Russian movie biz goes cold

Tough times leading to renegotiations, cancellations

MOSCOW -- In a film world beset by economic upheaval, there might be no territory more upside down than Russia.

At last month's Berlinale, sellers grumbled openly that business in the territory was hardly what one would call usual. Tales of existing deals with Russian distributors being renegotiated or canceled en masse were rampant. As one European seller cheerily put it, "Russia isn't just dead, they're pulling us into the grave with them."

Others were more generous. "We haven't had any cancellations, but we have introduced payment schedules for some of our Russian buyers," said Irina Ignatiew, exec vp international at German sales group Telepool. "We have relationships with these buyers, and we want to help them in these tough times."

One thing seems certain, though: The end of the tough times is nowhere in sight.

"It is true that (Russian buyers) are renegotiating deals and even canceling them. It is very difficult indeed to get money out of that territory," a spokesperson for London-based sales and finance house Hanway Films said recently.

News is even worse on the local production front. As the global financial downturn has worsened, Russian distributors increasingly have turned their focus toward Hollywood blockbusters, leaving homegrown films and even foreign indies on the outside looking in.

It's a trend that's left an already uncertain local production scene -- one that has seen state support and private funding dry up -- with a decidedly bleak outlook.

"These days, our priority is highly publicized, strong projects (because) films of that kind are taking a bigger and bigger share of the boxoffice," said Yulia Kulikova, a spokesperson for Central Partnership, Russia's largest independent filmmaker and distributor.

Kulikova added that the company expects a decline in the number of domestic releases as well as a drop in prices paid for distribution rights to foreign independent films.

"While earlier they could afford to buy a noncommercial film, now everyone is looking for a sure hit," said Yekaterina Manakhova, general director of the ongoing 77th Russian international film market, which has seen its number of participants slump 10%-15% this year.

Not that the desire for U.S. blockbusters necessarily will translate into a gold mine for the studios.

"One of the problems is that movies might be performing well in theaters but the distributors are having huge problems collecting cash from exhibitors for them," one seller said. "Distributors are having the same problems getting cash from the television deals too. Everyone is holding out on cash on deals to maintain their cash flows and not paying distributors their rentals."

Manakhova said the true impact of the downturn isn't even being felt yet.

"The market has not yet fully reacted to the crisis," she said. "Currently, projects that were completed some time ago are being offered, but within about six months, the market is likely to experience shortages of domestic films as well as foreign independent fare."

About 100 Russian film projects have been canceled or suspended since the fall, when the film industry experienced the impact of the economic crisis, according to the Russian film industry's trade journal, Byulleten kinoprokatchuika. Earlier this year, Mosfilm, the country's largest studio complex, said it had no films being shot in its studios.

A spokesperson for the Russian culture ministry's film industry unit said state funding has begun to be allotted but would not comment on whether the 3.5 billion rubles ($101 million) in funding for the industry originally stipulated for this year would be delivered in full.

But studios with local operations aren't giving up on the territories.

"All our pictures will be released here as previously planned," Fox spokesman Aleksandr Kovalenkooff said. He added that the company still has plans to make movies locally for the Russian market.

Stuart Kemp in London contributed to this report.