Company back on track
Eight months after the bruising defeat of Black Tuesday, Patrick McKenna‘s Ingenious Media is making its comeback in the British film financing game, more determined than ever to win for the long term.This week the company will launch Ingenious Film Partners, which plans to raise a minimum of £100 million ($180 million) to invest in all stages of production and distribution. McKenna, who ran the Really Useful Group before founding Ingenious in 1998, insists this is not a tax-driven fund in the old sense but a wholly new, vertically integrated approach to the U.K. film business. And he’s putting his own money where his mouth is. Half the capital will be drawn from the company’s extensive client base of rich individuals and corporations, but the rest will be committed by Ingenious itself. “It’s a real partnership between Ingenious and other investors, using genuine risk capital to operate an integrated studio model but without the studio facilities,” McKenna says. Roughly half the money is earmarked for production, but IFP will also have its fingers in everything from development to rights acquisition and P&A. As well as spreading risk for the investors, McKenna explains, “it means we can be more flexible in the way we work with creative talent.” Ingenious already has struck development deals with two British producers, Graham Broadbent (“Millions”) and Alison Owen (“Proof”). In the longer term, McKenna predicts Ingenious will evolve its own production operation, and form joint ventures for U.K. distribution and foreign sales. Twice in the past year, the company has attempted to buy into Brit indie distribs through its private equity arm. McKenna’s bullishness is a far cry from the bleak mood of Feb. 10, when the U.K. government suddenly dropped the ax on various film tax schemes, including the Inside Track fund run by Ingenious. In the previous two years, Inside Track bankrolled more than $800 million of production, putting up a third of the budgets for indie and studio movies including “Wimbledon,” “Alien vs. Predator,” “Kingdom of Heaven,” “Closer,” “Bride and Prejudice,” “Shaun of the Dead” and “Vera Drake.” McKenna had long predicted the government would clamp down on rival funds that he regarded as mere tax avoidance mechanisms. But he was aghast when Inside Track was also caught in the net. “We’re probably one of the largest investors in the creative industries in this country. I don’t put us in the same category as people who have set up companies solely to generate commissions from film tax schemes. In the past I didn’t go out of my way sufficiently to differentiate what we were doing, and as a consequence I got punished,” he says. He spent the weeks after Feb. 10 lobbying and arguing with tax officials that Inside Track was a legitimate attempt to attract long-term investment into British filmmaking. It was an argument he couldn’t win, of course, but the structure of IFP emerged out of that dialogue. “In the end the government understood better where we were coming from, and we clearly understood what they thought was acceptable,” he says. Judging by advance interest, McKenna predicts IFP could end up raising substantially more than the $180 million minimum by the time its first fund closes next March. Further funds will likely be launched in subsequent years. The business plan envisages an initial slate of around nine pics to be greenlit by July, costing a total of $100 million, although that will increase if the fund exceeds its target. The remaining investment in development and distribution will be phased and recycled across a five-year life span. “Sometimes in life you go through something terrible, and then it turns out to be the best thing that’s ever happened to you,” McKenna muses. “We’re not quite there yet, but I’m hoping Feb. 10 was one of those moments. It encouraged us to look at what’s truly sustainable going forward.”
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