Guidelines for the Promotion of Mexican Cinema

The purpose of this alert is to inform our clients about the new guidelines for the promotion of Mexican cinema published on March 12, 2021, in Mexico's Federal Official Gazette (Diario Oficial de la Federación).

Mexico has a significant creative production capacity in the film industry and is one of the most important markets worldwide for the screening of audiovisual projects. Although the pandemic confinement measures taken in the country have impressively boosted Mexican consumption of streaming platforms, which have had a massive growth in subscribers, the National Chamber of the Film Industry (La Cámara Nacional de la Industria Cinematográfica or CANACINE) estimates that from March 2020 to February 2021, the Mexican film industry accumulated losses of approximately MX$18.407 million(US$925,832).

As a result of the foregoing, the Mexican government has decided to modify the financial incentives offered to the industry through the Guidelines and the new Mexican Film Development.

Purpose of the Program

Pursuant to the Guidelines, the Program will contribute to building a financial and investment support system  for creators, producers, distributors, marketers and exhibitors of Mexican films and institutions interested in preserving important film collections. It is a system that will also stimulate the participation of the public, social and private sectors in the integral reactivation of the national film industry and is intended to replace the function that, until last year, the federal government used to carry out through the following trusts:  

• Film Investment and Incentives Fund (Fondo de Inversión y Estímulos al Cine or FIDECINE), a federal trust fund for the production, post-production, distribution and exhibition of fiction and/or animation feature films (75 minutes or longer) through the investment of venture capital and/or the provision of loans. Individuals and corporations could access the fund through national public tenders.
• Quality Film Production Fund (Fondo para la Producción Cinematográfica de Calidad or FOPROCINE), a trust fund that offered support for the production or post-production of fiction and documentary feature films (more than 60 minutes).

The Guidelines provide that the purpose of the Program is to grant resources for the promotion of film projects in order to a) encourage and promote film quality, diversity, plurality, inclusiveness, gender equality and accessibility to the entire Mexican cinema population through economic incentives; b) preserve the cultural expressions of the country's intangible heritage; c) encourage the development and conservation of collections through restoration, creation of catalogs, databases and guides, among others, for the reconstruction and reappropriation of our identities or visual narratives; d) create and take advantage of cultural infrastructure; and e) promote the development, access, and artistic and cultural integration of indigenous peoples and communities, through art and cinematography in general.

Program Coverage and Support

The Program will cover all 32 states and provides for different types of support; in all cases, the economic incentive will be delivered in pesos through electronic transfer to the beneficiary individual or company. The different types of support are as follows:

• Support for the financial consolidation of feature films: The economic incentive will be up to MX$250,000 (about US$12,000).
• Support for the production of fiction feature films, documentaries and films for children: The amount of the aid will be allocated and differentiated according to the experience of the director of the project, and he or she may request between MX$5 million (US$245,228) and up to MX$8 million (US$392,365).
• Support for pre-production and production of short and feature animation films: Feature film projects may request up to MX$10 million (US$490,456), and short films may request up to MX$700,000 (US$34,331).
• Support for the production of debut features from film schools or with a film specialty: Fiction projects may request up to MX$3 million (US$147,136) and documentaries may request up to MX$1 million (US$49,045).
• Support for the production of short films by region and with trajectory: The economic incentive will be up to MX$550,000 (US$26,975), or up to 80 percent of the total cost of the project, including other federal support in the percentage.
• Support for the post-production of feature and short films: For feature films, the amount of the incentive will be up to MX$2 million (US$98,091). For short films, the amount of the incentive will be up to MX$200,000 (US$9,809).
• Support for the production of feature films in collaboration with the state: The amount to be granted for feature films up to the final image cut will be up to MX$1 million (US$49,045). The percentage of support will be up to 80 percent of the total cost of the project, including other financial support. At least 10 percent of the total cost of the project must be contributed in cash and/or in kind by a state and/or municipal cultural institution of the state to which the application was filed.
• Support for equipment and/or conditioning of film exhibition spaces and projects, audience education, Mexican cinema exhibition projects/audience formation and Mexican cinema exhibition projects of Mexican cinema: The amount of aid may not exceed 80 percent of the total cost of the project, nor exceed the amount of MX$1,5 million (US$73,568).
• Support for the creation and preservation of film collections: The incentive amount may not exceed 80 percent of the total cost of the project nor more than MX$500,000 (US$24,523).

Application Calls and General Eligibility Requirements to Receive Support Under the Program

The registration of projects shall be carried out within 30 calendar days from the publication of the corresponding call for financial support. Application calls will be carried out annually. The participation conditions will be published on the institutional website and on the Mexican Film Institute's social media.

Requirements to gain access to the support described in the previous paragraphs will depend on the type of support requested. 

Both individuals and legal entities must prove their identity and Mexican nationality. Educational institutions must submit a curriculum vitae of the institution indicating the study plan. Any person who applies must have a positive tax compliance check no older than three months.

In addition, they must comply with the terms and conditions of the corresponding call and with the specific requirements of each financial support, which may include having a copy of the registration certificate of the screenplay before the National Copyright Institute; submitting a letter stating that they have no previous support from FIDECINE and/or FOPROCINE; presenting a synopsis of the project; presenting a summary of the budget and preparing a financial plan for the project, among others.

The results will be published on the institutional web page and on the film institute's social media, no later than 90 calendar days after the closing date for the project registration.

Migration of FIDECINE and FOPROCINE Support

On the other hand, the Transitional Articles of the Program's Guidelines establish that the financial support that FIDECINE had been granting to entities will be assumed by the Program according to its rules of operation, evaluation and management indicators, as of its effective date. The Program must comply with the commitments, rights and obligations acquired by the parties.

Whereas, in the case of the projects that were winners in the FIDECINE Official Call published on Sept. 19, 2020, and the projects that were winners in the FOPROCINE Official Call published on Dec. 22, 2019, the conditions under which they competed will remain in force, until they are fulfilled.

Finally, FIDECINE trustees who have been approved or have been authorized funding may migrate to the Program to ensure its completion.

Final Thoughts

We believe that access to the various support offered in the Guidelines will be considered  an incentive for major and minor producers in the creation of audiovisual projects and will promote the recovery of the industry despite the adversity resulting from the pandemic.

In an article in Forbes, Netflix confirmed its plans to invest and allocate more than US$300 million dollars in 2021 in local Mexican productions, increasing by 50 percent the quota assigned in 2020 (US$200 million).

Likewise, at the Prime Video Presents Mexico event, Amazon announced that it will invest US$2.65 million in the film and television industry in Mexico and Latin America in order to support projects that were affected and halted by the pandemic.

With the publication of the Guidelines and the creation of the Program, and the great investment news by major film production companies in the country, we hope that the film industry in Mexico will continue to grow and position itself as one of the main content-creating countries.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.