Online Extra: Filmmaking's Battle in Bulgaria

Eastern Europe has credibility as a setting, but buying a Sofia film lot has proved a challenging role for U.S. producer David Varod

In the Bulgarian capital of Sofia lies a street that looks for all the world like Los Angeles. If David Varod has his way, soon a big piece of Hollywood will rise there as well.

Varod, an Israeli-born former set designer who runs the Bulgarian operations of Los Angeles-based Nu Image/Millennium Films, is trying to buy the state-owned Boyana film lot and turn it into "the most important studio in Europe." It has already provided the setting for director Brian DePalma's latest thriller.


  Just one problem: The Bulgarian privatization agency is reneging on an agreement earlier this year to sell Boyana to Nu Image. The case, which has already turned into something of a diplomatic cause célèbre, serves as an example of how, despite their progress in becoming more transparent and cleaning up corruption, Bulgaria and other Central European countries are still sometimes perilous places to do business. "It's frustrating," says Varod.

Things looked a lot rosier back in June. Back then, Nu Image outbid several rivals for Boyana, agreeing to pay $7.8 million and invest an additional $19.5 million in improvements, including a sound stage that will look like a New York City street. Varod even promised to produce at least two Bulgarian movies per year to help nurture local filmmakers.

Nonetheless, even though both sides have signed contracts, the deal has become tangled in Bulgarian politics. Nu Image has filed a complaint with state prosecutors, accusing officials of the state privatization agency of improperly holding up the deal.

Good luck: Bulgarian courts are notoriously bad at resolving commercial disputes. They lack the expertise to understand business issues, foreign investors say.


  Varod and Nu Image already have a long track record in Bulgaria. By Varod's count, they've shot 47 films there in the last seven years, taking advantage of the country's skilled film technicians and extremely low costs.

Earlier this year, DePalma shot his noir thriller The Black Dahlia -- starring Hilary Swank and Scarlett Johansson and produced by Nu Image -- on a street constructed to look like 1940s Los Angeles. Next year, Nu Image will produce the Morgan Freeman film The Code in Bulgaria, and discussions are under way about shooting the next Rambo sequel there.

Central and Eastern Europe have a rich filmmaking tradition. The 2003 Civil War drama Cold Mountain was shot in Romania. Prague's Barandov Studios has provided the setting for such big features as Mission Impossible and Roman Polanski's Oliver Twist.


  Low-cost labor accounts for part of the phenomenon, but so does expertise. CSL Hong Kong recently shot a spot for its One2Free mobile-phone service in Prague. The city "is absolutely up there in terms of understanding what filmmakers need," says Richard Pinder, president of Europe, the Middle East, and Africa for ad agency Leo Burnett. Filmmakers also like the region's abundance of sinister-looking castles and rugged, unmanicured countryside.

Varod, who says he turned to producing after growing tired of building beautiful sets for what turned out to be lousy films, remains optimistic he'll eventually own Boyana. He says he has had an encouraging meeting with Bulgarian Prime Minister Sergey Stanishev and other top leaders in the government. And Nu Image has the support of the U.S. government, which is pressuring the Bulgarians to go through with the sale.

"When deals are made, American businesses want to know that the decisions are reached fairly and openly. They need to be sure that when they sign the deal, that is the end, and not the beginning, of negotiations," U.S. Ambassador to Bulgaria John Beyrle told an audience in Sofia on Nov. 28, in an obvious reference to the Boyana dispute.

Despite his problems with the government, Varod remains a big fan of Bulgaria and its well-educated people. "Everyone here has graduated from a university -- even the secretaries," he says. "It's a great country. They're warm people. The top just has to learn to change a little bit."

By Jack Ewing in Sofia

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