Cannes: Russia celebrates 100 years of film production

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Russia's anniversary of 100 years of film production couldn't have come at a better time. With local releases taking in almost $150 million last year, representing a 27.3% jump over 2006, there is plenty to celebrate as Russian film hits the century mark.

Driving this growth is Russia's first generation of private producers, who are now in their mid-40s. Indeed, the most financially successful Russian films are largely producer-initiated projects similar to those of old Hollywood.

Renat Davletyarov, the 46-year-old CEO of Moscow-based production company Interfest, whose body swapping comedy "Lovey Dovey" took in more than $11 million at the local boxoffice, says Russian cinema was always producer-driven, it's just that for many years the producer was the government.

"And they weren't too bad at it," he adds, citing how auteurs like Andrei Tarkovsky were allowed epic-scale budgets while more populist directors such as Eldar Ryazanov were able to outdo Spielberg with proportionally astronomic admissions numbers to their films.

But while there is much to celebrate at the moment, a number of lingering challenges beg the question: With all of the market development over the past decade, has it become easier to be a Russian movie producer.

"It's probably easier (since) the government no longer messes with film production," says Konstantin Ernst, CEO of Channel One Russia, which produced one of 2007's biggest hits , "Irony of Fate 2."

Veteran producer Sergei Selyanov, one of the vps of the Russian Producers' Guild, says that while there may indeed be more filmmaker control these days, it all depends on perspective.

"It's easier because revenues have grown and a (theatrical) market has appeared," he says. "Ten years ago, there was only a home video and a very weak TV market. The possibilities are greater now, but so are the risks. Before, you could lose hundreds of thousands of dollars on a film. Now, you can lose millions."

"Three years ago, you could shoot (a professionally made commercial film) for $1 million," Davletyarov says. "Now it's impossible. If you want a decent production, you need around $3 million. That's also why the growth rate in cinemas being built has slowed down."

Another factor complicating the lives of Russian producers is the unrestrained growth in actors' salaries, which take up 20-30% of a film's budget, while below-the-line talent takes up 30-35%.

"Salaries have skyrocketed in all filmmaking professions," says Alexander Rodnyansky, ceo of CTC Media. "All manner of assistants, lighting technicians and gaffers cost more to employ than senior corporate managers because the demand for them is really high."

Ernst argues that producers have to agree on general rules among participants in the filmmaking process. "For the moment, such rules are not clearly articulated," he says.

With the industry in such an amorphous state, and with costs continuing to rise, the obvious question is: Where does investment money come from? While Ernst offers an explanation, specifics are scarce.

"The question is so general that I'd like to laugh you out of the room," he says. "But seriously, money for filmmaking is provided by television, the government, companies and investors."

Ruben Dishdishyan, CEO of Central Partnership says there are two types of investors: professional producers and those who are willing to invest merely out of an interest in cinema. But only the former is oriented toward a transparent business plan.

"It's great that professional film investors do not have financing problems now," he says. "If a project seems promising, we are prepared to invest considerable sums of money into it."

"Everybody has money to shoot films in Russia these days," Rodnyansky says. "There are several main sources of financing. One source is certainly television -- an important factor that is either sold to or provides financing up front in co-production."



Other sources of financing Rodnyansky mentions are banks, which have started to enter the picture after the enormous boxoffice successes of Timur Bekmambetov's "Night Watch" films. Then there are local film studios -- both wholly native ones and ones set up by Hollywood interests to muscle in on some of the Russian domestic boxoffice action.

But if the money is from within Russia, it typically comes out of the ground.

"When a Russian producer says that he finances films only from other elements in the film industry, it's a white lie," Rodnyansky says. "Because when you take money from (local production houses) Prof-Media or Central Partnership, it's really (metals magnate) Vladimir Potanin you're taking money from. The producer can tell you he doesn't take money from tycoons, but the money still flows from the nickel mines."

Taking the money is one thing; having something to show for it at the end of the process is another. Davletyarov says financing is best achieved in stages, as all the production costs could be covered. The process usually works like this: A screenplay is developed with some working capital. After it is finished, above-the-line talent is found and attached, followed by an application for government support, which comes in the form of grants. "Right now, it's not the deciding factor, but it helps a lot because, after getting it, it's easier to sell the project to a domestic distributor, as well as sell DVD and TV premiere rights," Davletyarov says.

Some producers, like 30-something up-and-comer Roman Borisevich, depend on government support for significant portions of their budgets, while others who come from the cash-flush world of television do not tap the government at all. Still others, like Selyanov, see government grants as an essential crutch for a film industry that is still finding its feet.

"Over the last year and a half, government support has become necessary for just about every film because of the gap between what the market will support and rising production costs," he says. "If government support ended now, the number of films being made would fall by as much as 50%. The government could be a major market regulator if funds went to reputable organizations and development of the exhibition market was supported. In today's market conditions, the grant system must be preserved, as the market will not support recoupment models."

But Rodnyansky echoes the frustration of many when argues that other areas of the industry -- specifically exhibition -- need to be developed to reduce the reliance on government money.

"I think that the most reasoned way for the government to support the film industry is to build cinemas in areas that are not so attractive for commercial players -- say, cities with 400,000 inhabitants or less," Rodnyansky says. "The presence of such cinemas expands the opportunities for the film industry."

Dishdishyan agrees: "The government should support production for a minimum of five more years. I would double, triple production support until there are 5,000 screens in Russia, including screens in small cities."

While these numbers are based on economic estimates, there is, ironically enough, a historical precedent: In Soviet times, there were around 10,000 movie screens in Russia.

"Only about 20 large cities are bringing in exhibition money, but Russia is full of cities with populations of 100,000 or less," Davletyarov says. "There's no exhibition there, because it's deemed commercially unfeasible. Here is where government support is absolutely necessary -- specifically in financing construction of cinemas in smaller cities. The film industry will become self-sufficient when there are enough sales outlets."
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