Report on the work of the crisis team in the cinematographic industry

Scholarships for creators who are in a difficult financial situation, changes in the Cinematography Act and the Act on financial support for audiovisual production, numerous amendments introduced to PFI Operational Programs and a number of initiatives implemented by working teams – these are selected effects of the work of the crisis team in the cinematographic industry, which were presented by the director of the Polish Film Institute, Radosław Śmigulski, who headed the work of crisis team.

Ladies and gentlemen,

The coronavirus outbreak has had a particularly painful effect on the film industry. The closing of the cinemas was the beginning of an unprecedented paralysis of the film sector, the effects of which we are not able to foresee. The Institute took immediate corrective actions, which began with the creation of a crisis team in the cinematographic industry. My invitation to cooperate with the team was accepted by eminent experts, representatives of all the pillars of the Polish film sector: producers, directors, distributors, representatives of cinemas, film festivals, independent experts and employees of the Polish Film Institute.

The team’s task is to develop rescue solutions for the film industry in the face of the economic situation. During weekly meetings of the full team, through discussion and exchange of experiences, directions of activities are determined, followed by widely discussed conditions of their implementation. To optimize work, team members meet during the week in working teams (committees) to which they have been assigned in accordance with their competences. The committees work, among others on the issues of distribution in the conditions of the closure of cinemas, maintaining financial liquidity, smooth and collision-free resumption of discontinued production, restart of cinemas and their functioning in conditions of social fear of the return of the epidemic.

Scholarships for filmmakers

As a result of the work of the film crisis team, the Polish Film Institute, in cooperation with the Polish Filmmakers Association, Polish Film Academy, Polish Film Directors Guild and the Association of Artists for Rzeczpospolita, created a Support Program for film professionals. Under the program, scholarships can be applied for by representatives of all film professions who have found themselves in a difficult financial situation due to the COVID-19 pandemic.

The scholarship amount is PLN 2,400 gross, and you can apply for support once a quarter. The scholarship can be received up to three times. The scholarship commission included representatives of the most important film industry organizations in Poland: Łukasz Ronduda – recommended by the Guild of Polish Directors, Robert Kaczmarek – representing the Association of Artists for Rzeczpospolita, Ilona Łepkowska – representing the Polish Film Academy, Michał Szcześniak – representing the Polish Filmmakers Association and Małgorzata Szczepkowska-Kalemba – representing the Polish Film Institute.

Legislative changes

Immediate actions taken by the Polish Film Institute shortly after the first meeting of the team resulted in legislative changes adequate to the needs of the situation. The definition of film was changed in the Cinematography Act. According to the current interpretation, the film is also a work that due to unpredictable circumstances was not displayed in the cinema. This allows the Institute to co-finance films that will go to VOD and PPV platforms in the first place. In this way, PFI gives producers a chance to discount their production where it is possible today. This action, which is somewhat contrary to the Institute’s tradition, is an expression of a pragmatic compromise between the current model and the current market reality.

As a result of the team’s work, at the request of the Polish Film Institute, a change was also made to the Act on financial support for audiovisual production. It is possible to submit an application for financial support not earlier than 12 months before the start of works to be covered by financial support and not later than before the start of these works. Thus, the non-practical requirement to apply for support among others two months before Production was abolished.

Below is a list of changes already made in individual legal acts:

Amendments to the Cinematography Act:

1) Changing the definition of a film – the film is also a work that was not screened at the cinema due to unrelated circumstances.

2) Adding paragraph 3a to art. 19 of the Cinematography Act, enabling the cinema operator not to submit a report to the PFI specifying the daily data on the number of viewers, the number of tickets sold and accepted instruments of entitlements as well as revenue from the sale of tickets for each film displayed on a given day and monthly data on the revenue displaying movies and commercials at the cinema as long as all data is 0.

Changes made to the Act on financial support for audiovisual production:

1) Enabling the submission of an application for financial support not earlier than 12 months before the start of the works to be covered by financial support, and no later than before the start of these works. The applicant is obliged to start works covered by financial support not later than 12 months from the date of submitting the application.

2) If the applicant, for justified reasons, cannot submit a contract for the provision of services for audiovisual production or synopsis and a script of an audiovisual work, confirmation of the acquisition of rights to the script or literary basis of an audiovisual work, the Director of the Institute may decide to submit other documents to the Institute, on the basis of which it will be possible to examine the application.

3) Extension of the time limit for presenting modifications to the cost estimate attached to the application to 60 days.

4) Extending the conclusion of the contract for financial support at the request of the applicant up to 3 months.

