(1)

The Treaty on the Functioning of the European Union (TFEU) aims at an ever closer union among the peoples of Europe and confers on the Union the task, inter alia, of contributing to the flowering of cultures of Member States, while respecting their national and regional diversity and at the same time ensuring that the conditions necessary for the competitiveness of the Union's industry exist. In that respect, the Union, where necessary, supports and supplements Member States' actions to respect cultural and linguistic diversity, in accordance with Article 167 TFEU and the 2005 Unesco Convention on the Protection and Promotion of the Diversity of Cultural Expressions (the "2005 Unesco Convention"), to strengthen the competitiveness of the cultural and creative sectors and to facilitate adaptation to industrial changes.

(2)

Union support for the cultural and creative sectors is based primarily on the experience acquired with the Union programmes set out in Decision No 1718/2006/EC of the European Parliament and of the Council (4) (the "MEDIA programme"), Decision No 1855/2006/EC of the European Parliament and of the Council (5) (the "Culture programme") and Decision No 1041/2009/EC of the European Parliament and of the Council (6) (the "MEDIA Mundus programme"). Decision No 1622/2006/EC of the European Parliament and of the Council (7) (the "European Capitals of Culture action") and Decision No 1194/2011/EU of the European Parliament and of the Council (8) (the "European Heritage Label action") also contribute to Union support for the cultural and creative sectors.

(3)

The Commission Communication on a European agenda for culture in a globalising world, endorsed by the Council in its resolution of 16 November 2007 (9) and by the European Parliament in its resolution of 10 April 2008 (10), sets the objectives for future activities of the Union for the cultural and creative sectors. It aims to promote cultural diversity and intercultural dialogue, culture as a catalyst for creativity in the framework for growth and jobs and culture as a vital element in the Union's international relations.

(4)

With regard to the Charter of Fundamental Rights of the European Union and in particular Articles 11, 21 and 22 thereof, the cultural and creative sectors make an important contribution to the fight against all forms of discrimination, including racism and xenophobia, and are an important platform for freedom of expression and for the promotion of respect for cultural and linguistic diversity.

(5)

The 2005 Unesco Convention, which entered into force on 18 March 2007 and to which the Union is a party, underlines that cultural activities, goods and services have both an economic and a cultural nature, because they convey identities, values and meanings, and must not, therefore, be treated as solely having commercial value. That convention aims to strengthen international cooperation, including international co-production and co-distribution agreements, and solidarity so as to favour the cultural expression of all countries and individuals. It also states that due attention is to be paid to the special circumstances and needs of various social groups, including persons belonging to minorities. Accordingly, a support programme for the cultural and creative sectors should foster cultural diversity at international level in line with that convention.

(6)

Promoting tangible and intangible cultural heritage, in the light of, inter alia, the 2003 Unesco Convention for the Safeguarding of the Intangible Cultural Heritage and the 1972 Unesco Convention Concerning the Protection of the World Cultural and Natural Heritage, should also contribute to the enhancement of the value of the relevant sites whilst giving to peoples a sense of ownership of the cultural and historical value of such sites.

(7)

The Commission Communication entitled "Europe 2020 – A strategy for smart, sustainable and inclusive growth" (the "Europe 2020 Strategy") defines a strategy that aims to turn the Union into a smart, sustainable and inclusive economy delivering high levels of employment, productivity and social cohesion. In that communication, the Commission noted that the Union needs to provide more attractive framework conditions for innovation and creativity. In that regard, cultural and creative sectors are a source of innovative ideas that can be turned into products and services that create growth and jobs and help address societal changes. Moreover, excellence and competitiveness in those sectors are primarily the result of efforts on the part of artists, creators and professionals that need to be promoted. For that purpose, access to finance for the cultural and creative sectors should be improved.

(8)

In its conclusions on mobility information services for artists and for culture professionals (11), the Council confirmed the importance of the mobility of artists and cultural professionals for the Union and for achieving its objectives within the Europe 2020 Strategy, and called on the Member States and the Commission, within their respective spheres of competences and with due regard to the principle of subsidiarity, to facilitate the provision of comprehensive and accurate information to artists and cultural professionals seeking to be mobile within the Union.

(9)

In order to contribute to the enhancement of a shared cultural area, it is important to promote the transnational mobility of cultural and creative players and the transnational circulation of cultural and creative works, including audiovisual works and products, thereby promoting cultural exchanges and intercultural dialogue.

(10)

The MEDIA, Culture and MEDIA Mundus programmes have been the subject of regular monitoring and external evaluations, and public consultations have been organised on their future, from which it emerges that those programmes play a very important role in protecting and promoting Europe's cultural and linguistic diversity and that they are relevant for the needs of the cultural and creative sectors. It also appears from those monitoring, evaluation and consultation activities, as well as from various independent studies, in particular the study on the entrepreneurial dimension of cultural and creative industries, that the cultural and creative sectors are facing common challenges, namely the rapid change caused by the digital shift and globalisation, market fragmentation relating to linguistic diversity, difficulties in accessing finance, complex administrative procedures and a shortage of comparable data, which all require action at Union level.

