What is the Motion Picture Act about?

As up till now it was the Hungarian Motion Picture Public Foundation that had the main role in allocating film industry subsidies, it is continuing to be in the hands of the Foundation where the majority of the state funds to be shared will be concentrated. According to the act, that is to say, from now on, it is primarily the HMPPF's task to distribute the amount subset in the state budget for film professional purposes. The responsibilities of the Public Foundation are increasing with the expansion of material sources and tasks; therefore, it is significant that the operation of the organization is efficient, comprehensible and legal. In order to guarantee this, the Public Foundation is compelled to publish its pre-proposition plan until the end of February each year and in it define all motion picture profession purposes and the amount frame subset for their support. The same date is the deadline for publishing the condition system about the normative subsidies.

The Public Foundation must prepare a subvention decree, which will have to contain the general conditions of proposal writing, subsidy granting and the allocation mechanism. This regulation is to be endorsed by the Minister of Culture who will publish it in the Cultural Bulletin, which will from that point on obligate the Foundation.

The Public Foundation is to annually establish and operate a strategy in practice so that more and more material sources get activated in the sector. In the present condition of the Hungarian film industry it must simultaneously pay attention to helping realize quantitative and economic purposes and at the same time the production of more and more high quality films.

The coordination of subsidies

The act, with the participation of state and non-state organizations having an interest in the film industry, has established the Motion Picture Coordination Committee, whose task is to tackle a long unsolved problem: to harmonize subvention purposes. The disharmony of the proposals drawn up by state bodies granting funds (NCHM, NCF, NRTB, HHFF and some Ministries) has created a serious impediment to the development of the industry.

It will be the responsibility of the Committee from now on year after year to define the structure of film support system and make its operation efficient while paying close attention to the professional environment. Among its tasks, maybe one of the most important, is the annual presentation of a proposal calendar, with the aid of which, those concerned can get a clear picture about the plans of granting associations for the given year.

Since the long-term aim of the act is to make the private sphere interested in improving the film industry and in the more efficient expenditure of funds for film production - based on the media law - the nationwide commercial television channels will also have a seat in the Committee.

The Committee will be of consulting in kind since the primary purpose of its founding is assisting communication between the parties, thus it will exclusively articulate recommendations that will not have obligatory power. In its case order, which will be published in the Cultural Bulletin, the Committee, naturally, is permitted to state regulations applicable to itself; it cannot, however, declare commitments to a third party.

Rules of financial assistance

Regarding that the majority of the film industry regulated in the act is operated by the state funding system, it is not an exaggeration to state that the most important part of the motion picture act is the chapter on subsidizing rules. The definitions of supportable activities serve the affirmation of areas for state participation from which it is unambiguously recognized what kind of motion picture activities can be subsidized from public funds. At the same time, this exclusive listing means an obligation for HMPPF, who is appointed to be the main distribution body since the act states that the Public Foundation must subsidize all listed activities.

According to the recommendation on legal issues in connection with film productions and audiovisual pieces of the European Committee, the rate of state subsidies in the case of individual film productions cannot exceed 50% of the production budget. However, the member states deviate from this principal considerably and on a regular basis, an act to which the recommendation gives an opening since it states that in the cases of 'low budget' and so-called 'difficult' (artistically valuable or originating from countries of limited language areas) productions there is an opportunity to fully subsidies. According to this, the Hungarian law - regarding that in the case of Hungarian film productions both categories can be applicable - sets the general rate of subsidy intensity at 80% at the same time making 100% subsidizing also possible if that is otherwise justified by artistic and financial reasons. It is important to comment that these percentages only mean the maximum and the subsidizing organization is free to set the subsidy rate at a lower level within their own internal regulations.

The act preserves the circle of subsidies originating from the central budget for Hungarian productions and co-productions with Hungarian participation. But since the Hungarian film maker in many cases is only present with financial contribution - thus based on the classification of the point system the given production would not qualify for co-production title - the act gives the opportunity for such productions to receive direct subsidies as well if in the given national relations the film can be regarded a co-production. (The European Co-production Treaty makes it possible for such productions to be recognized as financial co-productions.)

