Posts Tagged 'PACT'

BFI latest: Back to the future

So Ed Vaizey has set out his “exciting new vision for the British Film industry” which was welcomed by BFI Chairman Greg Dyke “as a bold move to create a single body to champion film across the whole of the UK and provide a clear focus internationally.”  Hmm..wasn’t that just what the UKFC was set up to do?  Never mind, the increased Lottery funding for film and the BBC and Channel 4’s increased commitment to British movies are indeed ‘good news stories’ though there is precious little new thinking in anything the Minister has announced (though it was nice to see him ‘encourage’ Sky TV to think about investing in film…again.  Younger readers may be unaware of Sky Pictures,  the Murdoch behemoth’s previous foray into UK production helmed by Elisabeth M. which was not quite an unalloyed success.  Still there will be quite a few former UKFC staffers not transferred to the BFI who will be looking for a job shortly so it might be an opportune time to have another go).  Yes the BFI will assume most of the functions of the UKFC and the English Regional Screen Agencies have circled the wagons and formed themselves into three super-regions with a wider creative industries remit under the banner ‘Creative England’ (now where did they get that idea one wonders?). But that is all about structure not policy or priorities.  The one hint at the latter comes in the Minster’s enthusiastic references to PACTs proposals to amongst other things reform the equity position taken by public film funders and a passing reference to the ‘debate on exhibition and distribution’.

In essence today’s announcement is largely a rearrangement of the deck-chairs although the Lottery consultation Vaizey has announced and the reformation of the BFI’s Management and Board do represent a window of opportunity to influence the direction the ship takes in the future.   Sadly British film policy continues to lurch two steps forward, one step back, as it has done since the 1930s and, notwithstanding Ed Vaizey’s rhetorical attempt to deny, despite all the evidence to the contrary, that the US film industry in the UK and the UK industry itself are in many ways at odds with each other doesn’t bode terribly well for an informed debate about its future course under this Government.

Let’s not pit TV against film

A couple of years back in a contribution to the book Scottish Cinema Now I wrote

Over the past twenty-five years filmmakers in Scotland have benefited from a protected support system which has privileged their claims to both cultural subsidy and direct financial investment in screen content. That situation is changing rapidly, as television, games and new media producers demand equal status in the subsidy game, basing their claims on economic, cultural and democratic grounds.

Today’s Sunday Herald article on television in Scotland highlights the sector’s growing case for greater public investment to underwrite the domestic production sector’s capacity to secure a greater share of network commissions.  The BBC is the key objective, as it rolls out its promise to up Scotland’s share of network spend, but Channel 4 and, to a lesser extent, ITV are additional prizes on the horizon.

The suggestion that film in Scotland has enjoyed a ‘privileged’ status akin (STV’s Alan Clements is quoted as saying) to ‘snobbery’ in the eyes of Creative Scotland’s predecessor Scottish Screen echoes the comments made in evidence to the Scottish Broadcasting Commission in 2007 by PACT CEO John McVay “The obsession with film was a big mistake. “ and well as former Scottish Enterprise CEO Jack Perry who claimed films supported by the Glasgow Film Fund had ‘negative value to the economy’.

Now public investment in talent, skills (both creative and business), development resources, infrastructure and professional support services are all perfectly legitimate claims for any industry – creative or otherwise – to make on the public purse but in a period of swingeing cuts to public sector spending its even more vital that legitimate and important conditions are met by any investment regime.

Firstly public funding mustn’t be used to substitute for or ‘crowd out’ rather than ‘crowd in’ investment that could (and indeed should in the case of public service broadcasters) be made by the central industry players in the market. Where public funds leverage new additional investment either from end-users (broadcasters, distributors etc) or from private finance that’s undoubtedly a good thing. There is certainly a case for additional investment in the development capacity of independent producers but if this simply leads to a transfer of risk e.g. from broadcasters to public funds without a significant net increase in overall investment nothing will really been achieved. 

