Although the financial crisis worsened in Europe this year, a bright spot emerging is the region’s film financing. I’m told that European investors who have become increasingly skittish about putting money into the markets are more seriously eyeing film investment as a safer bet. At the same time, producers and studios want to let outsiders in to mitigate risk. In recent high-profile deals, France’s StudioCanal which is riding high with Tinker Tailor Soldier Spy among other projects has signed a $200 million slate financing pact with London-based private fund Anton Capital Entertanment. But on a down note for France, the end of the year has been marked by upset in the post-production sector with the financial turmoil at Tarak Ben Ammar’s Quinta Industries and the future of dozens of films in jeopardy. The next year will see much hand-wringing over a sector that has moved to digital at a breakneck – some would say reckless – pace. Buyers were in fine fettle at the Cannes Film Festival with many deals concluded and a sense that smart money and realistic prices have returned. I’d be remiss if I didn’t mention Cannes’ persona non grata Lars von Trier and his controversial “Nazi” remarks. On the opposite end of the spectrum, Cannes this year saw the debut of such award darlings as The Artist and Palme d’Or winner Terrence Malick’s The Tree Of Life. Cannes programmer Thierry Frémaux in 2012 faces the daunting challenge of coming up with a better selection than his 2011 vintage which found favor with the typically harsh Riviera audience.

In Germany in December, the oft-morphing Senator entered a long-term strategic partnership with Ryan Kavanaugh’s Relativity which also took a significant stake in the producer-distributor. In other German news, there were troubles at Degeto, the film acquisition arm of broadcaster ARD whose chief, Hans-Wolfgang Jurgan, was let go in November following revelations that the company had overspent its budget. German independent producers were particularly anguished given Degeto’s position as a prime co-production partner. The situation remains somewhat tenuous and will likely be a hot topic at the Berlin Film Fest in February.

Meanwhile, over in Hungary, Hollywood producer Andy Vajna rode to the rescue earlier this year by winning approval for a plan to overhaul the country’s film funding system.

Italy went through its own shake-up in November when media baron Silvio Berlusconi resigned as Prime Minister – a move welcomed by critics who have long held that politics and his media empire were strange bedfellows. In late December, Alberto Barbera was named to succeed Marco Mueller as head of the Venice Film Festival leading to speculation about where Mueller will head next.

In Holland ailing Dutch reality giant Endemol was reportedly given an extension after it failed to reach a deal to restructure its $3.7 billion debt. Time Warner in December made an unsolicited bid for the company of $1.4 billion in cash.

In crisis-riddled Spain, broadcasters Antena 3 and LaSexta agreed to a merger near the end of the year, but channels are investing less in local film production in general leading to fewer local films being produced. A new subsidy system is to be announced at the beginning of the year with the industry concerned over an expected drop in the funding envelope and more rigorous requirements for producers.

The biggest story in the UK this year was the phone hacking scandal that rocked Rupert Murdoch’s News Of The World. The salacious dealings led not only to the paper’s closure but also to the sinking of a $14 billion deal for Murdoch’s News Corp to acquire the 61% of UK broadcaster BSkyB it does not already own. A weary Murdoch appeared before a parliamentary panel this July with his embattled son James, but he would have had more than egg on his face if wife Wendi Deng hadn’t been there to fend off a shaving-cream pie attack. In other News Corp news, the conglomerate acquired scion Elisabeth Murdoch’s TV production company Shine for £415 million in February. Murdoch senior caught flack for that too. He may ultimately testify before the already long-drawn out Leveson Inquiry into UK media ethics when it resumes next year. Riots in London in August had a particular impact on Sony which suffered big losses in a north London warehouse fire. On the VOD front, Netflix and Amazon have been waging a war of one-upmanship this year. Amazon completed its acquisition of the UK’s Netflix-similar LoveFilm in January and has been signing deals with the likes of Sony TV, Warner Bros, StudioCanal and Disney. Netflix, which is planning to launch in the UK and Ireland in early 2012 has entered arrangements with such players as MGM, Lionsgate and BBC Worldwide. However, Netflix is reportedly facing an uphill battle in securing rights from important local players who already have their own streaming services. These include ITV which may be  unlikely to include the most recent episodes of Julian Fellowes-created hit Downton Abbey in any content deal the two entities may strike especially given that the episodes are already readily available via several services that don’t require extra subscription fees. Downton Abbey begins shooting its third season in February, but demonstrating the power of the UK’s traditional sudsers, even a spectacular two-hour Christmas special couldn’t beat Eastenders and Coronation Street in the ratings. At the box office, the UK saw the end of its locally-shot cash cow Harry Potter franchise while some solace was to be found in The Inbetweeners Movie, a homegrown pic that took more than $70 million. Still, the box office will be tested this year as the London Olympics, the Queen’s Diamond Jubilee, and the European Football Championships are all expected to be a drag on movie ticket sales in 2012.

