Hollywood to Czech Republic: “Give us a break!”

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In 1996, Mission: Impossible put the Czech Republic on the international map of film-making locations. It wasn’t just that the city provided a backdrop to much of the action in the film; it was also the fact that a major Hollywood production made use of the crew and facilities of the city’s Barrandov film studios –something that had been done with great effect in 1984 with Miloš Forman’s Amadeus. In the years that followed, Prague became an “A-list” location with everything from James Bond to Oliver Twist coming to the city. But today, a weak dollar and increasing competition from other European countries is putting Prague’s premium status at risk and that is what I’ll be exploring in this programme.

Philip Waley is the co-founder and head of production of the Prague-based International Production Company, which is behind such films as The Pink Panther and has just wrapped principal photography on an adaptation of the Norad E. Howard stories of Solomon Kane. Despite a sense of a looming crisis in the business, he remains a passionate advocate of Prague and took me on a tour of Barrandov:

“In front of us are the new super-stages, which are three stages that can actually open into one massive stage, which they used on the Bond film. We used it for some stuff on Jumper. Then you have what are called 'Nový Haly', or 'New Halls' – that is actually three massive stages. Also, Barrandov has an amazing back-lot, which is a massive asset and the on-site construction company here is fantastic, and there are great prop stores – from the First and Second World Wars, you’ve just got thousands or army costumes and everything else…”

In 2003 and 2004, the government of Hungary passed legislation to provide financial and tax incentives to foreign filmmakers considering filming in their country. One key move was a 20% government rebate to film investors spending money there. Since then, Hungary hasn’t looked back. Its newly built 5 million six stage Korda Studios west of Budapest are vying to become the Hollywood of Europe. But its first production, Hellboy 2, was a sequel to a film, whose first part was filmed at Prague’s Barrandov studios. A worrying sign. Meanwhile, countries all over the world are competing for productions, while Czech legislators struggle to pass a series of incentives for the Czech Republic.

Philip Waley again:

The Chronicles of Narnia
“To me it was a very sad statistic that in January, we were shooting Solomon Kane, and we were the only movie in town. And for big companys like Stillking and Etic not to have any films was quite surprising – they were meant to be doing The Chronicles of Narnia 3 here - that has moved – it is, I believe being done in Mexico and New Zealand. Bond went back to England. It wasn’t that the Czech Republic did a bad job, not at all – it is purely financial.”

Petr Keller is the founder and executive producer of Starlite Productions based at Barrandov studios, which provides production services not just to Czech films but also international productions such as director Guillermo del Toro’s Hellboy. He is also the vice-president of the Czech Association of Producers and has been lobbying, albeit unsuccessfully, for the country to pass measures similar to those adopted by Hungary:

“We have competition, which is kind of worldwide. We are competing for feature films with New Zealand, we are competing with Romania, and what really hit us hard was the implementation of the tax rebates in Hungary in 2004. Unfortunately, my company lost two feature films last year, just because of the tax rebates. The full turnaround of only those two feature films was 1.1 billion crowns and unfortunately this has gone down to Budapest.”

Philip Waley explains just why he believes tax incentives are so important:

“A lot of people say ‘Well, why should we support films? Why should we give them a tax break?’ The film industry is actually very unique in the sense that for one it employs a lot of people, but also there’s the accommodation, transport and also supporting the city with permits for filming. The big films like The Chronicles of Narnia probably spent a million dollars on accommodation. With Solomon Kane, we spent nearly a million dollars just on fuel. So that’s probably a half a million dollars in taxes for the government that they are not going to get now.”

Petra Smoliková is the Director General of the section for EU, Legislative and Copyright Affairs of the Ministry of Culture. She explained to me that the earliest such incentives could be passed is January 2010, despite the fact that discussions have been ongoing for years:

“We are currently preparing draft legislation with regards to the film business in the country. We began the preparatory work back in 2006, and part of the discussions focused on the idea of fiscal stimuli for international productions. The end result is that we have some fundamental issues from various departments such as the Finance Ministry, Labour Ministry and Ministry of Trade and Industry.”

Thus, as it stands, the current legislation doesn’t even include tax incentives for international productions. I asked Petra Smoliková to explain why this was the case:

“It cannot be worked into the current legislation because this legislation is for the support of Czech cinema and this system of tax relief would require a change to other laws which are not under the purview of the Ministry of Culture. But, the sooner the better, because the clock is ticking and surrounding countries are developing their film incentives and our country hasn’t so far reflected this in its legislature.”

Matthew Stillman
Matthew Stillman is the founder of Stillking Films, perhaps the best known of all the international production companies operating in the Czech Republic, which is currently filming G.I. Joe at Barrandov. I asked him if he believed that the government was doing enough to address the concerns of a looming crisis in international production:

“No. I don’t think they are. They’re not being pro-active. There have been words of support. There was a proposal to put legislation on the government’s agenda a couple of weeks ago, which was then taken off the agenda. So in words – perhaps; in practice - not.”

I decided to contact the Ministry of Trade and Industry for their view and was emailed a surprisingly blunt statement indicating that they had “encountered a fundamentally negative attitude from the Ministry of Finance with regards to this issue.” They also added that “at the moment, support of the film industry is at a dead end.”

Vladimír Kuba
While the political machinations play themselves out, the worrying signs are continuing. In early May, Vladimír Kuba, the general director of Barrandov Studios stepped down suddenly. Kuba’s ousting is believed in part to be connected to his failure to effectively secure the much request tax incentives from the government. At present, according to Kuba, the studios are 50%–70% occupied and in relatively good shape, but there are clearly worries about the future.

On the government side, one source suggested to me that it simply did not see the urgency in helping “rich Hollywood types” when there were more fundamental concerns for the country. However, Stillking head Matthew Stillman strongly believes that that the government would actually make money by passing these incentives:

“There has been a report done by Česká Spořitelna and another one by ČSOB that both show that if the system employed by Hungary was employed here, there is a net tax benefit to the Czech Republic. As it works in any other industry from car industries to any other foreign investment into the country, those have traditionally been supported. This is another form of investment, so the question is – does the Czech Republic want part of that industry; does it want to be competitive; does it want to secure economic gain, or does it want to opt out? It is not Hollywood producers; it is not all that hype that comes with the industry, it is purely economic.”

But the clock is ticking and very little is being done. The worst case scenario, in a few months, there may be no Hollywood productions at all filming at Barrandov. Petr Keller again:

“Now it is already late, I believe, or we are just at a minute before midnight. I think we would need it to come into effect by the beginning of next year. Otherwise, we start losing the little bits and pieces we still have. We have good connections in the US and with studios and productions all around the world. But those people will simply make new partnerships with somebody else and they will start to go somewhere else, and it will be very difficult and much more expensive to bring them back.”

Philip Waley is even more blunt:

“The problem with the Czech government is that in anything they do - I’ve lived here ten years and I don’t follow politics that much - but you notice that the Czech government always acts in haste or they leave it till it is too late They have been talking about tax breaks here for years, and to be honest, I’ll be amazed when it happens.”

Clearly, emotions are running high in the industry, and whatever the reasons for the government’s procrastinations, the lack of action is clearly costing the Czech Republic dearly.