The reign in Spain

This year is set to be ground-breaking for Spain as the government underlines its support for the film industry by doubling its investment in local production and distribution. A new General Audiovisual Law is set to increase state support of individual films to $2.8m (€2m) and more than double the funds available to Spanish distributors.

“This is going to have a huge impact not just in Spain, but also for the international market, as co-producers will potentially be able to access more funding,” says Beatriz Setuain, head of Spanish sales agent Imagina, which is handling Woody Allen’s next project.

At a national level, Spain’s film institute, the ICAA, is introducing a new $125m (€85m) film fund which provides money to local projects and international co-productions from development to exhibition, taking into consideration not just box-office success, but also internet downloads and festival awards. Further factors will apply such as whether a project is to be made and/or distributed in 3D.

To access the part of the fund based on commercial success (the ‘ayuda general’), producers will need to wait until the film is completed and has scored up to the maximum 120 points required from the various criteria to secure the full $1.1m (€800,000) per project. After at least a year of ongoing distribution of the film via a cinema release, festivals, ancillaries and so on, the producer can then receive the fund money from the government based on how many points they accumulated.

However, if a producer wishes to access this fund in advance through a loan from the banks, via the Instituto de Credito Oficial (ICO), the amount they receive is based on the projected success of the  film. This is a riskier deal for both producer and bank, but if the film reaches its target then the ICO covers the bank loan.

Local producers can also access up to $1.7m (€1.2m) per project (including international co-productions) through the development/producer side of the new fund (the ‘ayuda complementaria’), as long as their own investment exceeds $5m (Û3.5m) and the project has been approved as officially Spanish.

To be eligible, international producers must work with a Spanish company to receive up to 50% of the budget of a film, or up to 75% of the local company’s investment in the project.

This fund has yet to be approved by the European Union and will only apply to projects which begin shooting from October 2010. In the meantime, the existing ICAA funding structure based on local production input and box-office success applies.

A possible downside for producers under the new law could be the potential reduction in the required level of Spanish TV broadcaster investment in film from 5% to 3%. Spain’s constitutional authorities are already considering the legality of the TV quota system. And, while the law has been passed in Spain, it may be as late as April before it is approved by the EU, leaving producers in limbo.

“When we try and get subsidies for our projects now, we are uncertain whether we are going to be applying under the new or old law, and the TV broadcasters’ decisions are on hold,” says Che producer Alvaro Longoria of Morena Films.

But there is much optimism for the year ahead, particularly in Valencia and Catalonia. Both regions have subsidies that are among Europe’s most generous and are unaffected by the new law. Valencia in particular has sparked huge interest, especially from the US, thanks to its newly approved $26m subsidy system, which offers a tax rebate of up to 20% of local spend.

In Catalonia, the regional government has an annual $30m film pot to support major projects. Films to have shot there in 2009 include Alejandro Gonzalez Inarritu’s Biutiful, Jim Jarmusch’s The Limits Of Control and Guillem Morales’ Julia’s Eyes.