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FilmFour’s deep-sixed

Company's exit would be blow to industry, Film Council CEO sez

LONDON — FilmFour, the British film production and distribution company behind “My Beautiful Laundrette” and “Trainspotting,” is expected to be shuttered today by its parent Channel 4.

Decision, which would involve axing 55 staff including FilmFour chief exec Paul Webster, is due to be ratified at today’s meeting of the Channel 4 board.

The web’s new chief executive, Mark Thompson, is believed to have lost patience with the money-losing film company and wants to absorb its production activities back into Channel 4’s drama department.

That would mean slashing investment in film production and closing down its U.K. theatrical distribution operation, its international sales arm and its Los Angeles office.

Move would rep a huge setback for the British film industry. Even though Channel 4’s film arm has underperformed financially and, arguably, creatively, since it was spun off from the web into a stand-alone company four years ago, it remains a cornerstone of the local industry, investing $60 million per year in production and distribution.

Channel 4, which itself went into the red for the first time in nearly a decade last year, has been reviewing the future of FilmFour for several months, exploring various corporate options involving mergers or joint ventures with other film players. None of these discussions, however, progressed to the stage of serious negotiations.

Late last week, some industry sources still held out the faint hope of a last-minute compromise to salvage some of its operations, although most believed the shutdown to be a fait accompli that was merely awaiting the board’s rubber stamp. Some FilmFour execs were already actively circulating their resumes last week.

Film Council concerned

The Film Council was also engaged in desperate late lobbying. C4, a pubcaster funded entirely from commercial revenues, is mandated to invest in British filmmaking.

“I am extremely concerned,” Film Council chief exec John Woodward declared. “FilmFour is a very important part of the ecology of the British film industry, both in terms of creative risk-taking and financial muscle. Its disappearance would be a real blow to building a sustainable film industry.”

FilmFour lost $8.2 million on sales of $65.5 million in 2001, after losing $4.6 million the previous year.

‘East’ was last hit

It has not produced a theatrical hit since “East Is East” in 1999, although some recent high-profile “flops,” such as Gillian Armstrong’s “Charlotte Gray” and Peter Cattaneo’s “Lucky Break,” actually made a profit through pre-sale and co-production deals with partners including Warner, Universal, Miramax, Paramount and Senator. A deal to co-produce Warner’s ill-fated “Death to Smoochy,” however, was less financially astute.

As well as attempting to produce bigger-budget movies for the international marketplace, FilmFour also invests heavily in developing new talent through short films and the low-budget FilmFour Lab.

It is unclear whether C4 will sustain its commitment to these areas and what will happen to the more mainstream projects in the pipeline, including “Edgardo Mortara,” starring Anthony Hopkins, which is due to be co-produced with Miramax.

Many of C4’s greatest movie hits over the past two decades, from “My Beautiful Laundrette” to “Trainspotting,” were produced when film investment still fell under the web’s drama department.

But C4 decided to build on the “Film on Four” brand by spinning off the movie arm into a separate profit center, handling its own U.K. distribution and foreign sales. It struck a long-term co-financing deal with Germany’s Senator and a co-production pact for bigger-budget movies with Warner.

But at the same time, growing competition from other U.K. players, such as Working Title, BBC Films and the three lottery franchises, meant that FilmFour no longer had first choice of all the best British projects. As it produced one quirky misfire after another, many in the industry began to question its creative choices and strategy.

FilmFour is part of C4’s commercial arm, 4 Ventures, which also includes pay TV services E4 and FilmFour, both of which are still some distance from break-even. In 2001, 4 Ventures suffered a $65 million deficit.

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