The new face of Spain

From Pedro Almodovar to Javier Bardem and Penelope Cruz, Spain has long been a major well-spring of talent. And in the last few years the territory has witnessed the emergence of highly ambitious film-makers who are exploring new horizons with international partners and talent.

These include directors such as Rodrigo Cortes, who is following up his English-language breakout Buried with thriller Red Lights, starring Robert De Niro and Sigourney Weaver; Juan Antonio Bayona, who is in production on the Summit-backed tsunami drama The Impossible, starring Ewan McGregor and Naomi Watts; and Juan Carlos Fresnadillo (Intacto, 28 Weeks Later), who is in post on Intruders, starring Clive Owen and backed by UPI.

“Spanish film-makers are hot properties at the moment and their films are selling abroad more than ever,” says Adrian Guerra of Versus Entertainment, producer of Buried and Red Lights.

Other recent hot sellers to international distributors include Almodovar’s The Skin I Live In, sold by FilmNation, and two Filmax genre titles, Miguel Angel Vivas’ Kidnapped and Manuel Carballo’s Exorcismus, which both went to IFC Midnight for North America.

“Previously we had too many films made which just disappeared without any impact at the box office. But now Spanish producers and directors seem to know what works with the audience and they are very well respected in the international markets,” says Alvaro Longoria, a producer at Morena Films, which has optioned the US remake rights for Daniel Monzon’s 2009 hit prison thriller Cell 211 to CBS Films with Paul Haggis set to write and produce.

The ambition of the productions coming out of Spain is all the more impressive given how tricky financing has become in the current climate.

‘Spanish producers and directors seem to know what works with the audience now’

Alvaro Longoria, Morena Films

One bugbear among local producers is the unwillingness of banks to provide credit. “Even when you have a good project that is interesting to the international market, you’ve already gained approval from the government for the national subsidies, sold the rights to TV and set up co-production agreements, most of the banks are still not willing to discount the financing,” says Manuel Monzon, an executive producer at Vertice Cine, who is putting together the Spain-Portugal-France co-production Painless and is a minority co-producer of Red Lights through his own company, Monzon Films.

“The Spanish banks generally don’t understand the film industry and have little money. We’re having to go to international banks to discount our Spanish contracts instead, such as Coficine, which is very expensive.”

The financing landscape has shifted further with the introduction last year of Spain’s new General Audiovisual Law. Spain’s producers were given a major boost by the law’s stipulation that telecoms companies, such as giants Telefonica, ONO and Vodafone, now have to invest 0.9% of their annual income in film production, which should see millions more euros pumped into the industry (Telefonica has dabbled in film investment before, most recently providing finance for Andrucha Waddington’s Lope, but the other companies are new to the game).

Funding overhaul

However, a key tenet of the legislation also reduced the required amount Spain’s private broadcasters invest in local and European film and TV projects from 5% to 3% of their annual turnover, which is a big blow for local producers.

“The networks are investing less and being a lot more selective with what they invest in,” says Joaquin Padro, president of The Orphanage production outfit Rodar Y Rodar. “Antena 3 and Telecinco tend to invest most of their money in their own productions.”

‘Spanish banks generally don’t understand the film industry. We are having to go to international banks instead’

Manuel Monzon, Vertice Cine

The film arms of Spain’s major privately owned broadcasters, Antena 3 Films and Telecinco Cinema, co-produce six to 10 local projects a year. Recent titles include Woody Allen’s You Will Meet A Tall Dark Stranger and Alejandro Amenabar’s Agora, respectively. “Given the choice, we would not invest in film at all,” says Ghislain Barrois, CEO of Telecinco Cinema. “We have only really made our money back on a few titles [most notably The Orphanage, which Telecinco co-produced with Rodar Y Rodar, and Cell 211].” Nevertheless, Ghislain has high hopes for Telecinco Cinema’s new batch of high-profile projects, to be announced soon.

But it is not all bad news. As part of the law, other private broadcasters are also required to invest 3% of their revenue, which in the case of La Sexta, owned by Mexican media giant Televisa, and Spanish conglomerate Imagina, will result in a cash injection of $8.7m-$11.7m in 2011, based on estimated 2010 revenue.

