International co-productions access complex treaties


"The Children of Huang Shi"

Set in China in 1937, "The Children of Huang Shi" (also known as "The Bitter Sea") is a $15 million epic that was made as a Chinese-Australian-German co-production through a complex web of financing.

The movie, which will be released in early 2008, tells the true story of British journalist George Hogg, who led a group of 60 orphans on a 1,000-mile trek across China to escape the invading Japanese. Directed by Roger Spottiswoode, it stars Jonathan Rhys Meyers, Radha Mitchell and Chow Yun-Fat.

While the movie is considered the first official co-production between Australia and China, it was already in postproduction when Australia signed its co-production treaty with China in June. However, government authorities agreed to give the film's producers an official memorandum of understanding, allowing them to receive all the benefits of a proper co-production.

That meant guaranteed distribution in China as a Chinese film instead of the very limited distribution it would otherwise have had as a foreign film.

In Australia, it also meant that Australian co-producer Jonathan Shteinman was able to access funding from a government agency, the Film Finance Corp., and the state government agency Film Victoria as well as the federal government through its new PDV (post, digital and visual effects) tax offset.

Australia currently has official co-production treaties in place with eight countries: Canada, China, Germany, Ireland, Israel, Italy, Singapore and the U.K. Memorandums of understanding are also in place with France and New Zealand, and treaty negotiations are under way with South Africa.

Australian co-production treaties covers film, television and new media and require several key Australian creative components. In the case of "Huang Shi," those requirement are satisfied by the involvement of actors Radha Mitchell and David Wenham, both Aussies.

The film was financed through a 40%-30%-30% split of Chinese, Australian and German money, with some funds also coming from Taiwan and Korea. Hyde Park International is handling foreign sales. It will be distributed domestically through Sony Pictures Classics.

"'The Children of Huang Shi' will consolidate the growing relationship between the Australian and Chinese film industries," Shteinman says. "A lot of work was done in Australia on Chinese films like 'Hero' (2002) and 'House of the Flying Daggers' (2004); 'The Children of Huang Shi' takes this relationship to another level."

-- Pip Bulbeck

"Goodbye Bafana"
(Germany-Italy-South Africa)

It may seem strange that a film about Nelson Mandela shot entirely in South Africa is considered a co-production, but that's how "Goodbye Bafana" was structured. That allowed its producers access to European subsidies as well as the greater level of aid provided by South Africa to co-productions than to indigenous movies.

The screenplay was written by South African Greg Latter, based on the book of the same name by James Gregory that describes Mandela's relationship with his Afrikaner jailer during his 27 years of imprisonment on Robben Island.

Six of the nine principal cast members were South African, joining British actor Joseph Fiennes as the prison warden and German actress Diane Kruger as his wife.

South African production company Film Afrika engineered the movie as a South Africa-Italy-Germany co-production.

Capitalizing on existing bilateral agreements that South Africa has with Germany and Italy, Film Afrika's David Wicht -- a producer of the film -- helped put together a deal that raised 44% of the $30 million budget from those two European countries.

A further 23% of the budget came from private equity within South Africa itself. Because participants from other European countries can qualify for the German-Italian requirements of the treaty, the movie was able to use a French director of photography and a French editor. Postproduction was done entirely in Europe, with the picture edited in Brussels and mixed in Paris.

South Africa has a total of four co-production agreements, with Canada, Germany, Italy and the U.K. The South African government has also announced its intention to negotiate similar agreements with Sweden and France.

-- Margaret O'Connor

"Cry of the Owl"

Initially developed as a movie by BBC Films, "Cry of the Owl" was meant to be co-financed in part by British tax fund Prescience. But when the U.K. changed its tax rules, the Prescience funding fell through.

"Initially, they (producers Antoine de Clermont-Tonnerre, Julia Sereny and Jennifer Kawaja) asked us to do the sales," says Myriad Pictures CEO Kirk D'Amico. "Then all of a sudden we found ourselves helping to arrange co-production financing."