India‘s Reliance, which rode into Hollywood a few years ago to back DreamWorks as well as a host of star shingles, confirmed in May that it would fund David Linde’s production and finance company Lava Bear. Back at home, mogul Anil Ambani’s Reliance MediaWorks, which includes movie theaters and TV production among its businesses, announced plans to raise $111 million in a rights equity issue. The group also launched phase 1 of its RMW studios, a Hollywood-compliant facility in Mumbai that became partly operational in January. Ambani’s brother Mukesh is also reportedly looking to get into the entertainment biz. It’s understood the Reliance Industries chairman, who is India’s wealthiest man, is in talks to acquire a minority stake in TV and Internet group Network18. In other news, Tata Elxsi, the technology arm of Indian conglomerate Tata, recently formed a joint-venture with LA-based A Squared Entertainment to create, develop and distribute original animated entertainment and digital gaming. Meanwhile, India has welcomed such high-profile shoots as the latest Mission: Impossible – Ghost Protocol and The Dark Knight Rises while local indies like Delhi Belly have been shaking up the box office. The prolific industry is expected to continue to grow with smaller films having a shot at finding audiences, although export remains a challenge for the future.

Japan suffered a catastrophic earthquake in March that set off a horrific tsunami leaving more than 15,000 dead in its wake. A handful of films,
including Clint Eastwood’s Hereafter – which depicted similar events - were pulled from cinemas amid concerns of their inappropriateness. The events also triggered a fear of tape and digital memory shortages in Hollywood especially as Sony was led to stop production at several of its factories. As a result of the devastation and a hacking scandal that saw over 100 million PlayStation accounts compromised, Sony said it expected to post a $1.2 billion net loss for the fiscal year ending March 2012. Around the same time as the disaster, Kazuo Hirai saw his duties expanded to oversee all of Sony’s consumer electronics businesses along with other functions in what is believed to be an important step on his way to succeeding CEO Howard Stringer. Japan’s box office suffered heavily, although a well-attended Tokyo International Film Festival this fall provided some solace as the industry continues to recover.

China has been a hot bed of activity with A-list stars and U.S. production companies getting in on the action. Christian Bale this year famously starred in Chinese master Zhang Yimou’s The Flowers Of War while Keanu Reeves is directing his feature debut, Man Of Tai Chi, with coin from Village Roadshow Asia and China Film Group. Also in 2011, Thomas Tull formed Legendary East in Hong Kong to produce one to two event-style films for worldwide audiences per year and in August it was announced that Paul Y Engineering Group would invest in the venture taking a $220.5 million 50% stake. On December 30th, however, it emerged that PYE was unable to raise the necessary funds in a share sale and put its investment on hold. PYE said options to modify the deal structure could be discussed in 2012 while Legendary East said a placing exercise was being targeted for a relaunch next year. Also in August, Relativity along with Huaxia Film Distribution and Beijing’s SkyLand Film-Television Culture Development Ltd created a strategic partnership to form China/US distribution entity Sky Land Entertainment. The first film under the deal, Jon Lucas and Scott Moore’s 21 And Over, caught flack in October for filming in a province of China where a blind activist has been held under brutal house arrest. In December Celestial Pictures Limited, Saban Capital Group and Lionsgate created Celestial Tiger Entertainment, an independent Asian media company focused on branded pay TV channels, content creation and distribution across Asia. DreamWorks Animation was also reportedly eyeing a China outpost with plans to build a studio in Shanghai.

