Russian Film Industry Likely to Be Short on Cash in 2015

Moscow Russia Aerial View - H 2013
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Moscow Russia Aerial View - H 2013

The falling ruble and weaker sales to Ukraine and local TV make the sector's prospects look grim

Anton Malyshev, head of Russia's Cinema Fund, an organization administering state cash for the film sector, has predicted financial problems for the Russian film industry in 2015.

"We are already feeling pressure," Malyshev was quoted as saying by the news agency TASS. He added that problems the industry is likely to face are caused by more than just the falling ruble, which has lost more than 60 percent of its value against the U.S. dollar and the euro over the past 12 months.

"There are problems with the Ukrainian market," he went on to say. "Companies haven't yet recovered from the decline in revenues from DVD sales, and TV networks have been buying content less actively. And even those contracts that get signed are not paid on time, as far as we know."

According to Malyshev, the negative impact of the ruble's value loss is important because most of film companies' production expenses, including stars' fees, are nominated in dollars or euros, while their revenues are in rubles.

"With stars it is possible to negotiate," Malyshev said. "But there are expenses linked to technology as well."

The Cinema Fund and the culture ministry are two agencies in Russia that administer state money earmarked for the film sector. This year, the fund distributed among film producers 3 billion rubles, which at the beginning of this year corresponded to $90.9 million. But now with the ruble falling, it could be exchanged for only $55.2 million.

For many years, Russian filmmakers have heavily depended on state cash, which until recently was paid to them as non-repayable subsidies. Last year, the fund introduced repayable interest-free subsidies, which accounted for 40 percent of all cash it distributed in 2014.

However, with worsening economic conditions, producers could have trouble paying back the subsidies.