrhic victory
While the French lm industry was pursuing the path of
protectionism,the Korean lm industry was embarking
upon liberalization. The Korea-US Film Agreements in 1985
and 1988 opened up the Korean lm market to Hollywood
by abolishing import quotas and permitted Hollywood stu-
dios to distribute their lms directly to Korean movie the-
aters.
3.
Given that the Korean lm market was only 20 per
cent of its French counterpart in 1989, it is interesting to
compare the different paths undertaken by these two lm
industries up to 2005, the year before the screen quota cut
came into force in Korea and created new dynamics. In this
analysis, the two lm industries are compared by consider-
ing the number of domestic lms released and then the
average revenues generated per lm. The number of lms
released and produced is a barometer that is often used to
measure the dynamism of the industry while the average
revenues per lm signify the attractiveness of lms among
audiences.
Figure 1 compares the number of lms released by France
and Korea since 1976 in order to trace their evolution. The
two industries have faced the same slow but despairing
decline in this number up to the late 1980s. Interestingly, the
TVWF Directive of 1989 and the Film Agreements of 1985 and
1988 brought diametrically opposite paths for each side. The
articial shortage created by the TV quotas was perceived by
the French lm industry as an opportunity to increase the
number of lms produced and released. Thus, there is an
immediate and unagging increase in the number of French
lms after 1989. By contrast, the Korean lm market experi-
enced stagnancy after the short-lived surge during the years
19851990. It is important to emphasize here that the number
of lms produced in Korea began to increase after 1999 and
that today Korea produces and releases more lms than
France (UNESCO Institute for Statistics, 2020).
When it comes to average revenues per lm, the compar-
ative outcome of French and Korean lms is noteworthy as
shown in Figure 2. After 1991, the average revenues per
French lm has stagnated at a historically low level. For
Korea, the average revenues for domestic lms has grown
since the early 1990s at a rate which has become higher
than in France. The average revenues per lm in Korea was
one-fourth of the gure in France for 1985, roughly half in
1995, but 1.4 times higher in 2000, and 3.4 times higher in
2005. In other words, facing mostly the same competitors
Hollywood blockbusters the Korean lm industry has been
able to produce more attractive lms than its French coun-
terpart.
For those who believe that the TV quotas have put the
French lm industry in a favorable situation, it is rather sur-
prising to see such a reversed outcome; particularly given
the fact that Korea opened up its market to Hollywood as
France was closing its doors. In examining the Korean lm
industry during this period, Parc (2017, 2019) argues that it
Figure 1. Number of lms: France and Korea, 19752005
0
50
100
150
200
250
Number of French films Number of Korean films
Sources: Centre national du cin
ema et de limage anim
ee (CNC, various issues), Korean Film Council (KOFIC, various issues).
Global Policy (2020) 11:Suppl.2 ©2020 University of Durham and John Wiley & Sons, Ltd.
The TVWF Directive and Its Quotas on the French Film and TV Markets 33
has experienced signicant changes in its industrial structure
to produce attractive lms that were able to be in competi-
tion with Hollywood lms in the domestic market. To this
end, the large Korean conglomerates or chaebols have been
heavily involved in this process for their own interests. This
then raises the question, what happened to the French lm
industry under these TV quotas? The next section addresses
this issue.
Regulatory costs: TV quotas
The introduction of TV quotas has had an unexpected out-
come: it has deepened the conict between the French lm
companies and the TV networks which has been ongoing
since the late 1970s. With French audiences preferring to
watch lms at home instead of visiting movie theaters, there
was a massive decline in admissions. In fact, this trend was
not French-specic but can be found across the world,
including in Korea.
