Jan Sawkins.

On a recent trip to the U.S., it became clear that many of our friends and associates in that country, whether broadcasters, major studios or independent production companies were more keen than ever to discuss how we put co-development and co-production deals together. With the recent further spate of mergers and consolidations in the U.S., it has become an even tougher and riskier market place for both development and fully-fledged production. Indigenous producers are now looking more intensely at Europe as the model both for creative partners and financial ideas and collaboration.

It was rather a novel sensation to feel envied for being European for other than artistic reasons, even more so to be told by one top studio executive that, "Right now the European animation market place is more buoyant and varied with a lot more going on than in the U.S. We know it's still a tough market there, but you Europeans are used to having to pull the financing from so many different sources -- for us it's a newer experience..."

This individual was right on a number of counts: yes, we Europeans are used to it; yes, we are good at pulling deals together; and yes, it's tough. In fact, one might say that putting a co-production deal together is an art form in itself, presenting endless challenges. But boy, what a great feeling if you can pull it off both financially and creatively. Add to this the fact that we are also used to getting series initially financed for the European market with (hopefully) a U.S. sale usually occurring once the series is made. Suddenly this is making co-production with European partners an attractive option in the U.S.

Oi! Get Off Our Train! is just one of the many co-productions in which Varga Holdings is currently involved. © BBC, Miramax, ZDF and Varga Budapest.

No Set Model Or Formula
One clear fact about European co-development and co-production deals is that every deal is different, every new alliance calls up new issues to be addressed and overcome -- from allocation of production work, compliance criteria to trigger tax breaks or subsidies or grants to allocation of rights (which themselves may affect or be affected by those very same tax breaks, subsidies or rights). This is before we even get into the deficit finance obligations of each partner or apportionment of distributors' advances or pre-sale monies...

Let us be clear though, there are a substantial number of European co-productions which do not involve the use of grants, subsidies or tax breaks at all, just straightforward "financial engineering" or the piecing together of a deal using a combination of any of or sometimes all of the following:

• Pre-sale; distribution advance; deficit finance; license fees; insurance backed schemes; contract discounting.