The Finance and Production of Independent Film and Television in the UK: a Critical Introduction

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The Finance and Production of Independent Film and Television in the UK: a Critical Introduction The Finance and Production of Independent Film and Television in the UK: A Critical Introduction Vital Statistics General Population: 64.1m Size: 241.9 km sq GDP: £1.9tr (€2.1tr) Film1 Market share of UK independent films in 2015: 10.5% Number of feature films produced: 201 Average visits to cinema per person per year: 2.7 Production spend per year: £1.4m (€1.6) TV2 Audience share of the main publicly-funded PSB (BBC): 72% Production spend by PSBs: £2.5bn (€3.2bn) Production spend by commercial channels (excluding sport): £350m (€387m) Time spent watching television per day: 193 minutes (3hrs 13 minutes) Introduction This chapter provides an overview of independent film and television production in the UK. Despite the unprecedented levels of convergence that characterise the digital era, the UK film and television industries remain distinct for several reasons. The film industry is small and fragmented, divided across the two opposing sources of support on which it depends: large but uncontrollable levels of ‘inward-investment’ – money invested in the UK from overseas – mainly from the US, and low levels of public subsidy. By comparison, the television industry is large and diverse, its relative stability underpinned by a long-standing infrastructure of 1 Sources: BFI 2016: 10; ‘The Box Office 2015’ [market share of UK indie films] ; BFI 2016: 6; ‘Exhibition’ [cinema visits per per person]; BFI 2016: 6; ‘Exhibition’ [average visits per person]; BFI 2016: 3; ‘Screen Sector Production’ [production spend per year]. 2 Sources: Oliver & Ohlbaum 2016: 68 [PSB audience share]; Ofcom 2015a: 3 [PSB production spend]; Ofcom 2015a: 8. Over 80 per cent of commercial channels production spend was on sports programming that required payment to view. When sports was included, the total production spend by commercial channels was £1.6bn [prod. Spend commercial channels not including sport]; Ofcom 2015b: 146 [minutes watching TV]. 1 public service broadcasters (PSBs). The much-noted convergence of film and television in recent years is therefore, in the production sector, a one-way street: film companies are scrambling to make television drama, but few television companies have ambitions to produce feature films. The high levels of public funding in UK television production derives from a policy framework which has historically acknowledged broadcasters’ social and cultural power (Scannel and Cardiff 1991, Ward 2008). Because of this, both public and commercial broadcasters are bound by statute to fulfil certain public service obligations. As the flagship PSB, the BBC is funded by a substantial amount of public money – £3.7bn in 2015/16, of which £1.7bn was spent on television production (BBC 2016: 28-38) – to provide exclusive and wide-ranging public service content across a range of media, including film. However, since the early 1990s broadcasting restrictions have been steadily relaxed, and ownership controls lifted. As a result, the so-called ‘independent’ television production sector is now largely foreign-owned, and is polarised between ‘superindies’ – conglomerates of companies ultimately controlled by European or US-based multinationals – and ‘trueindies’, an ever- decreasing number of smaller, genuinely independent producers. Furthermore, the cornerstones of the PSB system – the BBC and Channel 4 – are currently under serious threat by the current Conservative government, which in the process of commercialising all BBC production, increasing government involvement in its management and debating the wholesale privatisation of Channel 4 (DCMS 2016; Communications Committee 2016). By contrast, film policy has traditionally approached filmmaking as a predominantly commercial endeavour that is, for the most part, unworthy of public subsidy. This general trend continues today, as is evident from the disparity in the levels of public funding afforded to the film and television industries. Compared to the BBC’s £3.7bn, the total public funding for film in 2014/15 was just £414m, of which £317m – or 68 per cent – was spent on production (BFI 2016: 3-7).3 This relatively low level of subsidy for film has played a major role in allowing Hollywood’s domination of the production and distribution sectors of the industry. UK film production is almost entirely dependent on Hollywood finance: in 2015, 83 per cent of the total production spend was associated with big budget, inward investment films such as Rogue One: A Star Wars Story and Pirates of the Caribbean: Dead Men Tell 3 Public Investment in Film in the UK. 2 No Tales (BFI 2016: 3).4 Distribution is also controlled by a handful of foreign multinational media corporations. The top ten distributors operating in the UK enjoy 96 per cent market share, all of which are based in France (StudioCanal), Canada or the US. The other 121 distributors active in the UK and the Republic of Ireland compete over the remaining 4.5 per cent (BFI 2016: 3).5 Foreign media corporations do not have quite as