Russian market faces contraction in production, Central Partnership's Armen Dishdishyan says largest companies will weather crisis.

The global credit crunch has forced a sharp contraction in Russian film production, with up to a quarter of film projects falling victim to the financial meltdown.

Armen Dishdishyan, vice president of international sales and co-production at Central Partnership, told that several of his company's projects were on hold, although those affected were only in the development stage. 'We are just waiting for the situation to calm down, hopefully next year, and once it happens we will resume the production,' he said.

Dishdishyan stressed that Central Partnership's prestige $25m action movie Taras Bulba (scheduled for April release) is secure.

His comments appear to confirm recent reports in the Russian daily, Kommersant, that the effects of the credit crisis are being felt throughout the sector. Kommersant quoted Karen Shaknazarov - the general director of the country's leading production facility, Mosfilm - saying that up to a quarter of the studio's projects had been halted in the last two months. A collapse in domestic production on that scale has not been seen since the Russian economic crisis of 1998.

The Russian economy is certainly under pressure. The Russian stock market has fallen 70% since May, for example, and filmmakers are particularly anxious.

Restructuring efforts at the Ministry of Culture have also resulted in delays on funding promises. The bad news emerges just weeks after Prime Minister Vladimir Putin gave Russian film-makers a boost, promising that the government would provide $76m (RUB 2bn) in immediate support with a further commitment of at least $164m (RUB 4.3bn) per year for domestic producers. The government has since reassured producers that the promised funds will be made available, but conceded that filmmakers may not see any money until Spring 2009 at least.

Two other sources of film finance - private loans from individuals and bank loans - have also dried up. Dishdishyan noted that 'nobody has spare money' for private finance and added that 'film financing is on the bottom of banks' priority list, so they no longer offer any loans'.

Dishdishyan believes that the largest production companies will survive the dry spell by utilising their own funds. 'It is the smaller producers that only have a few projects that will suffer the most,' he said.

The Russian market saw 85 local premieres in 2007. Scare stories from some industry insiders say that number could fall by 70% in 2010, but Dishdishyan puts the drop at closer to 30%. The producer added that there may even be a silver lining if the crisis helped clean up the local production market, in which only half of all films produced secure distribution. As he explained, 'Hopefully, the production of really bad films... will get filtered out by the crisis. Only the best, most professional producers will remain, boosting the quality of Russian film.'

Sticking with his optimistic theme, Dishdishyan went on to say that the tough economic climate might actually benefit the industry as more Russians seek to escape their worries by way of the box office. 'People who cannot afford travelling or clubbing will now entertain themselves by going to the cinemas,' he said. 'So we expect more positive Russian films to come out, such as comedies and romantic films, to help people get through this hard period.'