Spain is an international talent hotspot and a frequent co-producer. But how will funding cuts affect the health of its film sector?

The Spanish film business has had an undeniably tough few years. Piracy has hit revenues hard, while wider economic woes have brought funding cuts and affected bank credit. Nevertheless, Spain continues to be a consistent talent producer. A new generation of film-makers, many working in the horror genre such as Juan Antonio Bayona (The Orphanage), Jaume Balaguero (Sleep Tight), Juan Carlos Fresnadillo (Intruders) and Rodrigo Cortes (Red Lights) have found international success, while the solid prestige of Pedro Almodovar and auteur hits such as his The Skin I Live In are an ongoing source of pride. Indeed, Spanish talent maintains its profile at this month’s Berlinale with Antonio Chavarrias’ horror film Childish Games in competition, Pedro Perez Rosado’s Wilaya in Panorama and Alex de la Iglesia’s As Luck Would Have It in Berlinale Special. Add to this the fact the market share of local films rose to nearly 15% in 2011 despite a box-office drop, and that long-awaited anti-piracy legislation is due to become law in March, and there are bright spots for the local industry.

But these are bright spots on an uncertain horizon. In a territory undergoing a debt crisis, with unemployment rates running to 22%, Spain’s government has been slashing costs to calm the financial markets and at least four of the Spanish industry’s key sources of financing were put on hold following the victory of the centre-right Popular Party in last November’s elections.

‘Disappearance of subsidies would mean the end of cinema in Spain and the loss of hundreds of jobs’

Enrique Gonzalez Macho, Alta Films

For example, uncertainty surrounds the ICAA, the government agency that manages the largest funds and supports all aspects of the industry, from production to distribution and exhibition. While the ICAA had an annual budget of $140m in 2011 — already 10% down on 2010 — it remains to be seen what will happen to the funding in the future, and the industry is waiting for plans to be revealed by the body’s new director, tax and finance expert Susana de la Sierra. Also in doubt is the ‘recoveries’ system — under which funding is triggered by any production scoring more than 35,000 box-office admissions locally.

Comments from minister of culture Jose Ignacio Wert that he wants to end a “culture of subsidies” have concerned a sector that depends on ICAA money. The new government wants to foster private finance and patronage, but the industry is doubtful. “There is no tradition of [private investment] in Spain like there is in the Anglo-Saxon world,” says Enrique Gonzalez Macho, president of the Spanish Cinema Academy, producer and owner of distributor Alta Films and the Renoir cinema chain. “Producers need a clear message they will have the money from the state they counted on when they were preparing their current projects. If that money doesn’t show up, we’ll just go bankrupt. The disappearance of subsidies would mean the end of cinema in Spain and the immediate loss of hundreds of jobs.”

Another concern is the $264m budget cut at broadcaster TVE, which will surely affect its activity as one of Spain’s most powerful producers. TVE has been crucial to projects such as the Oscar-nominated Chico & Rita, Mateo Gil’s Blackthorn and de la Iglesia’s As Good Luck Would Have It. Regional backers are also cutting subsidies and producers are worried about the suggestion from some politicians that the law requiring broadcasters to invest 5% of their income in Spanish cinema could be reversed.

“We are worse than ever,” says Agustin Almodovar of El Deseo about the situation for producers in Spain. “We have reduced our activity to the minimum because we have no confidence about what is going to happen with the new government, the budget cut at TVE… and the deep crisis we are all suffering. Everything is paralysed until we have clear rules. We are shooting the new movie by Pedro [Almodovar] this year and would like to produce something more, but we are just very, very cautious.”

“At this moment, what is happening is that there is no movement,” continues Gonzalez Macho, who is in post on Miel De Naranjas, a film by veteran Imanol Uribe that will open at the end of 2012. “There are some shoots this year because cinema is a long-term process and they were already booked months ago. But almost nobody is working on new projects.”

Generally, there are two kinds of projects produced in Spain: films budgeted at less than $4m (€3m) for the local market, and films aimed at the international market. Despite the problems in Spain, the latter have been becoming more expensive recently. Apaches Entertainment and Telecinco’s The Impossible, one of the most ambitious Spanish projects ever, will be released this year. Budgeted at $38m and directed by Juan Antonio Bayona, the English-language film is set against the 2004 Indian Ocean tsunami and features a cast led by Ewan McGregor and Naomi Watts. Summit handles sales.

“There is no way of making expensive films only for the local audience in Spanish,” says Belen Atienza, co-head of production at Apaches. “And if you want to succeed on an international level and get some finance with pre-sales, you need a good budget and famous actors. Besides, this is the best way to get broadcasters on board which is the only way, public funds aside, to make a film in Spain these days.”

Power of broadcasters

Broadcasters are hugely important to Spanish cinema, but not everybody is happy with their very commercial approach. “Broadcasters are not helping the new generation of artistic Spanish directors at all,” says Lluis Minarro, whose company Eddie Saeta was a co-producer of Palme d’Or winner Uncle Boonmee Who Can Recall His Past Lives. “I am talking about interesting young film-makers such as Albert Serra, Javier Rebollo or Jose Luis Guerin. They keep sustaining the same old names.”

Almodovar adds: “We are not interested in the same projects that private channels in Spain might be. Those are people who don’t care about cinema. I don’t like these huge $50m Spanish productions made in English for the international market either. That’s just a way TV broadcasters have to spend all the money they are obliged to in one production and not think more about cinema.”

‘Everything is paralysed until we have clear rules’

Agustin Almodovar, El Deseo

Apaches’ Atienza, who worked as a producer for Telecinco Cinema at the time Pan’s Labyrinth was produced and became an international hit, disagrees: “Here in Spain we have a great generation of new film-makers who are good at filming big productions and genre films… The only way to keep them working in the Spanish industry is by having good budgets. And if you want that, broadcasters are essential. If it were not for them, what we would be seeing is these people leave the country because their skills are highly appreciated overseas.”

Some still believe in mid-budgeted Spanish-language projects, such as Emma Lustres, CEO of Vaca Films, which had international success with Cell 211 and is currently producing Invader, a $6.5m thriller with Morena Films. “We feel comfortable with these kinds of tight-budget movies focused on the local audience with an international appeal,” says Lustres.

Spanish producers are increasingly looking to co-productions, and some have been very successful, such as Woody Allen’s Midnight In Paris — which Mediapro co-produced with US-based Gravier Productions — and Roman Polanski’s Carnage, which was co-produced by Spain’s Versatil and other international partners. Gerardo Herrero’s Tornasol has had success with Argentina-Spain collaborations such as Oscar winner The Secret In Their Eyes and Son Of The Bride.

In the co-production arena Spanish companies have been able to call on public support from the likes of the ICAA, which last year had $2.9m for co-productions, and the Ibermedia programme, which aims to foster collaborations between Spain and South America, and there is a sense the government will look to strengthen Spain’s attractiveness as a co-producer. “I think internationalisation of Spanish cinema is a key factor and it should have more support from the state,” says Jose Maria Morales, head of production at Wanda Films, which has Wilaya at Berlin and will shoot Claudia Llosa’s Don’t Cry Fly in the US and Canada later this year with companies from both territories.

Almodovar, who has produced films in Argentina such as Lucrecia Martel’s The Headless Woman, likes to co-produce but is wary of some of the conditions on crew members put in place by funders. “When we produce in other countries such as Argentina, we work with local people. We just don’t like those strange mixtures of nationalities that you have to use when you apply for subsidies.”

“There is a great diversity in our cinema,” concludes Apaches’ Atienza, “and every day we have people working on it with better skills. I think we’re just winning but the fight is long.”