Lottery franchise plays Fox trot

After two years on the sidelines sorting out its corporate future, lottery franchise DNA Films is finally ready to get back in the production game with its new partner Fox Searchlight.

The rebirth of DNA, now bankrolled jointly by Searchlight and lottery coin from the U.K. Film Council to the tune of $50 million, reverses the depressing trend of corporate closures (Polygram, HAL Films, FilmFour, Granada Film, Signpost) that has dogged the British film industry in the 21st century.

It also heralds a major long-term commitment by Fox’s specialty label to film-making in Blighty, building on its recent successes with “Bend It Like Beckham” and “28 Days Later,” itself produced by DNA.

DNA actually shot Danny Boyle’s sleeper hit back in 2001, but has made nothing since while topper Andrew Macdonald sought to restructure the company as a joint venture with a global distributor. Early talks with Sony and StudioCanal fizzled out, but after a year of tortuous negotiations, DNA finally closed last week with Fox.

Searchlight has taken a 50% stake in DNA, and committed $25 million in production finance to match the $25 million in lottery coin that the franchise still has left. The Film Council has extended the franchise term, originally due to expire next March, for another five years.

The recent history of such Hollywood ventures in London is not auspicious — think Miramax’s HAL, again, or Sony’s the Bridge. But Macdonald argues that DNA has a more “realistic” business plan.

The reborn DNA is already moving fast towards the first movie of its new era. It is in advanced talks with Celador Films to co-finance “A Way Through The Woods,” the directorial debut of “Gosford Park” scripter Julian Fellowes.

This $8 million romantic drama, starring Emily Watson, Tom Wilkinson and Rupert Everett, starts shooting Sept. 8. Celador is currently carrying the entire budget from its own $12 million production fund, but DNA is looking to come alongside in return for distribution rights.

Ironically, DNA’s late interest has squeezed out the Film Council’s own Premiere Fund, which was poised to back the pic.

Searchlight’s Brit connection

Following the Searchlight model, the new DNA will make British movies costing up to $15 million. As well as developing and producing its own projects, it will be Searchlight’s primary vehicle for pre-buying North American or other rights to any U.K. project. The only thing DNA won’t do is buy finished films.

Greenlight decisions will be taken jointly by Searchlight’s British-born president Peter Rice and Macdonald, who runs the DNA along with former Miramax exec Allon Reich. Co-founder Duncan Kenworthy has stepped back from the company’s management, but he remains a shareholder and non-exec director.

After Fox takes its distribution fees, all revenues will be retained by DNA for reinvestment in new movies. That marks a crucial departure from the terms of the original franchise, under which any lottery coin recouped went straight back to the Film Council. The org is effectively wielding the coin as venture capital with a new exit date in 2008.

Macdonald (producer of Boyle’s movies) and Kenworthy (who produces for Richard Curtis) won the six-year franchise in 1997. They were awarded $44 million but managed to spend less than half of that, producing six pics rather than the promised 16.

On the face of it, that doesn’t make much of a case for DNA to get a second chance. But Macdonald deliberately suspended production over the past two years because he recognized that the company was built on quicksand unless he could anchor its foundations to a major distributor.

But what has Fox’s ultimate boss Rupert Murdoch done to deserve such generosity, particularly since his satcaster BSkyB is notorious for its paltry support of the British film industry?

Film Council chief exec John Woodward rejects the accusation that he’s simply subsidizing a wealthy Hollywood studio. “We’re using the lottery money to find a way of building a proper British film company, harnessing executive and creative talent to worldwide distribution,” he argues. Rice adds, “There’s no capital coming from DNA into Fox. I actually think we’re giving money to them.”

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