Lottery boosts U.K.

Film financing org to be restructured

LONDON — Brit filmmakers have a raft of financing options, but how successfully they’re tapped and exercised seems to be an ongoing issue.

After much debate and re-examination, the various government-backed funds and the Lottery Film Program (now managed by the Arts Council of England) will be restructured under a council umbrella, likely to be called British Film. An announcement from the minister of culture on what the new body might look like is expected during the Cannes Intl. Film Festival. The aim is for the entity to be in place by next April.

“The eventual body will be much more federal than unitary,” says Simon Perry, who heads British Screen Finance, which monitored the now-on-hold Greenlight Fund that was dedicated to backing U.K. films from internationally established directors. “We’d like to be a part of this in a key position on the development side and maybe distribution.”

Perhaps one of the most lucrative funding sources, the Lottery Film Program has disbursed some £70.1 million ($114 million) to date to three production franchises, single-picture applicants and other recipients.

The franchises — DNA Films, Pathe Pictures and the Film Consortium — collectively have received about $25 million over the last two years, part of a total $158 million committed to the troika over a six-year period.

While most franchises work with a set pool of producers and filmmakers, Pathe recently established an open-door policy allowing any British producer to access lottery coin as well as investment from the franchise’s backers, Pathe and Studio Canal Plus.

The key, of course, is that films accessing government and lottery coin must pass certain economic and cultural tests to qualify as a “British” film. The essential factor is the film must be developed in the U.K. and 70%-80% of the production cost must be paid to British or European citizens.

Films that fail this economic test still may tap into tax-related incentives, such as sale-and-lease-back plans. Basically, they allow producers to earn money upon the completion of a film by way of refinancing the production outlay. In return for the tax savings enjoyed by the bank or individuals who participate in such a program — which in the U.K. is a 100% first-year writeoff for investment in many European films — the producer receives a benefit equal to a set percentage of the production cost of the film.

Of the six such plans around, the Factor 8 grouping is touted as being the one giving producers the biggest benefit: 9%. The key difference is that Factor 8 is not technically a sale-and-lease-back scheme and investors also share in the back end. “Factor 8 (participants) are looking to get in on the side of production now,” says attorney Mark Westaway, who helped set up the system. “Investors will advance their money and become an equity player in a sense, while getting a tax break.” In 1998-99, 17 films were assisted by Factor 8, including John Boorman’s “The General” and Sara Sugarman’s “Mad Cows.”

Beyond the lottery and tax plans, there’s still substantial funding to be had from the U.K. broadcasters, particularly Film Four and, increasingly, Sky Pictures. Other funds are available from a range of regional funding in England, Scotland, Wales and Northern Ireland that can be quite rewarding if a film’s major elements deal with a specific region and the pic requires substantial amounts of location shooting.