The Berlin-based station has been a main sponsor for the last seven years and shared the official partner status in 2004 with L’Oreal and Volkswagen, who have retained their deals.

According to German press reports, SAT.1indicated that the decision to step down as a sponsor was prompted by a desire to concentrate its resources instead in new production activities. Negotiationshave reportedly begun with public broadcaster ZDF to step into the breach left by SAT.1.

Around two-thirds of the Berlinale’s Euros 10m budget comes from the State Minister for Culture Christine Weiss’ and Euros 3.5m from sponsors and own income such as ticket sales.

This latest development comes just a week after news that the Berlinale may have to look for a replacement for one of thevenues for the International Forum for New Cinema since the Babylon cinema inthe eastern part of Berlin may be forced to close its doors at the end of thismonth.

The arthouse’s management has had to consider this drastic measure after Berlin’s Senator for Cultural Affairs Thomas Flierlannounced that he would be withdrawing the annual support of Euros 320,700 for the cinema from January 1, 2005.

Speaking exclusively to last weekend before setting off to Tokyo to view films, Berlinale director Dieter Kosslick observed that ‘in the past five years, almost 30 cinemas have closed in Berlin. For the Berlinale audiences, the Babylon is a wonderful and important venue that we mustn’t lose. We all must stop the death of cinemasin Berlin.