How the state supports Russian movie industry

Patriotism and conflicts of interests in the state film industry

The state annually allocates billions of rubles for support of the Russian movie production. Mikhail Shubin finds out who distributes that money and for what projects.

In the last four years, the state allocates about 6 bln rub annually for the Russian movie industry. The money has been shared equally between the Culture ministry and the Cinema foundation.

Culture ministry’s expert boards allocate money for themselves

The Culture ministry, according to its head Vladimir Medinsky, allocates budget money to support the “authors’ experiments”: debuts, doc-films, festival and indie movies.

The Ministry annually allocates funds for documentary and fiction films. In 2016, basing on the pitching, the state supported production of 216 documentary and 72 fiction movies.

The Izvestia daily reported the funds had amounted to 1.92 bln rub, without elaboration. The Culture minister advised the Russiangate to compile the full list of those films on his own.

Subjects of doc movies sponsored by the Culture ministry in 2016
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The competition winners have been defined by the expert councils comprising film directors, distributors, journalists, critics and a head of a production company. Their decision must be signed by the minister. Some of the decisions might manifest the conflict of interests.

Vyacheslav Telnov, director of the ministry’s movie department, is also a chair of three expert councils (for children, fiction debuts, indie and experimental films). In 1999 - 2007, he was the head of the St-Petersburg documentary studio (SDF). Currently, the SDF has been headed by Alexei Telnov, probably Vyacheslav’s brother.

In 2016, the Culture ministry allocated the SDF funds for five doc movies, though the director of the department could not give money to his brother. The question is, if the official could influence the experts’ decisions?

The similar support the ministry provided to two more studios: Maxim Gorky central children and youth films studio and the ATK-Studio.

Art movies sponsored in 2016 by Culture ministry
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The Russiangate failed to find if there were direct links between the ATK-Studio and the experts. But the Gorky studio has been linked to them directly, as its General director Sergei Zernov is a member of the board for the children and youth films. The studio’s pitch won in that category. Besides, the company received money for four more films: three docs and one debut.

Three films of the VGIK-Debut production center also obtained financial assistance from the ministry. The VGIK director Vladimir Malyshev has been a member of the experts board. The director of the VGIK’s cinematographic institute Alevtina Chinarova has also been a member of the experts board for children and youth.

The General director of the Lenfilm studio Eduard Pichugin is a member of the experts board for fiction and debut films. This board offered support for one of the Lenfilm’s movies in 2016. One more Lenfilm’s production in doc category also received financial backing.

Producer Ruben Dishdishayn founded the Mars Media Entertainment cinema company. He has also been a member of the experts board for indie and experimental cinema. In 2016, that board allocated funds to two films produced by his company.

Non-transparent reporting of the Cinema foundation

The Cinema foundation sponsors the commercially-valuable projects. In 2013, it stipulated the grants with the condition of returning 40% of the funds allocated. The condition was introduced after the Audit Chamber had found out that the production companies returned only 2% of the grants on average.

Vladimir Medinsky said that the foundation had been unable to return 750 mln rub since 2013 and the money must be given away rationally.

The production companies must pay off the grants in three months after their movies are released. The prime companies, however, have been free from that obligation. Instead, they must attract to movie theaters one viewer for each 100 rub invested. In 2016, to celebrate the Russian cinema Year, all company were able to receive grants for free.

The Cinema foundation’s board annually chooses the leading companies taking into consideration their results for five prior years, and finance them more generously than the average. The board has been chaired by Nikita Mikhalkov, director of one of the prime studios.

Culture minister Vladimir Medinsky and director Nikita Mikhalkov, photo – ministry’s official website

In 2016, the leading companies were TaBBak (by Timur Bekmambetov), STV (Sergei Selyanov), Non-stop Production (Alexander Rodnyansky), TRITE (Nikita Mikhalkov), Enjoy Movies (Georgy Malkov and brothers Andreasyan), Direktsiya Kino (Anatoly Maksimov), Art Pictures Studio (Fedor Bondarchuk and Dmitry Rudovsky), Central Production (by the Gazprom-media holding).

In 2016, the foundation allocated 1.8 bln rub to eight companies as non-repayable grants. The money was given to 15 out of 20 films pitched.

The conflict of interests had also been in place during the provisional selection on the foundation’s experts board. The chair of the board Leonid Vereshchagin has also been a the heads of the production companies in that “excellent eight”.

More 1.2 bln rub the foundation allocated in 2016 to the companies outside of that list, 34 movies in total. The head of the  foundation’s PR department Svetlana Brilliantova told the Russiangate that there was not a full list of those films at the organization’s website.

“The competitions are going on, at the different stages.Say, we would give a green light to a movie  but at the last moment the company returns the funds as their director has got ill, or due to changes in currency exchange rate. So they return money to us. This is why we don’t compile such a list, as it loses importance”, she said.

Brilliantova added she did not know if the foundation’s chiefs would be willing to reveal that list to the press as they need to understand the purpose of media request.

What Medinsky is thinking about

Finalizing the results of the Cinema Year, Medinsky noted that the share of the Russia-made movies in 2016 had been 18.5%, while box-office sales rose 20% to 8.6 bln rub. He called that “a significant growth”, a record high since 1990s. Thirty-three million people attended the movie theaters in 2016 to watch the Russian films.

In April, the minister said that those result had been achieved thanks to “efficient cultural policy of state”. Sill he admitted that the KPI had not been achieved despite that growth.

He also slammed the uncontrollable system of sponsorship which had existed in the Cinema foundation before 2013 as commercially unsuccessful.

Poster of the Hack the Bloggers movie sponsored by the Cinema foundation. The movie turned out to be an utter failure in distribution.

Medinsky added the money kept to be distributed uneven, with some movies have been over-financed, the others underfinanced. He lamented that some mediocre films had received financing, such as Hack the Bloggers by the Tabbak Ltd which had obtained 25 mln rub and returned only 7 mln and was also dumped by both critics and audience.

“We’ve been trying to take the best from both old and new systems. Until 2013, the system lacked a corruption factor because everyone was financed  equally. The new system of voting, competing, pitching is good, but it adds subjective assessments which arises questions, to put it mildly. Bush telegraph works rapidly in the world of cinema. All leaders have now big portfolios, they can receive nearly same funding and we don't have to scrutinise project financing. The leader is responsible for the audience outreach, the number of people its movies have distracted from the Hollywood’s stuff”, he said.

In 2017, the Cinema foundation will distribute 3 bln rub (similar to 2016). Out of that sum, 2.5 bln rub is to be handed out to the leaders and 0.5 bln will go to other studios.

In mid-May, the ministry revealed it would cut its support: only 42 art movies will be funded instead of 72 planned earlier. This is unknown if funding of the documentary films will be changed as well.

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