The leading Serbianexhibitor, state-owned Beograd Film has decided to close eight cinemas in thedowntown area of the key city which accounts for 50% of Serbia's overall box office. The board of thecompany's union announced a strike because of unpaid salaries, inadequate workconditions and poorly equipped theaters as a consequence of low attendance,which has hit rock bottom this year.

"At first weasked for state subsidy so that potential investors could come in and prevent thecinemas from collapse, but the government opted for privatization. We hadsubmitted an order for privatization to the National Agency for Privatizationin 2003, and a year later the process was brought to a halt," saysMiroslav Cenic, the CEO of Beograd Film. "Because of this, Beograd Filmcannot lease its 17,000 square meters of useful office space in strict centerof the city in order to improve it financial situation. The market is in anawful position, but our employees who have not been paid for 20 months sufferthe most."

"WhenBeograd Film submitted the order for privatization, we were absolutely infavour of a quick process which would enable the theaters to keep theirfunction and improve the facilities' equipment," says Serbian Minister ofCulture Dragan Kojadinovic. "But in our jurisdiction is only to recommend aproposition, the Agency for Privatization has the final word."

"Theverification of Beograd Film is in process," says Agency forPrivatization's Rade Sevic. "The financial support would have been offeredearlier if the Board was ready."

"BeogradFilm has been left on its own which shows a total lack of care of the state forthe exhibition sector that leads to the collapse of theatrical market,"says Zvonimir Djordjevic, CEO of Tuck, the leading Serbian distributor and ownerof the only Belgrade miniplex, five-screen Tuckwood. "In the past twoyears, we and other distributors offered to take under lease or buy some ofBeograd Film's theaters but got no response. The only solution is to privatizethree or four main theaters as quick as possible and turn them into modernminiplexes which would be able to bring audiences back. The rest should be soldfor other purposes so that impoverished employees can get back on their feet."

There are 21 cinemasin Belgrade with total of 34 screens. Beograd Filmowns 14 cinemas, six of which had not been in use since 2003, when the big boxoffice downslide started. In October 2004, the average weekend attendance in Serbia and Montenegro was about 40,000 patrons. This October, itwas less than 20,000, while all 40 theaters in the territory were still operational - that includesMontenegro, which became an independent state inJune.

July saw thelowest attendance in history with an average of only 6,366 admissions. Most ofthe cinemas in smaller towns have not been working on regular basis since thestart of the millennium, opening only for weekends or for domestic hits, suchas Zamfir's Zona (2002-2003, thehighest grossing film in the territory ever with 1.5m admissions). Thisweekend, similarly targeted local DistantTrumpet (Guca!) was released on 22 prints to a disastrous 2,413 admissions.Serbia is populated by some 8m people, comparedto 2m citizens in Slovenia where the October weekend average was 25,000admissions. With closing of the Beograd Film's remaining eight theaters, thereare now only 20 active screens in Belgrade which alone has the same population as Slovenia, which has 96 screens.

There are plansfor three multiplexes to open in Belgrade in September/October 2007, but the gap istoo big and the market has to survive before potential audiences completelyloose the habit of cinema-going. If the market crashes, the investors might nottake take the risk of building multiplexes that there will be no audiences for.