(11)

The European cultural and creative sectors are inherently diversified along national and linguistic lines, which results in a culturally rich and highly independent cultural landscape, providing a voice for the different cultural traditions of Europe's heritage. However, such diversification also gives rise to a series of obstacles that impede the smooth transnational circulation of cultural and creative works and hamper the mobility of cultural and creative players within and outside the Union, which can lead to geographical imbalances and, subsequently, to a limited choice for the consumer.

(12)

Given that the European cultural and creative sectors are characterised by linguistic diversity which leads in some sectors to fragmentation along linguistic lines, subtitling, dubbing and audio description are essential to the circulation of cultural and creative works, including audiovisual works.

(13)

The digital shift is having a massive impact on how cultural and creative goods and services are made, disseminated, accessed, consumed and monetised. While the need to seek a new balance between the increasing accessibility of cultural and creative works, fair remuneration of artists and creators and the emergence of new business models is recognised, the changes resulting from the digital shift offer wide opportunities for the European cultural and creative sectors and for European society in general. Lower distribution costs, new distribution channels, the potential for new and for increased audiences and new opportunities for niche products can facilitate access and increase circulation of cultural and creative works worldwide. In order to use those opportunities to the full and adapt to the context of the digital shift and globalisation, the cultural and creative sectors need to develop new skills and require greater access to finance in order to upgrade equipment, develop new production and distribution methods and adapt their business models.

(14)

Current distribution practices underpin the film financing system. However, there is an increasing need to promote the emergence of attractive legal online offers and to encourage innovation. Therefore, it is essential to promote new distribution modes in order to allow new business models to emerge.

(15)

Digitisation of cinemas has been an ongoing issue for many small cinema operators, particularly single-screen operators, due to the high costs of the digital equipment. While the Member States have primary competence for culture and should therefore continue to address that issue at national, regional and local level, as appropriate, there is potential for financing from Union programmes and funds, in particular those aimed at local and regional development.

(16)

Audience development, especially as regards young people, requires a specific commitment on the part of the Union, to support, in particular, media and film literacy.

(17)

One of the greatest challenges for the cultural and creative sectors, especially for micro, small and medium-sized enterprises ("SMEs") and micro, small and medium-sized organisations, including not-for-profit and non-governmental organisations, is the difficulty they face in accessing the funds that they need to finance their activities, to grow, and to maintain and increase their competitiveness or internationalise their activities. While that is a common challenge for SMEs generally, the situation is significantly more difficult in the cultural and creative sectors due to the intangible nature of many of their assets, the prototype profile of their activities, and their intrinsic need to take risks and experiment in order to innovate. Such risk-taking needs to be understood and supported also by the financial sector.

(18)

As a pilot project, the European Creative Industries Alliance is a cross-sectoral initiative that primarily supports the creative industries at policy level. It aims at leveraging additional funds for creative industries and at stimulating the demand for creative industries' services by other industries and sectors. Testing of new tools for better support for innovation in creative industries will take place and will be leveraged to feed into a policy learning platform composed of European, national and regional stakeholders.

(19)

Bringing together the current MEDIA, Culture and MEDIA Mundus programmes for the cultural and creative sectors within a single comprehensive programme (the "Programme") would more effectively support SMEs and micro, small and medium-sized organisations in their efforts to take advantage of the opportunities offered by the digital shift and globalisation and would help them to address issues currently leading to market fragmentation. To be effective, the Programme should take into account the specific nature of the different sectors, their different target groups and their particular needs through tailor-made approaches within two independent sub-programmes and a cross-sectoral strand. In particular, it is important to ensure synergies at the level of implementation between the Programme and the national and regional strategies for smart specialisation. To that end, the Programme should establish a coherent support structure for the different cultural and creative sectors consisting of a grants system complemented by a financial instrument.

(20)

The Programme should take into account the dual nature of culture and cultural activities, recognising, on the one hand, the intrinsic and artistic value of culture and, on the other hand, the economic value of those sectors, including their broader societal contribution to creativity, innovation and social inclusion.

(21)

With regard to the implementation of the Programme, the intrinsic value of culture and the specific nature of the cultural and creative sectors should be taken into account, including the importance of not-for-profit organisations and projects under a Culture Sub-programme.

(22)

A self-standing financial instrument, the Cultural and Creative Sectors Guarantee Facility (the "Guarantee Facility"), should enable the cultural and creative sectors at large to grow, and in particular should provide sufficient leverage for new actions and opportunities. Selected financial intermediaries should act in favour of cultural and creative projects to ensure a balanced loans portfolio in terms of geographical coverage and sector representation. Moreover, public and private organisations have an important role to play in that context, in order to achieve a broad approach under the Guarantee Facility.

