The British Film and Television Industries - Communications Committee Contents


Examination of Witnesses (Questions 1118-1184)

Ms Amanda Nevill and Mr Eric Fellner

17 JUNE 2009

  Q1118  Chairman: Good morning, thank you very much for coming. I am not sure whether you were not both here for the previous session and have a rough idea where we are coming from. What we are really trying to do is look at the film industry to see what its progress is and what contribution it is making, both economically and culturally, and see what else could be done because we obviously make our proposals to government as opposed to the film industry itself. Could you start by telling me something about the role and remit of the British Film Institute?

  We are in discussion with Ofcom in context with its own review of Public Service Broadcasting. Additionally, in our response to the Digital Britain interim report we asked that the BFI is included in discussions from the earliest possible stages to ensure that provisions are made for archiving Britain's TV heritage in a post-analogue world.

  Ms Nevill: Thank you very much for allowing us this opportunity to give evidence. Obviously you are taking masses of evidence from the industry and one of the jobs that Eric has is the Deputy Chairman of the BFI and a Director of Working Title, so he has very much a foot in both camps. Our job is to really try and amplify the voice for the importance of film as a cultural entity in this country. The BFI has been around for over 75 years, we are a royal chartered organisation and we are the national cultural agency for film in much the same way that the National Gallery is for paintings. If I was stuck in a lift and I was trying to explain to people what the BFI does, on a day to day basis what we do is we champion the diversity of film across the UK, so in other words we are on a mission to try and ensure that as many people as possible across the UK can have access to the broadest possible spectrum of film. Obviously what that means is we need to source those films, bring the films in and then tell stories about that film so we can get to the broadest audiences that we can.

  Q1119  Chairman: Thank you very much. Your relationship with the UK Film Council is what exactly?

  Ms Nevill: They are our funding body, so our grant in aid funding comes through the Film Council.

  Q1120  Chairman: And your annual budget is what?

  Ms Nevill: The grant in aid from the Film Council is £16 million, our turnover is somewhere between £32 million and £34 million a year dependent on how that year goes, so grant in aid is about 42 % this year. We are quite a dynamic organisation and we took the liberty of giving you a sort of dashboard of the BFI's performance over the last five years and we have managed to really grow quite a lot of our businesses. Bear in mind that we only grow businesses that do not succeed within the market itself so we do not stray into what the market can already deliver. Our monies come from obviously sponsorship and fund-raising and also partnerships that we do. We have had some really great partnerships with people like Palgrave Macmillan—we now do our publishing with Palgrave Macmillan because they could put in investment that we could not put in, but we have also had a really great entrepreneurial new partnership with Gracemates; those are the people who provide all the background data information that you need, for example, when you are downloading from iTunes onto your iPod. We are now providing them with the data that you will need when you download videos. We have had big expenditure of money upfront and then we will hopefully, cross fingers, start to see royalties coming through. We then have businesses, so things like DVDs, the Imax BFI Southbank, the London Film Festival and RB2B, so film sales that we can make from the archive.

  Q1121  Chairman: Do you get a levy from the commercial public service broadcasters or not?

  Ms Nevill: I do not think it is technically a levy but you are quite correct, we get just under £1 million in total which comes to us through Ofcom because we fulfil the chartered obligations to maintain a national archive which is discrete and different to a commercial archive for ITV, Channel 4 and Channel 5.

  Q1122  Baroness McIntosh of Hudnall: Can we explore a bit this notion of film as culture and film as part of the wider cultural landscape? You make some quite strong claims for the importance of film; you say, for example, that "Most of the information we need to navigate modern life comes through the moving image. To be literate in today's society means to understand the language of film and television, to be able to `read' and `write' in a medium other than print." You go on to say that "Watching a film is an entirely different—and far more immediate—experience than looking at a photograph or reading a book", and I could give other quotes. I might not altogether agree with you on the strength of some of the claims you make, but clearly you have a view of film as a medium for understanding ourselves, shall we say, that suggests that it should be higher up the cultural agenda than it currently is. Would that be fair?

  Ms Nevill: That is exactly it. Just to be really clear, we are not arguing for one minute, as you say, that it is more important than any of the other forms of communication—books, literature and writing are absolutely essential.

  Q1123  Baroness McIntosh of Hudnall: Not least, it might be said, because they are often the source of film material.

  Ms Nevill: They are, absolutely, and vice versa. Our argument is that film is always seen as the poor cousin within the cultural arena and as a society—it is very difficult to prove this in concrete terms—we under-estimate the power that film has for good. Anthony Minghella used to say that when you saw a film you actually borrowed somebody else's eyes for two hours, and we also know that young people with things like YouTube and this massive social network in terms of informal education—so much of the information they get and the way in which they communicate comes through the moving image. I suppose our mission is to say that we should not overlook film, it is a really powerful tool that we could make more of.

  Q1124  Baroness McIntosh of Hudnall: I am sure nobody would disagree with you about that; however, can you give us some indication, firstly, of what more you think needs to be done to try and make explicit the power of film—and we should not forget television since your responsibility includes television as a tool of communication—and particularly what are you able to do yourselves and through the Film Council to influence the kind of cultural impact that film and television has?

