Further to the political agreement reached at its meeting on 21 June, the Council adopted the Decision on the implementation of a programme encouraging the development and distribution of European audiovisual works (MEDIA II - Development and Distribution).

The ESC noted that access to funding was subject to a feasibility study by the Commission acting under the advisory committee procedure. This ran counter to the Commission’s declared intention to ‘make greater use of automatic aid systems rather than selective aid systems’. Although the action and funding procedures were clearly stated in the programme, it was important to note that a whole range of issues remained rather hazy. The proposal repeatedly mentioned ‘independent European production companies’ as the main beneficiaries, without actually defining what kind of independence was meant, or how that independence would be verified. Furthermore, the proposal ignored the urgent problem posed by the large media conglomerates and their international links, whereas it should suggest measures to avoid production and distribution subsidies going to these groups. The ESC felt that in order to avoid this, and in keeping with the need for transparency, a limit should be set on company size, using the criteria adopted for aid to SMEs. Monitoring procedures should also be made available: they could at least be required to publish details of their company structure and accounts. The ESC would like to see other development and distribution measures calculated to bring economic benefits without requiring direct funding. These might involve strengthening intellectual property rights, tax deductions, or long-term guarantees on soft loans.

Mrs ANDRE-LEONARD noted that MEDIA II, whose main objectives were training, development and distribution, had been allocated funding of ECU 400 million, in other words twice as much as its predecessor. As regards the main amendments, she mentioned the amendment to the legal basis as the EP’s Committee on Culture had called for codecision on the basis of Article 128 of the Treaty for the section on ‘development and distribution’. As far as the substance was concerned, the EP proposed, inter alia , the creation of a support system to enable distributors to reinvest in the distribution of new European films. The rapporteur concluded by quoting Martin Scorsese, who believed that the successes of Woody Allen and Quentin Tarantino could be explained by the influence of the films of Fellini and Bergmann respectively, as well as those of Melville. Commissioner Oreja stated that the Commission could take over, in full or in substance, Amendments Nos 1, 3, 4, 5, 8, 9, 10, 11, 13, 18, 19, 20, 21, 22, 23 and 24 on training; it could also take over in full Amendments Nos 3, 16, 20, 28, 29, 35, 37, 43 and 49 on development and distribution, and in substance Amendments Nos 2, 27, 31, 44 (support for distributors), 6, 18, 26, 34, 46, 47 (SMEs and countries with limited production capacity), 14, 23, 24, 25, 43 (promotion of archives and existing European audiovisual works), 12, 33 and 51 (establishment of catalogues of European audiovisual works). However, two issues had not been resolved: - support for the distribution of European films in cinemas, which strictly speaking was outside the scope of the programme’s objectives, given its limited budget in relation to the number of cinemas (more than 20 000) and the important role of the principle of subsidiarity in this area. In spite of this, the Commissioner was prepared to take over Amendments Nos 5, 8 and 44 on the issue. - the Commission’s choice of legal basis was Article 130 (consultation of the EP) rather than Article 128(4) (codecision), in accordance with the case-law of the Court of Justice, since the objectives of MEDIA II were essentially industrial.

Pending the opinion of the European Parliament, the Council held an initial discussion on the two proposals for decisions concerning the MEDIA II programme (1996-2000). At the end of the discussion, the Council instructed the ad hoc Working Party on the Audiovisual Sector and the Permanent Representatives Committee to continue examination of the Commission proposals in the light of the views expressed, so that the Council could take action at its June meeting. The Presidency noted that the following points in particular would require special attention in the course of examination: - the objective of a high Community added value and complementarity with action at national level; - the need for concentration of resources in the areas of development and training as well as that of distribution including cinema programming, while taking into account cultural and linguistic diversity and the circumstances of Member States with limited capacity in this respect; - establishment of management arrangements clarifying the respective roles of the Member States, the Commission and professionals in the field; - the need for effective interaction between the support provided by the MEDIA programme and the financial mechanism announced by the Commission; - organisation of a smooth transition from the actions carried out under the present programme. The MEDIA programme, the first phase of which has been running since 1991, is intended to encourage and develop the audiovisual programme industry in Europe . The Commission proposal provides for three main forms of support: training (the first proposal, based on Article 127 of the Treaty), development and distribution (second proposal, based on Article 130 of the Treaty). The second phase of the programme - MEDIA II - would have a funding of ECU 400 million for 5 years. Aid would be granted in the form of loans of up to 50% of the cost of the actions (except for aids to training, which could be as much as 75% and would be granted as non-refundable subsidies).