Bill seeks crackdown on rental costs

FECE calls on government to cap distributors' rentals at 48%

By JOHN HOPEWELL, EMILIO MAYORGA

MADRID -- A film bill seeks to place limits on the distribution rentals that Hollywood studios can charge in Spain. Presented Thursday by Spanish Culture Minister Carmen Calvo in the form of a 13-page document, the proposed legislation would crack down on distribution rentals that are "discriminatory, disproportionate or not in line with the average in European countries."

Grouped in distributors lobby Fedecine, the sub-branches of the U.S. studios in Spain can contest the proposed legislation over the first half of January, before it begins a lengthy process of parliamentary approval.

Set as a sliding scale dropping from a first-weekend 60% of total box office on blockbusters, U.S. studio rentals in Spain average 51%-54% over a film's run, according to diverging estimates.

In October Spanish exhibitors' lobby FECE called on the government to cap distributors' rentals at 48%.

Spanish film rentals are the highest of Europe's "big five." Distributors' cuts range from 45% in Italy and the U.K. to 49% in France and Germany, per Dodona Research.

So the new legislation might dictate a small -- though not drastic -- fall in rentals for the majors.

But it also introduces regulation into distrib-exhib negotiations that were previously dictated by market forces.

And, as B.O. is driven increasingly in Spain, as in other countries, by one-or-two tentpoles each month, the regs could prevent the studios from ratcheting up terms on their hottest movies.

Fedicine is likely to come out fighting, but faces an uphill battle.

In contrast, Spain's troubled indie distribution sector has been tended a life raft. Bill would oblige broadcasters to spend 0.8% of their annual turnover -- some $25 million --- buying European films from indie distribs. Future regs should result in more European pics being bought for Spain.

Other measures in the draft proposal deny Spanish nationality -- hence Spanish subsidies -- to 100% Spanish productions using non-European director-screenwriters. The rule does not, however, apply to co-productions.

"Like the increased emphasis on 'British spend' in new U.K. tax regulations, the new Spanish film law seeks to protect the country's film industry slightly more. More than introducing radical changes, it regulates in more detail, and that's positive," said producer Andres Vicente Gomez, CEO of Lola Films.

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