Who should be blamed for collapse of Armenfilm Studio?

The Armenian government has started a process of returning the Armenfilm cinema studio to its property, which was bought by Armenia Studios Company 10 years ago.

The reason for the governmental decision is the violation of the majority of liabilities which are required according to the agreement on privatization by the owners of the studio.

Armenia Studios, which is included in CS MEDIA CITY, belongs to the family of an American billionaire and philanphropist of Armenian origin, the deceased Jerald Gafeschyan, and the family of the former director of the Armenia TV-Company, Bagrat Sarkisyan, who lives in the U.S.

Armenia Studios bought Armenfilm in August 2005 for 350 million drams, i.e. about $725 thousand. According to media, referring to official sources, in fact the film studio is worth much more – about 3 billion drams.

According to the Committee for the Administration of State Property of Armenia, the deal included selling the main assets, buildings and facilities of the film studio with an overall area of 24.2 thousand square meters; and an area of 32.6 ha was rented for 50 years. The new owners of the studio, according to the agreement, had to invest $70 million into development of the studio over 10 years, including money for reconstruction of the film studio, technical renovation, preservation of the cinema fund, digitalization of archive movies, and producing films. It was expected that 4 feature films, 3 animations and 5 short films would be produced by the studio annually.

However, 10 years later it was found out that the owners of the studio didn’t fulfill their liabilities, except for rebranding it into CS Film-Studios and digitalization of several hundred movies. They didn’t invest $70 million in the reconstruction of the studio’s building, construction of new buildings, purchasing modern equipment, and so on. As for film production, only several cheap TV series were shot. Today the director of CS Film-Studios, Khachatur Tsokolokyan, prefers to make no comment on the issue.

The chairman of the Filmmakers Union, Ruben Gevorkyan, says that before the government had decided to nationalize the film studio, representatives of top institutions of power were holding “very friendly” talks with the families of Gafeschyan and Sarkisyan, who stated that they agreed to return the studio to the government.

Today many representatives of the film industry view the deal very negatively and state that there is no need for nationalization of the film studio. Gevorg Gevorgyan, the Head of the National Cinema Center, thinks that the owners of the studio have fulfilled their liabilities by only 10%. According to him, a special commission should define the volume and quality of the work carried out. The head of the International Cinema Festival 'Golden Apricot', film director Harutyun Khachatryan, says that not only should Armenfilm be returned to the state, but also those who are responsible for the collapse of the film studio should be brought to account.

Some filmmakers connect the gaps in the film industry with the fact that Armenfilm has belonged to a private company. However, many famous film studios in the world belong to private companies. The point is in the approaches and programs made by studios’ owners. The logical question is what were approaches of the government which decided to sell the studio to Armenia Studios 10 years ago, when many voices in Armenia begged to postpone privatization of the film studio, considering the sad experience of privatized studios in some CIS countries?

The next step which predetermined the negative consequences of the deal was selling the studio on a competitive basis, when only one competitor participated in the tender (as often happens in Armenia). Not only CS MEDIA CITY wanted to buy Armenfilm 10 years ago, but also other companies which were headed by Armenians from the US. They presented interesting programs for the development of the studio. However, none of these companies and interested persons participated in the tender.

This is not the only dark side of the deal. It was unclear who benefited in the top power structures from the sudden sale of the film studio for such a low price.

Instead of fulfilling the contract liabilities, the owner of Armenfilm actually destroyed it, and the government woke up 10 years later.

Meanwhile, not all countries have their own film studios, but there are 3 of them in Armenia – Armenfilm, the studio which has been existing since 1930, and film studios for TV films and documentaries – Yerevan and Ayk. Do top officials and the investors who turned out to be winners of tenders which sell this or that facility for low prices realize this?

It seems at the end of the studio’s nationalization there will be a problem of investment. We hope that the fate of Armenfilm will be decided in the sphere of development of the studio and serious prospects for its movies, rather than in the sphere of personal interests of some Armenian bureaucrat. There is a good example in neighboring Georgia, where the old film studio has been preserved, while a new one has been constructed. Today the film studios of Georgia attract even foreign directors. There are world-famous film directors in Armenia – Atom Egoyan, Karen Shakhnazarov, and many Armenians among leading American and Russian film producers. It could help Armenia to solve its problems in the cinema sphere.