2014 Examination dates

Year 12
TV Drama + Audiences and Institutions: 23rd May AM

Year 13
Critical Perspectives in Media: 10th June AM

Media ownership in the UK film industry - "The King's Speech" institutional case study

Here are links to information about institutions involved in funding, producing, editing and distributing The King's Speech (2010):

The National Lottery
http://www.lotterygoodcauses.org.uk/project/kings-speech


UK Film Council
http://en.wikipedia.org/wiki/UK_Film_Council
http://industry.bfi.org.uk/
http://industry.bfi.org.uk/kingoscars

The Weinstein Company
http://weinsteinco.com/
http://en.wikipedia.org/wiki/The_Weinstein_Company
http://www.capitalnewyork.com/article/culture/2011/01/1094564/kings-speech-and-weinstein-formula-industrial-conquest

Momentum Pictures
http://en.wikipedia.org/wiki/Momentum_Pictures

Aegis Film Fund
http://blogs.wsj.com/deals/2011/03/01/the-kings-speech-a-royal-return-for-film-financing-fund/
http://www.efinancialnews.com/story/2011-03-01/aegis-film-fund-gains-from-kings-speech?ea9c8a2de0ee111045601ab04d673622
http://www.thisismoney.co.uk/money/investing/article-1714421/Oscar-glory-How-to-invest-in-films.html
http://www.ifaonline.co.uk/ifaonline/feature/2039807/killing-movies
http://www.presciencefilmfinance.co.uk/
http://www.screendaily.com/aegis-film-fund-to-invest-50m-in-film-productions/5000482.article

Molinare, London
http://molinare.co.uk/
http://www.filmlight.ltd.uk/customers/case-studies/film/kingsspeech.php
http://www.screendaily.com/news/production/molinare-to-shift-focus-away-from-equity-post-deals/5036121.article
http://www.postmagazine.com/Press-Center/Daily-News/2011/Molinare-supports-The-Kings-Speech.aspx
http://www.growthbusiness.co.uk/news-and-market-deals/fundraising-deals/2345123/production-house-behind-the-kings-speech-and-masterchef-backed-by-saphir-capital-partners.thtml

FilmNation Entertainment
http://www.wearefilmnation.com/the-nation
http://variety.com/2013/film/features/filmnation-at-5-1200465888/

See-Saw Films
http://see-saw-films.com/

Bedlam Productions

The British Film Institute
http://www.screendaily.com/territories/uk-ireland/kings-speech-bfi-gets-kings-ransom/5024247.article

http://www.independentcinemaoffice.org.uk/resources/how-to-start-a-local-cinema/capitalisation/screen-agencies

Other links:

http://www.bfi.org.uk/live/video/500

Some more articles and information:

 Funding and ownership of the Film Industry

The film and television industries in the UK and the US are made up of many companies that are all owned and funded in many different ways. I will first discuss the film industry and then move on to the television industry, focussing on the ways these two similar but different media industries are funded and owned in the UK and the US, referring to a range of contemporary and historical examples.

FILM INDUSTRY

The film industry in the UK is made up of a number of different parts. There are companies that are involved in Development, Production, Facilities, Distribution, Exhibition and Export. Skillset’s most recent research shows that there are ‘around 400 'permanent' (i.e. registered) companies in the film industry’ but this number can vary depending on how many film productions are being worked on in the UK at any time. Their research also shows that of these companies, ‘43% are production, 13% are distribution and the remaining 44% are exhibition companies’, meaning that much of the distribution side of the film industry is likely funded by foreign companies, often Hollywood studios that help to sell British films to US and international audiences.               

The British film industry does not have quite the same power and wealth as the big Hollywood studios and therefore depends much more on public funding and financial aid from government intervention. In 2012 it was announced that ‘some £285 million of National Lottery money is to be put into the British film industry over the next five years’.  The British Film Institute (BFI) will determine how this money is spent after taking over funding responsibilities from the UK Film Council which no longer exists. Though there will be spending in other areas, much of the funding will be put into the production and development of future British films.