(23)

Funding should also be provided for the European Capitals of Culture action and for the administration of the European Heritage Label action, as they contribute to the strengthening of the feeling of belonging to a common cultural area, to the stimulation of intercultural dialogue and mutual understanding and to the enhancement of the value of cultural heritage.

(24)

In addition to Member States and overseas countries and territories which are eligible to participate in the Programme pursuant to Article 58 of Council Decision 2001/822/EC (12), the Programme should also be open, subject to certain conditions, to the participation of European Free Trade Association ("EFTA") countries which are parties to the Agreement on the European Economic Area ("EEA") and of the Swiss Confederation. Acceding countries, candidate countries and potential candidate countries benefiting from a pre-accession strategy as well as countries covered by the European Neighbourhood Policy should also be able to participate in the Programme, except as regards the Guarantee Facility.

(25)

The Programme should further be open for bilateral or multilateral cooperation actions with third countries on the basis of additional appropriations to be defined, and specific arrangements to be agreed upon, with the parties concerned.

(26)

Cooperation in the cultural and audiovisual fields should be fostered between the Programme and international organisations such as Unesco, the Council of Europe, the Organisation for Economic Co-operation and Development ("OECD") and the World Intellectual Property Organisation ("WIPO").

(27)

It is necessary to ensure the European added value of all actions and activities carried out within the Programme, their complementarity to Member States' activities, their compliance with Article 167(4) TFEU and their consistency with other Union activities, in particular in the fields of education, employment, the internal market, enterprise, youth, health, citizenship and justice, research and innovation, industrial and cohesion policy, tourism and external relations, trade and development, and the digital agenda.

(28)

In compliance with the principles for performance-related assessment, the procedures for monitoring and evaluating the Programme should include detailed annual reports and should refer to specific, measurable, achievable, relevant and time-bound targets and indicators, including qualitative ones. Procedures for monitoring and evaluation ought to take into account the work of relevant players such as Eurostat, and the findings of the ESS-net Culture project and of the Unesco Institute for Statistics. In that context, as regards the audiovisual sector, the Union's participation in the European Audiovisual Observatory (the "Observatory") should be continued.

(29)

In order to ensure optimal monitoring and evaluation of the Programme during its entire duration, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of the adoption of additional quantitative and qualitative indicators. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated acts, should ensure simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and to the Council.

(30)

As stated in the Commission report of 30 July 2010 on the impact of the European Parliament and Council Decisions modifying the legal bases of the European Programmes in the areas of Lifelong Learning, Culture, Youth and Citizenship, the substantial shortening of the delays in the management procedures has increased the efficiency of programmes. Particular care should be taken to ensure that administrative and financial procedures continue to be simplified, including through the use of sound, objective and regularly updated systems for determining lump sums, unit costs and flat-rate financing.

(31)

In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (13).

(32)

In accordance with Council Regulation (EC) No 58/2003 (14), the Commission has since 2009 entrusted the Education, Audiovisual and Culture Executive Agency with implementation tasks for the management of Union action in the fields of education, audiovisual and culture. The Commission may therefore use, on the basis of a cost-benefit analysis, an existing executive agency for the implementation of the Programme, as provided for in that Regulation.

(33)

This Regulation lays down a financial envelope for the entire duration of the Programme, which is to constitute the prime reference amount, within the meaning of point 17 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management (15), for the European Parliament and the Council during the annual budgetary procedure.

(34)

The financial interests of the Union should be protected through proportionate measures throughout the expenditure cycle, including measures for the prevention, detection and investigation of irregularities, the recovery of funds lost, unduly paid or incorrectly used and, where appropriate, administrative and financial penalties in accordance with Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (16) (the "Financial Regulation").

(35)

With regard to the European Anti-Fraud Office ("OLAF") and pursuant to Council Regulation (Euratom, EC) No 2185/96 (17) and Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council (18), appropriate measures should be drawn up and implemented to prevent fraud and to recover funds which have been lost or transferred or used improperly.

(36)

Since the objectives of this Regulation, namely to safeguard, develop and promote European cultural and linguistic diversity, to promote Europe's cultural heritage and to strengthen the competitiveness of the European cultural and creative sectors, in particular of the audiovisual sector, cannot be sufficiently achieved by the Member States, given the transnational and international character of the Programme, but can rather, by reason of its scale and expected effects, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(37)

Decisions No 1718/2006/EC, No 1855/2006/EC and No 1041/2009/EC should therefore be repealed.

(38)

Provision should be made for measures governing the transition from the MEDIA, Culture and MEDIA Mundus programmes to the Programme.

(39)

In order to ensure continuity in the funding support provided under the Programme, the Commission should be able to consider the costs directly linked to the implementation of the supported actions and activities as eligible for financing, even if they are incurred by the beneficiary before the grant application is submitted.

(40)

In order to ensure continuity in the funding support provided under the Programme, this Regulation should apply from 1 January 2014. For reasons of urgency, this Regulation should enter into force as soon as possible after its publication in the Official Journal of the European Union,