Rumor mill churns over Spain's Sogecine

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MADRID -- Spain's leading film production house, Sogecine, has quietly let three of its top international executives leave in recent months amid rumors of a possible halt in production activity. The studio has been a powerful force in the Spanish film industry's internationalization over the past decade, so the developments raise questions about what the moves may mean for the Spanish industry as a whole.

For many, Fernando Bovaira, Gustavo Ferrada and Simon de Santiago's departures mark the end of an era.

Sogecine's parent company, television titan Sogecable, maintains that there has been no official policy change and that the company intends to continue production, despite the fact that resources are being channeled into the group's free-to-air TV channel Cuatro.

"Events change things," Sogecable spokesman Javier Garcia said. "Now we have a TV channel that requires resources and it relegates film to the back burner."

According to Garcia, Sogecine will continue its investment in local cinema in accordance with Spanish legislation that requires broadcasters to commit 5% of overall revenues to film production.

Only two films -- Jose Luis Cuerda's "Los girasoles ciegos" and Mateo Gil's "Pedro Paramo," starring Gael Garcia Bernal -- have managed to hang on to their slot in the production lineup at the studio, which has cleared the rest of its slate.

So it seems the days are gone when Sogecine would carry the weight of projects like Alejandro Amenabar's "The Sea Inside," Antonio Banderas' "Summer Rain," Javier Fesser's " The Adventures of Mortadelo and Filemon," Julio Medem's "Lucia and Sex" and Juan Carlos Fresnadillo's "Intact."

"It's a real shame, especially given that Sogecine was one of the main forces behind the new Spanish cinema that revolutionized the image of the industry internationally and domestically," said Koldo Zuazua, executive producer on Medem's "Chaotic Ana," which was recently co-produced with Sogecine.

Some insiders suggest Spain's new film law -- which limits broadcasters to co-producing all of their films with independents if they want to access subsidies -- is partly to blame. Others point to the weak returns on Spanish films and the company's need to focus on its core business of television.

Sogecable said in September that cost-cutting measures had buoyed the company to its best third-quarter results ever, with 50.3 million euros ($71.2 million) in profit in the first nine months and revenue hitting $1.85 billon through September.

Thus far this year, Sogecine has earned only about 3 million euros ($4.39 million) at the domestic boxoffice from its 9 films released, according to the Culture Ministry's official figures.

But Sogecine's malaise is the Spanish industry's as a whole. Juan Antonio Bayona's standout ghost tale "The Orphanage" -- Spain's bid for foreign-language Oscar and due to be released by Picturehouse in the U.S. this month -- is the only Spanish title that to elbow its way into the top 25 boxoffice performers this year, with 13.9 million euros ($20.3 million).

Earlier this year, Columbia Tristar closed its Madrid production operation, moving its focus to Eastern Europe.

"Sogecine's closing production is not the disease. It is a sympton of the disease," said producer and industry consultant Michel Ruben. "What it says about the industry is very telling. If what we thought was one of the most successful producers decides it's not viable to continue production, that should give us pause."

Spain's producers' lobby FAPAE has long bemoaned a crisis in the film industry, saying its members' films didn't have enough time in theaters or garner enough support from broadcasters to earn money.

"Films are being made, but not being seen. It is a crisis in distribution and exhibition. You can't keep producing films that nobody watches," Ruben said.

New models are popping up already: smaller producers focusing on niche products, broadcasters looking to corner the TV-friendly film market, and animation studios switching to digital content.

Bovaira -- credited with masterminding Sogecine's dominance in the Spanish industry -- is currently setting up his own production shingle.
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