In Indonesia, HBO is making its first local film, the English-language action-horror pic Dead Mine. But it was a tricky spot this year for moviegoing as a standoff over the country’s tax on imported films led to the Hollywood majors cutting off distribution in the country. A 5-month drought during which the country was deprived of Hollywood films sent audiences in search of alternatives, including local productions, but box office reportedly fell off by as much as 70% in the first half of the year. The standoff ended with the release of Harry Potter And The Deathly Hallows Part 2 this summer. One Indonesian film of note that emerged on the global stage this year was from Welsh-born Gareth Evans. The Raid, made in association with America’s XYZ Films, won the Midnight Madness audience award at this year’s Toronto Film Festival. Screen Gems is planning the remake.

In Australia this year, Lionsgate scaled back in the territory and a new Mad Max movie halted due to heavy rains. (That film will now be shifting production to Namibia.) Director George Miller previously made Happy Feet 2 in Oz where the digital production company that worked on it recently suffered heavy layoffs. Also suffering setbacks from the rain was Baz Luhrmann’s take on F Scott Fitzgerald’s The Great Gatsby starring Leonardo DiCaprio, Tobey Maguire and Carey Mulligan. Bad luck forced the production to break a day early for the holidays, however, when Luhrmann was conked on the head by a crane. Production is to recommence in the New Year.

After Warner Bros threatened not to film The Hobbit in New Zealand because of labor guild action, Peter Jackson has been shooting this year in his native land. The film’s trailer materialized just this week. And a great 5th installment of the film’s production blog appeared on Facebook with Frodo Baggins himself, the now 30-year-old Elijah Wood, waxing nostalgic. It’s safe to say this return to the Shire is much anticipated not to mention a boost to local box office.

The Arab Spring – aka the revolution that Twitter built – made headlines around the world this year. But Iran made headlines in the film world for the fate of jailed filmmaker Jafar Panahi. Movie biz bigwigs rallied round him. The White Balloon director was convicted in 2010 over a planned documentary and an appeals court in October this year upheld his 6-year jail sentence and 20-year ban on filmmaking and travel. This spurred the U.S. guilds and Academy Of Motion Picture Arts & Sciences to come out in support.

In other unfortunate news, Oscar nominated Restrepo director Tim Hetherington was killed in Libya in April while covering the conflict there. Also in Libya, the ouster and ultimate death of Libyan leader Muammar el-Qaddafi surely meant the definitive end to his son Saadi’s Hollywood dreams. Saadi made a splashy entrance to Hollywood in 2009, backing production company Natural Selection. With the uprisings this year, the scion fled to Niger.

The killing of Osama Bin Laden in Pakistan has spurred a slew of films on the subject. The highest profile project, Kathryn Bigelow’s and Mark Boal’s hunt for Bin Laden picture, was already being developed before the terrorist was assassinated by Navy SEAL Team 6.

The increasingly splashy Dubai Film Festival recently welcomed the premiere of Paramount’s Mission: Impossible – Ghost Protocol in which the Emirate is heavily featured. The festival also supported some 20 films from the Arab world with post-production funding in 2011.

In war-savaged Iraq, the Independent Film Centre this month launched an advanced workshop in 35mm filmmaking for about 20 students.

In Egypt, award-winning Egyptian-American documentary filmmaker Jehane Noujaim was jailed in Cairo but later released when the Committee To Protect journalists successfully appealed to authorities.

Just ahead of the holidays it emerged that National Geographic Films had closed its LA office and at the same time a new partnership between Hyde Park/ImageNation and National Geographic was announced. The venture will produce National Geographic themed entertainment projects and is expected to be partly funded by the $100 million film fund National Geographic had going with Hyde Park partner Imagenation Abu Dhabi.

On the Saudi Arabia front, Prince Alwaleed Bin Talal, who is News Corp’s second biggest shareholder, invested $300 million in Twitter in December. It was later announced that he would headquarter his Alarab news channel and Rotana Media Group in Bahrain.  News Corp last year reached a deal for a 9.09% stake in Rotana. Meanwhile, Arabic news network Al Jazeera has been locked in a full-frontal competition with Canal Plus in France for soccer rights, despite not yet securing a channel in the country.

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