Under these circumstances, the TV quotas for lms
brought about two largely unanticipated difculties. First, as
mentioned before, French lm production companies had to
produce more lms than before in order to meet the new
demand. In fact, when the TVWF Directive was being dis-
cussed, a few gures from the TV industry were initially
opposed to the proposed quotas (Grantham, 2003); how-
ever, their views have been largely ignored by French pol-
icy-makers, thus the lm industry embarked upon their
Grandes Manœuvres. In such a declining lm market, produc-
ing more lms only served to disperse investments in lm
production far too much which led to a deterioration in the
quality of its lms. Second, the French TV stations could not
exhibit all the non-EU lms that had already been imported
for movie theaters. Given that the average share of the US
lms alone shown by French movie theaters is 57.6 per cent,
it can be judged that a large number of foreign lms were
already imported to France. It can also be easily assumed
that there were a large number of viewers who were wait-
ing for these US lms to be shown on TV. However, the
quota of 40 per cent hindered the full utilization of these
lms that had already been screened at movie theaters from
being broadcasted on TV.
Under strong pressure from the Bureau de liaison des
industries cin
ematographiques the lobby group coordinat-
ing all the trade unions within the French lm industry
the nations policy-makers believed that they could only
solve this dilemma by frequently rening and tightening the
chronologie des medias. Introduced in 1982, this regulation
was an attempt to balancethe relations between movie
theaters and TV stations by requiring a mandatory time
sequence for the release of new lms through different out-
lets or windowssuch as movie theaters, videos, DVDs,
and TV. It stipulated that lms must be rst released at
movie theaters for a few months before being progressively
released across other outlets according to the strict timeta-
ble produced.
4
With an increasing number of VoD services in the 2000s,
French policy-makers have sought to create new release
schedules in an attempt to re-balancethe relations
between TV channels and VoD service providers. The timeta-
ble used between 2009 and 2018 listed eight different win-
dows while the version used today has ten. Some windows
are dened in coded terms: for instance, the sixth window
consists of free-to-air TV who have invested at least 3.2 per
cent of their turnover for the funding of European works
(Journal Ofciel de la R
epublique Francßaise, 2019). As a
result, today, it takes 36 months for a lm to be released via
subscribed VoD service providers (Amazon Prime, Disney+,
and Netix) and 44 months for free VoD service providers,
which are the two most popular outlets today.
The chronologie des m
edias particularly hurts the produc-
ers of under-performing lms who once at the box ofce
Figure 2. Average revenues per lm: France and Korea, 19752005
0
2
4
6
8
Million constant 2018 US dollar
Average revenue per French film Average revenue per Korean film
Sources: CNC (various issues), KOFIC (various issues).
©2020 University of Durham and John Wiley & Sons, Ltd. Global Policy (2020) 11:Suppl.2
Jimmyn Parc and Patrick Messerlin
34
are stuck for four months without any chance to access
other outlets to recoup their losses. With such negative
effects from these regulations, this outcome raises the ques-
tion, how is the French lm industry able to produce a large
number of lms despite such low revenues? Messerlin and
Parc (2017), Messerlin and Vanderschelden (2018), and Parc
and Messerlin (2018) all argue that the answer is subsidies.
The next section addresses this issue.
Financial costs: subsidies
Increasing the number of French lms produced despite
declining revenues per lm has been possible with the help
of massive subsidies. Initially, there was little interest in TV
quotas among French TV stations as their core business is
not about making lms (Grantham, 2003). Despite this, the
French government and the TV industry managed to strike
a deal: TV stations agreed to support the lmmaking busi-
ness by pre-purchasing lms or coproducing lms; in
exchange, they became eligible for massive government
subsidies. Between 1989 and 2005, subsidies to the French
lmmaking sector increased by 160 per cent. Furthermore,
the average share of lm subsidies during the period of
19801989 in the box ofce revenues for French lms
jumped from 35 per cent hence before the adoption of
the TVWF Directive to 69 per cent for the years 1989
2005. At rst glance, it is clear that the provision of massive
subsidies has been effective in boosting the French lm
industry. However, such an evolution requires further scru-
tiny.
The most accurate measure of an industrys performance
is its value added. This is dened as the value of the prod-
ucts or services sold in the market by an industry minus the
inputs that are needed in order to produce its goods or ser-
vices. For instance, the value of lmmaking includes inputs
such as travel expenses for shooting lms at various loca-
tions, the rental of equipment, and other costs. The value
added of the lm industry excludes these inputs of goods
and services because they have been produced by other
sectors, such as airlines and hotel services, not by the lm
industry per se.
