Once an industrial laggard that was state mollycoddled and monopolized, Spain’s audiovisual industry is now going through a rapid overhaul, forging new opportunities for foreign players and striving to equal or surpass other countries in Western Europe.

The cable market is lurching forward: United Intl. Holdings (UIH) has launched two cable systems, and US West is eyeing a franchise in Barcelona. Multiplexing is on a roll: United Cinemas Intl. is setting the pace, and Warner-Lusomundo finally opened its first Spanish multi-screener this April. In production, local media giant Prisa is forging a Spanish major, led by a mega 30-pic alliance with Sogetel and vet producer Andres Vicente Gomez.

Meanwhile, indefatigable indie distrib/exhib Lauren Films has moved along the same road, with plans to resume film production on big titles. Lauren is also pushing with Spanish institutional investors to build a major film and TV studio complex, Santa Barbara Studios, at Sitges, near Barcelona.

TV acquisition prices have tumbled. But Spanish broadcasters still acquire Yank programming for off-peak and selected primetime berths. New or powerful theatrical indie distribs are bidding aggressively for top “A” titles.

The distribution sector could see the abolition of rulings that force U.S. majors to handle Spanish/European features in order to garner dubbing licenses for non-European Union (read: U.S.) product. Local distribberies like Enrique Gonzalez Macho have long argued that such pics are the natural preserve of local indies, not of the majors. The government has reportedly been in talks with film trade bodies to scrap the dubbing quotas this fall.

This move is supported by Spanish film producers, currently in a bullish mood. Local pictures’ market share climbed back to 10% for January-May this year, from a historic 7.1% low in 1994, per figures from audiovisual producers body FAPAE. FAPAE’s Jose Maria Otero predicts it should hit 11% by the end of the year.

In addition, according to new back-end subsidy rules, pics that gross over 30 million pesetas ($240,000) can be awarded an amount equivalent to a third of their budget. “This new system (gauging subsidy by B.O. performance) means producers are once again businessmen,” says one industryite.

Antonio Lopez Calvo at Banco de Exterior de Espana, which will provide some $24 million in film-bridging loans this year, notes film projects submitted now are “more commercial and more exportable.”

Adds Enrique Balmaseda, director-general of Spain’s ICAA film institute, “State film aid can work by either protectionism or incentives. We prefer the latter.”

As president of the EU, Spain’s government plans to take this policy to Europe, pressing for the creation of a major bank guarantee fund for European motion picture production.

If an upscale local movie costing, say, $2.4 million grosses $960,000 in Spain, it can reasonably expect some $2 million-$2.1 million from a combo of the new subsidy and Spanish theatrical, TV and video. That leaves $300,000-$400,000 to be made from second-run TV licensing and overseas sales – described as a “relatively easy” target by vet producer Gomez.

The new subsidy ruling has upped film production levels here. Some 40-50 pics are currently in production, ready, or have just bowed in Spain. And as the sector continues to shake out, producers beyond the Sogetel-Gomez powerhouse are raising the ante.

Having grossed $3 million-plus with the Gen X drama “Tales From the Kronen,” producer Elias Querejeta has announced a seven-film slate, the biggest production commitment of his career. All will be international co-productions and not in the contempo-reality genre of pics like “Kronen,” says Querejeta. First up is “Gracia, ” Querejeta’s second feature, and “Robert Ryland’s Last Journey,” an English-language, Anglo-Spanish drama now lensing in Oxford.

Pedro Almodovar’s latest pic, “The Flower of My Secret,” preemed at this month’s San Sebastian fest. Director Pedro Almodovar and his producer brother Agustin’s Madrid-based El Deseo, are, typically, financing two pictures by young directors: Monica Laguna (“Tengo una casa”) and Daniel Calparsoro (“Pasajes”).

Other producers, notes Spanish sales agent Francisco Rodriguez, have generally gone one of two ways – setting up camp with broadcasters, or pacting co-productions.

In 1994, burgeoning production indies Atrium, Cartel and Origen founded Lider with Antena 3 TV’s production arm, Aurum Films. Lider offers its partners financing from its theatrical distribution (currently handled by Columbia TriStar), pre-buys by Antena 3, and international sales.

Each player has an informal first-look at the others’ projects. This potentially potent domestic co-production force specializes in Spain’s favorite home genre: comedies.

The other alternative – utilizing extensive co-production facilities and overseas partnerships – is a route favored by the Basque-based Angel Amigo, Tornasol Films’ Gerardo Herrero and Filmania’s Ricky Posner.

Ernst Goldschmidt’s German-based Pandora Cinema is to provide part development and overhead costs, plus advances, for the nine-film slate of FilmPact, the joint production alliance of Posner’s Madrid-based Filmania and London’s Impact Pictures, owned by Jeremy Bolt and Paul Anderson.

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