A new reign in Spain

Bigger budgets, A-list stars and a new generation of risk-takers are transforming Spain's notoriously insular film sector.

MADRID -- Local filmmakers rejoiced the day the 2005 box-office figures were finally tallied, even though there were no Spanish blockbusters driving ticket sales through the roof. Nor was there a surprise hit at the art house from an emerging auteur. On the contrary, the numbers were rather bleak: Cinema attendance in Spain dropped by some 16 million tickets in 2005, an 11.3% decline from the previous year.

So, why the optimism? The answer is simple -- since the drop in attendance related mostly to U.S. fare, Spain's doggedly nationalistic film sector celebrated the fact that homegrown pictures had grown to represent more than a 16% share of the local boxoffice.

Similarly, when antitrust authorities slapped a €2.4 million ($3 million) fine on five U.S. distributors for imposing conditions on Spanish exhibitors that favored American product, local industry insiders lauded the unprecedented move.

But even as local filmmakers celebrate the triumph of indigenous production, the industry as a whole is becoming increasingly dependent upon the outside world. In the past few years, Spanish filmmakers have been focusing on projects that can tap financing from a variety of sources in order to make films that are more economically viable and more marketable to the rest of the world, leaning heavily on international co-productions with Spanish-speaking territories such as Argentina, Brazil, Mexico and Peru.

Recognizing the changes that have already taken place, many in the film sector say the time has come for Spanish filmmakers to look beyond the limitations of their market and embrace the global film industry. "In Spain, the structures for production are very small," says Fernando Bovaira, general manager of film and TV powerhouse Sogecable. "There are too many producers making too many movies for the viability of the projects. The film market has to see some movement in the future. Exhibition is down. Video is down. That has to force us to reflect where Spanish production should go."

The answer, some say, is to go Hollywood.

"The bottom line in Spain is that for a production to travel, it has to consider the boxoffice, so in many cases, the actual content suffers in creativity and loses the Spanish flavor," says Gillian Bulbeck, head of TailorMade Entertainment, which specializes in English-language productions. "Using Hollywood style is the only way some projects can get off the ground."

In fact, producers admit they are having trouble identifying exactly what "Spanish flavor" means now that the country has become so pluralistic thanks to a steady influx of South American and Moroccan immigrants. Rather than attempting to define a national identity, Spanish producers are instead looking to attract A-list actors to English-language films and use presales to foreign territories to amortize bigger-budget projects.

Andres Vicente Gomez, Spain's maverick film producer, leads the pack with the new strategy; he has a handful of top-drawer productions lined up, including director Menno Meyjes' $25.4 million "Manolete," starring Adrien Brody and Penelope Cruz. Also in the pipeline is the Paz Vega starrer "Teresa, Muerte y Vida" about Spain's mystic saint.

"There are certain ingredients for making a Spanish film successful for the international marketplace," Valentia Films president Jose Magan says. "Shooting in English with international actors and worldwide subjects are key. But it's like a paella recipe: Everyone uses rice, meat and vegetables, but they don't all turn out the same."

Filmax pioneered that philosophy by launching its genre-based Fantastic Factory, which caters to an international audience with English-language, star-driven films such as director Brad Anderson's 2004 Christian Bale starrer "El Maquinista" (The Machinist), distributed by Paramount Classics in the U.S. -- which generated considerable acclaim for Bale and more than $1 million in U.S. boxoffice receipts -- and Jaume Balaguero's 2004 release "Darkness," which Dimension Films distributed stateside, where it grossed $22.2 million. The company also has set up shop as a cutting-edge animation studio and a greenhouse for talent, recruiting young directors into its ranks.

"We saw that traditional distribution methods were ending in Spain and made our move to expand and broaden our market," Filmax president Julio Fernandez says. "Now, we're evolving, and our stability and growth will come from international operations."

Filmax benefits from the fact that it is located in Spain's northeastern Catalonia region, where the local government is committed to supporting the film and TV industry through a range of financial incentives administered by the Catalan Institute of Cultural Industries (ICIC), the Catalan Finance Institute (ICF) or the Catalan Broadcasting Corp. (CCRTV). ICIC has budgeted some €11 million ($14 million) for local productions this year, while ICF has set aside €50 million ($63 million).

As a result, Catalan companies are flourishing: Mediapro is a production partner on Woody Allen's upcoming romantic drama, which is slated to be shot in Spain; Rodar y Rodar has joined forces with Guillermo del Toro to produce Juan Antonio Bayona's horror-thriller "El Orfanato" (The Orphanage) and Guillem Morales' English-language remake of his 2004 thriller "El Habitante Incierto" (The Uninvited Guest).

Other regions are following Catalonia's lead. Galicia, in Spain's northwestern corner, has invested more than €4 million ($5 million) in locally produced films, while Andalucia is set to beef up its own incentive programs.

The Institute of Foreign Commerce (ICEX) provides additional assistance to Spanish filmmakers. The agency invested some €1.2 million ($1.5 million) in various productions last year, and representatives regularly attend film markets including the American Film Market to attract buyers to such events as the Madrid Spanish Film Screenings and the Malaga Film Festival.

Whether it's additional promotion or the quality of the product on offer, the markets have been kind to Spain lately, with international sales revenue more than doubling in the past five years, from €23.8 million ($30 million) in 2000 to €54.7 million ($69.3 million) in 2005. Paradoxically, though, while sales are up, prices have stagnated, making it more difficult for smaller companies to compete in the global arena.

"There are all these events that have sprung up everywhere, and we're supposed to be present at half a dozen events within a span of a few months," says Kevin Williams, a veteran sales agent and president of Kevin Williams Associates. "If you're a small company -- as most of us are -- it's a ball-busting exercise."

And while plenty of new sales companies are springing up in the hopes of successfully executing deals to export Spanish cinema, the majority of producers say they prefer to either keep their sales operations in-house or to work with established sellers abroad who have solid ties with distributors around the world.

"In Spain, there's still a long way to go to create truly international sales platforms," says producer Iker Monfort, who has signed Celluloid Dreams to represent his upcoming slate. "There should be more companies that don't just sell Spanish or Spanish-language films. To attract international clients, it should be a more international flavor."

But selling product at the film markets is not the only way to land financing. Spain's blossoming TV sector, which saw the launch of two new free-to-air channels within the past year, actually has been an important source of cash for producers -- since the government requires that broadcasters invest 5% of their revenue in domestic film production. In 2004, that revenue amounted to roughly $160.4 million.

Some producers resent having to create product that will appeal to a general TV audience, but that is not to say that the marriage of film and television can't work. In February, Spanish broadcaster Telecinco signed a three-year co-production pact with Telespan 2000; the companies previously had partnered on films including 2002's "El Otro Lado de la Cama" (The Other Side of the Bed) and 2003's "Dias de Futbol" (Soccer Days), which each earned upward of $15 million at the Spanish boxoffice.

"There's an eruption of new channels that are all going to need content, and that's good for the production and distribution sectors," Bovaira says.