The producers of The King’s Speech for example had to scrape together the approximately £10 million budget from the following companies:

Weinstein Company, The (presents)

UK Film Council (presents)

Momentum Pictures (in association with)

Aegis Film Fund (in association with)

Molinare Investment (as Molinare, London) (in association with)

FilmNation Entertainment (in association with)

See-Saw Films (as See Saw Films)

Bedlam Productions (as Bedlam)

Some of these companies, for example the American The Weinstein Company, would invest in production in order to gain the distribution rights and therefore a larger share of the profits when it is released. ‘The Weinstein Company (TWC) is a multimedia production and distribution company’, independently funded by its own profits, and ‘also active in television production’ showing it is both vertically and horizontally integrated. Vertical integration is where ‘a company expands its business into areas that are at different points on the same production path’ so when a film company owns the means to produce films and then also the means to distribute them, it is said to be vertically integrated. TWC is also horizontally integrated because it has acquired ‘additional business activities that are at the same level of the value chain in similar or different industries’. Not only can it produce films but it has also expanded into producing television shows as well.

Concerns were raised in the past about the major Hollywood studios’ oligopoly over the film industry. The so called ‘big 5’ studios were vertically integrated to the point where they owned the means to produce, distribute and exhibit their own films which meant that other films did not have a chance against the power of these big studios. The Paramount Decree passed in 1948 meant that the studios had to sell their cinema chains as this much vertical integration was seen as anti-competitive and therefore made illegal, diminishing the power of the old Hollywood studios.

However despite these moves to stop excessive levels of vertical integration, the film industry is still dominated in the US and UK by global companies such as Time Warner. Warner Bros. Pictures is a subsidiary of the global conglomerate Time Warner and produce films such as the Harry Potter franchise. But Time Warner also owns HBO, ‘the world's most successful pay-tv service’, the Turner Broadcasting System that ‘operates worldwide news, entertainment, animation, young adult & kids media networks and related businesses’ and Time Inc who are ‘one of the largest branded media companies in the world, with a portfolio of 96 titles’ which means they are horizontally integrated over television, film and print media. Warner Bros operates internationally all over Europe, Latin America, Japan and Australia leading to some concerns over huge companies like this and their potential influence over a global audience.

Bibliography:

http://www.creativeskillset.org/film/industry/article_6763_1.asp

http://www.bbc.co.uk/news/entertainment-arts-18056288

http://www.imdb.com/title/tt1504320/companycredits?ref_=tt_dt_co

http://www.boxofficemojo.com/movies/?id=kingsspeech.htm

http://weinsteinco.com/about-us/

http://www.investopedia.com/terms/v/verticalintegration.asp#axzz2Lir65Yba

http://www.investopedia.com/terms/h/horizontalintegration.asp#ixzz2LirnDseg

http://www.timewarner.com/our-content/

King's Speech: BFI gets king’s ransom?

