American Film Market 2012: Global Locations - Eastern Europe

Hungary gained a leg up on its old Eastern Bloc and Austro-Hungarian Empire neighbors nearly a decade ago when it launched the region’s first tax-incentive scheme for film producers.

The plan, which offers up to a 25% rebate on local spend, has survived challenges from the European Union and bids by existing budget locations such as Bulgaria and Romania to help Hungary become a thriving production hub where such recent pics as “Hellboy 2,” “Tinker Tailor Soldier Spy” and TV series “The Borgias” and “Pillars of the Earth” have set up camp.

The complex of studios and facilities — including Korda Studios, Raleigh Studios and Stern Film Studio — that have been built up to service incoming and local productions helped Budapest snare its latest prize, Fox’s “A Good Day to Die Hard,” the fifth in the well-known Bruce Willis franchise.

Budapest doubles for Moscow in the movie — which was originally slated to use Prague for the same scenes — and brought a welcome boost to Hungarian production and service companies struggling with the region’s double-dip recession.

The latest development in Budapest looks set to make Hungary even more attractive to international producers after the old state film studios Mafilm and its associated lab facilities were transferred to new ownership under the country’s recently established Film Fund.

The fund, headed by Budapest-born producer Andrew Vajna, took control of $27 million worth of property previously run by the defunct Motion Picture Public Foundation in early October.

Vajna says the studios, which boast two soundstages and a backlot that features a medieval town, had been neglected and, like the lab, are in need of refurbishment.

“We want to revitalize the studios and are looking at various options,” Vajna says.

One option may be to relocate the lab and rent or sell real estate to help fund a makeover at the studios, Vajna suggests.

“I am sure these facilities will be just as competitive as the other studios in town,” he adds, pointing to a slew of productions headed to Hungary including an HBO spy series set during World War II the country is vying for.

As upbeat as Vajna is, the transfer of the studios to his organization — an agency of the Hungarian government — has not gone down well in all quarters.

The move was fought through the courts by the Hungarian Filmmakers Assn., headed by acclaimed arthouse director Bela Tarr, who says the decision “winds up forever the self-governance of our profession” as it removed the facilities from the control of filmmakers.

Vajna’s plans are also unlikely to please industryites in Prague, which has been struggling to regain its once preeminent position in Eastern European production against competition from Hungary.

The Czechs, for their part, are eager to bring back the glory days before 2009, when Bond pics, U.S.- and Brit-backed fantasies and thrillers kept Barrandov Studios booked for months, but they’re up against a set of rebate incentives that don’t function as well as those in Hungary.

Czech helmer Jan Sverak, who heads the Czech Audiovisual Producers Assn., has been mobilizing to remedy the incentive system’s snags, such as its annual cap of around $16 million, which invariably gets claimed in the first quarter.

And, as he points out, the current system, which requires a production to wrap its budget in the same calendar year in which it’s funded, is “stupid.” But a new audiovisual bill expected to pass for 2013 should remedy at least the latter problem, Sverak says.

His org, along with the Czech Film Commission, has been working to win over the Ministry of Finance, which remains skeptical of the 118% return on the incentives investment that’s been documented in a study funded by Czech film bizzers. And that return, which factors in secondary effects of foreign crews buying services and spending their cash locally, could reach 134%, experts say, if the annual cap were removed or if the fund was doubled.

Ivana Dragounova of the commission calls the ministry “very active and responsive” but the annual cap is not expected to change.

Barrandov, meanwhile, has been busy with TV cable skeins such as “Borgia,” which has signalled it will return for a third season next year but has also been dividing its time increasingly between the Czech Republic and Italy.

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