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Spain’s Recession Calls for Creative Film Financing

With production, funding and subsidies down, low local production costs make it a buyers market

Since September, Spain has unleashed two of its three biggest movies ever: Juan Antonio Bayona’s The Impossible with a $172.5 million gross worldwide and Andy Muschietti’s “Mama” at $135.8 million gross and counting.

Only Alejandro Amenabar’s “The Others” ($203.9 million) has grossed more.

These box office watermarks come, however, as Spain suffers its worst recession in decades. Piracy, on top of an 8% to 21% hike in sales taxes on cinema tickets, has withered cinema attendance, down 2.5% in the first quarter of 2013, while leaping 12.5% in Germany and 11% in the U.K.

In 2012, 163 Spanish movies were shot, down 15% from 2010. And the number of high-end films, offering big paydays, has plunged far more steeply, slashing shoot costs.

In April, Alta Films closed Alta Classics, Spain’s biggest arthouse/crossover distributor.

“With Spain’s piracy, a 21% cinema tax, 6.2 million unemployed and broadcasters not buying your films, you simply can’t survive,” says Alta’s Enrique Gonzalez-Kuhn.

Spain, however, is pushing back. Its high-end producers are leveraging talent relationships, often with in-demand genre auteurs, to court finance and international distribution from studios and big European/U.S. indies.

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That’s not tilting at windmills, given the success of such films as “The Orphanage,” “Julia’s Eyes” and “The Body.” “We get screenplays from U.S. agents and producers wanting to make films with our directors, Spain’s new generation,” says “Orphanage” producer Joaquin Padro of “Rodar y Rodar.”

“Spain has directors who are valued internationally, who can make films in English produced out of Spain but financed from all over the world,” adds Madrid-based Morena FilmsJuan Gordon.

Telecinco Cinema has already sealed co-financing and worldwide distribution/sales with Studiocanal on the drug trade actioner “El Nino.”

More such deals will go down at Cannes, mostly on English-language films.

“Unless you’re Almodovar, films must have recognizable casts to ensure international potential,” says Marina Fuentes at production-sales label Dreamcatchers. “That usually means shooting in English.”

Morena has five English-language projects, Rodar y Rodar a dozen. Big producers must embrace international markets. Spain is no fit alternative.

While Guillermo del Toro godfathered “Mama,” “The Impossible” was bankrolled by Telecinco Cinema, whose parent, broadcast group Mediaset Espana, is obliged by law, like other TV operators, to invest 3% of revenues in Spanish films. As Spain’s TV ad market plunges, falling 16% in 2012, so does TV finance for Spanish movies.

A commission is debating state subsidies, tax breaks, TV investment and Internet business models. It will deliver its recommendations on tax incentives by May 31, says Susana de la Sierra, ICAA Spanish film institute head. One major aim is to make tax incentives easier to use and more attractive: For producers, they run at 18%; private investors only enjoy 5% breaks, she adds.

Producers fear for subsidies’ long-term future, however.

“The main challenge producing films in Spain is uncertainty,” says Adrian Guerra, whose “Grand Piano” with Elijah Wood and John Cusack partly shot in the Canary Islands and market preems at Cannes.

Downturn has its upside, however; production costs have fallen, and cast and crew are often willing to accept lower paydays in order to get work.

“We need to be clever,” Guerra argues. “Spain’s a great place to shoot. There’s not much going on. Great Spanish talent is available, and shooting in Spain is already much cheaper than the U.S., U.K., France and Germany.”

As Spanish TV pays less and invests in fewer films, the industry is expanding financing options, part backing movies from pre-sales as on 7th Floor, bought by Fox for North America, Latin America and Spain; investing in foreign talent, such as Argentine Lucia Puenzo’s Un Certain Regard player Wakolda, co-produced by Spain’s “Wanda Vision”; or resorting to crowd-funding, such as on the Basque pic Cuento de verano.

It is even making “non-profit” features — like Jonas Trueba’s “The Wishful Thinkers” and Oskar Alegria’s “The Search of Emak Bakia” — micro-budget titles aimed at festivals and cinematheques, not commercial circuits.

It’s not a sustainable business model. But, energized by creative freedoms, these films remain compelling calling cards for the day when Spain’s economy finally mends.


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