Exactly what will happen to DEFA, Europe’s largest film studio, is still unclear, but the fate of the former East German monolith, located just outside of Berlin, is certain to have a profound influence on the future of Germany’s film industry.

It could change the production climate in Europe and possibly even make waves that will lap at America’s shores.

The DEFA studio, founded in 1912, was the center of the German film industry until WWII. It was the launching pad for the careers of Lang, Dietrich, Wilder, Sirk and countless others.

Europe’s first sound films lensed at DEFA, and the Nazis made propaganda films there. After the war, anti-Nazi films were made at DEFA, until the studio was nationalized by the East German government in 1952. For 45 years, DEFA produced a yearly average of 15 features bearing the Communist Party stamp of approval, while its tech facilities slid into decay and obsolescence.

Since German unification, the fate of DEFA has been in the hands of the Treuhand, the privatization agency, which will decide its future. More than half of DEFA’s thousands of workers are now on the dole.

The Treuhand was to have reached a decision at the end of March, but the snail’s pace of government action and last month’s murder of Treuhand chief Detlav Rohwedder have postponed it, possibly for months, per Treuhand spokesman Ulli Schule-Dinghaus.

“The cultural aspect and traditions must be taken into account, as well as the business aspects,” the spokesman says.

Pinewood model

Sources close to Rohwedder say that he was personally very much involved in the DEFA decision-making process, and that he had decided that the studio should continue to function and would receive government funding for renovations. It is now virtually certain that DEFA will operate as a holding company along the Pinewood model.

A plan for the studio’s renovation will probably be announced shortly. Peter Schiwy, former head of pubcaster NDR and RIAS tv, is the odds-on favorite as head of the new operation, probably to take the helm in June. Schiwy, now practicing law in Berlin, served the Treuhand in an advisory capacity about DEFA. Under Schiwy’s direction the studio will be modernized, and during the transitional period will function as a co-production partner.

German producers are straining to get in and get a piece of the action. So, according to the grapevine, are names like Time- Warner, Maxwell, Murdoch, Berlusconi, Kirch, Springer, Bavaria Atelier and Studio Hamburg, although the Treuhand won’t divulge who’s making bids.

Current studio head Gerd Golde and business manager Bernhard Nowack were in Paris recently, at the invitation of Culture Minister Jack Lang, to discuss cooperation plans with French producers. The European Directors’ Federation has called for the maintenance of DEFA, and the establishment of a European Media Center at the studio. The buzz is that once the Treuhand makes up its mind, DEFA, and Berlin, will become the film production center of Europe.

But only after it’s fixed up. By some estimates, the minimum worth of DEFA’s real estate alone is 430 million marks ($270 million). The studio occupies 500,000 square meters. Its production capacity is higher than Germany’s other major facilities, Bavaria Studios and Studio Hamburg, combined. It has more and bigger stages. But according to the estimates of the Chase Bank’s Peter Degan, who has been working with DEFA in an advisory capacity, at least 150 million marks must be invested to bring the studio up to technical snuff.

Will securing the financing be a problem? Degan has been quoted as saying that “Berlin is not Latin America.” It is more than likely that investors in DEFA will be granted tax advantages by the German government, in addition to expected government financing.

Another possible scenario is that investors will receive a 12% rebate on their investment from the German government. Selling tv rights alone to the 670 films laying on DEFA’s shelves could provide a substantial portion of necessary coin to spruce up what the German press has dubbed “Honecker’s Hollywood.”

Despite shortcomings, cameras have been rolling at DEFA and operations didn’t come to a grinding halt at the end of March, as earlier feared. Productions over the past months have involved Fox, Allianz, Toro Film, Athens-based Maxcapita International, several Swiss companies and Regina Ziegler Productions. Paramount bowed out of “The Innocent,” allegedly because of gulf war security problems, but the project will lens this fall as a co-prod between DEFA and Berlin producer Chris Sievernich.

Dieter Geissler has five features slated to roll at DEFA over the coming year and has established an F/X studio there already. German docu production company Chronos Film has moved in, permanently. Rialto Film’s Horst Wendlanclt has let it be known he’s ready to invest five million marks in DEFA. DEFA directors Heiner Carow, Frank Beyer, Herwig Kippling and Egon Gunther are shooting there. Tv is playing a big role. The successful German series “Praxis Bulowbogen” has committed to shooting 37 episodes at the studio.

A production volume of 80-90 million marks is needed this year for the studio’s survival, per topper Golde. The studio already has contracts worth some 50-60 million marks. And those are before renovations.

Under the communist regime the studio received 40 million marks annually in subsidies; 45% of its total revenues. Since March, they’ve been going it alone, receiving only 7 million marks in subsidy coin from the state of Brandenburg. While DEFA’s subsidy days are over, foreign pix lensing there will be eligible for subsidies from the government film program, which should make the facility even more attractive to outsiders.

Television production could also provide a steady flow of coin to the studio, although since Bavaria and Hamburg are primarily tv facilities, many would like DEFA’s emphasis to be on features.

Berlin producer Regina Ziegler has made it known that she wants a piece of DEFA. She recently co-financed a DEFA project, and as head of the German Association of Tv Producers (BDF) has indicated a strong interest in DEFA as a co-prod center for Germany. The BDF is expected to submit a plan regarding their DEFA dreams within a couple of months. A mass exodus of tv prods from Berlin offices to DEFA digs is predicted.

Veteran Berlin feature producer Ingrid Windisch is one of DEFA’s many champions who recently worked as production manager on Fox’s “Shining Through” which shot at the studio. “The stages are enormous, the back lot is huge and no planes fly over. There is no other location like it in the world, and it’s only 10 subway stops from downtown West Berlin.”

DEFA’s other assets, aside from Europe’s largest stages, include the biggest prop and costume departments on the continent, and some of the finest craftsmen in the industry, especially for set construction. Disadvantages, aside from tech problems, include the lack of hotels and restaurants in the area. Several independent groups have submitted comprehensive plans for the restoration of the studio and surroundings to make it attractive to producers.

DEFA is poised for a big comeback in the next year and will doubtless find the legs it once had. Germany, the world’s second-largest market, has gotten bigger through unification.

As Berlin’s film commissioner Hans-Robert Eisenhauer put it, “if we didn’t have DEFA already, we would have to build it.”

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