  Ms Nevill: The first thing I should say is that there is a laziness if you like within the BFI in that when we say "film" it is our short form for film and television and in fact the moving image in its broadest spectrum. The question you have asked is quite a complex one because it is quite difficult to provide real concrete empirical evidence for where the impact goes, but what I can do is I can give you some examples of the alacrity with which the British public takes up certain things that we have done. An interesting example might be Mitchell and Kenyon. Mitchell and Kenyon were film makers at the turn of the last century and they made what at the time were seen to be very low level entertainment. What they would do is they would go out and they would film ordinary people doing ordinary things, so they filmed people leaving factories in Blackburn at the end of a working day or they would go to a leisure park or they filmed the first football match. Then in the evening what they would do is they would project these films in a tent and they would have audiences of 1,000 or 2,000 people a night because at the turn of the last century people just wanted to see what they themselves looked like on film. These films were considered absolutely culturally irrelevant, they vanished for many, many years but then were rediscovered in a milk churn—very dangerous, 800 nitrate films packed into a milk churn in a basement in the north of England. The identification and restoration of the films cost £4-£5 million and if it had not been for things like the partnerships that we had with Sheffield University none of that material would make any sense if you saw it. We then used digital technology to put it into the right speed so it could play, so it did not look like fast silent film, and there was a co-production with the BBC. The audience figures that were achieved for those pictures of early British life completely took all of us by surprise. In the beginning we could not get the BBC to take it, and in the end we said "Have it for free; we have done this and we know people would like it." The audience figures that we got on three consecutive Friday evenings were in excess of Little Britain and Big Brother. This was early silent film but what people loved was the fact that they were looking at what their grandparents were like, it gave a completely extraordinary window onto where we have come from and where our roots are. That is just one tiny example.

  Baroness McIntosh of Hudnall: They were wonderful films

  Q1125  Chairman: Did the BBC then pay for you it in retrospect?

  Ms Nevill: Not in retrospect but we did keep the DVD rights to it and it became one of our most successful DVDs. Then of course we went on after that to have this great relationship with the BBC and with the Discovery Channel and we are by and large doing one co-broadcast a year.

  Q1126  Chairman: Could we bring in Mr Fellner because you are co-chairman of Working Title, Britain's foremost production company. You have done Four Weddings and a Funeral, Notting Hill, Bridget Jones' Diary and other films; what is the value of the Institute for you as a working producer?

  Mr Fellner: I see it from the view of practitioners who I work with in the industry and I see how they came into the industry in the first place and how they were exposed to film. You have all had an incredible crash course into the film industry over the last few months from the minutes that I have been reading and you probably know a lot more about the industry than I do—it is amazing the people you have had speaking—but you will see that it is critical that new blood comes into this industry. We can never compete with America and the idea that we should try to compete is a non-starter—we are a smaller country and we should do our best to have the best possible industry we can, but we cannot compete with them. The only way in which we can create an industry is through our talent and we have amazing talent: we have incredible writers, incredible directors and first and foremost actors. Their exposure to film comes in two ways; one they go to their local multiplex as a young child and they see whatever the film is that first turns them on to wanting to make movies or they have a cultural exposure to it. The BFI's main job is to try and expose people to the history and the culture of film; whether it is as important as we maybe like to think is for opinions to shape but ultimately it is an essential piece of the fabric of the industry, to bring on that talent, to teach them where they come from, to teach them about film, to give them exposure to earlier film makers and practices. The Mitchell and Kenyon thing is fascinating because it goes way beyond film, it goes into historical representation of what our country was like. That is unique, no other medium could present that; we could have books explaining it, we could have early photographs showing still images, we could have paintings, but to have a moving image record of how we lived our lives here in Britain is absolutely unique. The wonderful thing about the BFI is it has this archive which is the largest—Amanda will correct me, I do not have all the facts at my fingertips—archive in the world and it is predominantly hidden. Although it is the BFI's job to maintain it, look after it and restore it, at the moment it is very difficult for us to share it with the greater public, and Mitchell and Kenyon was just one small piece of that. Imagine if the resources and the will, both political and financial, were there to be able to get that library into a digitised form and expose it to an enormous audience, it would resonate even greater and the talent pool would then grow beyond that. Amanda was talking to me earlier about should one teach maths if maths is not going to become a subject of choice in the real world? Of course one should because it is integral in one's education. It is the same thing with cinema in that we just do not know how much of an impact it is having, but I have a teenager and young children and see that, sadly, I cannot get them to read as many books as I would like to, but they will watch moving images all day long. If we can somehow define what that moving image is and change what they are watching, we can somehow maybe change the world in which they live.

  Q1127  Chairman: Having read your submission it seemed to me a bit that you were looking backwards but actually in fact, although that is obviously one part of what you are doing, you are looking backwards because out of that material you are going to encourage and help and bring on the talent of the future.

  Mr Fellner: Absolutely. Every society has a responsibility to its cultural fabric. I am a commercial practitioner so I straddle the two extremes—I am an absolute commercial practitioner as a film maker and then I enjoy my limited work with the BFI at the other extreme as a cultural supporter and champion. I am not an independent in the middle. Sorry, I have completely lost track of what I was saying.

  Lord Maxton: That is our job, not yours.

  Chairman: You will not be lost amongst this lot! Lady McIntosh.

  Q1128  Baroness McIntosh of Hudnall: Can I just take you back to what you said about your children and link it to what you said about the dominance of the American market, because clearly there is an enormous deal more material out there than is UK-originated and located with the BFI. That comes from other sources but is available to your children just as much as it is to anyone else and they can consume an enormous amount of that. As I understand it you are saying that what you want to do is to try to encourage people perhaps as it were not to consume quite as much of that but to consume a bit more that will tell them about their own heritage, their own cultural roots and will propel them towards becoming cultural practitioners of some kind in this country that will make them distinctive from the American influences.

  Mr Fellner: I do not think so; if I put it out like that I maybe was misleading you.

  Q1129  Baroness McIntosh of Hudnall: No, I am trying to mislead you.

  Mr Fellner: First of all the archive is not just British, it is world cinema, so we are not banging a British drum only, we are banging a film culture drum.

