There is hope for beleaguered UK producers as traditional sources of finance dry up, says London-based film lawyer Sam Tatton Brown.
‘To me, thoughts are fun and art is fun. The strength of our society should not be idle entertainments but the joy of pursuing ideas’
Philip Kaufman, director and screenwriter
No-one should ever underestimate the influence of cinema and television in shaping the ideas and values of our nation. From an early age the visual media can mould the way we as individuals and, more importantly, as a society see and feel about ourselves. A country with a healthy, thriving film and television industry is a nation in charge of its own voice, which will resonate further than any politician’s rhetoric ever could. A nation of struggling producers and out-of-work professionals will lose its voice, and be rendered silent by those who shout louder.
The all-consuming hunt
So, what does an independent producer do in the UK to find finance?
“Wish upon a star,” seems to be the answer, as independent producers have less time to dedicate to the joy of pursuing ideas, instead struggling to contend with the all-consuming horror that has become the state of production finance.
Banks providing gap finance have all but disappeared from the UK. Hedge funds’ interest in film finance has largely evaporated. Pre-sales are becoming increasingly difficult to implement as TV sales collapse in the face of reduced advertising revenues, DVD markets crumble and distributors have their credit lines pulled, with the result that some are falling over faster than footballers.
The changes to the tax breaks for UK film, together with worsening exchange rates, left the UK a less attractive co-producing partner.
Co-productions now seem restricted to instances where the script necessitates them (for example, if scenes take place outside the UK).
‘So it might seem there is less money around, but history suggests that as one source of finance disappears, another emerges to take up some of the slack’
All this has left independent producers increasingly dependent on public money (UK Film Council, BBC Films and Film4 and the regional funds such as Welsh IP and Scottish Screen) and sideways loss relief driven equity. The problem is that these are, if anything, likely to dwindle as lottery funds are diverted to the London 2012 Olympics and HM Revenue & Customs looks to further restrict tax-friendly schemes.
And on top of all this, the industry is facing a piracy problem second only to the seas off Somalia.
The trend in the indie sector seems to be fewer films being made than in the heady days of section 48 sale-and-leaseback, when third-party investors could defer their tax liabilities by investing in film.
Films which are commissioned are generally on leaner budgets. What money there is out there is available on much tougher terms.
Signs of hope
It is not immediately obvious where relief for the indie producer will come from next. There seems to be some hope from the other side of the pond:
Spyglass, Legendary, Relativity and Summit appear to be active, along with others such as Aver which have been increasingly involved in the UK. Some distributors in the UK are now showing signs of providing direct production finance.
The last few years have also seen deals from post-production houses become increasingly common - with the likes of Molinare, LipSync and others providing equity investment as a way of ensuring they secure the post work.
The US dollar-sterling exchange rate returning to its historical norm should help to attract US productions back to the UK, and while a tax credit of up to 20% in the UK compares unfavourably against the significantly higher (double, in some cases) breaks available in some US states, one wonders how long the latter will be able to continue at such levels in light of public bailouts of industries beyond the financial sector, such as automobile manufacturing.
So it might seem there is less money around, but history suggests that as one source of finance disappears, another emerges to take up some of the slack. In any event, producers will tell you it has always been difficult to find the last 15% or so of an indie’s budget. That is, after all, what keeps the rest of us in the jobs we do - if it were easy being a producer, we’d all be at it.