Battle lines drawn over German film financing

Local films, co-prod'ns like 'Reader' count on the support

BERLIN -- The German film industry is coming off its best year to date: Production is up; boxoffice is booming; and crews in Berlin, Munich and Cologne are booked solid.

But instead of celebrating, the industry is busy tearing itself apart, engaging in an uncivil war over the German law governing film financing. It's a war that could claim the country's film business as its first casualty.

On Thursday, Til Schweiger, Germany's biggest star and one of its most successful director-producers, warned that the legal battle between German exhibitors and the German Federal Film Board could have "catastrophic consequences" for local film production. Schweiger forecasts a 6%-10% drop in boxoffice revenue this year if the fight continues.

A national producers association has gone even further, warning that local production could be cut in half and a slew of film companies pushed into bankruptcy unless exhibitors and the film board end their feud.

The battle is over the levy -- 1.8%-3% of annual revenue -- that exhibitors, video distributors and German TV channels pay to the film board. The board uses the cash to subsidize everything from screenplays and production to film education and distribution.

The problem is that while cinema and home entertainment outlets are forced to pay by law, TV broadcasters' contributions are voluntary. Movie theaters think that's unfair and challenged the law. Last month, a German court agreed, saying the law is unconstitutional.

But here's the rub: The court didn't explain why. It will, but that will take awhile, as will the inevitable appeal to the German supreme court. It could be a year or more before the industry has any legal clarity.

German filmmakers don't have that much time. Before the ruling, a number of exhibitors had decided to pay their levy under caveat -- a legal notice that prevents the film board from spending the money until the matter is settled.

The budget gap is in the millions of euros and growing. This week, two big multiplex chains -- CinemaxX and Kinopolis -- also decided to pay under caveat. Others, including video distributors and perhaps even TV channels, are expected to join them, further shrinking the film board's subsidy budget.

Local films aren't the only ones that will suffer if German subsidies get cut. Many international co-productions -- Stephen Daldry's "The Reader" and Julie Delpy's "The Countess" are two recent examples -- also count on the film board for financing support.

Film board officials are meeting today to discuss the crisis and possible emergency measures.