SUBMISSION 31
Memorandum submitted by Helkon SK Film
Distribution Ltd
IS THERE A BRITISH FILM INDUSTRY?
Q. What direct and indirect contribution does
the film industry make to the UK economy?
The film industry in the UK makes a number of
direct and indirect contributions to the UK economy.
The production of each film employs in excess
of 75 crew for a period of three to six months. A film with an
average budget of £4 million would also spend approximately
30% of its budget with Service Company's such as couriers, catering,
film laboratories and post production houses etc.
Permanent organisations such as film distributors
and sales agents employ a large number of staff from marketing
to administration and spend fixed costs of millions of pounds
per annum on its services.
[Helkon SK alone spends over £10 million
on advertising, services and overheads on an annual basis].
Q. Is it important to seek to preserve a capacity
to make British films about Britain in the UK?
There are two points here, cultural and economic,
both of which require lengthy responses which go beyond the scope
of this document.
Simplistically from an economic point of view
the industry provides jobs and attracts international capital
flows into the UK.
Perhaps more importantly from a cultural point
of view one should not dismiss the need to have British films
with British characters set in British situations. Film is the
worlds, (and the British), most powerful and consumed form of
entertainment and has unquestionably a strong social impact. It
is therefore important that the British culture and British values
are represented in the films that British people and the world
watch.
Q. What is the relationship between the film
industry and the rest of the creative industries including the
broadcasters?
As far as I am aware the relationship between
the film industry and other creative industries is good. I would
suggest however that the relationship between British industry
film-makers and broadcasters is exceedingly poor.
Q. What should the relationship be between
British broadcasters and the film industry?
The relationship between the broadcaster and
the film industry should typify a buyer-seller (film industry)
relationship. The buyer should through pricing and direct relationships
should influence the type of films made and use their films to
attract audiences and advertisers. Broadcasters, especially public
Service Broadcasters, should through pricing and buying habits
encourage and support British film.
In general however, this does not occur and
the amount of screen time and prices paid for British films is
extremely low when compared to American films. This is especially
so in relation to Pay-TV (BSkyB).
In the past TV stations, and again especially
Sky, have opted instead of purchasing British films to attempt
to make their own. This has usually been their response to criticisms
that they don't support British film. Such activity does not help
build a sustainable British film industry. Moreover, that those
broadcasters that went in this direction have had nothing but
failure (Film Four, Sky Productions and Granada Film) and have
highlighted that broadcasters are not the best equipped to drive
forward the British film industry or even to make good films that
people want to see.
Q. Does the film industry merit support from
Government, if so, how can existing support be improved?
Yes, The film industry on both cultural and
economic grounds most absolutely deserves support form the Government.
Such support should focus specifically on the problems with TV,
particularly Pay, and through bodies such as the Film Council
should help British distributors deal with the low rentals the
British films face in the domestic market.
Q. How can the production, distribution and
exhibition of British films be improved in the UK? Is the right
balance being struck between these elements of the industry?
The following is a possible list of improvements
that could be made to these sectors.
EXHIBITION
The exhibition sector in the UK is one of the
most difficult sectors for British films, especially when compared
with other domestic films in other European territories. The average
share of gross receipts that distributors receive from exhibitors
is 25%. This compares with 40% or 50% in most European territories.
The economics of releasing a British film, therefore,
becomes less effective as a film must perform exceptionally well
before it has a chance of recouping its release costs. This is
very damaging to British film, as most films need to be recoup
a large percentage of their budget from their own territory to
have any chance of being economically viable.
Secondly, there is also no commitment by any
of the exhibitors to play a British film. The market power of
the US studios is leveraged heavily to get more screens for their
films and to get significantly better financial terms.
Improvements could therefore be made if exhibitors
were obliged to exhibit a certain number of British films per
year. This would slowly create a forum so that consumers would
know that at every multiplex of eight screens or over at least
one or more screens would exhibit a British film and from an industry
point of view create an exhibitor demand for British film. If
this was combined with an obligation to pay a larger share of
revenue, (perhaps Government subsidized) these incentives would
enhance dramatically the economics of British film and encourage
distributors (including probably the studios) to invest in and
release more British films.
DISTRIBUTION
The distribution of British films could be greatly
improved by garnering more support from the television sector.
At present there is no Pay-TV industry in the
UK for British films other than possibly FilmFour who pay a paltry
$25,000 per movie. Sky however has not acquired a British film
other than outside of the output deals with the majors for at
least four years. The terrestrial channels do endeavour to support
British film but even the more supportive of the channels, namely
Channel 4 and BBC2, are buying an increasing amount of American
mainstream fare. The ultimate improvement would be a quota on
Sky and possibly even the free TV channels to take a certain number
of British/European films. A system like the highly successful
one in France would give a huge fillip to the British film industry
without costing the exchequer.
Quotas work by encouraging distributors to buy
British films in the knowledge that they would have a much higher
chance of obtaining minimum license fees from both the terrestrial
and Pay-TV sector.
Helkon SK is the second largest British Independent
yet in its five-year history it has not once ever been able to
sell a film to Sky despite having a number of very significant
box office successes. This situation would not occur or be tolerated
in any other developed country. As a consequence companies like
Helkon SK distribute more American films for which it can sell
the Pay-TV rights back to a studio who would put them in their
pay-TV deals.
Once again this greatly damages the economics
of British film.
PRODUCTION
One of the major ways to improve production
of British films is to build a strong domestic market place for
those films so that a British film, even if it is not particularly
successful, can earn at least 50% of its budget out of the UK.
This can only be achieved by some of the methods
suggested above. Namely improving exhibitor rentals and quotas
on the TV stations.
In France for example, as a result of the language
barrier they are forced to earn 90% of their revenue from their
home territory. However as there are government quotas they are
able to finance their movies in this way and have a thriving industry.
In fact, even the major studios, as part of their output deals
with the TV channels are always looking for European product to
fill these quotas.
The other improvement that needs to be made
in British films is further support in the development of commercial
projects. One ideal way of achieving this could be to have the
projects backed at conception level by distributor, as a distributor
is in the ideal, consumer-facing position of determining the commercial
viability of a potential project.
Even in some of the most astute producers and
development executives that exist within production companies
lack that direct commercial link to consumers that only distributors
have.
Q. How effectively has the Film Council contributed
to a sustainable film industry since 2000? Does the Council have
the right strategy and approach?
The Film Council has been (in contrast to its
predecessors) much more effective in its strategy and approach,
but, could still be improved further.
In our dealings with the Film Council we have
in general been impressed. The Film Council has demonstrated that
it does understand the real issues at the heart of the British
film industry. However, the composition of the board of the Film
Council remains ludicrous and ineffective and comprises of a number
of people who seem always to be on such bodies and whom perhaps
may no longer be so relevant. Young blood would not go a miss
in this group.
Q. What has the Council contributed to education
about, access to, the moving image? What should the Council do
with the bfi and the Museum of the Moving image?
No View.
21 March 2003
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