Czechoslovakian film industry

On the eve of the annual Karlovy Vary Film Festival, the Czech Republic's film sector struggles to regain its footing.

Czech Audio Visual Producers Assn. president Pavel Strnad could barely contain his anger. Called away from the promotional booth his nation was sharing with its Slovak and Polish neighbors at last month's Festival de Cannes to answer a phone call, he received bad news: the Czech Parliament, during its final session in Prague before a general election, had failed to overturn a presidential veto killing a long-awaited new law that would have revolutionized state support and funding for local film productions.

It was an unexpected blow to a Czech film industry struggling to stay afloat in a particularly competitive region, and Strnad was not about to let it happen without a fight.

"Why should we spend money on promoting Czech film if our government says it is not interested?" he asked at the time. "The way the law was struck down was scandalous. Parliament met to vote on overruling the presidential veto on five bills; the first four were successful, but then a group of ruling-party deputies walked out, and the move to save the film bill failed by just three votes."

Later, during an emotional news conference convened hastily in Cannes' International Village, Strnad lowered a Czech flag and closed the nation's booth for the remainder of the festival. Further protests erupted back home, where a slate of Czech films pulled out of the Zlin International Film Festival for Children and Youth and students at the renowned Prague Center for Further Education Film School made their feelings known by hanging a large banner from a campus building that read, "For Sale."

For industry leaders who supported the law, it seemed as if eight years of campaigning for the measure -- which promised to increase the Czech Republic's annual national film fund from $2.6 million to about $15 million -- abruptly had come to an inglorious end. The nation's president, Vaclav Klaus, seemed to have the last word on the subject when he declared that film is a commercial business that does not deserve state funding.

But Strnad was not content to keep quiet on the subject. In a statement issued alongside the Czech Film Center, he said: "This inaction by Parliament serves primarily to protect the special interests of the foreign-owned commercial television stations. Speculation of corruption is rife."

Strnad's outburst led to an exchange of views with Klaus -- conducted through columns in Czech newspapers -- that finally began to draw widespread attention to the argument that the local production sector needs support from public money. Discussions between Czech film-industry leaders and heads of the parliamentary coalition parties, convened by Karlovy Vary International Film Festival president Jiri Bartoska, are set to begin Saturday -- just as the Czech Republic's biggest cinema showcase gets under way.

"I believe that, in Karlovy Vary, we should not only be screening films, but we should also be discussing their future," Bartoska says. "I hope that the festival will thus be contributing to a successful solution."

The crisis comes at a difficult time for the Czechs because many local industry figures feel increasingly out of touch with modern European filmmaking. The Czech Republic's largest neighbors -- Hungary to the south and Poland to the northeast -- have reaped enormous benefits from recent legislation designed to bolster local and international production.

In Hungary, a revamped national film fund is lending fresh support to local projects, and an across-the-board 20% tax credit for local and international productions shot in that nation is boosting movie investment. The incentive helped attract Steven Spielberg's Oscar-nominated 2005 drama "Munich."

In Poland, a $30 million annual revolving national film fund for domestic and co-productions -- funded by a TV and advertising levy similar, though lower, to that proposed in the Czech Republic -- took effect in late 2005. It, too, faced fierce opposition from those subject to the levy, but a well-executed lobbying campaign by Polish filmmakers eventually won the day.

In the Czech Republic, though, financing -- even for modest productions -- remains a major stumbling block. Last year, producer Pavel Solc had to pull out of a planned Czech-British-German co-production of rising young Czech director Alice Nellis' "Loving Hell" because he could not gather the $3.5 million needed to meet the project's budget.

"I had about one-third of it, enough to make an average Czech feature but not enough for what is considered quite a small film by European standards," Solc says. "We were due to begin shooting in November or December 2005, but I simply did not have enough for the advance payments that were necessary."

That was not the only issue: The film's Czech backers also did not understand why its co-producers needed to pay for insurance and completion bonds. Solc believes that local politicians do not understand or even care about such issues, which he says are precisely those that the failed film law might have addressed.

"The film industry is a very special system -- it is not like a normal business," Solc says. "Czech film producers are working because they love film; most barely see any profit, even if their films are successful. We desperately need a fruitful dialogue with politicians where we can explain that Czech producers are not rich guys who smoke cigars and spend their time sitting around swimming pools."

CFC head Jana Cernik, a well-known figure on the international film-festival circuit, concurs.

"Unfortunately, there is no political will on the part of (Czech) politicians to address the problems of the (local) film industry," she says.

Admittedly, the impasse between domestic film producers and the Czech government has not affected international productions shooting in Prague: The New Prague Film Studios and Prague's Barrandov Studios -- where Stillking Films recently hosted Sony's upcoming James Bond release "Casino Royale," directed by Martin Campbell -- report strong big-project bookings into next year. Nonetheless, stagnation in domestic production eventually could undermine the Czech Republic's reputation as Europe's leading center for cost-conscious offshore productions, according to Stillking co-founder Matthew Stillman.

"From an international point of view, there is a long-term threat to the industry," he says. "Foreign productions are profitable for the Czech economy, but that advantage could disappear if the government is not proactive about supporting the industry."

Complicating matters further, Stillman cites a new process by which foreign productions must attempt to win tax-incentive support in the wake of a CFC/Czech Ministry of Culture-backed study by London-based consulting firm Olsberg|SPI. The study, published this year, puts forth a vigorous argument that tax breaks for film productions actually would increase government tax revenue through the multiplier effect of increased local spending.

NPFS head Tomas Krejci believes that that line of reasoning offers a glimmer of hope amid the gloom that appears to have all but engulfed the local industry.

"I personally believe that the new government will look at the problem again sometime in the fall or early next year in a law that embraces both the tax incentives together, with support for Czech filmmakers," he says.

Strnad, for one, hopes that Krejci is right.