  Ms Nevill: We bring international cinema, world cinema, to this country and that is a really important part of our role. That is part of both contextualising the Britishness but it is also part of injecting all those world cultures. As an example, at this moment we are just about to release the recent film by Abbas Kiarostami—not that it would be picked up by anybody else because it is not going to make that much money. He is a really important eastern film maker.

  Q1130  Baroness McIntosh of Hudnall: He was not allowed to come here.

  Ms Nevill: He was not allowed to come here. Take Kurosawa. Nowadays we have all heard of the Seven Samurai; actually without the BFI you would not because we are the people who, on your behalf—we are publicly funded and we get up in the morning to do things for the public—bring films like that in and build the market for them. One extraordinary and really concrete example of how this can help the economy—I do not know if you have taken evidence from Thomas Hogue who looks after a company called LOVEFiLM. It is a fantastic phenomenon that has grown up in recent years—they are the company where you can actually go online, you can book your DVDs, they arrive by post and you watch them and then you send them back. It is very useful for us because they obviously carry BFI DVDs as well. They have a very, very sophisticated online customer data tracking scenario and I was introduced to it about four years ago. He was showing off and he said "I can press this button and I can tell you who are the most important film directors being talked about and being researched at the moment." I said, "Go on, press the button." He pressed the button and at the top was Fellini and the second was Hitchcock. For Fellini to be the top I knew was simply because the BFI had done a two-month season of Fellini down at the Southbank, so that starts to build that whole economy; that was directly driving his rental business and those DVDs coming in. He himself said Hitchcock would have always been number one under normal circumstances.

  Chairman: I want to bring in Lady Eccles and then I will bring in Lord Maxton.

  Q1131  Baroness Eccles of Moulton: I just want to go back to the link which you very clearly described to us of the Institute at one end and being part of the commercial industry at the other end. What contact is there, apart from yourself, between the two? Is there quite a lot of contact between the Institute and the commercial industry?

  Mr Fellner: There is; I would like to see more. There is a plan for the ultimate more to happen and that is for the BFI to have its own proper building on the South Bank, which is probably a separate conversation. That would create a focus for the industry like all the other artistic industry elements have, bringing them together with their culture, where you have the ballet, the opera, the theatre, the art world. Everybody has a centre of excellence in which they can congregate to have exhibitions, have shows, have screenings et cetera et cetera, so that would do more. However, there is an enormous amount of contact because all of the projects that the BFI runs, whether they are in education or film screenings or lectures or whatever they are, there are always practitioners from the industry present, or most of the time there are. People come right across the world to be part of these projects, so the interaction is good at the moment and if we get the opportunity to create a film centre it will be excellent.

  Q1132  Baroness Eccles of Moulton: And then they would be able to use the archive even more than they can at present.

  Mr Fellner: The arm that owns the archive is an extension of the Screen Heritage Fund and the current project is to start trying to restore and digitise the archive. The ultimate goal is to have a building which effectively becomes the digital hub for the world, where you create the film centre and that is where you have the film festival and you have all of the physical practical work of the BFI ongoing. From that emanates to the regions and to the world all of the digitised archive that can then be accessed by anybody anywhere. That is the Holy Grail.

  Q1133  Baroness Eccles of Moulton: Ms Nevill, would it be possible for you to quantify the economic contribution that the Institute makes to the UK film industry? I know you have given us one example about the online DVD ordering and I cannot wait to go home and do it.

  Ms Nevill: Thank you.

  Mr Fellner: Can I say one thing, since Amanda has been involved in the BFI the number between the grant in aid and the total money spent at the BFI or the revenue of the BFI has gown enormously. What that shows is that the executive there are now on top of creating a modern BFI. I have only been a governor for five and a half years, but when I came, about the same time as Amanda, the BFI was in a very sorry state. If the truth be known, if it had not been for John Paul Getty it probably would not even have existed any more because the funding was so huge from him and so minimal in the way in which it was used by the BFI and the funding from the Government. What this shows is that if the BFI is targeted carefully, clearly and properly the financial impacts can be greater because they can do way, way more with less. Sorry, I hijacked the question.

  Ms Nevill: It was a much more eloquent reply than I could have given, thank you Eric, because the answer is I cannot. I would not know how to do that with a cultural institution and perhaps I should find out if any of the other big cultural institutions manage to do it because it would be interesting.

  Chairman: Before going to Lord Maxton can I bring in Lady Bonham Carter?

  Q1134  Baroness Bonham Carter of Yarnbury: I was interested in you saying, particularly coming after our last session which was with the distributors, that you showed films that others will not distribute, and you talked about a Fellini season at the Southbank. Are they only shown in London or do you have outlets outside London?

  Ms Nevill: We are the biggest distributor of cultural cinema in Britain and we have a saying that no screen is too small or too remote, so whether you are a tiny film society on the Isle of Unst or whether you are a multiplex in Birmingham, we try and give both as much love and what have you as we can.

  Q1135  Baroness Bonham Carter of Yarnbury: You probably do not get into the multiplex at Birmingham, do you?

  Ms Nevill: We do not get into the multiplexes and I have some sympathy because they have a commercial imperative. One of the things that was missed arguably in the conversation about the difference between the independents and multiplexes is what is the motivation? So the motivation for the multiplexes is they are there to show great films, and we the BFI think they are great films as well, but they are there to make money and, by and large, those films go in and are selected on the strength of the brand and the marketing impact that is behind them, so they are almost in the nicest possible way garages: the film goes in, the studios, the producers, the distributors have done all the marketing, they have actually built that property. With the independent cinemas they are building audiences on a day to day basis and it is a tiny, tiny fraction of the market. We bring in, say, our back catalogue of the titles that we make available for distribution; we have not got the sort of marketing and one could never justify it, so we have to work with that smaller network of cinemas and work really hard to build audiences for it. The one thing—and I have not got the figures here—that does cause me some anxiety is that the funding in the regions for those independent cinemas is diminishing and therefore our ability to even get that diverse cinema that we are very privileged to be able to bring into London, to get it out there gets more difficult.

