“Odesa Film Studio turned from a film industry leader into a loss-making enterprise
5 June 2024 16:30
The world-famous Odesa Film Studio has become unprofitable and is at risk of ceasing to exist due to ineffective management decisions and inaction by shareholders. This is stated in the conclusion of the Southern Office of the State Audit Service of Ukraine based on the results of the audit of the company’s financial activities, "Komersant Ukrainian" reports
It is noted that over the past five years, due to ineffective management actions and decisions, the film studio has received less income or lost this opportunity, and has incurred unnecessary expenses totalling more than UAH 400 million.
In particular, the state registration of property rights to real estate – land plots of Odesa Film Studio located in the elite zone of Odesa on the Black Sea coast with a total area of 6.62 hectares – has not yet been carried out. This delay may lead to the irretrievable loss of these lands, which have an initial value of over UAH 61 million.
In addition, the failure to reassess the value of the property owned by the film studio resulted in an undervaluation of its assets by almost UAH 200 million.
Significant problems of the film studio are related to the income from copyrights for its products. For example, the audit found that the State Film Agency of Ukraine transferred exclusive property copyrights to the private structure Firma Budushchee LLC to use the national cultural heritage and state property of Ukraine – the Film Fund, created by the Odesa Feature Film Studio in the period from 1955 to 1991.
In total, there are 269 films, including well-known films: “D’Artagnan and the Three Musketeers”, “The Adventures of Elektronik”, “The Meeting Place Cannot Be Changed”, “The Children of Captain Grant”, etc. As a result, Odesa Film Studio did not receive additional revenues of almost UAH 13 million.
A separate problem remains the receipt of royalty income, which is significantly lower than the cost of the films produced by the company over the past five years. This situation may cause losses of over UAH 40 million.
It should be noted that the film studio is one of the producers of national films in Ukraine, approved by the Cabinet of Ministers of Ukraine on 26 January 2011. N 48.
At the end of May 2019, Odesa Film Studio celebrated its 100th anniversary. It is one of the oldest film studios in the world and boasts more than 700 films of various genres.
What is known about Odesa Film Studio
the state still controls 50% of the studio’s 1 share, but in June 2018, the Verkhovna Rada voted in favour of a bill in the first reading that would allow the studio to become fully privately owned.
However, not everyone liked this idea. Some film workers protested, and Oleksiy Honcharenko, a member of the Petro Poroshenko Bloc MP, introduced an amendment that would have prohibited privatisation.
In 2019, developer Andriy Vavrysh said that in 2018 he became a co-owner of the Odesa Film Studio, and another co-owner was the former long-time head of Ihor Kolomoisky’s 1 1 Media holding and Servant of the People MP and former head of the Ministry of Culture Oleksandr Tkachenko through the British Cinema Love Ltd.
After his appointment as Minister, Tkachenko said that he had sold his stake in Odesa Film Studio (25%-1 share) to Oleksandr Morozov, who had been the business development director of Vadym Novynskyi’s Smart Holding since 2013 until recently.
In early October 2019, the Verkhovna Rada invalidated the law prohibiting the privatisation of the state-owned stake in the charter capital of Odesa Film Studio CJSC.
In 2020, it was reported that the Odesa Cinematographers’ Guild, an NGO for the protection and realisation of the rights of cinematographers, had appealed to President Volodymyr Zelenskyi to punish those responsible for the seizure and destruction of the Odesa Film Studio. The letter was addressed to the heads of the SBU, the PGO, the NABU, the SAPO and the SBI. The letter describes the process of illegal privatisation of the Odesa Film Studio by MP Oleksandr Tkachenko.
In 2022, the Cabinet of Ministers took a step towards privatising the Odesa Film Studio. The Cabinet of Ministers transferred more than 800 enterprises to the State Property Fund. Among the objects to be transferred to the SPF are coal enterprises, Odesa Film Studio, Artemsil, Horse Breeding of Ukraine and others. The transfer to the management of the State Property Fund precedes the further privatisation of enterprises.
In 2023, during a meeting with members of the public, Minister of Culture and Information Policy Oleksandr Tkachenko stated that Ukraine does not need state film studios, they should be private and attract investment.
