Market Insight

Czech Republic to impose film fund levy on TV industry

March 07, 2012


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The Czech government has drawn up a bill requiring private broadcasters, cable companies and internet video providers to pay a percentage of their revenues to the state film fund. The taxes are designed to make up for declining advertising revenues at the public broadcaster Czech Television. Additional funds will also be raised from the cinema industry.

According to the bill, which if passed will come into effect in January 2013, the largest commercial broadcasters - CME-owned TV Nova, MTG-owned Prima TV, and Barrandov TV - will have to pay the fund (full name the Czech State Fund for the Support and Development of Czech Cinematography) two per cent of their advertising revenues. Cable TV operators will have to pay one per cent, and internet video services, 0.5 per cent. Cinemas, which already pay CKr1 from every ticket sold, will have to contribute one per cent revenues.

Czech public television assigned CKr150m (€6m) per year from its advertising income - about two-thirds of the fund's budget - until major public channel, CT1, stopped broadcasting advertising at the end of 2011. The fund was created in 2002 with the objective to support the development of local film production and distribution. Until now, in addition to money from public television and cinema owners, the fund also had revenues from copyrights for some movies produced during the communist era in the former Czechoslovakia. The annual budget of the fund was CKr225m in 2010.

 

On the one hand it is surprising that falling advertising on public TV could affect local private companies, such as cable TV operators, or internet video services. On the other hand, however, cable TV operators and other TV market players are required to pay fees to state film funds in other European countries, including France, Poland and Slovakia. In these countries public and private TV broadcasters also pay such fees. Poland and France also require satellite operators to pay the fees, whereas in Slovakia satellite TV players are exempted.

IHS Screen Digest estimates that total amount of money collected for the Czech Fund of Cinematography according to the new regulations will be likely higher than the fund's total budget in so far. For year 2013 the combined contribution from the TV market players should be higher than €8m and on top that the fund will also receive money from copyrights. The growth of TV markets in the Czech Republic, especially the growth of TV advertising (CAGR 2011-15 forecast at 4.4 per cent) and cable TV revenues (CAGR 2011-15 forecast three per cent) will make the fund's budget even higher. Nonetheless, as public television is no longer required to contribute to the fund, before 2013 the fund will only receive the money from cinema owners (according to current regulations) and from copyrights, which means a considerable decrease in its budget; however, a grant from the ministry of culture is likely to make up for that.

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