  Q1136  Lord Maxton: I am slightly confused because, coming from Scotland, as far as I understand it the Scottish film archive is held at present by the Scottish Film Council but about to be going to the new amalgamated archive; is that right?

  Ms Nevill: It absolutely is. The Scottish archive is an interesting one; in theory we are the national archive but Scotland has the national archive of Scotland and it has some fabulous material in it. We actually work very closely with them—for example, we recently restored all the Margaret Tate materials for you and we often come in like a lifeboat and help out with things like restoring nitrate.

  Q1137  Lord Maxton: The other major archive in this country of course is the BBC's archive which Greg Dyke promised when he was Director General would become free for everyone to watch on the internet, but somehow it has never quite happened. Do you have any relationship with the BBC in terms of their archive, in terms of cross-referencing and that sort of thing?

  Ms Nevill: Yes, we do. I would say that the actual delivery of that is very immature at the moment but we have just signed an MOU with them—we have a very close working relationship with Roly Keating who is now heading up the BBC archive and they are now a part of the screen heritage. The BFI is leading on behalf of the Film Council on this screen heritage initiative that Eric spoke about, and one of the fundamental things that we are doing there is to try and get over time the data of all the moving image archives within one common union database, and the BBC are coming in on that. The other area—and I am going to say it out loud because it would be good to have it—is that there are ways in which the BBC could really help us. For example, we are very keen and we have talked to them about the option of us using the iPlayer for the playback of digitised material from the BFI archive.

  Q1138  Lord Macdonald of Tradeston: I declare an interest here as a former governor of the BFI but that was about ten years ago and we were still struggling with the huge burden of deteriorating celluloid and nitrate stock and so on. Where have you got to with all the money you have had in recent years in tackling that problem? Is it still a big issue or is it largely solved?

  Ms Nevill: Gosh no, it is not solved yet. The money is pledged and there but we are still waiting at this moment for the DCMS capital plan to be signed off; we are told it is just a formality. What we have done is what I would call triage work in the last three years so we have driven massive economies through in other parts of the organisation so that we could do emergency work, so we have got most of the critical master material into an environment which minimises decay, so in other words it is decaying at a lot lower speed than it was doing previously. That is a huge piece of work, and what the screen heritage monies will do—and it will only be phase one—is it will allow us to build two vaults where we can put the material. Film is not decaying because we have done anything to it, but the moment it leaves the chemistry lab or wherever it comes out of it starts to decay. The screen heritage monies will mean that we can build two vaults and we can freeze this material. That means that rather than having to spend money restoring and copying it just because it is decaying, it will stop the decay—it will not mend it—and it then means that we can take materials out and restore them according to the cultural plan and what we believe the public are likely to be interested in at this moment.

  Q1139  Lord Macdonald of Tradeston: Could you just give us a context for that? How much material is there in that condition that will still have to be worked on? How many years will it take and how much money will it take if we want to have an archive where everything has been transferred properly and is now stabilised, preserved and accessible?

  Ms Nevill: Thank you very much for this question. We made a decision six years ago. Ten years ago the accepted wisdom for film preservation was that you copied the whole lot onto a different medium. If you have an archive where you only have 25,000 titles like, for example, the Danish film archive, you can envisage a scenario where you could achieve that. When you have an archive as large as the British film archive, which is 37 acres—so it is bigger and more significant than the archive in the library of Congress—we worked out that it was going to cost over £100 million and even if somebody gave you a cheque the notion that you could get the skills and actually copy the stuff in time—you were not going to get there. We worked with the Image Permanence Institute in North America and we found that if we froze the material that would stop deterioration. We therefore moved from a policy of trying to copy everything to freezing it. If you have frozen it you can then say, right, we will start to pull out the material as best we can over the years that come and we can start to restore, preserve and digitise because the end game is getting that material out before the public. Shall I just jump to the cost? If we were to finish the physical housing of it we estimate that between £15 and £29 million extra is going to be needed over the next two or three years but the critical master material will be in the best environment possible as soon as we have built these vaults, in about 18 months.

  Mr Fellner: You will be pleased to hear Leslie Hardcastle is still out fighting the fight—who I imagine was there when you were there.

  Q1140  Lord Macdonald of Tradeston: Yes, indeed. I remember about 30 years ago making a series on early film and one of the researchers coming back and saying "They are doing it for posterity but they do not really want to give us any access". My question related to that is clearly there is an enormous commitment to film and preserving film on the part of your staff and so on, and they will preserve things even if, for reasons of copyright, it is impossible for you to show them, or they might be preserving American B movies which you would put in a lower scale of preference, perhaps, to some of the important British material. How have you managed to tackle those kinds of issues and prioritise what you are doing at the moment?

  Ms Nevill: The first thing is that the mindset is completely turned upside down: six years ago when we bought the strategy we talked about turning the BFI inside out. Internationally we are the busiest film archive, so in other words our commitment is to getting that material out in every way that we possibly can, whether it is on YouTube or through DVDs. We are very committed to it. In terms of controlling what we acquire—because you are absolutely right, you have to be very careful with taxpayers' money, it is a very expensive commitment to take on a film—we have a collecting policy which we drew up five years ago. We are just in the process of revisiting again that collecting policy, and it is that collecting policy that dictates. Then there are various structures in place where we go back to curators and challenge them every quarter—in fact we did so yesterday—to make sure that they are not, as you say, drifting outside what we decided we want to collect.

