Those PACT proposals – good for whose business?

Yesterday’s ‘Something for Nothing’ Edinburgh International Film Festival discussion on PACT’s proposal for a new deal between public funders and film producers proved to be quite a lively affair.  Having raised the specific issue of how the proposals might impact on Scottish production (see earlier post) I was invited to be on the panel and contribute to the wider discussion.  Having given them a bit more thought it seems to me that PACT needs to address, and the public agencies need to consider carefully, some key questions and consider a number of safeguards should they take them forward.  There are some other issues, principally of methodology and the evidence required to back up the assertions around cause and effect, much of which could be addressed through some econometric modelling of the proposals, but we’ll leave those for now.  But for new readers let’s briefly recap the key ‘problem and solution’ posed:

a. In essence PACT’s view (and few could disagree with this first point) is that UK film businesses are underperforming – they are under capitalised, too few have any scale and even of those that do there are major obstacles to sustaining their businesses.  PACT also holds that this is not because of any deficiency in the product:  “UK Independent producers consistently make films that work with audiences and critics alike, yet the current business model prevents them being able to benefit.” 

b. PACT believes that a major contributory factor to the above state of affairs is that public film financiers such as the UK film council, Scottish Screen and the regional screen agencies treat their investment in film production as equity and expect to recoup their investment before the producer (albeit many now allow a recoupment corridor e.g. the UKFC’s recently agreed 30%).

c. PACT proposes, therefore, that henceforth public funding should be treated as the producer’s equity and that this would produce the following benefits:

1. producer’s would have increased leverage when seeking private sector finance as they would be seen as investing their own equity

2. production companies profitability would improve as a consequence of being able to secure more finance, on more advantageous terms, added to the direct benefit of being able to reinvest the recoupment revenue stream (of what would now be their equity) ensuring better financed development, less ‘rush to go into production’, the prospect of increased budgets and following those better results in theatrical and other markets.  In short a virtuous circle in which everyone would benefit because:

3. More succesful film companies would become progressively less reliant on public funding as they would increasingly be able to source finance elsewhere and this would in turn allow smaller/newer producers to get an increased share of the public funds thus ensuring that their (other principal) purpose – ensuring a culturally diverse, risk-friendly film financing environment – is not just maintained but enhanced, thus ensuring better public value all round.

It all sounds terribly good but there are one or two catches.  One of them I’ve already raised, the problem of national/regional funders seeing the recoupment stream (small as it is) leak out of their nation/region .  Though its worth noting here as a reminder that out of the £5m in Lottery awards Scottish Screen (soon to be Creative Scotland) made in 2007, 55% (£1.9m) went to London-based companies and while they might well, under the suggested new rules, be inclined to reinvest revenues returned by virtue of their (publicly donated) equity in Scottish talent/projects, without some safeguards in place there is no guarantee that would happen.

An even bigger issue, however, is the credibility of the idea that over time the call on public funds from the growing, more profitable, production companies would decrease.  At present, taking PACTs own argument at face value, there is a significant disincentive to better-capitalised, more market friendly companies seeking UKFC or Scottish Screen investment precisely because it is likely to dilute their equity position and reduce overall revenues.  Take away that barrier and it is difficult to see why any rational film business wouldn’t try to get as much public money into their projects as possible since in effect it would become a grant and increase their equity to boot.

On this point several panelists suggested that since the public bodies have the right to choose which projects to invest in they could choose not to invest in projects whose producers might only be trying to ‘milk’ the system.  However to do so there would need to be a criterion for determining which projects were ‘genuine’ and which were trying it on and that is by no means simple.  Almost any producer worth their salt could make a pretty convincing argument on the basis of employment, multiplier effects, sustaining UK production infrastructure etc. plus a modicum of ‘cultural relevance’ to argue their case to access the public cash. 

While these are legitimate arguments for certain kinds of public intervention, there remains a very real risk that a significant amount of public funding could end up substituting for, rather than additional to, market investment and thus not in fact delivering any of the public value it is intended to.

 There are, then, quite a few issues that PACT and others need to address and on a positive note the indications from yesterday’s event are that at least some of them will be taken forward.  In reality I suspect PACT don’t expect to get a complete transfer of equity from the public funders and the report is the first salvo in a negotiating strategy which is looking to gain at least 50% of revenues.  Unlike the effective and well-deserved reversion of TV rights from broadcasters (who unlike the UKFC or Scottish Screen etc. are end-users and get their/our public value from the licence to distribute ) to indies, the position of public film funds in the current climate makes any dimunition of their meagre resources a tough sell.

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1 Response to “Those PACT proposals – good for whose business?”


  1. 1 Philip Shaw June 24, 2010 at 8:24 am

    Since I am currently working on getting my first feature into production I have to say its very vexing. I have approached a number of the said bodies to be told its too commercial!! If we make commercial fims then cash moves round and the more ‘Arthouse’ films will get made as there will be more cash sloshing around. It seems as soon as someone is very successful the disapear to the States! and why not we seem to have such a small mentality. In the recent report by the UK Film council and others, (independantly) it demonstarated for every £1 spent £13 was returned to the economy! So surley common sense should prevail, increase the support and get bigger films made ad get greater return and more money back into the economy. History shows us that during any recession Entertainment and Food are the two things that do well! Lets cheer the country up and get cash moving. We produce some of the BEST creatives in the world we need o support them, and in doing so make money for the economy. Yes there will alwyas be a few sharks using the system but if the system is policed properly then they can be sifted out.
    regards
    P Shaw
    Director/Writer
    DGGB


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