Franchises get overtime

The U.K. Film Council has agreed to extend two of its three lottery franchises by another six months.

The Film Consortium and Pathe Pictures, whose six-year contracts were due to expire this fall, will get more time to spend what they have left in their lotto pot, but will receive no extra money.

The decision is sure to spark controversy. Many critics regard the franchises as a failed experiment that should have been terminated three years ago when they came up for midterm review.

In retrospect, some Film Council insiders share that view. But at the time, having only just taken over responsibility for the franchises from the Arts Council (which set them up in 1997), the org was not sufficiently confident of its legal grounds to act.

However, at this late stage the Film Council believes that no one would benefit from an unseemly rush by the franchises to greenlight under-cooked projects simply to meet an arbitrary deadline. Also, there’s a contractual gray area about the exact cutoff date for production decisions, so the Film Council has decided to err on the side of generosity.

There is, however, a quid pro quo. In return for the extra six months, the Film Council will take more active creative role in approving the remaining movies.

The third franchise holder, DNA Films, is also in line for an extension, but this depends on the outcome of its laborious negotiations to create a long-term production partnership with Fox Searchlight.

If and when the Fox deal finally closes — which is expected to happen within the next couple of weeks after Searchlight’s U.S. box office success with DNA’s “28 Days Later” — DNA’s franchise will be renewed for a much longer period because it has so much money left to spend.

The Arts Council originally dreamed up the idea of devolving part of its lotto budget to commercial players in the hope of creating mini-studios capable of thriving after the subsidy ran out.

It awarded the franchises in May 1997 after a fiercely contested auction involving just about every British film company. The three winners each got around £30 million ($49 million) over six years as equity to co-finance British movies.

The clock didn’t actually start running until the contracts were signed a few months later: So the Film Consortium’s term was originally due to expire in September 2003, followed by Pathe in October and DNA in February 2004.

None has spent the money as quickly as expected. The Film Consortium and Pathe each have a few millions left — enough for two more pics apiece in the extra six months. DNA Films, which has greenlit nothing for 18 months during its on-off talks with Fox Searchlight, still has a remarkable $26 million (more than half of its original award) to draw down.

None of the three companies has exactly flourished over the past 5½ years. Sporadic hits (“28 Days Later,” Pathe’s “An Ideal Husband”) have been amply outweighed by egregious flops. There have been controversial changes to strategy, management and ownership.

Film Council sources say that by the end of the sixth year, the combined lottery investment through the franchises will have recouped $54 million less than the companies predicted in their original business plans.

So, was the whole experiment a waste of $150 million? There are many in the British film community and on the Film Council who believe so.

But, ultimately, only the survival, or otherwise, of the three companies at the end of their franchises will reveal whether that’s true. The Film Council has clearly judged that an extra few months will marginally improve the odds of a positive outcome.

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