In 2013, Inspection g
en
erale des nances (Inspectorate
General of Finances, IGF) one of the key auditing bodies
for the French government released a joint report with
Inspection g
en
erale des affaires culturelles (Inspectorate Gen-
eral of Cultural Affairs, IGAC). This report has provided the
most detailed account on subsidies in the French lm and
TV industries for the year 2012, which unfortunately has not
been updated since. Institut national de la statistique et des
etudes
economiques (National Institute of Statistics and Eco-
nomic Studies, INSEE) has also published information regard-
ing the value added in the lm and TV industries for the
same year. This paper analyzes the true contribution of sub-
sidies to the French lm and TV industries by calculating
the share of subsidies in the value added of these two
industries. This share is labeled as subsidy rate: it is consid-
ered as one of the key indicators that demonstrates the abil-
ity of an industry to develop its own capacities. If the rate is
higher, it is indicative that the TV industry is less capable to
function properly without state support.
The subsidy rate in the French film industry
INSEE (2013) divides the value added of the French lm
industry into four main segments: production, post-produc-
tion, distribution, and exhibition (see column (1) of Table 1).
As the data only reports the value added for France, it does
not distinguish between the contributions made by domes-
tic or foreign entities. In other words, INSEE overestimates
the size of what constitutes as the trueFrench lm indus-
try. Therefore, in order to eliminate the contribution of for-
eign entities, two key steps are used. First, according to
Centre national du cin
ema et de limage anim
ee (CNC)
(2012) the share of foreign entities in the production and
post-production segments is around 24 per cent.
5
Therefore,
the trulyFrench value added of these two segments should
be at the level of 0.76 (10.24) of their corresponding values
presented in column (1), as shown in lines A and B in col-
umn (2).
Second, regarding the distribution and exhibition seg-
ments, the admission share of French lms in 2012 was
roughly 40 per cent (CNC, 2014). Therefore, the truly
French value added of these two segments is shown in
lines C and D of column (2) which is 0.4 times of the
value added shown for these lines in column (2). Com-
bined, these adjustments for the four segments suggest
that the more accurate estimate of the total value added
generated by trulyFrench lms is only 1.7 billion, not
Table 1. Value added and subsidy rate in the French lm
industry, 2012 (mil. )
Activities in the lm
industry
a
Value
added
made in
France
Truly
French
value
added
Subsidies
(1) (2) (3)
A. Production of lms 1,273 967
B. Post-production 499 380
C. Distribution of lms 526 210
D. Exhibition of lms 444 178
E. Total value added 2,742 1,735
F. Government-related
subsidies
476
G. Labor subsidies
(intermittents)
b
200
H. Total subsidies 676
I. Subsidy rate (in % of
value added)
24.7 39.0
Notes: a. The codes of the segments (French industrial nomencla-
ture NAF rev.2 2008 with 732 basic activities) are 5911C, 5912Z,
5913A and 5914Z for the lines A, B, C and D, respectively. These
codes ensure that the data are not overlapping; b. Subsidy compo-
nent of the specic unemployment regime of the intermittents du
spectacle.
Sources: INSEE (2013); IGF and IGAC (2013).
Global Policy (2020) 11:Suppl.2 ©2020 University of Durham and John Wiley & Sons, Ltd.
The TVWF Directive and Its Quotas on the French Film and TV Markets 35
2.7 billion which is signicantly below the amount that is
generally believed.
IGF and IGAC (2013) provide the most exhaustive informa-
tion on all the subsidies or equivalents such as scal rebates
of all kinds, granted by the French government to the entire
lm industry. Its overall amount is 0.5 billion as shown in
line F in column (3). However, this information cannot be
split for each of the four lm industry segments. Besides
these subsidies, one should not overlook intermittents du
spectacle or labor subsidies granted to part-time workers
under a special unemployment regime (line G in column
(3)). These labor subsidies amount to 0.4 billion for the lm
and TV industries together (Gille, 2013); half of this amount
has been arbitrarily allocated to the lm industry and the
other is for the TV industry. Therefore, the total amount of
subsidies granted to the French lm industry reaches almost
0.7 billion (line H in column (3)).