Changes worked out as part of the crisis team, reported by the Polish Film Institute to the Ministry of Culture and National Heritage:

1) Introduction to the Act on cinematography of a charge on the public levy of an entity providing an audiovisual media service on demand in the amount of 1.5% of the revenue obtained from fees for access to publicly available audiovisual media services on demand or income obtained from the broadcasting of commercial communications, if that revenue in given billing period is higher.

2) Introduction to the provisions of the Regulation of the Minister of Culture and National Heritage regarding the co-financing of cinematography projects of October 27, 2005 by the Polish Film Institute the possibility of extending the promise to 3 years.

Changes to be notified to the Ministry of Culture and National Heritage:

1) Amendments to art. 24 paragraph 2 of the Act on financial support of audiovisual production, enabling the transfer to the bank and thus expanding producers’ access to financial tools available on the European market.

2) Amendments to the Regulation to the Act on financial support for audiovisual production:

• reducing the minimum level of expenditure on a feature film of not less than 70 minutes from PLN 4,000,000 to PLN 1,000,000;

• reducing the minimum level of expenditure on a documentary film of not less than 40 minutes from PLN 300,000 to PLN 100,000;

• reducing the minimum expenditure level for an animated film with a film area of ​​not less than 60 minutes from PLN 1,000,000 to PLN 100,000.

Restoration of financial liquidity. Business loans

Restoring financial liquidity is a pillar of reconstruction of the film industry, common to all branches of this industry. As part of the crisis team’s work, low-interest revolving credit assumptions were developed to avoid payment gridlocks. They assume a simplified procedure for obtaining a loan, easing conditions for achieving creditworthiness, preferential interest rates and fees, and speed of releasing funds. Loans will allow many companies to survive the worst period, in which the need to settle permanent liabilities is accompanied by a lack of revenue,  this applies in particular to cinemas.

Producer companies need credits that will allow them to resume interrupted production and cover the additional costs resulting from duplication of many expenses. Thanks to the support of the Ministry of Culture and National Heritage, Polish Film Institute have started works on a preferential loan for the film industry, which financial guarantor will be Bank Gospodarstwa Krajowego. All companies from the audiovisual industry sector are to be supported.

Preparation of risk insurance for increased audiovisual production costs

According to the constantly updated PFI  report on discontinued work on audiovisual projects due to a pandemic, so far production of over 160 films and series has been discontinued.

To be able to complete these productions as soon as possible, as well as to start the next ones, including the performance of foreign services obtained through the operation of the financial incentive system, it is necessary to reduce the sense of threat and fear of producers and their financial partners of repeating the current situation. The only solution is to insure this risk with your participation. Otherwise, domestic productions will not start before at least a few months, and foreign services for a much longer period. Such insurance could also retroactively cover future additional costs of stopped production.

Thanks to the confirmation by the Minister of Culture and National Heritage of your interest in this problem, the working team is preparing an application to the Polish Chamber of Insurance to help, together with the film community and the Polish Film Institute, to develop an appropriate model in no more than 3 months. The next step will be to apply to the Minister for approval and implementation of relevant regulations.

Changes in Operational Programs

Another solution supporting financial liquidity are numerous changes introduced by the Polish Film Institute in Operational Programs for 2020, which were submitted for approval to the Institute Council. It is important to change the amount of grant installments paid by the Institute. In the case of co-financing for the development of the project, the Institute has decided to split the subsidy into two installments, of which the first, paid in advance, is 90% of the total amount of the grant, and in the case of film production subsidies, 80% of the grant will be paid in the first installment.

The Institute, implementing conclusions from the work of the crisis team, has implemented a number of solutions in Operational Programs, supporting industries during the epidemic and the period that will follow immediately after its completion.

An element of this strategy is the abolition in the Operational Programs of the limitation of the number of applications submitted in one session and conducted by one producer in the priority of Project development and Scenario development. The restriction of the application possibilities for a director who did not finish work on a previously subsidized film was also lifted. Allocations related to the priorities co-financing the development of the project and the stage of script work were increased by an additional PLN 6 million. This decision results from the adopted strategy of the Institute, which assumes increasing the number of developed film projects, in accordance with the prevailing realities of home isolation.

The PFI also made a change in the rules for calculating general costs favorable for producers – their 7% mark-up can be calculated from the base which is the sum of direct costs and all in-kind contributions.

The rational decision to change the definition of difficult film (“the film whose content and form are artistically ambitious and which has limited commercial value or whose production is difficult due to external reasons beyond the control of the producer”) is supported by a simultaneous decision to facilitate the possibility of retraining films for all applicants for a difficult film, so that more public financing would be possible.

The issue of increasing the subsidy granted in the event of losses or loss of market financing for production supported by PFI requires an individual approach. In order to reliably estimate the losses resulting from the introduction of the state of the epidemic, a standardized tool for their calculation has been developed as part of the task team work. PFI also supports the request of group members to grant increases in this respect post factum, after documenting the costs. Automatic consent for changing contractual dates has been issued by special orders of the PFI director.

