Germany's Babelsberg Studios aims to intensify its involvement as a co-producer on national, European and international productions.

On the publication of its annual report for 2006, the publicly-listed Studio Babelsberg AG announced that it would 'invest in promising film productions and thereby use the potential of additional sources of revenue as well as strengthen the film hub of Germany.'

The production centre on the outskirts of Berlin is currently serving as a co-producer on the Danish-German co-production Flame & Citron, Stefan Ruzowitzky's family entertainment film Lily The Witch (Hexe Lilli), and the German-English major production Speed Racer.

The studio will also be co-producer with Hofmann & Voges Entertainment and Action Concept of Mike Eschmann's comedy Ausbilder Schmidt - Der Film which will be shot at Studio Babelsberg during July and August and released theatrically in Germany by the local outpost of Universal Pictures International.

The studio management noted that delays to the launch of the German Federal Film Fund (DFFF) until January 2007 had resulted in the Hollywood studios adopting a wait-and-see policy and withholding greenlighting projects.

'This had repercussions on the situation for business and negotiations for Studio Babelsberg in 2006: a big international production was cancelled immediately before the beginning of shooting and had led to a profit warning in September 2006.

'Without having the new incentive scheme in place, we found ourselves in a lamentable negotiating position when trying to acquire and secure new projects.'

However, the studio is now much more positive about its business prospects for 2007 - its 95th year in business - thanks to its programme of restructuring and the stronger negotiating position vis-a-vis other European studios through the DFFF incentive scheme.

In addition to Speed Racer - which begins shooting at the studios in June -, the studio management are currently holding 'concrete negotiations' with two international large-scale productions with a prominent cast 'to be signed in the immediate future.'

'For the first time since the studio's privatisation, the studio finds itself in a situation of strong demand by not only German producers, but also international producers,' the management observed, pointing out that the production complex 'is clearly on its way to positioning itself as a successful, international corporation for many years to come.'