Brazil Reaping Film Rewards

Movie theater operators in Brazil claim to be strained—in this
case by the longstanding "screen quota"—under which each of
the country's roughly 1,800 theaters must screen homegrown movies
on a minimum number of days per year. The quota increased to
17.5 percent this year from just short of 10 percent in 2003.

Luis Waldmann

A decade's worth of tax-breaks aimed at the local film industry—which would make up less than one percent of the domestic market-share at the dawn of the 1990s—has yielded Brazil 10 Oscar nominations in the past eight years, including best director for City of God in 2003.

By means of tax-breaks, private and state-owned companies have poured about $460 million into the Brazilian motion picture industry since 1995, according to Ancine, the state cinema agency.

However, in an attempt by Brazilian authorities to secure as strategic a partner, film distributors were imposed an 11 percent surcharge should they decide not to make use of the incentives.

"It is still unclear whether to call it `fiscal waiver' or `fiscal blackmail'," said José Carlos de Oliveira, managing director of Warner Bros. South Inc.

Distributors contend that despite the funds they would otherwise have to pay in local taxes, they must alone bear all release and distribution costs once the movie is ready.

"For every $1 spent through tax breaks, we spend almost $2 from our own resources in order to distribute the film," added Rodrigo Saturnino Braga, managing director of Sony's Columbia Pictures.

As opposed to complying with the relatively cheap government surcharge, it appears to be paying off for some not to refrain from the alleged high marketing costs.

Columbia Pictures co-produced and distributed Carandiru, which fetched 22 percent of the nearly US$ 47 million that Brazilian movies tallied locally last year. According to Ancine, the total cinema revenue in Brazil in 2003 was $223 million.

Movie theater operators also claim to be strained—in this case by the longstanding "screen quota"—under which each of the country's roughly 1,800 theaters must screen homegrown movies on a minimum number of days per year. The quota increased to 17.5 percent this year from just short of 10 percent in 2003.

"The problem is that we might end up being forced to screen Brazilian movies to empty theaters. And if we don't comply with the rules, we are fined," said Valmir Fernandes, director of Cinemark in Brazil.

Dallas, Texas-based Cinemark landed on Brazilian shores in 1997, and will have invested $100 million in more than 300 theaters by the end of 2004.

"We are reining in investments for 2005 unless we get clearer rules from the government," he said.

Indigenous movies drew 21.5 percent of all Brazilian moviegoers in 2003, more than double what the government had ordered for that year. The South Korean quota currently stands at 40 percent.

Of the 30 Brazilian films launched in 2003, U.S. studios were involved in 14. The same 14 accounted for 98 percent of the amount Brazilian productions made locally last year.

"Our head office plays an important role in deciding what products we are going to get involved with," said Warner Bros.'s José Carlos Oliveira. "The main criterion to pick a project is to assess its commercial appeal."

"We have invested US$ 30 million in the last six years," said Sony's Rodrigo Saturnino Braga. "It is a very good business indeed."

"Most countries feature some kind of film incentive—it just couldn't be different with Brazil," concluded Braga.

Luis Waldmann is a freelance writer based in Rio de Janeiro and can be reached at editor@bnbureau.com.br.