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Euro films aim for commercial touch

Indie producers dig for gold in creative places

LONDON — In Europe, where cultural mandates have ruled for decades, there is a fresh abundance of talk about making commercial films. But it’s not all talk. Now more than ever, creative indie producers are taking action and finding more coin from a wider range of sources, from local incentives to elaborate tax plans promoting private investment.

A new Dutch tax incentive deliberately aims to promote the commercial film industry, specifically targeting theatrical pics. The plan is an effort to stimulate local biz by encouraging private investment in international co-production while requiring minimal local elements.

“The Little Vampire,” a $20 million family film starring kid thesp Jonathan Lipnicki (“Jerry Maguire”) from Dutch production company Cometstone, amassed half of its budget in just one week via the new Dutch investment initiative. The equity then was leveraged by a bank loan.

“Everyone is looking at these new tax incentives,” says Robbert Aarts, managing director of collection account managers, MeesPierson Communications. “A lot of Dutch people fall in a high 60% tax bracket. This scheme is more beneficial than most I’ve seen so far. The risk for the investor can be less than 10%.”

Similar tax incentives and sale-and-lease-back plans (see U.K. report in this section) are at work in many other territories, particularly England and Ireland.

Less TV coin

Industryites also are seeing something of a shift from the ’80s broadcasting-led film funding in the U.K., heralding an outlook that puts more stress on reaching international auds.

“A U.K. pre-sale to (theatrical) distributors sends out a signal to the international community that you are making a commercial film,” posits Flashlight Films producer Aaron Simpson, who just completed “Mad Cows” with help from Brit distribbery Entertainment, sales company Capitol Films and gap financier Newmarket Capital. “There’s (a) new generation of filmmakers who are all of a sudden allowed to talk about making money.”

Commercially minded producers now are just doing it rather than complaining about a lack of government coin. Low-budget hit “Lock, Stock & Two Smoking Barrels” bucked the system by eschewing funding crutches and, in the end, rounding up equity investors.

Producer Matthew Vaughn relentlessly shopped first-time writer-director Guy Ritchie’s script around until every distrib had passed on the project. Vaughn then exhausted his connections until he coaxed a few powerful people to take a risk. They included U.K. fashion mogul Stephen Marks, producer Trudie Styler (who got her husband, Sting, involved financially and attached as an actor) and Hard Rock Cafe founder Peter Morton.

Vaughn then secured a $1.6 million bank loan from Chase in London, got the pic made and struck a deal with Polygram. “Lock, Stock” has grossed nearly $30 million worldwide to date.

Films that fly

Vaughn and Ritchie’s next pic, “Diamonds,” will be with Sony, where the filmmakers’ Ska Prods. was able to ink a deal in the wake of “Lock, Stock’s” success. It will be another low-budget feature shot in the U.K. “I’m interested in doing films at a price that can make a profit,” Vaughn says.

Pics with distinct local flavor that still can travel are where backers are putting their coin. “We don’t care where the production comes from as long as it has a global appeal,” says Morgan Rector, president of Imperial Entertainment Group, the division of Imperial Bank that specializes in entertainment finance. “It’s not a bankable business if a film is made for one territory. It certainly has become a more international business on the distribution side, so I would think production would follow.”

Imeperial has opened offices in Oz and the U.K. to tap into this growing international business. “We’ll look at everything from $2 million to $30 million (budgets),” Rector says.

Germany’s fest and B.O. hit “Run Lola Run” mined a variety of sources. X-Filme Creative Pool, the production company behind the film, found strength in numbers. The production posse gathered the talents of producer Stefan Arndt and helmers Tom Tykwer, Dani Levy and Wolfgang Becker, who together wielded the collective clout to broker better deals with local film funding boards, banks and distribs.

Tykwer’s “Lola,” for instance, scooped up coin from local film funds in Nordrhein-Westfalen, Bavaria and Berlin as well as from the broadcasters WDR and Arte and a mix of distribs. (Sony Pictures Classics will handle Stateside release of “Lola” this summer.)

Another fest hit that’s seeing returns from a successful run aided by Oscar nominations, Walter Salles’ “Central Station,” tapped a mix of international coin, with backing from France’s Le Studio Canal Plus, Brazilian film institute Riofilme and a pickup by U.S. distrib Sony Pictures Classics.

Brit comedy “Waking Ned Devine,” which is now approaching $50 million at the worldwide B.O., got off the ground with an advance from the now-defunct U.K. distribbery First Independent. The finance mix included equity investors from France as well as some incentives for shooting the Irish story on the Isle of Man.

But on the whole, “Pulling it all together was a nightmare,” producer Richard Holmes admits. “Films are done this way out of necessity; life’s too short to do it out of choice.”

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