Russian distributors have issued a stark warning to US sales agents – renegotiate deals on films acquired before the economic crisis or else they will stop buying altogether.


Their fiercely worded remarks came during a panel discussion at the RussianPavilion in Cannes today (Friday.)
Senior representatives from Russian companies including Central Partnership, Paradise Group and Art PictureStudios told western sellers that they will no longer do business under current terms.

The buyers listed their woes. During the economic crisis, DVD sales have crashed by an estimated 60%. Piracy is
rampant. TV channels are refusing to buy new films. The theatrical business - the only potential source of profit remains perilous in the extreme.

“That is why we are seeking reductions on the deals that were made a year or two years ago,” one buyer stated.

Russian acquisition activity during the Cannes market appears to have ground almost to a halt.

The buyers are looking for reductions of up to 90% on deals struck before the crisis.

US sales agents attending the panel gave a mixed response to the complaints. They pointed out that the problems
are not unique to Russia.

“There have been cases where silence became the norm. Some (Russian) companies tried to ignore the situation
completely or walk away from deals completely,” said Richard Guardian, co-President of Los Angeles-based Lightning Entertainment. “I don’t think that is in anybody’s interest both from the business perspective or our future
business relationship perspective.”

Andrew Herwitz of New York-based The Film Sales Company said that in their re-negotiations, the Russian buyers
would find more flexibility dealing with finished films than with pre-buys. “If the film is completed, the likelihood is
that there is not a bank involved and the producer will have more flexibility,” Herwitz stated.

Nonetheless, the Russians were unyielding in their determination to secure more favourable trading terms. “Do the
independents want to have a place in the Russian marketplace or do they want to be out?” one buyer asked. “If
you’re not willing to work with the situation at hand and work at a pricing that the marketplace is able to afford, then the Russian distributors will stop working with the US companies.”

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