Film Studios Handed Sell-Off Plan

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President Vladimir Putin has signed two decrees intended to revitalize the post-Soviet film industry by allowing the gradual privatization of studios and establishing a state system of film distribution.

Under the first decree, signed Thursday, each studio will be split into two parts: The first — which will remain state-owned and will not be subject to conversion into a joint-stock company — will have control over the studio's film collections; the second will get the studio's remaining property and will be eligible to become a joint-stock company if its management so chooses.

The next step for studios turned into joint-stock companies will be privatization, according to Deputy Culture Minister Alexander Golutva, former head of the erstwhile State Committee for Cinematography, or Goskino, which became a ministry department last May.

Golutva said in an interview that the only real candidate for becoming a joint-stock company right now is the Gorky Studios, whose director Vladimir Grammatikov has long insisted on the company's privatization. If the Gorky trial balloon proves successful, Golutva said, St. Petersburg-based Lenfilm may follow suit next year. The second decree, signed Friday, provides for the creation of a state-owned distribution company called Rossiisky Prokat.

According to Golutva, the first stage of the company's work will be taking inventory of the remnants of the Soviet distribution system — production and reproduction facilities, research institutes and export arm Sovexportfilm — and whipping them "into decent shape." After that's done, he said, Rossiisky Prokat will undertake to build or renovate about 150 movie theaters nationwide. These theaters would belong jointly to the federal government and municipal authorities and would aim to be as comfortable as their privately owned counterparts.

There are about 40 state-owned film studios in Russia, most of which produce something like a film a year. The exception is Lenfilm, which has been making up to 10 films a year and is often used by Moscow filmmakers who find it offers the best value for the money.

A source at the Gorky Studios said that state-run Vneshekonombank had agreed to become one of Gorky's shareholders. A bank spokesman declined to comment last week, but said the bank was "interested in the revival of the film industry." Golutva also mentioned Vneshekonombank, saying it would be one of the creditors for Rossiisky Prokat.

These plans indicate the state is eager to fill the void left on the market by media magnate Vladimir Gusinsky. While his companies NTV-Profit and Kino-Most had recently been producing more than 10 films a year, their projects have been put on hold in light of Gusinsky's financial and legal difficulties.

Whether the state will manage to turn a profit, remains to be seen: Film industry insiders say that, since the 1998 crash, an average film makes between $150,000 and $200,000 from theater and video sales, while an average production budget is about $800,000.