Due to the limitation of cinema distribution, the requirement to submit a letter of intent from the cinema distributor was removed from the Operational Programs and VOD was allowed as the first field of exploitation where the cinema operation requirement was previously required.

In the Operational Programs of Film Culture Dissemination and Film Education, cost estimates from the previous year were restored, in which personnel costs, coordinators’ remuneration, accommodation and transport of guests as well as catering were recognized as eligible costs. To meet the expectations of festival organizers and their loyal audience, it was possible to organize online festivals by adding an item in the cost estimate: “operating the online festival”. The possibility of implementing online educational projects has also been included in the cost estimates of all priorities in the OP Film Education.

In the Operational Program Promotion of Polish Film Abroad, in the priorities Promotion of Polish Film Abroad and Distribution of Polish Film Abroad, the requirement that the minimum 10% own contribution of the beneficiary cannot come from volunteering or barter contracts (currently the minimum own contribution should be at least 10%, as it was before). The option of extending the validity of the financing decision by 6 months was also introduced in all priorities of the Operational Program Promotion of Polish film abroad. The option of including costs for non-cinema distribution has been added in the Priority for the distribution of Polish film abroad.

“Return to the cinema” campaign

As part of the work on the restart of cinemas, the initial assumptions of the campaign under the working title “Return to the cinema” were developed, which PFI will support financially. One of the directions of activities is also the promotion of knowledge and good practices related to security standards, including increased control of all employees of the cinemas coming to work (temperature measurement, repeated disinfection of toilets, handrails, door handles, fogging, ozonation of rooms, encouraging viewers to buy a ticket online).

Team members were able to agree with some city authorities and get assurance of their support in restoring pre-epidemic shooting permits. PFI will actively coordinate the resumption of film productions so as to avoid congestion in access to film crews and locations.

Calendar of festivals and film premieres

A calendar of film festivals is already available on the PFI  website to better coordinate these projects after the market restart. On the other hand, on the website, PFI will soon launch an additional column in the description that makes up the film identifier. Distributors have the option of entering the planned release date there after the cinemas restart. This is to help avoid the accumulation of film premieres at one time and cannibalize film content through oversupply of titles.

In addition, Polish Film Institute and the crisis team constantly monitor the internal market and use the best foreign practices. We still have a lot of work to do, but today we can see how much we needed to work together, regardless of what makes us different every day. The team’s work is consistent and based on understanding and respect. We managed to avoid selfishness of individual sectors, for which I thank all participants. Remember, we’re in this together!

Radosław Śmigulski

Composition of the crisis team in the cinematographic industry:

• Radosław Śmigulski – Director of the Polish Film Institute

• Jacek Bromski – President of the Polish Filmmakers Association, director

• Dariusz Jabłoński – President of the Polish Film Academy, director, producer

• Andrzej Jakimowski – Chairman of the Polish Directors Guild

• Alicja Grawon-Jaksik – President of the Polish Chamber of Audiovisual Producers

• Robert Kaczmarek – director, producer, Association of Artists for Rzeczpospolita

• Roman Gutek – organizer of the “New Horizons” festival, distributor, producer,

• Leszek Kopeć – Director of the Polish Film Festival in Gdynia

• Urszula Malska – President of the Board at United International Pictures Poland

• Tomasz Jagiełło – President of the Management Board of HELIOS S.A.

• Mariusz Spisz – President of the Board at Multikino Media

• Joanna Kotłowska – Director of Development at Cineworld Cinemas Polska

• Marlena Gabryszewska – President of the Studio Cinema Association

• Mariusz Łukomski – President of the Management Board of Monolith Films Sp. z o.o.

• Anna Limbach-Uryn – Vice President of Kino Świat

• Leszek Bodzak – member of the board of the Polish Producers Guild

• Klaudia Śmieja – member of the board of the Polish Producers Guild

• Paweł Dutkalski – Sales Director Warner Bros. Entertainment Poland

• Małgorzata Szczepkowska-Kalemba – Head of the Production and Development Department of PISF Film Projects

• Monika Piętas-Kurek – Head of the Film Culture Promotion and Promotion Department of the Polish Film Institute

• Anna Dziedzic – PISF – Polish Film Commission

• Marta Galińska – Coordinator of the Legal Department of the Polish Film Institute

• Małgorzata Gąska – Chief Accountant of the Polish Film Institute

• Małgorzata Matuszewska – Deputy Head of the Production and Development Department of PISF Film Projects

• Justyna Strzelecka – Polish Film Institute, representative for special projects • Tomasz Neubauer – Polish Film Institute, security adviser