many controlling interests in the UK exhibition sector as they do in distribution – although Odeon, Vue and National Amusements (Showcase and Cinema de Lux) are owned by foreign multinationals. However, in terms of the films on offer, control of distribution effectively extends to exhibition because the UK exhibition sector is also run by a handful of companies whose cinemas overwhelmingly exhibit the mainstream films available from the main distributors. In 2015, for example, the top five cinemas chains took 79 per cent of the gross UK box office, with 69 per cent shared among the top three (BFI 2016: 11).6 Clearly, the overseas domination of the UK film industry is as much about a lack of control over distribution as about issues related to production (Blair and Rainnie 2000: 202). Because of the differences between the film and television industries noted above, I address each industry separately, exploring the principal sources of finance on which they depend and the constellation of production companies they support. In addition to providing an account of contemporary film and television production in the UK, I also discuss why the industries have developed as they have in recent years, as well as some of the consequences of those developments for those who work in them. This chapter draws on a wide range on sources, including academic literature, government reports, legislation, the trade press and a range of statistical information from different bodies. Statistical data on the film and television industries is published regularly in the UK, both by the British Film Institute’s Research and Statistics Unit and by trade publications such as Broadcast and Televisual. These sources are invaluable, but must also be treated with caution. The BFI’s statistics, for example, are skewed by the definition of what counts as a British film. This definition is loose enough to include what are in effect American films because the definition is used to assess films’ eligibility for the tax relief, which was designed to attract inward investment from the US. On the other hand, trade journals are targeted at industry and as such privilege industry perspectives over those of audiences or license-fee 4 Screen Sector Production in 2015 5 Distribution 6 Exhibition 3 payers, while their statistics, though useful, are not comprehensive. Furthermore, industry data – such as records of active production companies – often varies according to source. In what follows, I treat these flawed and sometimes conflicting sources critically, and highlight ambiguity where it exists. Nonetheless, that there is such a wide range of sources on which to draw is ultimately to be welcomed. Industry data is an essential element of evidence-based policymaking, and the UK is ahead of many other countries in terms of the information available on its film and television industries. Section I: Film Film finance: tax relief Independent feature films in the UK are typically financed by a patchwork of public and private sources. Private finance can come from a range of places, such as investment banks or private equity firms, but will also typically includes pre-sales fees from distributors and sales agents. For independent British films, the backing of a public funder is a crucial marker of a project’s viability and provides reassurance to more risk averse sources of private finance. Therefore, getting one of the principal public funders to back a project is usually the first step for independent producers, because private capital is much harder to attract without them. The main providers of public production finance are the BFI, which distributes funding from National Lottery, the film production arms of Channel 4 and the BBC – Film 4 and BBC Films – and a handful of national agencies (discussed below). However, most public money invested in production – more than 60 per cent in 2015/16 (BFI 2016: 3) – derives from the tax relief. As such, these funds are not subject to the decision-making processes of these bodies but are allocated to qualifying productions automatically. Tax relief for film production was first introduced in the UK in 1992 as part of a raft of measures designed to reverse the effects of Margaret Thatcher’s decision to remove all forms of government support for the industry in 1984. Dismantling what she referred to as the ‘paraphernalia of Government intervention’ brought the industry to the brink of collapse: investment in production fell from £270.1 million in 1986 to £49.6 million in 1989, in which just thirty films were made (Hill 1996a: 103-4).7 As well as tax relief, the government also 7 Until 1984 UK film policy was based on three main support mechanisms: a quota, introduced in 1927, to ensure a minimum number of British films were produced and shown; a national film finance bank established 4 established the British Film Commission in 1991 (to attract inward investment to the UK); joined Eurimages, the European fund for production, distribution and exhibition, in 1993;8 and in 1995 established the London Film Commission (to attract inward investment to the capital) and introduced National Lottery funding for film (Caterer 2011).
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