The British Film and Television Industries - Communications Committee Contents


Memorandum by Mr Michael Kuhn, Director, Qwerty Films

  1.—My name is Michael Kuhn and I run Qwerty Films, an independent UK production company.

2.—I've been in the film business for over 20 years.

  3.—I built up the only UK based World Wide integrated film production and distribution company of modern times (Polygram Filmed Entertainment).

  4.—I attach my resume (Appendix A).

OBSERVATIONS ON THE INDEPENDENT FILM PRODUCTION BUSINESS

  1.—Historically the UK contributes significantly—an annual average of 10%—to the global English language film business.

2.—In recent years UK producers have regularly produced a significant number of movies with exceptional international success and profitability.

  3.—However, the UK production community has always suffered from insufficient capital being available to support it in a sustainable way. The UK Film Council has failed to remedy this despite it being within their remit and resources.

  4.—The main issues that are needed to remedy the situation is to group together the top four to six producers (who account for nearly all commercially successful UK films) to create a sufficient large slate of films that are capable of being financed.

FUNDING REQUIRED

  My company has modelled the amount of funding required to create a slate of 18 films within the budget range of £5,000,000-£12,000,000 (being the normal budget range of independent British films). We estimate that if the independent producers were to raise 50% from a combination of UK pre-sales and UK tax and a limited amount of foreign sales, and the balance were to be provided by a funding organisation, such as the UK Film Council, the amount the Film Council would need to raise would be approximately £100,000,000 of which £65,000,000 would be debt and £35,000,000 Film Council equity. This equity element would be spread over three years and could be funded, in my opinion, from existing UK Film Council resources without derogating from its other responsibilities. I attach a summary of the proposal (prepared for raising the money from commercial sources) (Appendix B).

I would be happy to give further evidence if required.

4 March 2009

APPENDIX A

Michael Kuhn Bio

  Michael Kuhn was born in Nairobi, Kenya in 1949. After primary school he left to attend Dover College in England in 1962 and went on to Clare College Cambridge in 1968 to read Law.

He joined Polygram N.V (now part of Universal) in 1975 and in 1991 set up Polygram Filmed Entertainment, which made and distributed over 100 feature films and which between them won 14 Academy Awards. These films included —Four Weddings and a Funeral", —Notting Hill", —Dead Man Walking", —The Usual Suspects", —Lock, Stock and Two Smoking Barrels", —Elizabeth", —Trainspotting" and —Priscilla, Queen of the Desert".

  He set up Qwerty Films in 1999 and secured finance to produce bigger budget movies and has investments in a music company, theatre and a film development joint venture with the Film Council. Qwerty Films has produced eight features in its first six years of operation, including —I Heart Huckabees", —Kinsey" and —Severance", and the recently completed —The Duchess", staring Keira Knightley and Ralph Fiennes, which was released in September 2008 by Pathé in the UK, and by Paramount Vantage in North America (Bafta and Oscar win for Best Costume 2009).

  His book —100 Films and a Funeral" was published in 2001 and a documentary based on it is being released this year.

  He was appointed Chair of the National Film and Television School in 2002.

APPENDIX B
Investment Return Summary Base Case


Funding Summary
Equity—Investment as
%age Neg Cost
Budget
GBP-£000's
Producer-Sourced Investment 50%
      Split as Follows:-
UK Tax Credit 16% 25,600
Recoupable —Soft Money" 4% 6,400
UK and Other Pre-Sales 30% 48,000
Sub-Total 50% 80,000
GBF Investment 50%
      Split as Follows:-
From (say) Film Council 43.75% 35,000
Debt 56.25% 45,000
Total 100% 80,000
GBP—£000's
Total Cost 169,300
Total Equity 44,600
Total Debt Required 44,600
Total Funding Required 89,000

Peak Cashflow Equity 20,000
Peak cashflow Debt 17,000
Peak Cashflow Total 37,000


      Funding committed, say 55,000
Investment Summary GBF—£000's
Investment in Slate 80,000
Monies Recouped 100,300
Tax Credit Fee 800
Nominal Catalogue Value 1,100
Development and Overheads (6,400)
Interest on Debt (2,900)
Slate Fees Payable (2,900)
Recovered Development and Overhead 8,000
Sub Total 18,000

Return on Investment 22.60%


 
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