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Russian producers join to limit costs

AKT brings together 18 top companies

MOSCOW Russia’s top film and television producers have joined together to forge a common anti-recession policy as buyers bargain for lower prices on content.

The Assn. of Film and Television Producers (AKT) brings together 18 top companies that together are responsible for 80% of television series and movies produced in Russia.

Key aims are to cut production costs, targeting spiraling prices for cast and crew that they say are threatening the industry’s existence as the global financial crisis hits Russia.

Faced with commissioning rates for next year down from 30%-40%, the association is also designed to bring collective bargaining power to sales negotiations with television commissioning chiefs and other key buyers.

Djanik Fayziev, a partner in Moscow production company Film Direction — the firm behind Russia’s latest movie blockbuster World War I epic “Admiral,” which has notched up more than $37 million since its release early October — says formation of AKT was long overdue.

“We had long felt the need for such an association; unfortunately the reason that eventually prompted the major companies to get together is the current bad economic situation,” Fayziev says.

A major priority is to draw up a database of market prices and agree minimum prices for different jobs and services in TV, film and advertising production.

Vyacheslav Murugov, commissioning editor at CTC Media, which runs Russia’s biggest commercial television network, says it’s better to work together at a time when the financial crisis threatens producers and buyers alike.

Murugov, a founder of top production house and AKT member Lean-M — in which he retains a stake — adds: “It’s a test of the strength of companies, by the end some will not survive. We have to adapt on cost of actors and crew, and use the opportunities of technology to cut costs.”

Cast and crew fees account for up to half of Russian film and series production costs.

Television dramas and mini-series, a genre that has boomed in the past decade, cost between $100,000 and $600,000 to produce. Until recently buyers were paying between $150,000 and $700,000 for such series but with television ads next year rumored to be at 30%-50% of its 2008 value, those prices are fast falling too.

Central Partnership, Russia’s leading independent production and distribution shingle, says a formula had to be found that enabled all sides to weather the storm.

“The main objective of the alliance is to achieve a balance between the current unrealistic production costs and the crisis-driven reduction of prices for the purchase of filmed content by TV channels,” a company spokeswoman says.

Bringing order and greater transparency to a market that has grown rapidly and chaotically is essential, says Andrei Smirnov, general director of Sistema Mass-Media, which owns producer and service provider Russian World Studios, also an AKT member.

“Production costs have risen much faster than advertising revenue,” Smirnov says. “Talent has become overpriced, both because of a lack of choice in the market and 10 years when new talent was not being trained.”

The org called for a 50% pay cut for actors lastweek.

Yevgeny Gindilis, general producer of Moscow’s TV Indie Film Production — which is not a member of AKT — suggested the big production companies had only themselves to blame for wage inflation in recent years.

“The companies that are the biggest players are most responsible for the salary hikes we have seen recently. They were paying bigger and bigger sums to get the people they needed. It is going to be very difficult for them to negotiate it back,” he tells Variety.

In a country used to crises, producers and commissioners remain resolute.

Despite talk of cancellation or postponement of projects, Film Direction’s Fayziev is confident that his company’s current slate will go ahead.

Slate includes a 10-episode television series based on the movie “Admiral” that is being edited for pubcaster First Channel, a six-episode family sitcom “Dom na Ozurnoy” in post-production for the same channel, a wartime behind-the-lines partisan series yet to be sold and a feature film due for a spring release, thriller “High Security Vacation.”

Murugov of CTC is also bullish.

“Producers will be hit the hardest; television has libraries. Russia is resilient — we’re used to living from crisis to crisis; the (financial crash) of 1998 looks just like a rehearsal.”

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