To sum up, the subsidy rate in the French lm industry
ranges between 24.7 and 39.0 per cent (line I). This per cen-
tage is massive when compared with other French cultural
industries, such as museums (13 per cent), live perfor-
mances (9 per cent), visual arts (2 per cent), and books (0.8
per cent) (IGF-IGAC, 2013). In fact, the subsidy rate in the
French lm industry is likely to be higher than 39 per cent
if one takes into consideration that around (or even more)
40 per cent of French lms are coproduced (UNESCO Insti-
tute for Statistics, 2020). This would suggest that there must
be a larger per centage of foreign investment; hence, it
may actually be higher than the estimate presented in this
paper.
The subsidy rate in the French TV industry
By using the data from the same sources, this section delves
into the contribution of subsidies to the value added of the
French TV industry related to activities in production, distri-
bution, and exhibition of lms. The method used in the
previous section is used again; (1) calculate the value
added generated by the trulyFrench TV industry; and (2)
calculate the contribution of subsidies in the value added to
the TV industry the subsidy rate. The higher the rate, the
more the TV industry is unable to function without state
support.
INSEE (2013) divides the value added of the French TV
industry into three main segments (see Table 2); (1) the pro-
duction of lms (for movie theaters and TV) and programs
(for TV only); (2) the distribution activities of the general TV
channels that broadcast lms and TV series as well as news,
sports, entertainment, and childrens programs; and (3) the
distribution activities of the thematic TV channels that spe-
cialize in broadcasting either news, sport events, talk shows,
or other specic programs (see column (1)). For each of
these three segments, it is necessary to estimate the size of
the trulyFrench TV industry by excluding the contribution
of foreign entities related to lmmaking.
It is important to note that assessing the value added and
subsidies in the TV industry is more complex than for the
lm industry because of the presence of state-owned French
TV channels. Since 2009, French law stipulated that revenues
generated from the broadcasting of commercial advertise-
ments are restricted for state-owned TV channels. To make
up for these losses, they instead receive a lump-sum of
funds from the government. As these funds cannot be split
between the different types of TV activities, such as lm-
making, news, sports, shows, and other programs, this paper
adopts two alternative approaches for this analysis. The rst
one relies on all the TV activities without distinction of the
specic funds that support lmmaking; hence it is based on
the largest estimates of value added and subsidies. The sec-
ond approach is focused only on the lmmaking activities
Table 2. Value added and subsidy rate in the French TV industry, 2012 (mil. )
Activities in the TV industry
a
Value added made in
France
Truly
French
value
added
TV aidedvalue
added
Subsidies
Entire TV
industry
TV aidedvalue
added
(1) (2) (3) (4) (5)
A. Production of lms/programs
for TV
2,460 2,288
B. Distribution: general TV
channels
3,214 2,604
C. Distribution: thematic TV
channels
410 410
D. Total value added 6,085 5,224 1,144
E. Government-related subsidies
b
5,006 613
F. Labor subsidies (intermittents)
c
200 200
G. Total subsidies 5,206 813
H. Subsidy rate (% of total value
added)
85.6 99.7 71.1
Notes: The codes of these French activities (in nomenclature NAF rev.2 2008 with 732 basic activities) are 5911A, 6020A and 6020B, respec-
tively; these codes ensure that the data used are not overlapping; The dotations en fonds propres for state-owned TV channels are included in
column 4; Subsidy component of the specic unemployment regime of the intermittents du spectacle.
Sources: INSEE (2013); IGF and IGAC (2013).
©2020 University of Durham and John Wiley & Sons, Ltd. Global Policy (2020) 11:Suppl.2
Jimmyn Parc and Patrick Messerlin
36
of the TV sector, with the corresponding value added and
subsidies.
The rst alternative approach leads to the following
results. The share of French investments in the production
of lms and other programs is 93 per cent (CNC, 2012).
