Aussies brace for financing pinch

Film, TV producers expect economic shortage

SYDNEY — Film and TV funding in Oz has not yet been stung by the economic tumult but producers and financiers warn production levels are not guaranteed in the long term.

Screen Producers Assn. of Australia exec director Geoff Brown says production is healthy. “The good news is there is not much exposure; the bad news is there’s not much exposure.”

Oz pic production is heavily reliant on non-commercial funds, with lower-budget pics — those under A$5 million ($3.2 million) — usually financed by federal agency Screen Australia in conjunction with individual state agencies, a domestic distrib guarantee and a foreign sales guarantee.

In addition to this mix, some producers arrange finance from commercial sources for the proportion of their budget that is eligible for the federal government’s new 40% producer offset (payable upon completion of the film), and sometimes high net worth individuals also invest.

The reliance on soft money means lower-end producers are in the short term largely unaffected by the market tumult but higher budget pics are enduring the tough market conditions akin to indies worldwide.

An oversupply of films, complacent buyers and competition for screens are making funding difficult.

“Disgrace” producer Emile Sherman is about to hit the phones to arrange financing for his next pic, budgeted in the difficult $3.2 million-plus range. Despite the downturn he is optimistic about raising the money, in part because some hedge funds still have coin to spend.

“I’m not sure who is still in business and who’s not, but film has a habit of bringing in money from unlikely sources,” Sherman says.

The upside to the Aussie dollar plunging against the greenback this month is that where Sherman once needed $2 million, he now only needs $1.5 million to finance pic’s international pre-sales.

Sherman anticipates there will be a tightening effect will mean “the strongest films will still get made and as the quality improves it will benefit our Australia brand.”

As diminished advertising leads networks to cut costs, Oz TV producers will feel the pressure, but SPAA’s Brown is optimistic the pain won’t be too bad. “With the Nine Network for example and all the problems it’s had lately, its biggest strength is Australian drama.”