There's no business like show business

Hollywood may be facing hard times as the world's credit crisis comes knocking on its door. Last month Deutsche Bank closed its film finance unit and pulled out of a $450 million (Dh1.65bn) deal to back 30 films with Paramount Pictures.

The shock announcement was the latest in a series of blows for producers seeking loans. But as traditional sources of funds dry up the moguls are turning to new ones – including the UAE and India.

It has been suggested that Paramount's parent, the vast Viacom group, decided not to take up Deutsche's loan after rejecting the increased cost of the financing. The deal would have paid for several major film projects, including Tropic Thunder (currently playing in UAE cinemas) and The Curious Case of Benjamin Button, starring Brad Pitt.

This news came close on the heels of German bank Dresdner's decision to withdraw completely from film financing. And there is speculation that the rest of Wall Street, the primary fund-feeder for major Hollywood studios, is getting antsy.

Media reports suggest Goldman Sachs has already backed away from underwriting $1 billion of film funding for Metro Goldwyn Mayer that would have helped finance the next James Bond film as a co-production with Sony Corp. As the recession in the United States digs deeper holes into its profits, Hollywood is eyeing the global market and the silver lining is now visible in the UAE and India. Major studios are tapping in to the film fund pool and resources available to them here.

Warner Bros Entertainment last year set up a film and video game production firm in conjunction with Aldar Properties and Abu Dhabi Media Company. The partners announced a $500m joint venture fund to develop films in the region.

This was followed by the announcement that an Abu Dhabi Film Commission and Film Fund were being set up to court Hollywood long-term. And if this wasn't incentive enough, Hydra Properties head Dr Sulaiman Al Fahim sweetened the deal by announcing his own film fund.

Meanwhile, India has forged ahead with joint production deals involving UTV Motion Pictures, the country's largest production house, and Fox for the 2006 release Namesake along with this year's Chris Rock-directed I Think I Love My Wife and the M Night Shyamalan-directed The Happening. Future deals with Sony and Disney are in the pipeline. Following in their footsteps is Anil Ambani's Reliance BIG Entertainment which announced at Cannes this year that it would make a major foray into Hollywood and fund production houses run by actors Brad Pitt, Tom Hanks, Nicolas Cage, Jim Carrey and George Clooney.

"Studios are circumspect about the financial situation in the US and are also being hit simultaneously with a market that is tight on funds and over-screened," Siddharth Roy Kapur, CEO of UTV, told Emirates Business. This trend can be largely attributed to the weakening dollar and spiralling fuel prices, which have shot studio overheads through the roof.

"Such is the financial situation that even distributors are now choosy about the films they will associate with," said Kapur. "This in turn has resulted in many studio houses looking elsewhere for funding future projects. The India and the Middle East offer ample funding and a wealth of resources."

India alone produces 1,000-plus films annually. Combine that with its growing multiplex and rural audiences and the market turns into a potential goldmine, churning out billions in revenue every year. The question now is whether the UAE is ready to exploit this golden goose and draw in the big stars and bucks.

Dubai Studio City Executive Director Jamal Al Sharif certainly seems to believe the dawn of a new film industry has arrived.

"Dubai offers a range of benefits for prospective partners including being a safe destination, logistical advantages and a 100 per cent tax-free environment," he told Emirates Business. "The enhanced ease of operation that our location approval services provides has proved popular among the industry, which registered a growth of 123 per cent in film permit applications during 2007."

That equals more than 650 shoots within a year and this figure can only grow according to Sharif, who added: "The Middle East is experiencing a period of significant growth in the electronic media industry.

"The media industry in the region achieved an overall growth rate of 19 per cent for 2007, the third successive year of growth. While our own project, Dubai Studio City, achieved a massive 263 per cent growth in 2007 based on 58 new business partners in 2007 compared to the same figure in 2006."

Cumulative film investment in the UAE already looks set to cross the Dh2bn mark over the next year as local and international production houses continue to pump money into the country's economy. But it's not just the money that is causing excitement but also the filmmaking expertise that comes with it.

The first batch of aspiring actors and filmmakers who recently graduated from the 24-Hrs Film Workshop are set to work on a live Hollywood film set. The workshop has been set up by The Scene Club, an initiative of Dubai International Film Festival and D-Seven Motion Pictures

"It is no secret there have been notable gaps and a lack of resources within the local film industry," acting instructor Bashar Atiyat told Emirates Business. Atiyat is an established Hollywood star and filmmaker from Jordan whose work credentials include sharing screen space with George Clooney in Syriana, which was filmed in the UAE in 2005.

"Early next year, a Hollywood production unit will be filming in Dubai and we will provide our students with hands-on training that can only benefit this country," he added.

The future is certainly looking bright for the country's film industry, but according to Abdallah Bastaki this is only the tip of the iceberg. As the Director of the Emirates Film Competition, an annual contest for UAE national and regional filmmakers, the young Emirati is fighting the good fight for the budding talent that exists in the region.

But he doesn't want them to be overshadowed by the glitz and glamour of renowned studio names.

"It is a two-way street and you simply can't have one without the other," says Bastaki.

"If we focus only on the local industry and failed to court international names then we lose out on contacts and networking with the major players. Similarly, if the big names are all that draw our attention and our investment then even in a 100 years we won't be able to build our own industry."