Secondly we need to be careful that public funds raised and designated for one purpose e.g. Lottery Funding explicitly designated to support ‘The Arts’, amongst other ‘good causes’, are not used to substitute for the lack of appropriate and necessary investment from other branches of Government. 

The perfectly legitimate case for pump-priming investment in television production companies producing revenue generating, employment creating, profit-maximising product in a context where they have been at a historical and structural disadvantage in the market place shouldn’t be confused with mechanisms to address a wider cultural, social and industrial deficit in the production, distribution and appreciation of indigenous screen content.  They are, of course, intimately intertwined but they remain separate policy objectives in need of co-ordinated but nonetheless in some respects distinct forms and criteria of intervention.

Thirdly we need to be wary of what economists call ‘regulatory capture’ – “the process by whereby beneficiaries of government decisions gain control over the relevant decision-making machinery.” – a charge usually leveled at cultural rather than economic players (see David Throsby, 2010. The Economics of Cultural Policy,  Cambridge University Press).  

Consultation, participation in deliberation, expert advice and opinion are all vital to the formation of policy but we always have to ask if any one interest group is exercising undue prominence or obscuring the wider picture and if the evidence, analyses and option appraisals they offer up are as objective and robust as the public have a legitimate right to expect when scarce public funds are at stake. 

As the Sunday Herald article rightly notes, there is in prospect a much more joined up approach to growing the economic (and indeed the cultural and democratic) contribution of television in Scotland. Likewise the television production sector has an absolutely legitimate place in the debate over public intervention in the screen sector, but so do filmmakers, the audience(s) and a host of interests from Gaelic speakers to community cinemas.  That said we need  to avoid setting television (or games or any other screen based creative content) against cinema and confusing the criteria by which each has a claim on public support. 

As I suggested in that Scottish Cinema Now essay, some in the film community were a little too eager in the 1990s to obscure the cultural case for film in order to make somewhat inflated claims for the (currently achievable) economic impact of indigenous production.  By the same token those now pressing, quite understandably, for a more serious approach to growing the broadcast sector shouldn’t see film as a competitor for attention and funds.  In reality television drama for example (a must for the long term health of television in Scotland) and film-making for the cinema are mutually inter-dependent.  Amongst their shared interests both rely on the same talent base from writers and directors (look at Paul McQuigan) to post-production SFX specialists and commissioners (think Andrea Calderwood) and there are important synergies to be found at a business level as a recent report on the corporate finance of SMEs in the UK film industry for the UK Film Council found.

When it comes to film and television, as in so many other walks of life, united we stand, divided we fall.

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.

Boost to UK film producers may spell bad news for Scots

A recent proposal by PACT, the Producers Association for Cinema and Television, to strengthen UK film producer’s businesses by allowing them to retain 100% of the revenue earned on public investment in their films has, on the face of it, much to recommend it.  Like the ‘automatic’ schemes in France and other countries it would give producers a greater equity stake in their productions and, for those (few) that are successful, generate more funds to reinvest in future projects.  On the other hand the film funds, like the UK Film Council and Scottish Screen, would lose out as they would no longer see a financial return on successful investments with which to top up their (declining) Lottery investment pots.

But there is a hidden and rather more worrying aspect to this proposal which would directly impact on Scottish producers.  Of the £37million of Lottery funds which Scottish Screen disbursed between 2002 and the end of 2009, over a quarter (£9.5m) went to London based companies. (This compares to just over £1m of UK Film Council feature film investment that went to Scottish based companies in the same period). Should PACT’s policy be taken up in Scotland then its entirely possible that profits from investment by (what will soon be) Creative Scotland in projects produced by companies in London or elsewhere in England will then be recycled into projects with no direct benefit to Scottish film industry or culture.  The present system, whatever its other failings, at least ensures that the admittedly meagre returns (approx 5%) are retained for investment in either Scottish based projects or Scottish based companies.

Let us hope that this downside features in Scottish Screen/Creative Scotland’s discussions with PACT.


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