24 February, 2011 | By Geoffrey Macnab

The UK Film Council invested £1 million ($1.6 million) in The King’s Speech through its now defunct Premiere Fund (then run by Sally Caplan) and is believed to have a net profit position as high as 34% in the film.
“The King’s Speech represents a great validation for the UK film industry as a whole and an amazing legacy for the UK Film Council,” Tanya Seghatchian, head of the UK Film Council’s Film Fund, commented after Tom Hooper’s film about the stuttering monarch won its haul of BAFTA’s earlier this month.
The legacy that Seghatchian is referring to isn’t just symbolic. The UK Film Council invested £1 million ($1.6 million) in The King’s Speech through its now defunct Premiere Fund (then run by Sally Caplan) and is believed to have a net profit position as high as 34% in the film, which was produced by See-Saw Films and Bedlam Productions. UKFC boarded the project at a relatively early stage, when Geoffrey Rush was already attached but before the casting of Colin Firth.
In advance of this weekend’s Oscars (for which it has 12 nominations), The King’s Speech has already made over $235 million at the box-office worldwide and could (some predict) gross as much as $400 million when its roll-out is complete. Even with the film world’s usually tricky accounting on recoupment, that’s a huge return on a film that cost $15m to make.
“It’s one heck of a dowry,” a UK Film Council spokesperson says of the benefits that may eventually come to the British Film Institute (BFI) via its stake in The King’s Speech when the BFI becomes the Lottery distributor for film in the UK in April. The fact that neither BBC Films nor Film4 invested in The King’s Speech strengthens the Film Council position yet further. (If a broadcaster had been aboard, UKFC’s net profit position would have been far smaller.)
“There absolutely will be real profits and everyone involved in the film expects there to be real profits,” says Tim Smith, Managing-Director of Prescience Film Finance, which co-financed the film through its Aegis Film Fund.
The assumption is that any profits that come the BFI’s way will be invested back into the Film Fund, although this is yet to be confirmed. Given that the share of Lottery funds for film will increase from around £27 million to around £43 million annually by 2014, this could provide a major fillip to British production.
“The BFI will be reinvesting the recoupment from The King’s Speech into making more British films, creating jobs and supporting UK businesses,” Nick Mason Pearson, Director of Press & Public Affairs at the BFI, commented this week.
The BFI shouldn’t start counting its King’s chickens quite yet. “Net profits” are a slippery and evasive concept. Ask a range of experts whether The King’s Speech really will generate the expected king’s ransom for the BFI and for Molinare (the post house which was also an equity investor) and opinions are divided.
“There aren’t that many films that return net profits,” notes Christine Corner, a Partner in Grant Thornton’s media and entertainment group.
The general principle is that the producers will take 50% of the net profits and the equity investors will take the other 50%. Given that exhibitors take 55% commission, the local distributor [in the case of The King’s Speech, Momentum in the UK and TWC in the US] might take 40-50% commission on what it receives from the exhibitor and the P&A costs need to be recouped, the potential for net profits can shrink fast.
“Distributors are extraordinarily good at not recouping,” points out one observer, warning that there may have to be a lot of auditing done in the coming months.
“From theatrical, there might not be much,” one leading UK-based film lawyer says of the likely profits. “There rarely is from theatrical. When the DVD is sold, that’s when overages might start to kick in.”
What gives the BFI grounds for optimism is that The King’s Speech was made for a relatively low budget and has already generated such huge box-office returns. Even given the scare stories about blockbusters that have failed to return any net profits, it would be very surprising indeed if The King’s Speech didn’t generate revenue for its equity investors.
Whatever happens, all those involved in The King’s Speech are bound to reap the benefits…except for the Film Council, which won’t be in existence to enjoy the rewards.
UK distributor Momentum, among the first to support the film as part of the first-look deal it struck with See-Saw in early 2008, didn’t have an equity position in the movie. However, The King’s Speech had made over $60 million in box-office returns in the UK and Ireland by mid-February. See-Saw’s sister company, Sydney-based distributor Transmission, has also done roaring business with the film.
Prescience’s Aegis Fund boarded early and likewise stands to benefit.
“The Aegis Film Fund is very important for Prescience and it (The King’s Speech) will heighten the success of that Fund, which is coming to the end of its second year. It has encouraged new investors into film and hopefully will be able to do so,” says Tim Smith. Prescience, he points out, also has a small profit participation in the film.
Crucially to the film’s financing, The Weinstein Company pre-bought The King’s Speech. It, too, is basking in the film’s success.
As for The UK Film Council, The King’s Speech simply came too late. The irony is self-evident. If Tom Hooper’s movie about Bertie and his speech impediment had appeared with the same fanfare a year earlier, it would have been very hard indeed for the British coalition Government elected last summer to justify dismantling The Film Council in the wake of likely Oscar glory. After all, this is the “biggest recouping project” the UKFC has ever supported. That’s why UKFC representatives past and present will be watching Sunday night’s Oscar ceremony with distinctly mixed feelings.

The King’s Speech, starring Colin Firth as a stammering King George VI and directed by Tom Hooper, was receiving advance buzz involving the words “Oscar” long before it officially opened. This happens a lot, and I tend to have a cynical response to it. I know when I’m being manipulated.

I finally saw it this weekend, in a sold-out matinee in a giant multiplex. There were kids there, and people had brought in lunch. It was a huge and mixed crowd. Yet from the opening scene, you could have heard a pin drop in that theatre, except during the funny moments, when the audience would burst into responsive laughter. Some woman’s cell phone went off, and she actually answered it, and people all around the theatre called at her, annoyed, to shut up. The huge crowd had cohered into a group. When The King’s Speech ended, and the credits began to roll, a man sitting beside me, who had silver feathered hair, shirt tucked into his jeans, and big white sneakers, said, with apparent emotion, “If that guy don’t win an Oscar, then there is no justice in this world.”