There is a section according to which the subsidizing organization can proclaim that the grantee is obligated to spend at least 80% of the given subsidies in Hungary. This section also has Union relations. The majority of European film producing 'great powers' (France, the United Kingdom, Italy) does exercise the option of area restricted subsidizing, whereas the European Committee is trying to limit these kinds of special member state conditions. In keeping with the reform plans submitted at the beginning of 2004 states can only enact upon subsidies on area bases that are given by themselves and cannot set the rate of area expenditure in reference to the whole budget of the production. It is indeed an old recognition that in order to liven up national film industries and protect local labor force, it is essential to restrict the expenditure of subsidies to areas; however, in the cases of smaller countries it is of equal importance that the openness for co-productions is also apparent in the decree. The Hungarian law - through only making the deployment of granted subsidies or their 80 percent possible - reflects this openness and at the same time is in agreement with the fundamentals of the integrated Union market conditions as well.

The motion picture act caters to a long prevailing need in the film industry with declaring and integrating the conditions of exclusion from subsidies. Earlier no decree stated that a film applicant congregating heaps of debt at a subsidizing organization would automatically lose further industry grants since this other subsidizing body had in general no way of checking for debts. At least two things are necessary to solve this problem: a decree applicable for all interested parties and establishing an information database accessible for subsidizing companies. The completion of the latter task is the responsibility of the National Film Office.

An also long awaited idea is being realized with including the rules of normative subsidies into the act. All governments responsible for the central budget that guarantees the sources of subsidies would like to see it confirmed that the subsidies granted on the money of taxpayers - even in such a subjective, therefore difficultly evaluated area as film making - bring results that can not only be sensed but even assessed. One of these assessable results could be the increasing number of viewers at the Hungarian movies with the restriction that during the distribution of subsidies as a whole, this cannot be the only concept asserted. The act does not declare what percentage of the subsidies needs to be allocated based on the number of viewers. It does state however the obligatory application of such kind of normative subsidies and those subsidies granted after awards received at film festivals. In accordance with this it appoints a reference-based subsidy for the next pictures of filmmakers or directors whose movies achieved a certain viewer number or were successful at festivals.

Assigning normative subsidies for distribution in the act means the appropriate acknowledgment of film distribution?s significance. There is a concurrence that without competent film distribution there can be no successful national film industry and film art. The maker of the law expects that there will always be own sources from the part of the distributors for the distribution of the so-called box office hits; however, it guarantees supplementary distribution subsidies, also on a normative basis, for pieces with a higher cultural value to reach the audience and to encourage cinemas screening these.


The National Film Office

The necessity of establishing the National Film Office is justified by the call for fulfilling authority tasks in connection with the film profession. These tasks indeed must be separated from subsidizing activities of the subvention organizations but at the same time they need to be organized in a way that certain data and services are always accessible for all subsidizing companies in the motion picture industry. The Office, regarding the public administration hierarchy belonging to the ministry of profession, is such an institution that has the professional know-how essential for performing activities of motion picture state administration. The Office engages in two groups of tasks: on the one hand it is doing classification, registration and data confirmation (authorizing) tasks, on the other hand it offers other film professional services.

Ratings and 'art' classification

There are two committees operating within the National Film Office structure: the Rating Committee dealing in classifying film productions according to age limit, and the Film Profession Committee that qualifies films for 'art' label.

The documents of European institutions on protecting under age children especially emphasizes that upon accessing audiovisual works, the audience get the suitable information about the content of the piece and the probable damaging impact it can have on the spiritual and intellectual development of children. In the past years, the restriction of violence spreading in the motion picture areas has occupied a commanding position even in the government programs; therefore, it is inevitable that the regulation of age limit classification be put into law.

