Teutons tighten funds
Bank bans Medienfonds' film funds
Germany's Commerzbank has discontinued the sale of new film funds from VIP Medienfonds, the country's most successful private investment film financier, following a report highlighting the company's dramatic profit shortfalls last year.
Move is a further setback for VIP, which is faced with the German government's plan to shut down all tax-haven film funds next year.
Commerzbank has long been VIP's main distribution partner, and the cooperation helped VIP establish itself as the country's leading film fund. Last year the company raised some $500 million, most of which went to back Hollywood productions.
VIP is bankrolling a number of projects by Roland Emmerich, including "The Girls Next Door" and "Soul of the Age," as well as upcoming titles such as Robert Towne's "Ask the Dust" and Steven Zaillian's "All the King's Men." Commerzbank reportedly brokered up to 75% of the capital raised by VIP last year.
The bank's decision to discontinue VIP's new VIP 5 and 6 funds followed a critical report by an investor-protection publication that highlighted a 98% shortfall in revenue on a fund launched in 2002.
VIP had forecast a return of $37 million by 2004, but the fund, VIP 3, made only $645,000. That information was missing from VIP's most recent fund brochure, which highlighted VIP's success.
VIP topper Andreas Schmid has downplayed the report, saying VIP 3's total revenue was delayed by a change in strategy and investors eventually would see a profit. The report contained nothing new and the information had been made public last year, Schmid added.
VIP 3 originally was intended to back TV productions, which generally offer a much quicker return. Due to a lack of attractive TV productions at the time, however, Schmid said VIP used the fund for theatrical pics, including "Lord of War," "The Jacket," "The Punisher" and "The Upside of Anger."
Some titles in the 12-title slate have yet to be released, including Lakeshore Entertainment's "Half Light," with Demi Moore; Elie Chouraqui's Arab-Israeli drama "Beyond Friendship"; and "Edison," starring Kevin Spacey and Morgan Freeman.
Commerzbank's move is yet another blow to Germany's private investment film fund market, which has long relied on tax-sheltering structures to attract investors. German Chancellor Gerhard Schroeder has outlined plans to shut down such tax incentives as part of his wide-ranging tax reform plan.