Based upon this gure, the truly French value added in this
segment should be adjusted at the 93 per cent level; thus,
2.3 billion as presented in line A in column [2]. Regarding
lm distribution through the general TV channels, adjust-
ments are based on the viewing time of the French audi-
ence: 31 per cent for watching lms of all nationalities and
69 per cent for other TV programs (CNC, 2012). As roughly
40 per cent of the lms are qualied as French, the viewing
time devoted specically to French lms is 12 per cent
(0.31 90.40). In terms of the other TV programs such as
news, sports, and entertainment of general TV channels,
they have been assumed to be entirely truly French in
Table 2. Based upon this, the nal result is shown in line B
in column (2). With the distribution through thematic TV
channels, as there is no detailed information, this paper
(conservatively) assumes that all these activities are truly
French as shown in line C in column (2). Combined, these
adjustments suggest that the value added of the truly
French TV industry is only 5.3 billion, instead of 6.1 billion,
as shown in line D in column (2).
Turning to subsidies, this rst approach includes the dota-
tions en fonds propres or the lump-sum of annual funds for
investmentgranted by the government to the state-owned
TV channels; 5.0 billion as shown in line E in column (4).
This is in addition to the rest of the labor subsidies which is
0.2 billion (see line F in columns (4)). Therefore, the total
subsidies granted to the French TV industry is around 5.2
billion which equates to the subsidy rate ranging from 85.6
to 99.7 per cent of the value added as shown in line H.
The second alternative approach is to put aside the com-
plications due to state-ownership and rely instead on the
estimate of aidedproduction of TV ction workssuch as
lms or the equivalents which are calculated every year on
the basis of the hours broadcasted that CNC supports. In
2012, this aidedproduction accounted for about 1.3 bil-
lion (CNC, 2012). One can derive the aidedvalue added
from the aidedproduction as INSEE (2013) reports that the
value added for this case is about 90 per cent. Therefore,
the aidedvalue added of TV works is roughly 1.1 billion
(1.3 billion 90.9) as shown in line D in column (3).
In order to estimate the subsidies granted to the aided
value added, the most conservative way (as above) is to
subtract the dotations en fonds propres and the scal tax
reliefs for low-income people and senior citizens; they are
around 3.9 billion and 0.5 billion respectively (IGF and
IGAC, 2013). Therefore, the subsidies allocated to the aided
value added of TV worksis roughly 0.6 billion (=5 billion
3.9 billion 0.5 billion) (line E in column (5)) to which
the labor subsidies (0.2 billion) must be added. As a result,
the subsidies provided to the aidedvalue added is 0.8 bil-
lion in total. The resulting alternative subsidy rate based on
this aided production of TV worksapproach is about 71.1
per cent (line H in column (3)).
Wheres Wally? Finding the key factor
As analyzed before, the TV quota provision of the TVWF
Directive has in fact put the French lm industry in a bad
position. Furthermore, government subsidies the remedy
used to overcome this situation have not been effective
enough to address these difculties. What therefore can be
done to turn this situation around? It may seem like looking
for Wally; however, the core factor that can help improve
Figure 3. Relative attractiveness of lms: Korea vs. France (19752005)
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
France Korea
Sources: CNC (various issues), KOFIC (various issues).
Note: Standard deviations for number of admissions during the period of 1989-2005 are as follows: French lms in France-12.45, foreign lms in
France-17.28, Korean lms in Korea-25.56, and foreign lms in Korea-8.33.
Global Policy (2020) 11:Suppl.2 ©2020 University of Durham and John Wiley & Sons, Ltd.
The TVWF Directive and Its Quotas on the French Film and TV Markets 37
the French lm industry can be easily found when compar-
ing the attractiveness of French and Korean lms.
Figure 3 presents the indexes for the relative attractive-
ness of lms from France and Korea. It is dened by the
number of admissions for domestic lms with respect to the
number of admissions for foreign lms. The stitched line in
Figure 3 represents the attractiveness index of French lms
whereas the solid line is the same for those from Korea. If
the value of the index is below 1.0, it means that the general
audience nds foreign lms more attractive than domestic
ones. If the value is over 1.0, however, then the opposite is
true, the general audience nds local lms more attractive.
