MADRID — Struggling to rein in its fiscal deficit, Spain’s government announced Tuesday it will slash the 2012 budget of its central Film Protection Fund by 36% to €49 million ($63.7 million).
Bucking the cuts, the San Sebastian Film Festival, the Spanish-speaking world’s biggest film meet, has retained its annual $1.3 million grant for 2012.
The austerity measure will do little to halt plunging production levels. Producers sought permits for 24 shoots through April 1, vs. 74 shoots, same period 2010.
$46 million-$52 million of the 2012 budget will pay off subsidies to Spanish movies released second-half 2010, leaving some other subsidy coin for 2012, Spanish newspaper El Pais suggested Tuesday.
The major challenge Spanish producers face, however, is great uncertainty about the long-term future of Spain’s subsidy system: More ambitious films going into production in 2012 would look to pull down in 2015 subsidies triggered by box office performance.
Local broadcasters are still obliged to invest sums equaling 3% of their annual revenue pre-buying or co-producing Spanish films. That percentage rises to 6% in the case of pubcaster RTVE.
On the upside, the government is still due to announce a new and improved tax break system to run parallel to the subsidy fund.
But with piracy having decimated Spain’s DVD market and most national films underperforming at the local box office, major Spanish producers will move very cautiously before green-lighting projects.
Also, the industry will have to look increasingly to international pre-sales and co-production to finance movies.