  Q1141  Lord Macdonald of Tradeston: I see here you have 675,000 television programmes; given the explosion into the infinite of television channels how do you make that choice now, how is that made affordable? Has the industry given you enough money or do you want to top slice the BBC?

  Ms Nevill: We are now digital and what we actually do with television is that we record off air but we only record terrestrial channels at the moment, which is an issue in its own right. We record everything and then we go back two or three weeks later and we get rid of probably 80 % of it. The reason we do it that way unlike films is because television often picks up things you do not know are going to happen, obviously, so we do it in retrospect. The big issue for us—and I think I have brought it up but we have not completely got our heads around it—is that when we move into the digital world, you are absolutely right, who is going to fund the national television archive? The national television archive at the moment is funded by just under £1 million that we fight for very hard through Ofcom, from Channel 4, ITV and Channel 5. I have a lot of sympathy for them, they are in an extremely difficult economic environment at the moment so that is a deeply unanswered question and one that we need to address. What we are proposing to do as an organisation is to lead a working party to start looking at what the solutions might be, and it would be extremely valuable and helpful to have this Committee's support to getting the broadcasters on side to work with us to address the issue you have raised.

Chairman: Can I bring in Lord Inglewood and then Lord King?

  Q1142  Lord Inglewood: In terms of early film is there a "lot more out there" that will turn up and be of interest to the Institute or will the material now being graded separately mean that probably there is not much?

  Ms Nevill: The irony is that nitrate film actually has been shown to last longer than acetate, so now we copy onto polyester because that is inert. It is such a good question because people always assume that we have this wonderful luxury of being able to say let us take in Slumdog Millionaire today and something else. Usually what happens is that somebody turns up with a pantechnicon and says this studio is closing or this post-production house is closing, we are either going to trash all of this or we are going to give it to you. Even Channel 4 gave us 4,000 prints of films and we have to really weigh it up, so a huge amount of time is spent sifting to make sure that we do not lose it, so we do have to take big pragmatic decisions about the material that comes in. In terms of silent film, worldwide we have got such a tiny slice of it—we run programmes called Missing Believed Lost and Initiative to try and dig things out, and it is not unheard of—which is why we have a special licence—for people to turn up to Stephen Street with ten cans of nitrate film which is probably enough to blow us all up.

  Q1143  Lord Inglewood: Do you think there is quite a lot still out there or not?

  Ms Nevill: I do not know; I do not think I can give you an intelligent answer. I would have to say it would be fantastic if there was.

  Q1144  Lord Inglewood: I know it is a silly question.

  Ms Nevill: No, it is a really interesting one. Let us hope that there is a lot more early silent nitrate film out there.

  Q1145  Lord King of Bridgwater: I may have missed it but I am not quite clear, are you trying to keep everything?

  Ms Nevill: No.

  Q1146  Lord King of Bridgwater: That is what I was not quite clear about. There are these huge quantities of programmes you are talking about; have you got some sort of committee structure that looks and sees what you keep and what you do not keep?

  Ms Nevill: Yes, we do. Television is less of a concern because it is digital now.

  Q1147  Lord King of Bridgwater: So because it is easier to keep you will keep lots of it.

  Ms Nevill: No, sorry, we have actually decreased the amount we are collecting now. We went through a review with the broadcasters and agreed with them that we would decrease the amount and we are actually going back in retrospect.

  Q1148  Lord King of Bridgwater: Who is making the judgment as to what you keep?

  Ms Nevill: The BFI curators.

  Q1149  Lord King of Bridgwater: Independently.

  Ms Nevill: No, what we have is we have a collecting policy which we do in wide consultation. We also have what we call an Acquisitions Review Board which meets quarterly—we had one yesterday which I chair personally—and in theory that Acquisitions Review Board reports into the Governor's Archive Committee.

  Q1150  Lord King of Bridgwater: So you are protected against one person's particular hobbyhorse that might lose us some very valuable things from the archive, mainly because it was not their personal choice?

  Ms Nevill: We are. The reason I would not say this is a perfect science is because I think the biggest and most responsible task that a national institution looking after the national archive has is to make those decisions. My background is museums and archives and if you look back across archives they are full of wonderful eccentricities and part of the big problem is that you often are acquiring things, trying to look into a glass ball to determine what the public might be interested in in 75 years. For example, television adverts which nobody was collecting; in a previous life I know we sucked all those up into the museum and of course now they are a wonderful picture of social ways at the time.

  Q1151  Baroness Howe of Idlicote: I have been absolutely fascinated by what has been happening since I was involved with things like the Museum of the Moving Image, which presumably will all become part of the great big exhibition place that you are planning, but on the training side how much involvement do you have in the process? How important is it where you are recruiting from because obviously you are doing something on the digital side, training people, beginning to do that and hopefully getting funding for that, but what other aspects of training are you meeting or trying to encourage in appropriate areas?

  Mr Fellner: The educational side of the BF I is a critical piece of the puzzle.

  Ms Nevill: Can I address the wider spectrum of education or do you want me to specifically look at training?

  Q1152  Baroness Howe of Idlicote: Yes, that is fine.

  Ms Nevill: Training for the industry is done magnificently I think through Skillset which, as you know, is funded from the Film Council. Where we go in education is really three areas: one is the formal area where we have worked massively on this project called Reframing Literacy which is about getting film used across the curriculum in schools and then evaluating it. We have had huge success there and local authorities have really bought into it. The second area is what I would call the informal area or the development of audiences and what we do is we pilot a lot of projects down on BFI Southbank, so for example there we have a project called Future Film Institute where we have this young group of people who change all the time. They get to do everything that the BFI does—they have their own festival, they programme the BFI, they help outside, all those sorts of things. The third area which is really important is our relationship with higher education because so much of what we deliver is for the benefit of higher education, so access to the archive, the library. There are huge amounts of digital resources that we provide online—because we are absolutely seen as probably the world's greatest centre of knowledge about everything you need to know about film—and also quid pro quo: without the relationship with higher education we could not fund or resource a lot of the activities we do.