Despite the fact that the share of US titles among foreign
lms in Korea is higher than it is in France, the implications
that we can draw from Figure 3 remain the same.
Since 1983, the attractiveness index for France has
remained below 1.0, which means that France has, in general,
never been able to produce attractive lms that could draw in
a larger domestic audience. As this index is a relative one, it is
interesting to calculate the standard deviation a measure of
the amount of variation or dispersion of admissions for both
domestic and foreign lms in France. During the period of
19892005, the standard deviation of admissions for French
lms (12.4) was not much different from that of foreign lms
(17.2). Given that French lms are less attractive than foreign
lms as shown in Figure 3, the close standard deviations of
the two groups of lms signify that there has been no signi-
cant change in terms of their relative attractiveness among
these two groups. In other words, the combination of TV quo-
tas and lm subsidies has not been effective enough to
enhance the attractiveness of French lms.
During the same period, the attractiveness index for Kor-
ean lms has also remained below 1.0 for the period up to
2001, but this index has increased signicantly thereafter.
This shows that Korea has been able to produce more
attractive lms that can attract a larger share of the domes-
tic audience. This improvement becomes even more evident
when comparing the two standard deviations for admis-
sions; 25.56 for Korean lms compared to 8.33 for foreign
lms. The relatively low standard deviation for foreign lms
mirrors the fact that the choice to exhibit attractive foreign
lms has been well maintained. By contrast, the high stan-
dard deviation for Korean lms illustrates the signicant
improvement of their attractiveness during the period 1989
2005. In other words, the increase in attractiveness of Kor-
ean lms can be considered as encouraging, especially tak-
ing into account the fact that the subsidy level is
signicantly lower when compared with France (Messerlin
and Parc, 2017; Parc and Messerlin, 2018).
Parc (2017, 2019) argues that instead of pursuing protec-
tionist measures, the Korean government opened up its
market during the period of 19851988. As a result, the Kor-
ean lm industry underwent a process of restructuring by
embracing the US lmmaking system of business verticaliza-
tion which was helped by the participation of chaebols,an
inux of private investment, and market-based competition.
All of which is very different from the French Grandes Man-
œuvres which have failed to achieve their objectives.
Conclusion
The EU Member States integrated their TV markets together
in order to create a larger and more open single TV market
through the TVWF Directive of 1989. The French lm indus-
try used this opportunity to extract additional revenues by
implementing TV quotas and strengthening the chronologie
des m
edias. This paper examines the impact of these two
measures on the French lm and TV industries and shows
how they were largely ineffective.
This paper provides three main results. First, the TV quo-
tas limited the presence of Hollywood lms on TV screens
while expanding the access for domestic ones. However,
contrary to such expectations, these quotas have induced
the already weak French lm companies to produce a vast
number of less attractive lms in order to meet the
demands of the TV market. For the TV industry, the quotas
have increased its nancial burden as it has been unable to
optimize the utilization of US lms that have already been
imported into France for the theaters.
Second, in order to ease this burden, the French govern-
ment has constantly expanded and diversied the chronolo-
gie des m
edias. As a result, this policy instrument has only
made it more difcult for the French lm companies with
under-performing productions at the box ofce to recoup
their losses. Furthermore, the chronologie des m
edias has slo-
wed down or even hindered the responsiveness of the
French lm industry to new technologies and global trends
in the media industry.
Third, the French government has poured massive subsi-
dies into its lm and TV industries. More importantly, the
subsidy rates in the lm and TV industries are at least four
to seven times higher, respectively, than in any other French
cultural industry. The overall costs of this situation on the
whole French economy are huge: more than one-third of
the value added for French lms comes from public trans-
fers, whereas the market-based production process con-
tributes to less than two-thirds of this value added. These
proportions are even worse for the TV industry.
The main lesson from this paper is that protectionist mea-
sures bring about a number of unexpected negative effects
that harm not only the industry in question, but also other
related industries. Notably, the reaction of the French gov-
ernment and industry is limited and not responsive enough
to new challenges brought on by any technological
advancement such as digitization and globalization, or even
unexpected situations like COVID-19.
