SUBMISSION 35
Memorandum submitted by Hallmark Entertainment
1. Hallmark Entertainment is the World's
largest producer of network movies and mini-series. Over the last
seven years, we have produced 1000 hours of programming. An industry
leader in both awards and ratings, Hallmark Entertainment productions
has captured 95 Emmy Awards as well as 13 Golden Globes and numerous
Peabody, Christopher and Genesis Awards. In the past decade alone,
Hallmark Entertainment provided eight of the 10 highest rated
made-for-television movies in the US. For the 1998-99 US season,
we produced four of the top-10-rated network movies. We also have
an amazing library of titles consisting of more than 4,000 hours
of family entertainment programming. Hallmark Entertainment currently
delivers over 40 projects each year providing family programming
for audiences worldwide.
2. Hallmark Entertainment has been a major
employer in the UK Film and Television Industry for several years
now. Since 1997, we have partially or fully filmed twenty projects
in the UK with budgets totalling in excess of $430 million, most
of which was budgeted at a minimum of US $5,000,000 per hour eg
the very top end of TV Production and actually probably well in
excess of average budgets on UK features. Hallmark productions
have directly employed over 5,650 crew and 850 main cast in England
alone. Hallmark Entertainment is proud of its part in the UK Film
and TV industry. We recognize that England has some of the best
creative and technical people in the industry. The partnerships
we have formed over the last seven years of filming in England
have brought great success to both sides. Eighteen of our Emmy
Awards have been won by UK productions. Of the 10 Emmy's won by
Framestore-CFC, six have been won with Hallmark titles.
3. The abolition of UK sale and leaseback
transactions has made it impossible for us to continue filming
in this country, due simply to the increased cost of shooting
in the UK, as compared to elsewhere in Europe and beyond. Sale
and leaseback brought costs down in the UK to a level where it
was roughly compatible with other potential destinations/locations
and the superior skill base and facilities meant that even when
the UK was a little more expensive Hallmark preferred to shoot
in the UK.
4. The last production Hallmark Entertainment
filmed here in the UK was a major six hour mini-series. In production
for almost three years, Dinotopia was filmed almost entirely in
the UK at Pinewood Studios by three UK registered companies (Beechmoon
Limited, Mysterious Passions Limited and Dinotopia Productions
Limited). The following key statistics have been extracted from
information provided by the production team:
| Total Production cost |
£58.5 million |
| Total production cost in UK industry | £47.8 million
|
| British qualifying labour | £23.2 million
|
| UK nationals employed | 650 persons*
|
| Number of UK suppliers | 1,330 companies
|
| VAT charged by suppliers to the production |
£6.3 million approx |
*The indirect employment is far greater—comprising
extras, drivers, hotel employees, laboratory technicians, caterers,
utility employees, professional advisors and many other vendors.
5. In addition to the above figures, non-UK nationals
employed in the UK earned £1.7 million on which taxes will
have been withheld. Of the £14.2 million paid directly to
UK individuals (as opposed to employing companies), there were
payroll taxes deducted at source of £3.1 million. This understates
the true amounts paid in taxes, as this payroll figure includes
those who are self employed (self employment is the accepted standard
in many areas of the film production industry) and, therefore,
responsible for paying their taxes personally.
6. While it is not possible to determine all the relevant
taxes paid by sub-contractors and the self employed, as a general
rule of thumb, economists estimate that for each incremental £1
spent in the UK economy, at least 50 pence will ultimately be
of benefit to the Treasury. Given that £47.8 million was
spent in the UK on this production that otherwise would not have
been spent, the benefit to The Treasury is approximately £27.8
million. The net present cost to the Inland Revenue of the sale
and leaseback is only £6.3 million (£17.55 million deferred
over 15 years rather than three years at the financing rate of
the sale and leaseback £17.55 million = £58.5 million
*30%). Clearly then, there is a substantial benefit to the UK
as a whole. Indeed, we would expect that the direct taxes payable
in respect of the UK qualifying labour alone would exceed this
cost.
7. There is a substantial and natural synergy between
film and television, leading us to believe that the British Film
Industry will only suffer from the decision by the government
to restrict tax breaks to the film industry. The loss of future
productions that Hallmark Entertainment would have filmed in the
UK has an indirect but significant knock-on effect on the British
Film Industry Actors, writers, directors and other crew automatically
lose a major source of employment. The knock-on effect to other
industries is difficult to judge but is also significant.
8. Sir Alan Parker's recent paper on the future of the
industry highlighted three key areas that must be improved in
order to sustain the UK Film Industry—distribution, skills
and infrastructure.
9. During the last year, Hallmark has taken major productions
that would have naturally come to the UK to Eastern Europe, filming
primarily in Prague and Budapest. While we still rely heavily
on UK talent, this is predominately either cast or senior crew.
Entry level and junior positions go to local crew. This includes
positions such as assistants to the director, producer and cast.
Hallmark productions attract prominent members of our industry.
Talent has included Patrick Stewart, Gerard Depardieu, John Rhys-Meyers,
Miranda Richardson, Isabella Rossellini, Glenn Close, Susan Sarandon,
Sam Neill, Helen Mirren, Olivier Martinez, Ian Holm, Vanessa Redgrave,
Lord Richard Attenborough, Dougray Scott, Rufus Sewell, Alan Bates,
Peter Ustinov and Greta Scaatchi, to name but a few. Directors
have included Andrei Konchalovsky, Steve Barron, Nick Willing,
Charles Beeson, Steve Boyum and David Wu. Working on productions
using cast and crew such as these provides young people just starting
out not only with an immeasurable learning experience but also
impressive credits to go on their cv and important contacts in
the world-wide industry of film.
10. With regards to infrastructure, Hallmark productions
have used over 70 stages in England alone up to the abolition
of sale and leaseback. Over a three year period, there was not
a single month without a Hallmark production in some stage of
production at either Shepperton or Pinewood. Framestore-CFC opened
up an entire new floor to work on Dinotopia, employing close to
100 animators dedicated solely to this project. Many of the projects
filmed in mainland Europe are still brought back to the UK to
post. Over 25 Hallmark titles have filled post-production houses
during the last few years.
11. Sir Alan's paper cites the relationship between the
film and television industries, focusing on the need for broadcasters
to invest in the film industry. While we recognise the need for
this investment, Hallmark would like to highlight the positive
aspects of the relationship, focusing instead on what television
production can bring to the partnership.
12. It is important that the Government recognizes what
has been lost by abolishing UK sale and leaseback transactions.
An example of the economic loss has been detailed above. Harder
to measure is the effect on the workers in this industry, especially
further down the rung. Hallmark Entertainment's exit from the
UK Production field has taken away a major source of employment
and training from the television and film industry.
13. Hallmark Entertainment is committed to continuing
to produce world-class family entertainment. We are proud of the
projects that we have created here in the UK. Dinotopia, the example
mentioned above, went on to premiere on Sky One last year and
became the highest rated non-terrestrial series debut in the history
of UK television. Hundreds of UK film and industry professionals
can share credit for this tremendous accomplishment.
28 April 2003
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