Studios thrive on rebates with more breaks on horizon

The Czechs are on the verge of European Union approval for a tax incentive scheme to help their beleaguered film industry, Bulgarian studio chiefs are bullish that a similar law will be adopted by the end of the year, and the Romanians are lobbying hard to set up their own scheme.

Countries that once held prime positions as budget locations for international film producers are fighting hard to regain ground lost five years after Hungary introduced its own generous 20% tax rebate scheme, transforming a central European filmmaking backwater into a regional hotspot overnight.

A study commissioned by the Czech Film Commission to support the case for tax incentives found that money spent by foreign producers had dropped from $270 million in 2003 to just $40 million in 2008.

Much of that coin has gone to Hungary, where in 2008 foreign spend comprised $150 million of the total $250 million spent on film services there.

With incentives now extended to include an element of a production budget spent outside the country — for example, on post-production — the Hungarian law means productions can save up to 25% on its total budget.

That has created a boom in studio building: Korda Studos, boasting six soundstages, opened outside Budapest in 2007, and smaller facilities within the capital, including Stern Studios and Focus Fox, have also bowed.

Business is good in Budapest, says Gabor Ferenczy, general manager at Focus Fox, which also co-produces on projects with Tivoli Film.

“This year seems to be definitely stronger after the economic crisis,” Ferenczy says. “We are doing post-production of the Irish-Dutch film ‘The Other Side of Sweep’ and are in competition for several big projects.

“The overwhelming majority of the good-quality Hungarian features are finished at Focus Fox. In the near future, we are thinking about expanding our existing strong vfx department to Hollywood-size.”

Hollywood’s Raleigh Studios is unveiling a a 45,000-square-foot facility with a 15-acre backlot this month. Partnering with the Budapest entity, Burbank, Calif.,-based post house FotoKem will manage and operate a post-production facility onsite. Allan Tudzin, a 29-year Fotokem vet, has already moved to Budapest to manage the operation.

Steve Auer, who ran Hollywood’s Sunset Gower Studios for 12 years, will be Raleigh’s topper there.

“There will be six to eight American managers there,” says prexy Michael Moore. “We’re still looking for people.”

But the region’s other studios are determined to fight for a piece of the pie.

Bogdan Moncea of Bucharest’s Castel Film Studios says that Castel is heading a major campaign for a rebate law in Romania.

“We managed to get support from practically all the industry players and the current government, including the president. The authorities understand the impact of the film industry for the country’s image, prestige and economics.”

In Bulgaria, plans for a new film law have been put before parliament.

Sofia’s Nu Boyana Studios have been among those lobbying for tax incentives and now, with the support of culture minister Vegdi Rashidov, a new film act is under discussion.

“We are optimistic and are expecting the law to be enacted by September at the latest,” says Dona Doycheva of Nu Boyana.

Given that any law will have to be approved by the EU, that timetable may be a little optimistic — the Czechs, who submitted their law to Brussels last November are still waiting for approval, although that should come within a few months.

What is clear is that studios in countries that still offer cost benefits to international productions are doing their best to improve their offers in an intensely competitive environment.

Prague’s Barrandov Studios says its situation has improved after “a difficult first half of 2009″ with an increase in the number of commercials shooting there and steady bookings from “small to midsize international film productions and local TV shows.”

Barrandov expects business to pick up this year and says it is increasing international co-production activity. It is developing a TV series, “Station Quartet,” based on novels by British write David Downing — and, marketing director Jan Macola says, “is actively looking for suitable Czech and international projects to invest in.”

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