Russia Ditches Plan to Boost Exhibition Fees After Outcry, Considers Levy System

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Vladimir Medinsky

Plans for an across-the-board $90,000 distribution fee have been scrapped, though the burden of a possible new levy system will still fall on Hollywood.

Russia's culture minister Vladimir Medinsky has ditched plans to boost exhibition fees from less than $100 to nearly $90,000 after an industry outcry.

Instead, Medinsky is looking into a scheme to impose a levy on box-office receipts. Such a system would mean that smaller films — European art house pics and others released on a limited number of screens — will not face a punitive one-off distribution fee of five million rubles ($86,700).

A levy would still leave bigger films, such as Hollywood blockbusters, exposed to fees that could be as high as 12 percent, though it is not yet clear whether Medinsky's new proposal would apply to gross or net receipts.

Speaking to Russian news site, Medinsky said, "I believe that this is the correct principle, to make sure that at the expense of Western, Hollywood cinema, domestic cinema is financed."

But the way in which money was raised to support domestic cinema could vary, he added: "In France and Poland, there is not a one-time fee, but a percentage of fees. In France, it is quite high, about 12 percent. I think the French model is fairer. You can discuss the percentage figure."

Medinsky noted that figures as high as those levied in France would probably be "too heavy" for the Russian movie market.

The change of tack comes after the Russian parliament last month published draft legislation scrapping the current distribution fee of 3,500 rubles ($60) per film to replace it with a fee of 5 million rubles.

Domestic distributors and exhibitors were horrified, with many saying that though major Hollywood studios could probably absorb the cost, smaller films and European art house fare would be effectively killed off.

Although no separate figures are kept for Hollywood box office in Russia, U.S. and foreign films in 2016 accounted for 82 percent of box-office takings — some $596 million out of a total of $727 million.

Medinsky suggested he is bearing these figures in mind, saying, "The principle, when the rich pays a lot, and people and companies whose films collect less money, pay less, looks more fair than a one-time fee."

Medinsky remains adamant, though, that the main target of the new system is still Hollywood: "The task was simple — to find additional funds at the expense of Western releases, Hollywood, primarily to support domestic cinema."

Money raised, he added, would "go directly to the Cinema Foundation," which supports domestic filmmakers.

Meanwhile, Russian distributors remain unconvinced. A source in the industry told The Hollywood Reporter that it was too early to discuss Medinsky's statements and it would be better to wait and see what the ministry actually does.