Creating the most potent UK-based, studio-backed outfit in London after Working Title Films, Fox Searchlight Pictures and UK National Lottery franchise DNA Films have finally unveiled their $50m joint venture to make British films over the next five years.
The deal marks an ambitious bid to turn DNA into a longterm business: the joint venture will be owned 50/50 by Fox and its UK management including Andrew Macdonald and Allon Reich. Ownership of films will be split 50-50. Fox will take a distribution fee but, instead of recouping its investment in the negative, will allow all revenues to go back to DNA, half of which it will own.
"It replicates the Village Roadshow/New Regency relationship, although obviously on a hundredth of the scale," Macdonald told ScreenDaily.com. "We want to grow a substantial company and use the revenues to make more films."
Greenlighting decisions will be shared jointly by Macdonald and Fox Searchlight president Peter Rice, who will be a director of the company. DNA has the sole right to extend the partnership after five years.
The Film Council, which administers lottery cash for film and had to approve the deal, has a recoupment position but it is anticipated that it will split completely from the venture after five years, effectively being bought out by the partners.
"Thanks to the strategic foresight of John Woodward and his team at the UK Film Council, we have married a formidable and well financed production company with a global distribution network," said Rice.
DNA, which was awarded some £30m in lottery cash when it was founded by Macdonald and Duncan Kenworthy in 1997, previously had a partnership with Universal. But that relationship has been in question ever since Fox boarded Danny Boyle's $9m 28 Days Later. The hit zombie horror's success - including an ongoing US gross of $45m - was one factor in cementing an on-off deal that was first reported by ScreenDaily.com almost a year ago to the day.
"One half of why it took so long was the way the Film Council works and how its board meets," said Macdonald. "It takes a long time for the board to meet and decide. The deal was also so different from what Fox has done before."
For the Film Council, a concern was not being seen to use public funds to support a US studio. DNA's $25m investment in the joint venture represents the remainder of its original lottery allocation - an allocation which the Film Council could have recalled now that the franchise's original six year life-span is up.
"I see it as Fox putting $25m into the UK film business," said Macdonald. "The franchise was launched to create a sustainable film business and that is impossible without access to worldwide distribution and those revenues."
John Woodward, chief executive of the UK Film Council, added that the joint venture provided a long-term source of finance for UK films along with distribution access. "This new partnership will make an important contribution to creating a truly sustainable UK film industry," he said. "As well as enabling the production and distribution of a series of new UK films, the agreement will also provide a return for the UK Film Council on the lottery funds being invested, which will help to fund the development of the film industry in the UK."
Kenworthy, who has spent the last 18 months producing Richard Curtis' directorial debut Love Actually, will step down from his co-chairman role at DNA but continue as a non-executive director.
"Global distribution and guaranteed financing for a slate of films are the twin keys to the growth of the British film industry," he said. "By forging this important long-term partnership with Fox Searchlight, Andrew has succeeded in finally turning DNA Films into an important tentpole for the independent British film sector."