  Q1153  Baroness Bonham Carter of Yarnbury: Following on with this theme, one of your objectives is to encourage the development of the art of film and television and one of you said earlier that film is seen as a poor cousin in the cultural arena. One of the things that has come through in the evidence we have been getting is a concern that training schemes are being cut, that there are plenty of media courses but not enough practical training and it is going back to something that Eric Fellner said about how critical new blood is in the industry. Is this something that concerns you?

  Ms Nevill: I do not feel sufficiently equipped to comment on where the actual funding to it is. We would absolutely share the concern if the level of funding Skillset has got is going to be threatened because—

  Q1154  Baroness Bonham Carter of Yarnbury: ITV has pulled out of Skillset.

  Ms Nevill: It has, yes. We would absolutely share that concern.

  Mr Fellner: Outside the BFI I can answer the question; is it appropriate to do that?

  Q1155  Chairman: Yes, please go on.

  Mr Fellner: I see that there is a distinct lack of skills, especially on my side of things, production. Any industry is led by its leaders, led by its entrepreneurs, and we are not training enough people to go into that side of the industry. Whether it is because the brightest and the best have been misled—apologies if anyone is in the financial world—in going into that arena over the last five or ten years—maybe now we will see people who are more interested in it. I get inundated with people wanting everything from work experience through to jobs during university periods and then after university and none of them, even if they have done media studies, has a clue about how the industry really works. That is something that has to be addressed. In terms of the crafts the skills are working really well—teaching cameramen and designers, costume designers et cetera et cetera, it just works well. On the business side however it is very poor still.

  Q1156  Chairman: It is the training for the business which is core, understanding the business and evolving the business is where you find there is a big lack.

  Mr Fellner: Absolutely. There is another element to it which is that there are not enough companies, especially on the film side. There are ourselves, Film4, the BBC—I am stretching already to try and find organisations that have some form of pyramid executive structure that allows people to grow and learn on the job, so there is that problem in itself. There is also the fact that ultimately anybody who is intelligent, has commitment and has some form of taste and marketing knowledge can be a film producer, so the barriers to entry are very, very low. I hate to say that because it shows that I am obviously not that talented, but they are very, very low. It is tough.

  Q1157  Baroness Bonham Carter of Yarnbury: What is your solution?

  Mr Fellner: I was originally involved in Skillset scheme five or six years ago when I first started and there was great talk and fanfare of a fulltime business film course and it ended up being a very diluted, one day a week, CASS business school type of thing, purely because the money got diluted and diluted and that is all they could deliver. The quality of the lecturers was not as good as it should have been, the quality of on the job training was not as good, so what we did actually at my company was we just decided to set up our own internship. We finance it fully ourselves, it costs us a couple of hundred grand a year and we just think it is worth putting that kind of money in. We can give three places and we train people right across the board. All of the people that we have trained have since gone on to work in the industry and are starting to develop business skills and creative skills to take them into, hopefully, being the leaders of the future. It is a difficult one because the industry is small—you have probably discovered that over the last few weeks.

  Q1158  Chairman: To what extent does it deserve the description of cottage industry at times?

  Mr Fellner: It is not cottage in that the revenue generated by it, if you go all the way through the food chain from cinemas to DVDs to TV revenue to employment, all areas of it, including production, it is quite a big chunk of money. But compared to the global force of Hollywood it is a small industry and it is cyclical, it is horribly cyclical because it relies on two things: one is just general opinion that there is a trend. If you have a Slumdog everyone wants to come and make British films. It goes all the way back to, I imagine, Chariots of Fire and maybe even earlier, it comes in waves when the trend is right for studios to finance British films. The other thing is the exchange rate which I notice you have talked about extensively, and that is a major factor. Some of that has been flattened by the tax break which is a very welcome thing for the industry as a whole, but what has happened is that even in America—you are now seeing tax breaks in California and the idea that California would have to create a tax break to persuade people to shoot in Hollywood was unheard of just three or four years ago. But the tax breaks are so large that are appearing in every state in the country, mainly due to the recession, that now our 20 % is starting to look pale so now the exchange rate becomes even more important. It is a horrible vicious circle where every now and then everything is right. At the beginning of this year you had Slumdog, you had the dollar at 1.35 and everything was rosy. Studios fill up, there is no room in the studio right now. Next year it is going to be miserable.

  Q1159  Lord King of Bridgwater: What about the exchange rate because we have asked other witnesses this question. It has been down to 1.35, it has been over two, it is now 1.64. How do you do that?

  Mr Fellner: You cannot. The only commercial thing you can do is hedge it.

  Q1160  Lord King of Bridgwater: Are you competitive at 1.64, that is my question? Is that a fair rate?

  Mr Fellner: I would say it is the upper limit, beyond that it starts to get expensive. We do have a major benefit here. I am currently shooting a film in Santa Fe and here in London right now, so I am watching all the numbers on a daily basis and comparing them. The competitive edge we have is that we do not have teamsters—I do not know if you all know what teamsters are. Teamsters are very well-paid and you have to have them on an American film, we have to have loads of them; here we do not have to have them and that is a major, major saving in terms of how we operate.

  Q1161  Lord Maxton: The T&G should wake its ideas up.

  Mr Fellner: Let us not advertise that. When I came into the industry it was impossible because I did not have a union card so I could not get into the industry, and I could not get a union card without getting a job.

  Q1162  Lord King of Bridgwater: Some government ended the closed shop.

  Mr Fellner: I seem to recall it was early in my career. I am not sure who it was.

