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German biz’s big bounceback

'Lives of Others' adds to list of power pics

Beneath the sales and critical scrutiny at the 57th annual Berlinale, there was a faint but unmistakable subtext for anyone who spent any time here: A newfound Teuton optimism.

The local pride at the Berlin Film Festival, which wrapped Feb. 18, serves as a microcosm of the country with the world’s third largest economy. The fest featured a record number of submitted pics for the competition and sidebars: 4,500 submissions, up 700 from 2006.

Significantly, many of them were German pics, with filmmakers anxious to tap into topper Dieter Kosslick’s unabashed enthusiasm for German film.

“The Counterfeiters” and “Yella” headed the German films in the competition while Teuton thesps Martina Gedeck appeared as Matt Damon’s German doomed secretary in “The Good Shepherd” and Moritz Bleibtreu had a major role in “The Walker.” Berlin itself and the Cold War play a supporting role in “The Good German” and “The Good Shepherd.” German coin helped finance two others, August’s Nelson Mandela yarn “Goodbye Bafana” and London-set “Irina Palm,” with Marianne Faithfull as a sex worker, directed by Bavarian-born Sam Eduard Garbarski.

Until Kosslick took the helm five years ago, the fest only grudgingly included a few local films. Even though he was an unapologetic cheerleader for German output, the country’s mood was depressed with a gloomy economy on the brink of recession. Last year, German festgoers talked about the slew of mediocre local films, bankrupt multiplexes, declining box office (tickets down 20% in 2005) and slipping market share (19% of the local B.O., a 5% dip from the previous year).

But the 2006 turnaround was breathtaking. German films grabbed about a quarter (26%) of the home box office in 2006 and had three of the year’s top seven grossing films.

“We had a simply fantastic year in 2006 and I think 2007 is going to be even better,” says Stefan Arndt, topper of Berlin X Filme Creative Pool.

“There were 20 German films in 2006 that had more than 500,000 admissions (earning $3.9 million each). I’ve never seen anything like that as long as I’ve been around. It’s incredible. It’s bad news for our American friends.”

Arndt says new government subsidies, which will boost budgets by 20%, should help Teuton films burst through to the next level from 2008.

Industryites attribute a number of factors for the rebound. Artistically, German films are improving (despite modest budgets of $2 million to $5 million), plus a growing interest at home and abroad in German stories and the country’s turbulent history.

Economically, Germany has lured private equity investors. Investment group Kohlberg Kravis Roberts and Permira are acquiring the country’s biggest commercial broadcasting group, ProSiebenSat 1, from German Media Partners, a holding company owned by U.S.-based media mogul Haim Saban and his investment partners.

“The ad market has recovered strongly and companies are investing more in advertising again,” says Silke Koenig, an analyst for media and entertainment at PricewaterhouseCoopers in Hamburg. “Germany suffered disproportionately beforehand and is now recovering that much more. The mood has brightened.”

It features the second biggest TV ad market in the world, with TV ad revs recovered to $5.2 billion, below the 2001 peak of $5.8 billion but well above 2003’s $4.5 billion.

“I think the country was changed by the World Cup,” says Beta Cinema topper Dirk Schuerhoff.

“The people seem so much more optimistic and relaxed than before, and so much more interested in German subjects.” Last summer’s World Cup unleashed a wave of patriotic fervor. After the soccer tournament, German films topped the charts for 11 weeks, unprecedented in the past 20 years.

Kosslick credits the thriving European Film Market for lifting interest in Berlin.

“The Lives of Others” was the first surprise of the year. Although it didn’t screen at the Berlin Fest, the pic about East Germany’s notorious Stasi security agency had 2.2 million admissions and scooped seven Lolas at the German Film Awards. It also received three European Film Awards and an Oscar nom for foreign-language film, the third straight foreign film nom for a German pic.

“We showed it in the market at Cannes and it’s been sold everywhere around the world now, except China,” Schuerhoff says. “In a lot of markets, we’re finding German films are really ‘in.’ The stories are good and the quality is taking big steps forward.”

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