Some German media fund managers had hoped to continue signing up investors until new Chancellor Angela Merkel officially begins business next week.
But FinanceMinister designate Peer Steinbrueck says he intends to retain theoriginal cut-off point of November 11 for the planned changes to the Income Tax Code at his first cabinet session.
What that means is that old-style media funds are now finally consigned to the dustbin ofhistory and the spotlight is now turning on other types of film financingstructures.
DavidGroenewold of German Film Productions (GFP), for example, is likely to focushis energies on the New York-based National Film Fund (NFF), which he launchedearlier this year. It backs English language independent feature films and TVproductions by raising private equity from US investors.
Anotherpossibility is offered by Wolfram Bauer's $90m (Euros 76m) Stories of Faith Ltd fund, based in Dublin and thus not affected by the changes in Germanlegislation.
"Investorscan participate both directly via the Dutch trustee company Fintage House orvia an Irish limited partnership in the private placement," Bauerexplained.
Accordingto his fund prospectus, "private German investors should determine withtheir tax consultants whether the write down option for an associated company("Progressionsvorbehalt") can be invoked for a planned investment inan Irish limited partnership."
Noteveryone has been shedding tears about the drastic steps taken in the past weekby Steinbrueck and his predecessor Hans Eichel.
AsMichael Paul of the Berlin-based media consultants paul und collegen noted: "In recent years, up to $2.9bn (Euros 2.5bn) was raised each year and a maximum of $60-105m (Euros 50-90m) arrived again in Germany. Whoever wants to master the budgetdeficit can't allow a situation where a film like The Lord Of The Rings isproduced abroad with German tax money and without any [economic] effect inGermany."
"Many German producers hardly ever got their hands onthe funds' monies because they could not guarantee the demanded prospectedreturn on capital and their projects were too small," the consultancy'sanalyst Roland Schmidt added.
"Butthe German studios or production service companies also couldn't profit thatmuch from the international projects. The international caravan of 'runawayfilms' is attracted to the places where support of the production location iscoming from the state or the wage costs were simply more reasonable."
Accordingto Paul, with the demise of the media funds, discussion should now centre onlooking at the options for the introduction of a tax incentive model forattracting international film production to shoot in Germany and use facilitiesthere.
"Given the outstanding production infrastructure already in place,a doubling of the jobs in film production would be possible within around fiveyears," he argued.
"After all, countries like Canada have managedthat."
Whilethe Schroeder administration's planned $105m (Euros 90m) venture capital fund appears tohave been conveniently forgotten about - there was no money in the budget tofinance the initiative in any case -, the CDU-CSU-SPD grand coalition is inprinciple in favour of policies to improve the German film industry's lotvis-a-vis the international competition.
Inthe Coalition Agreement, the three parties stated that they "want toimprove the general parameters for the German film industry in order to secureits international competitiveness."
These would include fiscal measuressimilar to those existing in other EU member states by July 1, 2006 "atthe latest" "in order to mobilise private capital for film productions inGermany."
Inaddition, the coalition partners indicated in the Agreement that they want achange to the Media Decree which would result in "co-productions withGerman participation no longer being hindered."
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