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The ups and downs of film finance

3 minute read

Shutterstock/RedSharkFilm Finance

It is, to put it mildly, no great secret that the film industry can be a somewhat difficult place to find work, in a similar way that the north face of the Eiger can be a somewhat difficult place for an afternoon stroll

This is at least somewhat true everywhere, because people are preferentially attracted to places where the business is bigger, although it's hard to avoid the fact that those of us who don't live in the United States, India, or a very few other towns around the world are probably at a bit of a disadvantage. Such is the opinion of BECTU, the UK union representing film and TV workers (among other people), who've recently commissioned a report by Creative Screen Associates looking at the potential for a tax-funded UK production fund.

Regulating the film industry

Regulation of the film industry is something that some countries – France, most famously – have done for some time, and the UK used to do. The Eady Levy was in effect from 1957 to 1985, and operated in effect as a government subsidy to film production funded from a tax on box office receipts, although its description as a “levy” as opposed to a tax was specifically intended to avoid international regulatory problems that might have been caused. It is no secret that since the 1960s, when the levy was arguably at its most effective, the amount of British film shown in British cinemas has fallen precipitously and the amount of work that's available has accordingly reduced.

BECTU's solution is a film support tax levied on cinema admission tickets and ploughed back into production work – sound familiar? Naturally, government regulation of commercial enterprise is a touchy topic at the best of times, and while it's instinctive to be supportive of this sort of idea, there are a few problems. First is the thought that this is, in effect, the direct handing-out of tax revenue to commercial entities, with few details given about any restrictions on how the money might be used. The Eady Levy was abandoned over concerns about where the money was going, and this new proposal would risk the same problem. Also, taxing cinema receipts targets a small and ever dwindling revenue stream for feature film production. With blu-ray and DVD ascendant and video-on-demand entering the mainstream almost as I type, scalping the box office comes off as a little misdirected.

Everything to do with distribution

But the biggest issue with this sort of regulation is that it doesn't address the real problem, which is nothing to do with production funding and everything to do with distribution. The film industry is not a unique and special snowflake; it is a business, and funding – loans – are as available to it as they are to anyone else with a realistic business plan and a product to sell. The problem in many markets is that it is very difficult to get distribution for film, and it is difficult to avoid the reality that this is so because of the unstoppable juggernaut of the American industry and its bottomless promotional pockets. I don't want to offend my friends in Los Angeles here, but it is a genuine surprise to many Americans to learn that much more than ninety per cent of all film shown in the UK is of US origin. There is no intrinsic protection from a language barrier, as there is in say India or China.

It's important not to whine about the product. It is a truth, whether we like it or not, that filmmaking is expensive and Hollywood seems willing to fund things adequately. They do it very well. There are several categories of production which are not done better anywhere else, and complaints abound that the French industry produces a lot of bad film to fulfil quotas, in the same way that the UK's Cinematograph Films Act of 1927 provoked a stream of feeble “quota quickies” when it was in effect. Even so, it's difficult to lie down to arguments that  audience choice and the creative freedom of cinema chains (which is an extremely dubious concept in itself) are enough to justify such an overwhelming proportion of material coming from just one country. Americans, who go to the movies much more than Brits in any case, wouldn't tolerate the reverse situation, and outside the offices of Universal's distribution arm they usually don't expect us to like it either.

70% of UK features made with less than £0.5M

So, while it doesn't seem like a good idea for taxpayers to directly fund commercial enterprise, the situation in many countries is now so extreme that some form of regulation is probably reasonable. What's harder to support is the reimposition of – to all purposes - the Eady Levy, which didn't work properly anyway. The 1927 act, also, is a warning sign that quota rules must not be facile or easily played.

As far as crew are concerned, though, what BECTU do get right is that the situation as it exists right now provides no middle ground. 70% of UK features in 2011 were made for less than UK£500,000 (about US$785,000), but the average is even worse – under £200,000 ($315,000). This is micro-budget filmmaking, the realm where legality, insurability and even safety are frequently under question, the results can be extremely variable, and prospects of turning a profit are dicey at best. Without reliable distribution, it's all but impossible for budgets to expand, so producers (and crew) find it extremely difficult to make the leap to the realm of multimillion budgets where things can be done more properly.

Presumably, similar situations exist around the world; I look forward to the comments on this one.

Tags: Business