Babelsberg's 11: Studio rebounds with big slate

'Valkyrie,' 'Racer' lead way back

Less than a year after teetering on the edge, Germany's legendary Studio Babelsberg is back in business.

Eleven feature films have shot or are set to shoot in Babelsberg this year. Among them are United Artists' Tom Cruise starrer "Valkyrie," a World War II conspiracy thriller directed by Bryan Singer; the Wachowski brothers' high-tech "Speed Racer" for Warner Bros.; and the Columbia Pictures thriller "The International," directed by Tom Tykwer and starring Clive Owen and Naomi Watts.

Babelsberg executives also are chasing a fourth, as-yet-unnamed studio project to shoot at the facilities outside Berlin in the fall.

Last year, Babelsberg played host to exactly one feature: Stefan Ruzowitzky's World War II drama "The Counterfeiter."

On Friday, Babelsberg released figures that forecast revenue of more than €100 million ($137 million) this year, compared with €16.4 million in 2006. Even compared with 2005, when films including "V for Vendetta" and "Aeon Flux" shot at the studio, the rebound is astounding.

"We expected 2007 was going to be a good year but we could never have hoped it would be this good," Babelsberg COO and deputy CEO Christoph Fisser told The Hollywood Reporter. "A lot of the credit has to go to the new German tax credit, which has made it a lot easier for Hollywood studios to shoot here."

By most accounts, the new credit system, which gives productions that shoot in Germany a 20% refund on local spend, was a deciding factor in securing big-budget productions. "Speed Racer" received $12 million in tax rebate relief, while "Valkyrie" claimed a tidy $6.5 million.

"The tax credit has also had an effect on German productions. They are shooting at our studio again instead of heading to Eastern Europe," Babelsberg CEO Carl Woebcken said in an interview .

Babelsberg has been able to capitalize on the production boom because of a major expansion the company undertook last year when business was drying up. The German studio built new facilities that doubled their sound stage space, to 270,000 square feet over 16 studios.

"We made the decision to expand in 2005, after the experience of handling production services for 'V for Vendetta' and 'Aeon Flux,'" Woebcken said. "We realized how risky it was to only have space for one big-budget film at a time, because when that shoot is over, it is very difficult to quickly secure another."

Now, Babelsberg is able to handle two to three big-budget productions simultaneously as well as three to four smaller features.

Woebcken said Babelsberg expects revenue in 2008 to be comparable to this year and that the studio will again operate close to full capacity.

But competition is increasing in the global production facilities market. In addition to such European giants as Pinewood in the U.K. and Barrandov in Prague, newcomers including Hungary's Korda studios and City of Lights in Spain are putting pressure on the established players.

"It certainly isn't getting any easier, but we're confident we can remain competitive even as things get more crowded," Woebcken said.