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Blighty’s blight: Indie pix suffer

LONDON – When David Lynch’s ”Lost Highway” was unveiled to foreign distributors in London a couple of months ago, not a single British buyer turned up to the screening. Yet the film had presold everywhere else, and the U.K. was the only territory still available.

It’s a typical incident, and it illustrates just why producers and sales agents now regard the U.K. as the toughest major market in which to sell independent films.

There’s an acute shortage of well-resourced indie distribs, which means they can afford to be very careful how they pick and choose in a market where Hollywood movies rule almost unchallenged.

Mounting frustration is driving several sales companies to consider handling their own theatrical distribution in the U.K. beginning next year. Goldcrest and Canada’s Alliance have declared firm intentions, while the likes of Winchester and Ciby (which handled the Lynch movie) are mulling their options.

But existing distribs warn that the newcomers could be in for a nasty shock when they discover firsthand just how punishing the British market can be.

They argue that the U.K. combines heavy marketing costs with the lowest distributor rentals in the known world. That, they say, explains why indie distribs are an endangered species, and why so many movies go unsold.

All of which means that there’s growing concern about what will happen to the glut of British movies that is going to be generated by the injection of national lottery funds into local production.

Next spring the Arts Council of England will award up to four production franchises, to be funded by lottery cash. The winners will have to give detailed U.K. distribution plans for their pics, which involves either hooking up with an existing distrib or launching their own releasing arms.

But with the U.K. market already painfully tight, it’s unclear how this will work. The fear is that the lottery will create a mountain of unreleasable movies without the distribution infrastructure capable of handling them, let alone any audience demand to see them.

”The lottery may be a devil in disguise,” confides one sales exec whose company is going to be a leading bidder for a franchise. ”It’s quite a maze, and nobody really knows what they are doing.”

Channel 4 has learned just how thankless it can be to release British movies in the home market. The web launched its own distribution last year after long frustration about the way its films were handled in the U.K.

Its two most recent releases were the critically acclaimed ”Brassed Off” and the widely excoriated ”True Blue” (co-funded by the lottery). ”True Blue” was a megaflop, but the real problem is illustrated by ”Brassed Off,” which has the look of a genuine hit.

The pic has grossed a sparkling $4.3 million, but after subtracting the 17.5% sales tax on tickets and the exhibitor’s share of gross (typically somewhere between 70% and 75%), that leaves Channel 4 with a grand take of $1 million – which doesn’t even cover the reported $1.3 million in prints-and-advertising costs. And that’s as good as it gets.

Rock-bottom rentals

Distributor rentals of just 30% at most, and more typically 25%, are probably the single biggest reason why the cards are so heavily stacked against indie movies in the U.K. By comparison, Japanese distribs get 50% of box office gross, and the Germans command 45%.

Meanwhile, despite the multiplex-building boom, the U.K. is underscreened. ”It’s not difficult to get screens, but it certainly is to keep them if a film doesn’t open strongly,” says Ciby’s Fiona Mitchell. That plays into the hands of the American majors, who have deeper pockets for big-bang openings, and the comfort of richer satellite TV deals to subsidize their P&A costs.

It’s little wonder, then, that the handful of deep-pocketed indies huddle around the warmth and relative safety of big Hollywood pics whenever they can.

Entertainment Film Distributors is the U.K. outlet for New Line, Mandalay and Cinergi; First Independent has a deal with Scott Free; Rank is tied to Castle Rock and Turner; and Guild, owned by France’s Pathe, was the long-standing outlet for Carolco movies. Polygram is a big new player on the U.K. distribution scene, but its slate is mostly filled by its own movies.

Pix left in the cold

That adds up to a distinct lack of competition to buy the riskier indie pics. Sales companies look for a U.K. minimum guarantee to cover as much as 9% or 10% of a film’s budget, but in reality distribs tend to offer no more than 6% or 7%. They also resist attempts to jam marginal pics into packages with desirable ones, and don’t like the growing tendency of sales companies to split out TV rights.

”The problem for the sales companies is that they can’t find buyers stupid enough to pay large prices,” says a leading British distrib. ”If they launch their own distribution companies, then they’ll be able to experience directly the positive and the negative of this business, which is not particularly profitable.

”The question is where people think they are going to get the P&A from to give their films a proper chance against the big Hollywood movies,” he adds. ”The lottery means there are going to be a lot more films, but if they don’t take any money on their first weekend, they’ll all be out of the cinemas the next week. The danger is that we’ll get 30 low-budget British movies, but I don’t see audiences wanting that.”

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