Film Production Bites Budget, Grows Cannier

“Head above water,” “taking in the belt,” “just trying to stay afloat” are the catchcries of the Australian production industry as it faces one of its most difficult years to date.

Like a spoiled teenager coming to terms with the harsh realities of adulthood, the industry’s transition from ’80s tax-based funding to life in the ’90s under the Australian Film Finance Corp. is proving difficult.

But it was change it knew it needed. Most of the shysters have been weeded out. Producers are getting wiser; international contacts, essential to the industry’s future, are improving. And, on balance, the quality and commerciality of Oz offerings is rising.

Since 1988 around $A300 million worth of government funding has been spread over four years by the Film Finance Corp., generally on a commercial investment basis contingent on private sector backing and marketing attachments.

It’s always been expected the industry would become more compact as a result. “Australia would have a really hard time supporting an independent production industry of the size it was in the 1980s,” says Phil Gerlach, co-m.d. of Beyond Intl. and prexy of the Screen Production Assn. of Australia. “There has to be a logical scaling down of expectations.”

But what wasn’t figured on was the near collapse of the local tv industry and recession-driven economies here and abroad.

License fees for local miniseries have halved from $A300,000 an hour 18 months ago to $A150,000 hourly, “which means the networks are saying they don’t want them,” notes a key player.

Realistic tension

“There is tension between what the networks think is realistic and the reality of production costs; there’s a great disparity between them,” says Kim Williams, chief exec of Southern Star Entertainment. Adds Patricia Edgar, head of the Australian Children’s TV Foundation: “It’s very difficult out there. Prices have dropped in Australia but costs haven’t.”

Budgets have been shaved to the point where, per industry sources, some ongoing series are being debt-financed to make up for the shortfall in the hope of making up the difference with international sales. At the same time, the level of ongoing series and gameshows (currently around 15 titles) appears to be up.

Not a brass razoo

Says Richard Becker of Fremantle Prods.’ Oz operation, which is making “Let’s Make A Deal” for the beleaguered Ten web: “Producers are having to cover some of the costs with the result that you wouldn’t believe the margins on some (ongoing) shows. ‘Let’s Make A Deal’ won’t make a brass razoo.”

Adds Matt Carroll of major house Roadshow Coote & Carroll, who figures there have been 30% cuts across the board, “There’s some very hard bargaining going on.”

It’s even said there is collusion between the commercial webs over pricing, but of course that can not be proved either way. But, notes a well-placed source, “There certainly appears to be more than a coincidental understanding.”

One casualty will be the indie producer and the freelancer, working on a project-by-project basis. Yet many players think this is inevitable anyway.

Says Kim Williams: “Producing doesn’t happen out of a suitcase. It happens now when you have an infrastructure and capital. This is part of the growth and development of the industry.”

Adds producer Paul Barron: “There’ll always be the lone wolf, but you need administrative and financial backing to land a deal in the ’90s.”

That means more producers orbiting around the established houses or joining forces. Yet, ironically, the larger companies are also under threat because of FFC funding policy. Established players are saying the FFC doesn’t fully recognize in its funding levels the above-the-line overheads a sizable company carries, so a regular volume of production is needed to maintain viability.

‘Profound ignorance’

“It puts you in an impossible situation of the dog chasing its tail,” notes one producer, who says the FFC’s stance displays a “profound ignorance” of the industry.

FFC chief exec John Morris concedes it needs to be looked at, but warns: “It never has been and never will be easy to allocate the limited funds of the FFC to make everyone happy. Many different producers have many different ideas about where the money should go.”

He also says the FFC will be reviewing its policy of tv drama needing a local presale to be eligible for investment. “But by and large we don’t believe in interfering with the market,” he says. “It’d be hard to justify investing if a network didn’t want to prebuy.”

Downturn is also hurting the industry’s infrastructure.

Video post-production houses are reeling. Atlab, the country’s major lab, says it has seen sales plummet 52% since November, largely because of lack of tv work. It’s so bad m.d. John Donovan is lobbying government to get more release print work from the major film distribs.

Law firms and completion guarantors are undercutting each other despite shrinking margins. “To have four guarantors in an industry of this size is bizarre,” says Film Finance’s Helen Watts.

Film-related membership of the Australian Theatrical & Amusement Employees Assn. has shrunk from 1,600 to 1,045 in three years in Victoria alone, which federal secretary Charles Livingstone says is “fairly indicative” of an overall contraction in members.

For the first time in 12 years membership of Actors Equity is showing no growth. “Clearly it really is starting to bite out there,” says federal secretary Michael Crosby.

Talent drifts away

And there’s a “silent drift” of technical talent to L.A. that has extended beyond directors and cameramen to assistant directors and line producers, observes producer Sue Milliken. “You used to know what your production infrastructure was before a production started. Now you can’t be sure. It’s a real drain of talent.”

Feature production, however, is steady. The FFC has entered into negotiations on investment in 15 pics since July 1, about the same as this time last year. That’s in addition to backing five films in its 1991 film fund. And some bigger players are now entering pic production, including the Australian Childrens TV Foundation (with “Raggedy Eileen”), and PRO Filmworks, the Oz-owned L.A. film production company (with “Gross Misconduct”).

Although six-hour miniseries are now practically extinct, the bigger players are still managing to make four-hour minis that incorporate significant overseas and local involvement. Pubcaster Australian Broadcasting Corp. and the Seven Network have emerged as key players.

The ABC has underpinned much of Australia’s tv drama over the past two years by facilities deals. And as the Nine and Ten webs arguably remain quota-driven when it comes to commitment to local production, the Seven Network continues to invest at a substantial level. “The ABC and Seven are very critical to the fortunes of the Australian production industry,” avers Williams.

Some more cost-effective production is also appearing. New mini “Good Vibrations” from Lynn Bayonas and Rod Allan will be shot entirely on video instead of film with a much reduced budget of $A2 million. Producer Bob Weis recently has assembled a package of six telepix, called “Six Pack,” to consolidate production costs.

Earlier this month the Grundy Organization announced the first privately financed miniseries, “The Other Side Of Paradise,” in three years. With Central Films taking up some of the budget, Grundy believes it more practical to negative finance a portion of the remainder rather than follow FFC requirements.

“We’re aiming to go this way in the future,” says tv head Ian Bradley.

The Aussie Film Commission has approved 15 coprods since 1986, and chief exec Cathy Robinson says two more treaties (probably Germany and the USSR) could be completed by the end of the year.

AFC is also considering backing four low-budget features over the year; it has done eight since 1988. Beyond Intl. is looking to produce four low-budget features with Canada’s Alliance, using new directing talent.

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