During the 2002 amendment of Act I. of 1996 on radio and television, the decrees relating to age limitation did enter not only the media law regulations but public awareness as well. The motion picture act - in order to achieve a cohesive classification of audiovisual ratings - spreads these decrees to all film productions. (Naturally, the works broadcast in the television programs still fall under the jurisdiction of the Hungarian Radio and Television Board.)

The members of the Rating Committee - whom are chosen by an open tender and their assignment is for the duration of three years - are educators and psychologists with film professional experiences and one of the representatives of the film distributors also received a seat. The rating category stated by the Committee must be clearly and noticeably shown on all copies of the film work. If the rating falsely or does not appear at all, the Office can compel those responsible to paying a fine. The unsettled payment will be classified as public debt, which fact is important because any person or organization holding public debts cannot receive subsidies in the manner stated in the motion picture act.
There are other functions of the rating classifications besides informing the audience, since the pieces included in category 5. - pornographic or unreasonably violent in content - cannot receive neither indirect nor direct state subsidies.

The purpose of classifying pieces as 'art', is to maintain the capability of subsidizing on a normative basis the distribution of works valuable from cultural points of view and the operation of film theatres screening these types of movies. Although the introduction of 'art' category does not indicate the subsidizing of European films exclusively, past experience shows that cinemas operating as 'art' theatres do put together their programs from mostly European works of art.

The Film Profession Committee is to have five members whose assignment is also set for three years and will be selected through an open tender. They will have to have qualifications as professors of film art or film science or motion picture and experience.

Registration and other tasks

In the chapter dealing with subsidy regulations we pointed out that in order to follow the way of film profession subventions it is essential that there is an appropriate registration and information system so that this basic information (settling of accounts, debts) in connection with various film subsidies is accessible for all subsidizing organizations. The elementary condition of this is to register the data of subventions, of the subsidized people, associations and productions.

The authentic data details of film distribution and box office sales services will be stated by the professional department in the decree about the operation of the Office. For the adequate functioning of the system it is also of vital importance that these data are public, meaning that they be accessible for not only the various subsidizing bodies but also anybody (with special regards to the fact that the registration is to serve, among other things, the flawlessness of utilizing public funds).

From among the registered data, from the point of view of the legality of applying for subsidies, the most essential ones are those that deal with the accounting for expenditure of subsidies, since these make it possible for the grantees to be deleted from the registration. Based on the decree on the allocation of subsidies this means that the person or organization deleted from the registration is excluded from further grants for a definite time period.

One of the most important responsibilities of the Office is to issue subsidy and investment confirmations entitling for tax exemptions. This is the condition of companies granting subsidies with film production purposes or investing in film productions, to access tax exemptions stated in the act. It is these confirmations that contain, in the budget of the given film production, the amounts of direct film industry production costs occurring in Hungary.


National film assets

The act assigns Hungarian National Film Archives to be the trustee of state owned films, which belong within the circle of national film assets. The condition of executing the decree is as follows: to acquire the ownership rights of Hungarian film writers' copyrights and ownership of copies that, at present, are in possession of film studios and film profession companies, which belong to the enterprise assets of SPE Ltd.; and then after the legal and accounting examination and evaluation of the film assets, pass the ownership rights over to the Hungarian Film Archives.

The act only declares - since merely it is this that is covered by its regulation structure - that, the asset management rights defined in the interpretative decrees, regarding the national film assets, will be passed over to the Film Archives. It is also here that it declares, as a guaranteeing regulation, that the national film assets owned by the Film Archives cannot be sold, transferred or encumbered.

The act does not define the manner of deploying the film assets, therefore does not exclude the former right owners from participating in the utilization process. However, while utilizing the film assets, it must be kept in mind that the income originating from the process needs to be appropriately divided between those entitled to it (writers, legal successors) and that sources need to be created for other film profession purposes such are production, copy restoration and digitalization. This is why the act declares that the detail ruling of multi channeled and efficient distribution of films coming into possession of the Film Archives and the manner of allocating the income from this distribution will be stated in a decree by the Minister.

source: NMPB