U.S. majors take advantage of Teutonic tax breaks

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COLOGNE -- The German boxoffice took a breather last year, with both revenue and admissions figures dropping. But ironically, the weak numbers reaffirmed the strength of homegrown films.

Hollywood's Pirates, Potters and Remy the Rats delivered as promised, but with no big German titles in the mix, the overall trend was down.

That won't be the case this year: Local megastar Til Schweiger has already made sure of that with his rom-com hit "Rabbit Without Ears," which spent 15 weeks in the top 10, earning some $60 million for Warner Bros.' German distribution arm.

"Rabbit" leads the pack of local-language titles that show the breadth and diversity of current German cinema. Veteran director Doris Dorrie has staged a mini-comeback with her critically acclaimed "Cherry Blossoms," which has earned more than $5 million for art house distributor Majestic.

"The Red Baron," Nikolai Mullerschon's take on the legendary WWI fighter pilot and another Warner Bros. Germany title, is also off to a flying start, with a top 10 debut and $1 million take on its opening weekend.

That Warners and fellow major Disney invest heavily in Teutonic talent isn't news. Both studios have been steadily building their German operations for more than a decade now. They have hit a particularly rich seam in German kids' films -- Disney with its "Wild Soccer Bunch" franchise and pickups such as Studio Hamburg's "The Three Investigators" and Warners with a long line of German animated hits, including "The Little Polar Bear" and "Laura's Star," both co-produced with Thilo Rothkirch's Cartoon Film.

What is new is that other majors are coming on board, taking advantage of a new federal tax rebate scheme, the DFFF, to produce local-language titles. All are targeting the steady 18-25% of Germany's annual boxoffice that goes to homegrown films.



Fox has boosted its German operation, signing a three-year, five-picture deal with Munich-based Claussen+Wobke+Putz that will include the fall release of Marco Kreuzpaintner's highly anticipated fantasy film "Krabat" and the campus comedy "13 Semester." Universal has started up a German-language production and acquisitions arm, headed by Andrea Willson, and plans to produce or acquire two to three titles a year. And Sony, after shutting down its stand-alone German film production arm in 2003, is back, shifting its European production operations from Madrid to Berlin.

The DFFF, which provides €60 million ($95.3 million) in immediate tax rebates to productions shooting in Germany, has set off a boom in local and international production. Top-end titles such as Warner Bros.' "Speed Racer," Sony's "The International," MGM/Weinstein Co.'s "The Reader" and MGM/United Artists' "Valkyrie" lead a swarm of international co-productions, from Michael Hoffman's historical drama "The Last Station," starring Helen Mirren, James McAvoy and Christopher Plummer, to Paul Schrader's post-WWII drama "Adam

Resurrected," featuring Jeff Goldblum and Willem Dafoe.

Fremantle Media, the production arm of television giant RTL Group, has also announced its return to feature films, relaunching the legendary UFA Cinema label, producer of Fritz Lang's "Metropolis" (1927), with a promise to make eight German films a year starting in 2010.

But this production boom masks a growing uncertainty in the German distribution business. Takeover rumors continue to swirl about Constantin Film, the country's No. 1 independent, as its majority shareholder Highlight Communications engineers a merger with TV group EM.Sport Media. Resurgent indie Kinowelt was picked up by French giant StudioCanal for €70 million in January, raising questions about the company's future direction. And Senator Film, having emerged from insolvency to become a player again on the German scene, has yet to land a major hit, leading to wagging tongues concerning the company's long-term viability.                    
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