At first, D'Amico and the producers thought of structuring the project as a British-Canadian co-production -- an obvious strategy given that writer-director Jamie Thraves, who adapted the thriller from a Patricia Highsmith novel, is British.

But when Studio Hamburg came in with roughly 20% of the budget, D'Amico says, "it made more economic sense to do it simply as a German-Canadian co-production."

D'Amico realized that the movie could qualify as a Canadian shoot through a combination of creative elements and Canadian spend.

"We had to adjust the spend in each territory, and we had to pay attention to the creative elements, which included not only the writer, director and cast and what their nationalities were, but also the department heads: director of photography, composer, etc."

One of the reasons D'Amico wanted to shoot in Canada was that Canadian actress Sarah Polley was attached to star. When she dropped out, they approached Julia Stiles, who is American. That meant other key cast members had to be Canadian. In addition to Briton Paddy Considine, the filmmakers cast Canadians Caroline Dhavernas and James Gilbert.

Shooting on the $11 million-$12 million movie kicked off early in November, with all filming taking place in Canada and all postproduction in Germany.

-- Stephen Galloway

"The Argentine" and "Guerilla"
(Spain-Puerto Rico)

When producer Laura Bickford and attorney Robert Darwell of the Sheppard Mullin Richter & Hampton law firm were structuring the financing for a two-part, $65 million biopic about Che Guevara, they opted to take advantage of one of the world's most generous subsidies, offered by Puerto Rico.

"Puerto Rico gives a 40% rebate based on the expenditures there," Darwell notes. "This is transferable, which means you can sell it (in advance of production). And unlike say, South Africa, where you have to wait up to a year, in Puerto Rico, one may receive 50% of the benefit even before principal photography begins, which one can then use to finance the production."

Curiously, the fact that the movies' star, Benicio Del Toro, is Puerto Rican was not an element that came into play when financing the films.

Puerto Rico has a cooperation agreement with Spain, meaning that as long as at least 20% of the budget is spent in one country and the rest in the other, and as long as some key cast and crew members come from Spain, a project can qualify for subsidies in both nations.

Darwell says he and Bickford chose not to make the production entirely Spanish because Spanish subsidies are somewhat uncertain.

"If you shoot just in Spain, you might not get anything," he says. "In Spain, each year the government allocates only a certain amount of money to subsidize Spanish production; depending on the timing of when the application is submitted, the subsidy you receive can vary. If it's toward the end of the year and they don't have any more productions coming, you might do well, because they have to account for the money each year before rolling over to the next year. But if they've used it up, it could (be the other way around)."

In this case, he says, "Our application came in later in the year, and we were able to do quite well."

Unlike some other treaty signatories, Spain had strict requirements for production personnel and cast on the combined films, which Darwell refers to as "Che."

"In order to qualify, there were quite a few criteria that had to be met," he explains. "There had to be a Spanish 'author' -- either a writer, director or composer." With American Steven Soderbergh helming a screenplay written by Peter Buchman and Ben Van Der Veen (along with Soderbergh himself), that meant the composer had to be Spanish -- so the filmmakers hired Alberto Iglesias.

"Then there had to be a Spanish actor in a principal role," Darwell says, "and we used Damian Bichir as well as other Spanish actors who had to appear in secondary roles. There also had to be at least two Spanish heads of departments, and we ended up with Spanish personnel in other areas below the line."

Qualifying for the Spanish part of the deal had its benefits: The producers almost immediately were able to sign a lucrative distribution agreement with Spanish broadcaster Telecinco.

But the entire project took months to put together and was still being finalized even after shooting got under way this summer.

"The actual financing co-production agreement with the Spanish parties is not that long a document -- maybe 15 pages," Darwell notes. "But you have all those contracts with the other parties as well. It ends up being a big transaction."

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CONNECT FOUR: Projects made possible by complex treaties