Five-percent film tax to get rewrite

After 13 years and one billion euros of investment, the government has decided to rethink the way television companies finance the Spanish film industry.

The current and controversial five-percent model, which requires all private television networks to earmark five percent of their income to Spanish or European cinema in order to comply with an EU directive, will now be one of the points up for debate by the mixed committee that has just been set up to study a new film law to replace the current 2007 legislation, as well as changes to film industry financing.

The move was announced on Tuesday by Deputy Prime Minister Soraya Sáenz de Santamaría during the opening of the annual conference of the Union of Associated Commercial Television Networks (Uteca), which brings together Spain's biggest private broadcasters. Pointing out that the current model dates from 1999, Sáenz de Santamaría said the government was "conscious that it needs revising" and that "there will be amendments," although she did not indicate what direction these might take.

What Sáenz de Santamaría did make clear was that TV companies would go on financing the troubled Spanish film industry, which has been battered by the economic crisis and recent government measures such as a brutal VAT hike and drastic cuts to Culture Ministry budgets, which are down 20 percent for 2013. Among other reasons, she said this was because the system had allowed the tackling of "big film productions that would not have been possible."

The deputy PM made it clear TV companies would go on funding Spanish film

As agreed between the Culture Ministry and the film industry, the mixed committee will present its definitive bill for the new law to Congress on May 31, 2013. Headed by the secretary of state for culture, José María Lassalle, it has promised to reach a consensus on the new law in conjunction with the main political parties and bring the legislation into force in January 2014.

TV companies and producers welcomed the idea of changing the financing model at the Uteca conference on Tuesday. Antena 3 Vice President Maurizio Carlotti called for a grand pact between TV and the film industry, and encouraged the search for greater efficiency. "After more than one billion [euros] in financing from TV companies, Spanish cinema needs to face reality, renounce obstructionism and work with the TV networks loyally," he said.

For Carlotti, success was not "150 failures," but "40 films that return the capital invested," thus allowing the creation of a strong industry.

President of the PATE television producers association José Manuel Lorenzo said the relationship between cinema and television was "tortured," but admitted that film production might have disappeared without help from television.

FAPAE film producers association president Pedro Pérez, meanwhile, told EL PAÍS he was "open to studying an improvement in the application of the investment" from the television companies, but without forgetting the commitment TV channels have to the film industry, as they do in other European countries. He said this was even more important in Spain, where only two operators capture 90 percent of advertising spending.

As well as what the private television networks bring, the Spanish movie industry also benefits from six percent of the income of state-owned operator TVE, which amounts to around 40 million euros a year, according to RTVE President Leopoldo González-Echenique.

Since coming into force in 1999 under the Popular Party government of Prime Minister José María Aznar, the five-percent tax has been a source of continued controversy and confrontation between television stations and the film industry, even reaching the courts at one stage. And now a new front has opened in the battle, relating to the protection of movies shot in any of Spain's official languages at a time when the big TV companies are backing grand English-language productions, such as Juan Antonio Bayona's box-office smash The Impossible, which was financed with funds from Telecinco.

An Industry Ministry memo circulated in late October warned that from 2012 onwards only films shot in one of Spain's official languages would be able to access financing dedicated to national cinema.

It is a measure some TV operators believe could throw into question the production of big movies that are able to break into international markets.