Eugene Beginin, UIP Russia's former general director, has set up the new distribution company, Profit Cinema International, a title he might find hard to live up to in today's economic climate.

Beginin's initial plan was to create a holding with the classic structure of a troika, combining a production company (Profit), a cinema chain (Cinema Invest) and a distributor (Profit Cinema International).

However the economic crisis intervened, 'Unfortunately, as we were setting up the structure, the crisis struck, and our deal with the bank was suspended. So our distribution company was created de-facto,' Beginin explained.

Beginin already a pioneer of Russian film distribution (he was the first permanent independent distributor of major Hollywood studios in the Soviet Union) is realistic about prospects in the short term.

'We just started up and our box-office share is very little (4.4%). The leading companies are still very strong, and they will continue this way. We need serious funding at the moment, and with times of such poor liquidity it's near impossible to get it.'

However Beginin also believes that private equity has not vanished, but will merely be held back for the duration of the financial crisis.

'When the crisis passes, there will be a tremendous growth. For instance, after the industry collapsed in 1990, we (UIP Russia) quick started the distribution industry by 1996. It was growing, but very slowly. Then the crisis struck in 1998, but within a year, as the crisis deteriorated, the distribution industry experienced a real boom.'

Central Partnership's spokesperson Yulia Kulikova agrees and also sees potential longer term benefits to the market, 'Undoubtedly, the crisis will clear the market of 'casual' investors, those who see cinema as a hobby, and not a business. This will make the market more transparent.'

Prospects in the short term out-look for funding for emerging companies is problematic. Kulikova explained,'It will be a very difficult period for indie companies. The Russian producers have now cut back on their production plans, while studio films on international market are extremely expensive.'

Profit Cinema is planning to mainly work on Russian projects, although they are presently preparing the release of Echelon Conspiracy (US) with Martin Sheen.

'We definitely plan to pick up more foreign films but this will depend on the terms. We can not afford heavy MGs [minimum guarantees] right now but we can successfully release films on a percentage basis,' explained Beginin.