  Q1163  Chairman: It is nice to hear genuine old Labour still speaking. Before I ask Lord Maxton to respond, presumably it must be the case that a British company like yours which has size is able to negotiate with more clout than the smaller companies.

  Mr Fellner: Negotiate with exhibitors or who?

  Q1164  Chairman: With the distributors, the exhibitors, everyone.

  Mr Fellner: Absolutely. It is a success-led business; if you have a hit you can do whatever you want, if you do not have hits you are in trouble. The problem with the independent film business in this country is it has a hit once every two or three years and, as such, it has very, very little clout. Plus, the very fact that it is independent means that there are loads of different factors and every negotiation then has to become a fight and it is very, very hard. You have had the studios in here and you have seen that the power they have is enormous. It comes down to silly little things like shelf space at any of the retail outlets. If you cannot physically get three feet of shelf space to put your DVDs on you cannot sell any DVDs. No independent can get that shelf space because these studios have access to it.

  Q1165  Chairman: What is your batting average?

  Mr Fellner: In terms of?

  Q1166  Chairman: You say you have got to have a success and you have obviously had some good successes, but there are a huge number of films that we know are really duffs. What is your batting average?

  Mr Fellner: It is today better than most but it could change tomorrow. We have been very lucky, but what we have done is we have done something which I would encourage other independents to do and that is rather than complain—I am not saying they do—rather than look at Hollywood as an enemy, look at Hollywood and embrace them. What we have done is a partnership in terms of taking everything that we do as well as we can and utilising everything that they do as well as they can and trying to get some benefit in bringing it back here. As such—I am English, I live in England, I want to stay living in England, I want to support the British film industry, I want our craftsmen to continue, our talent to continue. So what we have done is we have gone to Universal Studios, we did a deal with them in 1999 and we brought as much of their money back to the UK to spend on making British films and then distribute in a way that is hopefully as commercially successful as possible by using their clout in the marketplace with British films. One can get slightly distracted by how much money are we investing in the UK and what are we seeing as a return, but I think the industry is more than just money, it is actually about the people, the resources and the revenue generated by all of that rather than us as an investment bank.

  Q1167  Chairman: What about ownership? You say you did a deal with Universal; does that mean you are owned by Universal?

  Mr Fellner: We actually are owned by Universal. Working Title is a combination—we wanted to have a European partner in so we kept Studio Canal who are a French conglomerate involved in it. The company is actually owned by General Electric.

  Chairman: Yes, we saw the companies earlier.

  Q1168  Baroness Eccles of Moulton: But that still makes you an independent, although you are owned by them.

  Mr Fellner: We are weird because the fruits of our labours in terms of ownership—the fruits of my partner Tim Bevan, who I think you are seeing because he is about to be involved in the Film Council—the fruits of our labours and hence of our employees is as a result of ownership of a share of the copyright. So we may not own our company but we own a piece of every film that we make and that is where the real value is. The value is not actually in the company; it is very hard to make any money with an independent film company; I would suggest that it is virtually impossible. The only way you can do it is if you can access the distribution margin, which is the percentage that the distributor makes and then you have a share of that. Through the success that we had in the 1990s we were able to leverage that position and create an ownership of a piece of that margin.

  Q1169  Lord Inglewood: Who is leader in this context? Is it a separate company—you say you leveraged the money out, the company is owned by Universal and you have a French partner, not a British European partner, but you as it were derive advantage from the profits you are making through a percentage of various sales that you achieve.

  Mr Fellner: Yes.

  Q1170  Lord Inglewood: Is that you as an individual or do you do it collectively?

  Mr Fellner: When we negotiated it we had the opportunity to do two things: one was to just get the best possible deal for my partner and myself or to try and get the best possible deal for a sustainable company that could work through a long period of time which would include the employees and, ultimately, all the people that we then employ. We decided to do the latter, so rather than kind of just saying "Okay, we are guns for hire, the two of us" we said "No, we are going to stay with Working Title and we want to use a lot of the negotiable leverage that we have in making sure that we get a guaranteed overhead for the company over a long period of time, we want guaranteed development, we want guaranteed distribution, we want guaranteed BNA, we want the ability to make films even if the executives change at the company"—which they have done since we did the deal in 1999, so we could decide to make films ourselves. It created a sustainable company, which I know is the Holy Grail that everybody talks about, a sustainable industry, and the reason that Working Title has stayed around is for two reasons: one that we have had our fair share of success but in the periods when we have not done well we have been able to rely on the fact that we have created an organisation that is properly funded over a long period of time. The only way we were able to do that is because we decided to take the big bad wolf as a partner rather than go up against them.

  Q1171  Bishop of Manchester: The final Report Digital Britain published yesterday says "The Government believes that piracy of intellectual property for profit is theft and will be pursued as such through the criminal law." Earlier this morning we were hearing from the film distributors' perspective that this is the number one problem facing the industry. What is your view on that and is there any way in which you are involved at the moment in trying to come up with ideas which can prevent or at least limit piracy?

  Mr Fellner: It is true it is a major, major problem. It is theft and as such I was thrilled to see that written in such a black and white form because we have listened to the current minister who has waffled and suggested oh well, um, er, you have to support the people. I was shocked when I heard that—I went to a BBC conference about piracy and I just could not believe what I was hearing. Millions and millions and millions of pounds are invested in trying to create these pieces of material and it is not a charity, it is a business and it will get decimated in the same way as the music business did if there is not something that is done immediately. Sarkozy in France has shown that an iron will is what is needed; it will be interesting to see how that plays out now that it has become law over the next 12 months, but this is a fantastic beginning to an issue that should have been dealt with years ago. It would have saved the music industry if it had been dealt with properly.

