Broadcaster, Pact agree to deal
BBC Films is making it easier for U.K. producers to share in the profits their films make by creating what it calls a “corridor” for producers to access 30% of the equity the BBC recoups on a film.
This will promote one of government’s intentions when it introduced the U.K. tax credit system last year — to up producers’ stakeholding in films and ensure coin flows back into the film industry.
In 2007, the BBC, the U.K. Film Council and Film4 agreed that any tax credit used to fund a film should be treated as equity funding provided by the U.K. producer, giving them a proportionate share of a project’s initial receipts alongside the public funders and equity financiers. As many films do not make a profit, this would push the producer’s stake in the film higher up the chain and give a financial return on a par with other investors in the film.
In reality, this has proved hard to achieve. So the BBC is creating a corridor for the producer from the equity it recoups. This will apply wherever the tax credit has not been treated as producer’s equity.
It is one of a number of changes agreed to by the BBC and Pact, the U.K.’s largest trade association that represents the commercial interests of indie film, TV and other media content companies.
From now on, the BBC will have a maximum 15-year broadcast license in the U.K. If after five years the pubcaster has no further plans to air a film, then either it or the pic’s producer may exploit those rights elsewhere in the U.K., with a 70-30 split in profits if the BBC has not recouped its costs or 50-50 split if the BBC’s equity has been repaid.
The BBC also is dropping its charge of a 50% premium on development costs incurred if it turns down a project that is picked up by another financier. The requirements for trust accounts at development stage also will be abolished.
Pact has welcomed the BBC’s moves. “We’re delighted that the BBC has shown the way forward with this initiative, which will make a real difference to British film producers,” said Andrea Calderwood, Pact’s vice chair of feature film and topper at Slate Films. “Independent producers put a lot of investment — of commitment as well as money — into their films to make them happen, and this will give them the chance to make a proper return on their investment.”