Seeing Action; New studios and big money are heating up the film industry competition in Eastern Europe and Russia.

Byline: William Underhill (With Katka Krosnar in Prague and Anna Nemtsova in Moscow)

The gently rolling hills of western Hungary, home to bucolic woodlands and vineyards, do not much resemble the mean streets of Manhattan. But on one peaceful patch, a giant lattice of scaffolding rises up over the landscape, ready to support the facades of a seamy New York street and the swarms of actors who will populate it. A mocked-up neon hotel sign stands nearby. In the outsize hangars a few yards behind, carpenters are busy completing an imposing--but temporary--suite of paneled rooms, which will serve as an auction room. Elsewhere, work is underway on a giant arch intended to serve as a fittingly grand entrance to this new temple to filmmaking: Korda Studios, named after the three great Hungarian cineaste brothers and built on the 34-hectare site of a former Soviet military base just outside Budapest.

The country that heavily stocked the cast of Hollywood's golden era--think Bela Lugosi, Tony Curtis and Zsa Zsa Gabor--is looking to climb back into the industry's spotlight. And even if the first film under production at Korda, Universal Pictures' "Hellboy 2: The Golden Army," isn't quite the ticket, officials hope it will mark the start of a cinematic renaissance. Certainly Sandor Demjan, the millionaire Hungarian developer behind the [euro]91 million venture, is thinking big. Within five years, he reckons that the studio could double in size--and double again within 10 years. "I hope in time we are going to see Oscar-winning films made in Hungary by Hungarians," he says.

Other countries in the region have similar ambitions. Since the collapse of communism, Western moviemakers have been looking East for low-cost locations. Now the competition for their business is really heating up. The acknowledged leader in the region is the Czech Republic, whose world-class studios provide a backdrop for about 30 international films a year. Angelina Jolie and Morgan Freeman were recently in Prague to shoot the thriller "Wanted," as was the cast of "Prince Caspian," the latest of the "Chronicles of Narnia." But neighboring countries are horning in. The hills of Romania doubled for rural North Carolina in the 2003 Oscar-winning film "Cold Mountain," and Bulgaria has turned out a stream of action movies for the Western market, including Brian De Palma's "The Black Dahlia."

Those could be just the prequel. New facilities, money and financial lures are transforming the filmmaking business in Eastern Europe and Russia, threatening Czech dominance and unsettling the major studios of the West. In Bulgaria, work begins shortly on an overhaul of the newly privatized Boyana Film Studios, which is slated to build 13 soundproof stages as well as camera-ready street scenes of England and New York to lure foreign filmmakers. In Russia, work is underway on the new Thema Production studios in St. Petersburg, modeled on the Warner Brothers spread in Los Angeles and supposedly ...