BBC Films announced today that it will create a corridor for UK producers to access 30% of the actual equity recoupment that BBC Films receives on a project.

The move comes as part of some key changes to the deal terms offered to UK film producers, and has been warmly welcomed by producers body PACT. The idea is to move the film producer further up the profit chain, therefore hopefully helping producers build more sustainable businesses.

The 30% will apply wherever the tax credit has not been treated as producer's equity even though the funding has been used to help finance the film.

The corridor to the producer will be mirrored by a similar corridor to the BBC of the producer's eventual net profits, if the film is successful.

The reasoning behind the change is that when the UK Tax Credit was introduced in 2007, the BBC, the UK Film Council and Film4 signed a joint statement to the effect that, wherever possible, any Tax Credit that was claimed on a film and used to fund the budget would be treated in the finance plan as if it were equity funding provided directly by the UK producer -- i.e. it would give the producer a proportionate share of initial receipts alongside any public funders and other equity financiers. In reality, this has proved hard for the BBC and producers to achieve in all cases.

Claire Evans, the BBC's head of operations and business affairs for fiction, said 'these changes will deliver tangible benefits to UK producers by helping to significantly recalibrate the producer's place in the value chain of UK film production and by unlocking the residual value of the films we have helped to create.'

Jane Tranter, Controller, BBC Fiction, said 'Six months ago we created the
new Films Board at the BBC and announced an increase in funding to $24m (£12m) a year. Together with this announcement today, these measures demonstrate the BBC's commitment to British Film. The development slate is in rude health and we are feeling ambitious and excited for the future.'

Andrea Calderwood, producer of Slate Films (The Last King Of Scotland) and vice chair of Pact, feature film division, said: 'We're delighted that the BBC has shown the way forward with this initiative, which will make a real difference to British film producers. Independent producers put a lot of investment - of commitment as well as money - into their films to make them happen, and this will give them the chance to make a proper return on their investment. Providing a genuine share of revenues to producers of successful films creates a real partnership between the BBC and producers to support a sustainable British film industry, and allows us to work together to build up the quality and range of British films.'

Tessa Ross, controller of film and drama at Film4, said: 'As one of the partners in the joint Film4/UK Film Council/BBC Films/PACT Producer Equity policy initiative announced last year, and as a champion of independent producers in the UK, we welcome this additional measure of support from the BBC to support independent producers and congratulate the BBC on being able to use the benefits of its funding model in this way.'

Ross continued: 'Our own deals with producers are always evolving on a pro-active basis both to support the independent production community and to reflect changes in the market. Our own long-standing producer equity corridor is payable to producers regardless of the position on producer tax credit equity, and we also introduced more than two years ago as part of our WarpX studio a 25% first dollar financiers' gross corridor for producers and talent, and we shall continue to innovate to build new ways to support independent producers in the UK.' (The Film4 corridor is activated whether or not the producer also gets producer equity.'

John Woodward, Chief Executive Officer of the UK Film Council added: 'It's true that despite our best efforts the producer equity initiative which we launched with the BBC and Film4 and PACT last May has not worked in practice and it's good that the production sector has recognised that fact.'

Further changes announced by the BBC and PACT include dropping several of its standard requirements around development, in particular the charge of a 50% premium on development costs incurred to date if the project is turned down by the BBC and picked up by another producer or financier. The requirements for trust accounts at development stage will also be abolished.

Also, the BBC's broadcast licence in the UK will be for a maximum of 15 years. After five years, if the BBC has no further plans to transmit a film, then either the BBC or the producer could sell the UK rights to another party, sharing profits 70/30 if the BBC is unrecouped on the film, or 50/50 if the BBC's equity has been repaid.