Independent filmmakers call for government funding

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Woody Allen can't even make movies within the United States, it appears. He hasn't had the most rock solid of decades but his movies are almost guaranteed to appeal to his decades-long faithful constituents. Then again, most of them appear to live in other countries.
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‘Osama’ Funding Appeals as U.S. Independent Filmmakers Hurt Share Business
By Kristen Schweizer


Nov. 4 (Bloomberg) -- Todd Solondz, the U.S. director whose movie “Happiness” was nominated for a Golden Globe award in 1999, knows how desperate raising funds for a film has become.

“Look, I mean if Osama bin Laden gave me money to film I’d take it,” he said in a phone interview from Singapore. “It’s always difficult for a filmmaker and particularly in these economically troubled times.”

Solondz and other independent U.S. filmmakers with funding difficulties even before the financial crisis are calling for government support as hedge funds retreat and credit lines are frozen. As the American Film Market, the largest gathering of the world’s independent film industry, opens in Santa Monica today, the U.S.’s lack of European-style public support for filmmaking is being felt more than ever.

“We need to have some kind of government funding,” said first-time U.S. filmmaker Tina Mabry, who spent 18 months raising money for “Mississippi Damned,” an award-winning movie about three children in an abusive household. “In America, independent film is almost a dying art.”

U.S. film production has fallen 26 percent since 2005 to 520 films last year, while in Western Europe it rose 9 percent to 1,145, according to David Hancock, the London-based head of cinema at market researcher Screen Digest.

Global film-production investment in 2008 was $25.8 billion, with the European Union’s share at $7.04 billion, he said. France alone spent 1.26 billion euros ($1.85 billion) on film production, 26 percent more than 2007, according to the European Audiovisual Observator.

U.S. vs Europe

While U.S. and European filmmakers are grappling with funding woes in the economic slump, the old continent’s public support is giving it an edge, Hancock said.

Take German producer Jens Meurer. His latest film “The Last Station,” about the final days of Russian novelist Leo Tolstoy, was shot in Germany and Russia, with much of its 14 million-euro budget coming from public funds. Gap loans and movie presales made up the rest, said Meurer.

The star power of Oscar-winner Helen Mirren and Christopher Plummer, Captain Von Trapp in “The Sound of Music,” wouldn’t have been enough to lure U.S. funds to the film, he said.

“I couldn’t have made this film in the U.S. as we did here in Europe, with the financing,” said Meurer, of Berlin-based production house Egoli Tossell Film AG. “It’s a political understanding in Europe that film is a cultural product and needs public support.”

No Return

U.S. incentives are tied to specific conditions and “not readily turned into cash,” said Jean Prewitt, Santa Monica- based chief executive officer of the Independent Film & Television Alliance, organisers of the American Film Market.

“It’s harder to piece it together,” she said. Funds “are non-transferable or refundable if you don’t have a local tax liability.”

Funding probably will never return to pre-recession levels, independent producer Mark Damon said. He plans to raise money for a new project at the American Film Market by selling rights to international distributors. The as-yet untitled comedy will star Patrick Dempsey, he said.

“We’ll probably be able to conclude some presales and we have some equity financing, so that picture will come to fruition,” Damon said.

Gap Financing

Gap financing, which traditionally provided as much as 25 percent of a film’s budget, broke down as banks avoided risk, said Angus Finney, a manager at Film London, which joins producers and financiers at the annual London Film Festival every October.

Financing from hedge funds, which could have formerly paid for as much as 35 percent, has all but disappeared, he said.

Banks and hedge funds that have invested in films in the past include Deutsche Bank AG, Barclays Plc, Merrill Lynch & Co., JPMorgan Chase & Co, Dune Capital Management LP and Elliot Associates LP. Individual investors have included Larry Ellison of Oracle Corp., Paul Allen of Microsoft Corp., Fred Smith of FedEx Corp. and property developer Tom Rosenberg.

“A film that has a $5 million budget in the U.S. is now very hard to get made,” said Finney.

The most vulnerable films are those between $2 million and $7 million, he said. In Europe that money can be raised by making the film a co-production, drawing public funds from two countries, he said.

“It’s easy to see how Europe can become effective strategically in putting films together,” Finney said.

Tax Breaks

Many U.S. states have started offering tax incentives for filming to revive local economies. Michigan offers one of the world’s highest refundable tax credits, about 40 percent for in- state expenditure.

Louisiana provides as much as 30 percent credit on in-state investment of more than $300,000. New York’s package includes exemption of local sales tax on machinery and equipment in production and postproduction.

Solondz who put up much of his own money to make 2004’s “Palindromes,” shot his latest $4.5 million film, “Life During Wartime” in Puerto Rico, whose 40 percent tax benefit is among the world’s highest.

French director Luc Besson’s film company, EuropaCorp., shot Jim Carey’s latest film, “I Love You Phillip Morris,” in Louisiana, and took advantage of the tax break there. The film is due for release around Valentine’s Day 2010.

French Support

In Europe, France is the most generous, granting subsidies and loans, and also requiring television broadcasters like Vivendi SA’s Canal Plus to set aside revenue for films. A part of the proceeds from ticket sales also go to filmmakers.

Canal Plus put 210 million euros toward the industry last year, said Neil Gillard, a partner in the media department of law firm Reed Smith LLP in London. Broadcasters are also required to broadcast French films at certain times, he said.

“If you’re Claire Denis, you can live in France and flourish and be valued as a filmmaker,” said Solondz. “But if she were in America, she would not have a career. There’s no system to subsidize a filmmaker like her.”

Denis won the Golden Palm award for 1988’s “Chocolat” and was nominated for a Golden Lion at this year’s Venice Film Festival for her newest release “White Material.”

‘Slumdog Millionaire’

The U.K. offers tax credits as well as funds from the national lottery and government aid for the film industry through BBC Films, the U.K. Film Council and Film4, which helped pay for last year’s Oscar winner, “Slumdog Millionaire.”

The U.K. Film Council awarded Lions Gate U.K. Ltd. 120,000 pounds ($196,800) for Heath Ledger’s last film, “The Imaginarium of Doctor Parnassus” and 100,000 pounds for Oscar- winner Jane Campion’s latest film, “Bright Star.” U.K. funding can cover up to 60 percent of a film’s costs, Finney said.

The EU’s Media Programme grants a maximum of 60,000 euros to help develop a single film and 150,000 euros for a maximum of three films, said Nils Koch, its spokesman.

“Europe sort of stands for loads of soft money, or public money for filming,” said Agnieszka Moody, who heads the Media Programme’s U.K. office.

The U.S. has no co-production agreement with Europe, though Americans shooting in Europe get tax incentives and vice versa.

“An area that may make sense for the U.S. to broaden its coverage is in co-production treaties,” said Jonathan Wolf, managing director of the American Film Market. “But there’s a strong view here in the first amendment and that government is not involved in content and what you’re producing.”

Big Money

“Planet 51,” an animated film co-produced in the U.K. and Spain, starring Jessica Biel, Gary Oldman and John Cleese, benefited from tax incentives in both countries, said Michael Ryan, international director at London-based HandMade Films, which produced the film with Spain’s Ilion Animation Studios.

“I have no conception how an American filmmaker gets a film made,” Ryan said. “There’s absolutely no support whatsoever. The U.S. government ought to look at this. It’s a big money maker.”
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