European competition heats up

BERLIN — With their takeover neatly wrapped up and shooting on the Wachowski brothers’ “V for Vendetta” nearly completed, Studio Babelsberg’s new owners are eager to continue their fruitful relationship with U.S. majors.

CEO Carl Woebcken and chief operating officer Christoph Fisser, who bought the studio from Vivendi Universal last year, and longtime Babelsberg production exec Henning Molfenter land in Los Angeles June 4 to talk up the legendary studio’s potential.

For Babelsberg, the Hollywood connection is vital to the studio’s long-term success.

In the past two years, company has partnered with Warner, Paramount, Disney, Universal and Walden Media on projects like “V for Vendetta,” “Aeon Flux,” “Flight Plan,” “The Bourne Supremacy” and “Around the World in 80 Days.”

In August, Paul Verhoeven will shoot his World War II thriller “Black Book” on the Babelsberg backlot.

But competition from the Czech Republic, Hungary and Romania as well as established facilities like Pinewood-Shepperton and Cinecitta in Rome, has given U.S. producers plenty to choose from.

So why come to Berlin?

“The most important thing is our track record,” says Woebcken. “For Warner, it was the first time shooting in Berlin and it was a very positive experience for them.”

Indeed, “V for Vendetta” producer Joel Silver says he’s eager to return with another project — if it makes financial sense.

To make sure Hollywood keeps knocking, Woebcken plans to establish private equity financing and to bring in local investors to bankroll projects 100%.

For Hollywood studios, it would mean paying a net present value discounted at a rate of 7.5%-10%.

The use of private and corporate equity in film is on the rise here due to the government’s plans to shut down tax-driven film funds as part of Chancellor Gerhard Schroeder’s sweeping tax reform plans.

Babelsberg is in talks with a number of investment firms to set up the scheme, which would potentially lower the cost of a $100 million film to $90 million.

Woebcken also is pushing for a tax incentive scheme similar to the one in Hungary — a 20% tax rebate for producers who shoot here.

Babelsberg has lost some international productions to Hungary due to that country’s tax rebate policy. Woebcken argues Germany must offer something similar, not only to lure producers to Berlin but also to strengthen the local film industry.

With federal elections likely taking place in September, both Schroeder’s bill and a discussion on a tax incentive may have to wait.

In the meantime, Babelsberg can bring state subsidies and loan guarantees to the table. Working closely with the Medienboard Berlin-Brandenburg subsidy org, studio projects can count on around $600,000 per film. “Vendetta” landed $800,000 and “Black Book” nabbed $1 million.

Since taking over the studio, Woebcken and Fisser have paid off its debt and incorporated the company through a private placement, paving the way for a possible initial public offering.

They also are enlarging soundstages and soon will boast one of the biggest in the world, when the studio completes renovations of a nearby train factory measuring 7,100 square meters, considerably larger than Pinewood Shepperton’s 007 Stage.

The execs say they want to make sure Babelsberg can sustain at least two major studio productions simultaneously.

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