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26 September, 2011  ▪  Yaroslav Pidhora-Hviazdovsky

Financing Ukrainian Cinema: To Have One’s Cake and Eat It Too?

In early September 2011, the State Cinema Agency announced what projects were officially included in the 2011–2012 Program for Producing and Distributing National Films. Who will benefit and how?

For three months the Expert Commission on Cinema closely watched a film project competition, a unique and unprecedented event in Ukraine, as both critics and professionals agree. The main distinctive features in this new event were the nearly complete transparency of the selection process and high-profile experts from various areas — from film criticism to directing — including Volodymyr Voitenko, Alik Shpyliuk, Roman Balaian, Oleh Fialko, Volodymyr Tykhy and Andriy Khalpakhchi. Of the 52 projects accepted, 37 were selected and seven more were marked as needing improvement to be resubmitted for the next competition. The list is loaded with what are nearly household names: Kira Muratova, Serhii Masloboishchykov, Dmytro Tomashpolsky and Myroslav Slaboshpytsky.

SPLITTING UAH 70 M

At a mid-August master class in pitching, the State Cinema Agency announced that a total of UAH 70m of budget funds would be divided among the competition’s winners for completing projects in 2011-12. In Russia, a comparable sum (RUR 250 m) went to each of the seven Russian film companies which received aid from the Russian Cinema fund this year. However, it would be wrong to think that the Ukrainian prize fund will be divided equally. Each Ukrainian project has its own financial needs and limits. For example, debut, animation, short, children’s and non-fiction films will be financed 100%. They comprise the majority of the winning proposals — 23 — including a documentary in three parts about Kostiantyn Stepankov, a new animation series by Stepan Koval and the feature-length cartoon Mykyta Kozhumiaka by Mykhailo Kostrov. Other – fiction – films can only receive up to 50% of the funds they need under the Law on Cinematography. These producers must obtain the other half of financing from private investors.

According to one application for pitching at the Second Odesa Film Festival, the Parajanov project indeed has half of its total budget of € 1,980,000. In contrast, the DAU project is 80% completed and needs to be financed 20% (€ 580,000). It is likely the only proposal asking for less than the legally established maximum of 50%. Curiously, these two projects are joint productions: Parajanov is also financed by the French, while DAU has received more money from Russians than Ukrainians. Moreover, the former is directed by a Frenchman (of Armenian origin) – Serge Avedikian (see more on him at http://tyzhden.ua/Culture/22760), and the latter is directed by Russian Ilya Khrzhanovsky.

There is a similar situation with the film Pid elektrychnymy khmaramy (Under Electric Skies): directed by Russian Alexey German Jr., it is financed largely by Russian Metrafilms, while Linked Films Ltd., owned by Serhiy Antonov, former director of FILM.UA, is responsible for the Ukrainian part of the investment. The draft of Masloboishchykov’s feature-length Diamantovyi khrest (Diamond Cross) is also planned to be produced jointly with the Russians. However, this project has a scandalous political subplot with an internal moral conflict. On the one hand, its Russian investor is A-1 Kino Video which has a stained reputation for producing anti-Ukrainian films My s budushchego (We Are from the Future) and its sequel My s budushchego-2. On the other hand, the Ukrainian investor is Patriot-Film, a company headed by Party of Regions MP Oleh Sytnyk. Curiously, the project was blessed by Patriarch Volodymyr of the Ukrainian Orthodox Church (Moscow Patriarchate) on March 30.

BEHIND-THE-SCENE SCANDALS

It turned out that there were several potentially scandalous cases connected with the competition. One is a conflict of interests – the expert commission evaluated proposals that were submitted by some of its members. For example, noted director and producer Svitlana Zinovieva, an invited commission member, is involved in privately-owned Inspiration Films which eventually won an award for Chas zhyttia obiekta v kadri (Lifetime of an Object in the Lens). She also co-authored the script for this feature film. Another director and producer, Volodymyr Tykhy, also a commission member, submitted two projects: Ukraino, goodbye! and Zelena kofta (Green Jersey). The former was included in the Production Program, while the latter was found lacking and returned for improvement. Director Roman Balaian also sat on two chairs: as the commission chairman he reviewed projects submitted by the Iliuzion company where he is the director.

Another sensitive aspect relates to the legal and property rights. There are two types of government aid – government support proper and government commission. The former is essentially a kind of donation or subsidy – money is provided without any demands of return payment or compensation. The latter, on the contrary, requires the recipient to transfer the rights to the state under a contract that covers the copyright and property rights. Once a movie is completed, the state has the copyright to it. The distribution rights can only be obtained from the state through a bidding procedure which is open to anyone and in which the highest bidder wins. That this scheme may further complicate life for film producers was evidenced by the story with Braty (Brothers) (see more here: http://tyzhden.ua/Publication/3324).

“Now we are in a situation that we can no longer transfer rights to the state because of the contracts signed with our German and Swedish partners who provided financing for our project from their government funds and received in return exclusive rights to distribute the film in Germany and Austria, Sweden and Norway, respectively,” producer Ihor Savychenko says. According to State Cinema Agency Deputy Head Lidia Klymenko, there is no conflict of ownership rights: the state does not take them away but only receives “a part” of them in proportion to the financing provided. “If the government invested UAH 20 on top of UAH 20 provided by a private entrepreneur, it will later receive [rights] in proportion to the invested UAH 20,” she says. But this explanation does not negate the transfer of the copyright. Specifically, Savychenko will be forced to either violate his arrangement with the state and transfer the rights to his foreign partners in defiance of Ukrainian laws or, if he agrees to accept money from Ukraine, terminate more than 10 contracts with his foreign partners, because he will be unable to transfer to them exclusive distribution rights – half of his revenue would have to go to the Ukrainian government in this case, which would destroy any exclusivity and violate the terms of the contracts.

Why such contradictions arise is another question. Some of the projects were submitted to the competition precisely to receive government support. “But currently, the legalities of this method of financial support are not fine-tuned: under the current Tax Code, we cannot physically obtain such financing. In other words, our film will be eligible for the other option only, which is government commission. If it is a commercial movie, there are no problems. But if it is an auteur film, such as ours, problems do arise,” Savychenko explained.

ILLUSORY FINANCES

Some of the producers polled by The Ukrainian Week are not completely sure that the promised money will indeed be disbursed by the end of the fiscal year. As long as the issue is being decided by the Finance Ministry and the Ministry of the Economy, producers are utilizing funds received from private sources or loans or hope to obtain budget money later. The odd thing however, is that Ukraine’s treasury still has none of these sums on its accounts – neither the total of 120m  allegedly allocated by the government to support the national cinema, nor the 70m that would have to be doled out to the 37 winners of the film competition. Even if these funds do arrive in a month or two, there is a real possibility that there will be too little time left to spend them. In this case, the money will be returned to the budget.

But then, how can something that has not come be returned? Finally, here is a more serious question: Could it be that the 120m – a “luxurious” sum, to quote Kateryna Kopylova – was just a grandstand play?


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