Fox Searchlight is in talks to form a joint venture with DNA, the UK National Lottery franchise of leading British producer Andrew Macdonald and Duncan Kenworthy.
The offshoot of Twentieth Century Fox is likely to take over from DNA's current backer Universal Studios, although the franchise has been talking to other potential partners including Sony Pictures Entertainment.
A Fox-DNA joint venture is expected to have access to around $23.4m (£15m) in lottery cash, which DNA has still not spent from its original franchise of around $44m (£30m). That lottery cash would remain with DNA after its six-year franchise expires next year, subject to approval from lottery administrator the Film Council.
DNA and Fox Searchlight recently teamed on 28 Days Later, a sci-fi horror directed by Macdonald's regular collaborator Danny Boyle. Outside DNA, Macdonald and Boyle made The Beach and A Life Less Ordinary for Fox.
Whichever partner DNA ends up with, the franchise is also expected to access debt funding, as well as backing from the UK's booming tax financing sector. Tax-financing companies are now offering to provide 25-50% of film budgets.
A deal with a US studio would be a massive boost for DNA, which like fellow franchises Pathe Pictures and The Film Consortium was originally set up as a bid to create a permanent UK film company. The Film Council has not been expected to renew any of the three franchises, but it is thought to be interested in allowing them to continue if they bring outside investment into the UK film sector. While the council may not grant any further lottery funds for the franchises, it is believed to be more willing to allow at least one of them to keep the funds which it has not spent from its original franchise beyond its six-year life-span.
Twentieth Century Fox has a presence in London through a deal with Michael Kuhn, former head of PolyGram Filmed Entertainment, to make large-scale European films.