Public broadcaster TVE has also seen its investment quota in Spanish and European films rise from 5% to 6% under the new law. Recent high-profile pre-buys include The Skin I Live In and Iciar Bollain’s Vicky Sherpa.

“The relationship between the producers and TVE is magnificent. TVE invested $60m (¤45m) in Spanish films in 2010,” says Pedro Perez, president of producers’ association FAPAE.

With traditional financing more difficult to come by, Spanish producers are becoming more savvy about how they put their films together. One area of interest is private finance, which is beginning to flow into the industry thanks to Spain’s 18% tax credit, designed to attract investors to the industry. Private companies can receive an 18% reduction on the taxes they have to pay annually in Spain by investing in local film projects.

To make sure all interested parties are treated fairly, the government has created economic interest groups (AIEs), through which all the private companies and producers involved in a film project join forces so that profits and creative interests are shared.

Investment opportunities

The model has already been used successfully by Spanish producer Ibon Cormenzana on Edward and Rory McHenry’s animated Spain-UK co-production Jackboots On Whitehall and Mateo Gil’s upcoming western Blackthorn. And the hope is that more money will start filtering into the industry once major Spanish companies realise the benefits of paying less tax and making money back on films.  

“We’re looking to access funds for our forthcoming co-productions from some major private companies listed on the local IBEX 100 index, including Telefonica, through the 18% tax credit introduced in 2008,” says Denis Pedregosa, vice-president of productions at Kanzaman Films.

Spanish producers are also increasingly looking at overseas partners and mounting creative co-productions with territories Spain has treaties, such as Canada, New Zealand and Brazil. These treaties allow Spanish producers to access national subsidies from Spain’s Institute of Film and Audiovisual Arts worth up to $2m (€1.5m) per project, simply by working with production companies from those territories and using European, as opposed to just Spanish, cast and crew.

‘We need to get out to emergin markets and are already building relations with companies in China’

Agustin Almodovar, El Deseo

“For our sci-fi project Cold Skin, we want to keep control of the production, so we’ll probably shoot it in Europe and then do post-production in one of those treaty countries,” adds Pedregosa. “We can get investment from those countries, co-production partners, local subsidies from here and potentially new territory sales.”

Other high-profile local producers are following suit. “We need to get out to emerging markets and are already building relations with companies in China,” says Agustin Almodovar, co-head of production outfit El Deseo and producer of his brother Pedro’s films.

“We are looking to work with countries such as Colombia, Brazil and Mexico where there is plenty of private investment in film,” says Morena Films’ Longoria. “If we want to make three to six films a year, we cannot just rely on the three main local television networks and subsidies.”

Spanish production, 2010

Spanish productions 106
International co-productions 35, including nine projects with Argentina and seven with France
Spain attracted approximately $240m in inward investment

Sources: FAPAE, ICAA

3D production

The 3D phenomenon is well and truly taking hold in Spain — especially among the territory’s major animation players.

Ilion Studios, whose credits include alien adventure film Planet 51, is in production on a large-scale 3D project, while Galicia-based Dygra Films has a slate of digital 3D projects in development, including Christmas animation Holy Night, due for release at the end of this year, and Lost & Found about a boy who searches for his missing toys.

“We believe 3D films make sense on a creative and business level, but they must offer an additional experience to the spectator that develops the format,” says Lucas Mackey at Dygra Films.

Barcelona-based studio Filmax is also at work on 3D projects. Having already taken $1m in Spain for its adventure film Magic Journey To Africa last year, it is now working on Andres G Schaer’s Snowflake in 3D, which is about an albino gorilla. Filmax president Julio Fernandez says the company is also developing another big stereoscopic project.

Outside of the animation sphere, horror specialists are also dabbling in 3D, including Rodar Y Rodar, producers of The Orphanage, which is making Sergi Viscaino’s Scars with leading young Spanish actors and backing from Sony Spain. Meanwhile Antoni Sole’s company Sole Goldstern Media is going into production this year on Web Cam, starring Robert Englund, Estella Warren and Amaia Salamanca, and Alpha, directed by Joan Cutrina and starring Michael Madsen and Alex Garcia.

“We think 3D gives horror films that little extra edge, which grabs the audience’s attention,” says Sole.