German biz marked for tepid times

It's about returning to reasonable prices, Helkon exec sez

CANNES — Buying films is out of favor with the Teutons.

Following last year’s crazed German environment, when high-profile deals were all the rage, this year saw a glaring lack of pick-ups at the Cannes market, let alone any splashy announcements.

The big-buck deals of the past year were nowhere in sight. And the relatively few agreements that were signed came in at a far cry from last year’s extraordinary prices. While buyers last year typically paid 15%-20% of the budget, and some went as high as 30%, as little as 5%-7% was being paid for German rights this year. Late in the market, only Highlight Communications, Tele-Muenchen and pubcaster aligned ZDF Enterprises were known to be in negotiations.

“The real value of the German market is 8%,” says Helkon Media CEO Martin Heldmann. “Prices last year were ridiculous. It’s about sending a sign out and getting back to reasonable prices. We need to build up and create a relationship with Bertelsmann and Kirch (TV stations). Once they realize that pricing is back on a normal level then it’s better for maintaining a long-term relationship.”

Adds Thomas Friedl, chairman of distribution and marketing for Constantin Film: “For sure, part of this trend has to do with the fact that there was little product out there, but the rest is to do with the prices. Companies want too much for Germany and it’s not worth more than 8%.”

But international players are watching the developments closely.

“It’s not about the percentages, whether it’s 8 or 15%,” says Lions Gates exec VP intl. Sergei Yershov. “It’s the financing of movies that’s going to be in jeopardy (without Germany).”

Adds Barry Barnholtz of Barnholtz Entertainment: “Germany was out in full before. People were depending on a German sale. Without them, how do you proceed to make the production and think it’ll sell later? I don’t know how people will be able to make movies without Germany.”

Instead of deal-making it was deal-breaking that was the grapevine focus as talk centered on which deals were falling apart.

After a week of frenzied speculation on the financial health of the indie giant Kinowelt Medien, news broke that U.S. producer Steve Golin was filing suit for breach of contract over a second-look deal Golin claims came into effect last October. Kinowelt claims the deal was never concluded.

It’s the latest in a long line of indicators that could suggest the indie giant is seriously struggling to keep up with its commitments.

It looks increasingly certain that Kinowelt will not take up its 50% stake in the U.K. distribution entity Momentum Pictures.

Universal Pictures Intl. is quietly shopping Beacon’s “The Palace Thief” to other German distribs. Pic was supposed to be picked up by Kinowelt.

And as Kinowelt’s German output deal with New Line comes to a close at the end of 2001, the U.S. company has made it known that the deal for 2002 and 2003 is up for grabs.

“We have to accept that we won’t get the kind of prices that we were getting before,” says New Line’s president of worldwide distribution Rolf Mittweg.

VCL Communications denied rumors that it will not be financing the second package of five movies from the 10-pic American Zoetrope slate. The news comes as the VCL subsidiary, Starlight, announced it has launched a lawsuit, claiming that VCL hasn’t fulfilled its promises.

Meanwhile Franchise Pictures says that Intertainment has formally defaulted on “Get Carter,” the first pic in their long-term co-financing deal. Intertainment denies this, but the legal gulf between the two companies seems to grow wider by the day.

Understood as a bid to get out of the ongoing law suit with Intertainment, Elie Samaha unveiled the new outfit Dante Entertainment which will use the Kirch Group and Mediaset’s Epsilon to distribute in Europe. Samaha also has been shopping around the rights to films that Intertainment took as part of its 60 picture deal.

And Splendid’s deal to take a 49% stake in Initial Entertainment Group might not last.

Splendid CEO Andreas Klein conceded that he would be open to taking in another partner but said he wouldn’t sell the stake all together. Rumors suggest that Initial is looking eventually to replace its German partner.