BERLIN — The German Federal Film Board (FFA) agreed on Friday to provide Euros 40 million ($55.5 million) in start-up financing to help the digitization of domestic cinemas on the condition that exhibs drop their opposition to mandatory levies to the film subsidy org.

A federal court ruled earlier this year that the levies are unconstitutional because theatrical exhibs and home entertainment distribs are legally required to pay while TV broadcasters’ contributions are voluntary.

In protesting the levies, a number of leading exhib chains have been making their payments under caveat — a legal notice stipulating objections and blocking the FFA from spending the millions it receives until the matter is settled.

With a budget of around $90 million, the FFA is a major financier of both domestic and international productions in Germany, including such pics as Stephen Daldry’s “The Reader” and Michael Hoffman’s upcoming Leo Tolstoy biopic “The Last Station,” starring Helen Mirren and Christopher Plummer.

Exhibs have also used the legal battle as to angle greater financial assistance from the FFA and the German government for the conversion from analog to digital projection, a daunting prospect that has the German industry grappling with the question of who should pay for the high-priced technical upgrades.

Under the initial plan put forward by the FFA’s administrative council, the FFA will provide $55.5 million over the next five years to assist the transition.

The initiative, which is to be ready by Oct. 1, calls for the involvement of the federal and state governments.

At the same time, the government is increasing political pressure on cinema owners to drop their legal battle against mandatory levies.

Speaking at a film industry event in Berlin last week, Wolfgang Boernsen, a member of the German Bundestag and media expert for the ruling CDU/CSU party, reminded theater owners, who enjoy reduced tax rates for cultural commodities such as film, that they are obligated to keep up their part of a fundamental bargain.