  Q1172  Lord Maxton: How far down do you go with piracy? If I copy onto my hard drive a film which I then put onto a DVD and give to my son essentially that is piracy, although at the moment it is very unclear what the law is in terms of giving away rather than selling. Where do you draw the line, that is the problem.

  Mr Fellner: If you are giving away in your immediate circle that is one thing, but if you are giving away to strangers—which is what these file sharing things are doing—

  Q1173  Lord Maxton: For cash.

  Mr Fellner: Or for cash, yes.

  Q1174  Lord Maxton: The problem is eventually it may finish up in the hands of a stranger because I do not know my son's friends.

  Mr Fellner: I am not a law maker.

  Q1175  Lord Maxton: This is the problem that we have, is it not, how do you define what piracy is?

  Mr Fellner: Can I say one final thing? In South Korea there is no DVD market any more—I do not know if anyone has told you that before. There is no DVD market any more because they have brought in the big fat pipe that delivers at incredible speed.

  Q1176  Bishop of Manchester: What about within the cinema itself? We were hearing earlier that if camcorders being used within the cinema could be made illegal that would make quite a difference. Is that the case?

  Mr Fellner: That was the case at the beginning. There is some of that now but the illegal consumer is so savvy now that they realise if they really want it they will go and get a good copy that has been stolen at source. There is still the pub business of the £2 DVD that has been camcorded but that is slowly going to be dying out because the quality is such rubbish and even the people that steal the material want to steal good stuff, they do not want to steal bad stuff.

  Q1177  Bishop of Manchester: Welcoming, if you have done, what the Government is saying in this Report, were you to be asked directly what are your ideas for enabling this to be put into practice, is there anything beyond what you have already said?

  Mr Fellner: It is predominantly policing through the ISPs.

  Q1178  Lord Maxton: Can I just come in briefly on this because there is an important question on the next wave of technological advances which will be through the internet presumably. That will allow smaller films, presumably?

  Mr Fellner: Away from the piracy issue.

  Q1179  Lord Maxton: Yes.

  Mr Fellner: I do not know of any other industry where five or six companies have controlled an industry for 100 years in the same way as they have in the film business, but they have done it through three things. They started with property, physical studios in areas like California and then it spread slightly. They then did it through controlling the talent, all the talent was tied up to individual studios. Then they did it with finance because they were the only ones who could afford to pay for things. All three of those things have now gone but there is the fourth which is the only remaining barrier to entry and that is physical distribution, to have a network of physical distribution and the ability to get the shelf space, get into the cinemas and do output deals with television companies around the world. They are the only ones that have that infrastructure. Once digital distribution becomes available to any of us in this room, where we can go and make a film and we can stick it out there, if we can find a couple of hundred grand or whatever to publicise that material out there, the final barrier of entry to the industry will disappear and then the studios will be being competed with by the likes of you and I. That is not more than five or ten years away; I do not know if they fully believe that but a lot of people in the industry believe that.

  Q1180  Lord Maxton: So the next form of technological development is linking in your television set.

  Mr Fellner: That you can do with Apple TV. I do not know enough about the technology companies but we are being set up basically. They could do it today, there could be one piece of kit that we could buy today that would have everything on it but they want us to go 3D and then 3D TV. Yes, once you have got one piece of kit with a remote keyboard and a remote mouse and a huge set-up, that is it. The problem is we can break down what the studios do and we can start to become competitive, but the revenue model is going to be very hard to work out because at the moment you get this streaming model, a water-borne model, from theatrical release to DVD revenue to TV revenue to ancillary revenues, and the minute that you put something new in there, nobody quite knows which bits are going to disappear and how much they are going to disappear, so it is very hard to work out how to price that new delivery system. The whole thing is quite sensitive and brittle, therefore, but in the next five or ten years it is going to be a very different world.

  Q1181  Chairman: Thank you. Just one last question. You sound really quite happy with the progress that the British Film Institute has made and is making; is there anything that you want as far as the Institute is concerned, as far as government is concerned?

  Mr Fellner: I will give the non-political response and then Amanda will give the political response. I just think that we are scratching the surface. You just have to look at the grant in aid for some of the other cultural bodies and you realise that the film industry, film culture, is woefully underfunded and should be funded in a greater way. Secondly, film has no dialogue directly with government so it has to go through the Film Council which ostensibly is a commercial body, so the idea that a cultural body is funded by a commercial body funded by the Government seems to be a mis-step to me. I know there are conversations about how those two bodies will operate in the future, but more money, more attention, more love would make an enormous amount of difference from my perspective.

  Q1182  Chairman: That is the non-political answer so you are going to give me a political one.

  Ms Nevill: I do not think I will actually.

  Q1183  Chairman: Is there anything else you want to say?

  Ms Nevill: Just one tiny little thing. We have talked massively about the archive and I am sure you all know this, but the BFI is not just about films of the past, we run the London Film Festival and we are in the business of bringing in films by emerging film makers, so it is very much a dynamo. Also we are leaving some bribes for you here.

  Mr Fellner: These numbers are very impressive. You asked about how many prints go to the regions—12,000 prints a year go out of London around the country; 300,000 DVDs of old BFI library films are sold; 125,000 people come to the London Film Festival and it shows 300 films from 43 different countries. As a film producer I never took the London Film Festival seriously, I would never let any of our films be launched at the London Film Festival but now we do. With Frost Nixon last year it has now become a fantastic event, much bigger, and the industry is now supporting it in a much bigger way.

  Q1184  Chairman: Thank you very much. We have ranged quite wide in the evidence.

  Mr Fellner: Sorry about that.

  Chairman: Do not apologise, it has been absolutely fascinating; thank you very much. We may have one or two other points to put to you but perhaps we might do that by correspondence.




 
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