As reported in Screen International weekly this morning, the UK's BBC Films, Germany's Kinowelt and Spain's Lolafilms have formed a development and production alliance aimed at creating a European powerhouse that can offer film-makers an alternative to Hollywood.

The partners, key film operations in their respective territories, aim for the initial three-year pact to yield a slate of English-language, mainly larger budget films that can cross borders. Projects budgeted up to $12m can be greenlit without a US partner.

Fuelling the production operation is a joint development fund of more than $4m.

"This venture is a groundbreaking development," said BBC Films head David Thompson. Citing Michael Winterbottom and John Madden as film-makers who had started at the BBC but been snapped up by US companies, he sees the partnership as offering "a collaborative way of working" that will attract writers, directors and actors

"In the past, key people we've worked with have felt the need to move to the US to further their careers, but we believe this new arrangement will offer a viable alternative," he said.

"We believe this is a unique opportunity to allow European films and talent to stand on their own two feet," said Rainer Koelmel, Kinowelt's chief executive officer.

Kinowelt and Lola have been collaborating on projects such as upcoming English-language co-production Rain since unveiling a share-swap last Cannes. Gomez added: "This [latest] partnership has come about through working together and discussing many projects, and realising that all three companies have a similar understanding and taste. There is a real empathy between us."

The deal was also endorsed by Alan Yentob, the BBC's director in charge of film, drama and entertainment, in the first major film development under his auspices. "This is a terrific move and an important step in realising the full potential of BBC Films," he said. Jennifer Green in Madrid contributed to this report. For full story see Screen International weekly