Difficulties in the film industry: "The cost trend is alarming"

According to information from the industry, producers have to cope with rising energy costs, increased personnel expenses and additional expenses for green production.

What effects does this have on the economic situation of the production companies?

The current cost development in the production industry in Germany is alarming.

Economic pressure has increased enormously in recent months due to high energy prices, which in turn directly or indirectly increase production costs.

There are additional production-specific costs: the salaries for crew members have increased significantly in recent years, and there are also noticeable additional costs from common remuneration rules, for example for screenwriters.

When implementing sustainability standards, which are becoming increasingly mandatory, we anticipate additional costs of up to five percent.

The shortage of skilled workers is exacerbating the situation, and the occupational safety measures that are still necessary to prevent corona cases on the set are putting a strain on the budget.

According to the current annual report, the increased sales of Constantin-Film 2021 resulted primarily from the increased sales of commissioned productions.

So the producers seem to be benefiting from the boom in orders from the TV stations?

Moving images are booming, as films and series made in Germany continue to be popular.

The cinema, however, naturally had a very difficult time during the pandemic. That has to be made up for first.

But I don't see a boom in orders, I see stable to declining broadcaster budgets with additional investments by streamers at the same time.

To what extent are the clients, i.e. the TV broadcasters and the film sponsors, willing to assume part of the additional costs by increasing the budget?

The current experience of many producers is that they have to shoulder the lion's share of these increases themselves.

Clients are not increasing their program spend to the extent that costs are currently increasing.

An example of this are cancellation and rescheduling costs in the event that filming on a commissioned production has to be interrupted due to Covid-19.

If there is no other insurance, the TV stations, for example, currently bear a maximum of half of these additional costs – often up to six figures.

What possibilities do you see to compensate for the growing costs and lower revenues for producers?

First, the producers try to save energy and produce greener.

Depending on the location, this is not always possible.

If only because of the competition, it is not possible to save on quality, nor on labor costs.

So the pressure to save rests solely with the producers - they have to compensate for the costs out of their own pockets.

What role does a possible increase in the license fee play in your considerations in order to compensate for the increased costs, which the producers seem to be discussing?

I cannot confirm that such discussions exist.

However, we assume that the KEF registrations of the public broadcasters will also contain assumptions about inflation rates for program costs.

Checking the expenses of the transmitter is then the sole task of the KEF.

It is important to us that the unusually high cost increases are taken into account;

here, recording the cost increases separately could help to better understand the broadcasters' programming expenses for commissioned productions.