SYDNEY — For many years Australian film producers have had an unhealthy reliance on government funding, and they’ve found it tough to attract private investment locally and coin from overseas sources.
All that is about to change after the Film Finance Corp. Australia approved a radical new business model last week.
The funding agency will switch its focus from equity investment to putting up distribution guarantees, or DGs, against Oz and worldwide rights, or, for a few high-profile films, P&A money to trigger release in North America or key Euro territories.
The new strategy will boost the FFC’s returns, which in turn will enable it to bankroll more films, according to Brian Rosen, who signed on as chief exec last March.
By providing distrib guarantees of up to 60% of budgets, the FFC is counting on producers’ ability to raise coin from Aussie investors using the seldom-tapped division 10BA tax break, which gives a 100% writeoff over two years, and from film funds in the U.K. and Germany.
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The model could also be applied to miniseries — an endangered species since the Oz TV networks are only willing to fund a small percentage of the budgets.
Until now the FFC has made equity investments of up to 50% of films’ budgets but has been badly placed to recoup, behind foreign sales agents.
Now, “our money will be last in and first out, meaning our returns are quicker and far greater,” Rosen says, “and the industry will be less reliant on direct government funding.
“We’re opening the door to innovative financing models. The FFC recognizes the need to be more proactive and to help the Australian industry get back up and be more productive.”
The FFC recouped just $9.2 million from investments in films, miniseries, telepics and docus in the 2001-02 fiscal year, and Rosen says that’s likely to fall to $4.5 million in the current year and next year.
“If we had continued (purely as an equity investor), we could do six to seven films a year. Now we should be able to do 10 to 12 films a year,” he adds.
He foresees putting up the P&A for North America and Europe for films with name casts, such as pics like “Lantana,” which would enable producers to secure sizable pre-sales in various territories.
The FFC board approved Rosen’s game plan after consulting widely with guilds and individuals. For an industry notoriously fragmented and divisive, there was widespread support for the new model. “For the first time in many years, the industry reached a consensus,” Rosen says.
The first projects seeking DG funds are expected to be presented to the FFC’s board meeting next month. In the first year, the board has suggested a ceiling of $6.5 million on providing guarantees, but Rosen says that is flexible.
The board also approved an increase from $2.9 million to $3.2 million in the maximum equity investment per pic, acknowledging the inflation in budgets.