"By the beginning of 2008, the current corporation will separate into Barrandov Film Studio, which will continue to operate the Prague film studios, and the new Barrandov Studio, which will concentrate on digital TV broadcasting," said company spokesman Tomáš ?elazko on Aug. 27, according to the Czech news agency ČTK.

The owner of both new companies will continue to be Moravia Steel (www.moraviasteel.cz), which owns 99% of the shares and is held by Tomáš Chrenek.

Among Barrandov's minority shareholders are Czech-born U.S. director Miloš Forman, Czech director Václav Marhoul, who is currently shooting the big-budget war movie Tobruk in Tunisia, and renowned cameraman Miroslav Ondříček.

Barrandov's digital TV channel obtained a license last spring and is expected to start broadcasting next year.

"On the one hand, the division of Barrandov Studio should help to concentrate on TV broadcasting," said ?elazko. "On the other hand, it will increase the skills, product and facilities of the film studio as well."

The Czech Republic has been losing business from foreign productions to other European countries such as Hungary, Germany and Romania which offer rebates of up to 20% on production costs. Hollywood spending dropped from 5 billion crowns (€179 million) in 2003 to 1.4 billion crowns (€50 million) in 2006 according to figures provided by the Czech Association of Film Producers (www.associaceproducentu.cz).

Nevertheless, Barrandov has announced that 2006 was its most successful and productive year since 1989, with net profit rising 29% to 43.8 million crowns.