Ending months of speculation, the UK government's film super body The Film Council is set to absorb pivotal funding outfit British Screen Finance.
British Screen chief Simon Perry confirmed that the operation's shareholders - United Artists Screen Entertainment, Channel 4 and Granada - have agreed to hand over the operation to the council. British Screen's other shareholder, Rank, is to withdraw as part of its planned reduction in film activities.
The hand-over is still subject to approval at a Film Council board meeting on Jan 25. But, under council ownership, British Screen is expected to form the backbone of a division responsible for all state-backed support for production and development.
No money is understood to have exchanged hands, but the shareholders never made a profit from British Screen. British Screen also faced the possibility of losing public funding if it stayed outside the council, which is charged with hammering out a policy for overseeing all state-backed support for the film industry.
British Screen, which has credits including Wilde, Before The Rain and Orlando, received £4m a year for its main fund and the European Co-production Fund. The Film Council has agreed to employ its 14 staff.
"We have a memorandum of understanding," Perry said. He added: "For the sake of the staff, [the shareholders] did not want to risk being cut off from public money."
British Screen is expected to be funded until September, when it is to move into the council. The council is also expected to take over British Screen's library, which generates a six figure annual revenue.
The Film Council's production and development division is to combine UK funding bodies including lottery administrator the Arts Council of England (ACE) and cultural funding operation BFI Production. It is expected to sit alongside two other divisions - a cultural and education wing built around film and TV body the British Film Institute and an inward investment arm created around the British Film Commission.
British Screen managing director Cameron McCracken - who could not be reached - is seen as front-runner to manage the production and development wing. Perry could reportedly head a European strategy and fund at the council, providing he has a certain level of autonomy.
The council is to consult the industry in April on its overall strategy. Critics of the move to integrate British Screen are expected to see it as an example of power concentrating in the hands of Film Council chiefs Alan Parker, Stewart Till and John Woodward. It is also a U-turn for culture secretary Chris Smith, who previously stated that British Screen would retain its private status.
However, supporters argue that the move fulfils the council's mandate to streamline the funding system. One pointed out how three separate funding bodies - BFI Production, the Arts Council of England and British Screen - backed Beautiful People. Supporters of the council also argue that its power is spread over a formidable board that includes producers Tim Bevan and Duncan Kenworthy; HAL Films' Colin Leventhal; lottery film panel chief Charles Denton; and the Film Consortium's Chris Auty.
Other appointments this week at the council or affiliated bodies saw Mike Kelly, British Screen's finance director, appointed as head of finance at the council, and ACE lottery accountant Simon Bartlett appointed management accountant for the council. Additionally, the BFI enlarged head of education Richard Collins' role to include deputy director.