6
This was clearly
shown with the case of Okja (2017) which created contro-
versy at the Cannes Film Festival in 2017 regarding the for-
mat of its premier release through Netix.
7
Therefore,
instead of intervention, the French government should focus
more on fostering a business-friendly environment.
In this regard, the experience of the Korean lm industry
is meaningful. As the Korean government opened up its lm
market to the world, the countrys companies have invested
and developed the lm industry for their own interest and
prots. This has eventually worked out well and now con-
tributes to form a positive brand name for Korea. Parasite,
©2020 University of Durham and John Wiley & Sons, Ltd. Global Policy (2020) 11:Suppl.2
Jimmyn Parc and Patrick Messerlin
38
the Korean lm that won the Palme dOr at the 2019 Cannes
Film Festival and four awards (Best Picture, Best Director,
Best Original Screenplay, and Best International Feature
Film) at the 92nd Academy Awards, clearly illustrates the
importance of business in the lm industry.
If the French lm industry truly wishes to enhance its
competitiveness, it needs to broaden its view and look at
other parts of the world where competitive lm industries
have emerged and enjoyed more success. It is clear what
the future direction of Grandes Manœuvers should be, pro-
gressive liberalization and globalization.
Funding
This work was supported by the Laboratory Program for
Korean Studies through the Ministry of Education of the
Republic of Korea and the Korean Studies Promotion Service
of the Academy of Korean Studies (AKS-2015-LAB-2250003).
Notes
1. For example, French TV is not permitted to show lms on Wednes-
days in order to encourage young people to go to movie theaters.
2. An EU Directivelays down certain objectives that must be achieved
by each Member State; however, each Member State is free to
decide how to implement this directive into national law.
3. In Korea, screen quotas have existed since 1966 but only became
the key protectionist measure from 1986. Later, it was cut by half in
2006. Many believe that these quotas were benecial as they pro-
tected the Korean lm industry; however, Parc (2017, 2019) argues
that the screen quotas have not had any notable positive impact.
4. For further details, see CNC (2012).
5. The institution in charge of regulating the French lm industry and
granting the vast majority of the subsidies.
6. Refer to Sweney (2020).
7. For further details, refer to Jamet (2017) and Guerrasio (2018).
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Author Information
Jimmyn Parc is a visiting lecturer at Sciences Po Paris, France and a
researcher at the Institute of Communication Research, Seoul National
University, Korea. His current research focuses on the lm and music
industries which are faced with a changing business and trade environ-
ment as well as new challenges from digitization.
Patrick Messerlin is Professor Emeritus of economics at Sciences Po
Paris, and Chairman of the Steering Committee of the European Centre
for International Political Economy (ECIPE) in Brussels. His current
research deals with economic and trade relations between Europe and
East Asia, with a particular focus on cultural industries.
Global Policy (2020) 11:Suppl.2 ©2020 University of Durham and John Wiley & Sons, Ltd.
The TVWF Directive and Its Quotas on the French Film and TV Markets 39
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Projection Infernale à Cannes pour Okja, le Film Polémique de Netflix
  • Jamet C.
Jamet, C. (2017) 'Projection Infernale a Cannes pour Okja, le Film Pol emique de Netflix', Le Figaro, 19 May. Available from: https:// www.lefigaro.fr/festival-de-cannes/2017/05/19/03011-20170519ARTFIG00111-projection-infernale-a-cannes-pour-okja-lefilm-polemique-de-netflix.php [Accessed 2 May 2020].
The Hollywood Economist: The Hidden Financial Reality behind the Movies. Release 2.0
  • E J Epstein
Epstein, E. J. (2010) The Hollywood Economist: The Hidden Financial Reality behind the Movies. Release 2.0. New York: Melville House Publishing.
Some Big Bourgeois Brothels', Contexts for France's Culture Wars with Hollywood
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Grantham, B. (2003) 'Some Big Bourgeois Brothels', Contexts for France's Culture Wars with Hollywood. Luton: University of Luton Press.
Netflix Hits Back at Cannes by Saying It Won’t Screen Any Movies at the Festival
  • Guerrasio J.