Produced in part by the Weinstein Company, headed by Harvey and Bob Weinstein, formerly of Miramax, The King’s Speech has all the earmarks of Miramax Oscar-bait: It is a film about a real person, and about overcoming obstacles. It is smart enough to please people who like smart fare, but it is also crowd-pleasing on a deep and visceral level. The reason to see it is the scene-work between Firth and Geoffrey Rush, who plays speech therapist Lionel Logue. The characters are funny with one another, cagey, and sometimes cranky; it is a meeting of the minds. Firth plays the stammer so realistically that you forget he has ever spoken otherwise, and Rush is marvelous, as the commoner who suddenly finds himself training the King of England to overcome a debilitating impediment.

The film is not perfect (the final section with the actual speech is drawn out to shameless lengths), but it works on an emotional level. The power of the acting, and of the story, makes sure of that.

 

The Weinstein Brothers have spent a couple of decades muscling their way into Oscar season. Their tactics are aggressive and unseemly, if not brutal, but Miramax’s run of success in the 90s had a transformative impact on the industry. Miramax championed smaller films, foreign films, difficult-to-sell films, and they got these so-called art-house films into the multiplexes. The independent scene changed forever.

When these films were challenged by the MPAA (and they often were), Harvey Weinstein was vocal and contemptuous in his objections, bringing a blitzkrieg of publicity to the film, whatever rating it eventually received.

Scandal (1989), a Miramax film about the Profumo affair, starring John Hurt and Joanne Whalley, came in originally as an X-rated film due to an orgy scene. There was a big controversy about it, lots of publicity, and then a two-second cut was made in the scene, satisfying the MPAA, and the film was released as an R. The film grossed $8.8 million in the U.S., a huge amount of money for a film of its kind, and Miramax was satisfied. InDown and Dirty Pictures, a book about the indie movie scene of the 90s in which Miramax naturally plays a large part, author Peter Biskind writes: “Harvey’s strategy was always the same: come in as an X, make as much noise as possible, and go out as an R.”

We saw this identical situation most recently with Weinstein-produced Blue Valentine, which was threatened with the deadly NC-17 rating, bringing an avalanche of publicity to the film before it even opened. Of course, it was finally released as an R-rated film. It was just business as usual with the Weinsteins.

The King’s Speech also had its ratings issues, due to one scene where Rush makes Firth shout out profanities in one of their therapy sessions, because the King does not stammer when he swears. The scene is hilarious, Colin Firth playing two things at the same time: manly gusto in shouting out the words “bugger, bugger, shit, shit, tits, tits …”, and also mortification at what he has been asked to do. The MPAA objected to the language of this scene, another example of how ridiculous context-less objections are. Weinstein, once again, did his publicity-garnering routine: “While we respect the MPAA, I think we can all agree that we are living with an outdated ratings system that gives torture porn, horror and ultraviolent films the same rating as films with so-called inappropriate language.”

Miramax’s films were not often obvious crowd-pleasers, at least to those who were used to sitting in gleaming conference rooms watching Power Point presentations showing demographic information. Their films were not easily classified. They were often esoteric, and had subtitles on occasion, all things which would have relegated such films as Life Is Beautiful to limited runs in smaller artsy cinemas. But the films struck a chord with wide audiences. Miramax marketed to the masses. The Weinsteins were not above re-cutting films to make them more accessible to American audiences, and directors who refused to go along with this found themselves shunned by Miramax. Their Oscar campaigns are by now notorious. If you were not aware that Shakespeare in Love was up for every Oscar under the sun then you were not at all paying attention to the world around you. That kind of thing can get tiresome, obnoxious, and it made you wonder what other films were out there, more difficult films, perhaps, that weren’t getting a shot because of the domination of Miramax.

The Weinsteins, since the sale of Miramax, have formed The Weinstein Company, and have distributed and produced such diverse films as Inglourious Basterds, Persepolis, I’m Not There, Rambo and A Single Man. Oscar-bait can be annoying fare. It can be blatantly manipulative and calculating, like a politician shaking your hand and telling you he really cares about you and your issues.

But the Weinsteins, with the one-two punch of the gritty-realistic Blue Valentine and the more elegant-worldly The King’s Speech, show that they are back at the forefront again, bringing challenging and yet also crowd-pleasing films to the cinemas of this country.The King’s Speech may very well be “Oscar bait”, and there were moments in the film when the heart-strings were too obviously tugged at. There is certainly a conversation to be had about the strong-arm tactics of the former Miramax in getting their films distributed and showered with Oscars. Biskind found that many people (former employees of Miramax and others) were afraid to talk to him on the record for his book because they feared retribution.

But these are business conversations, exclusive to the world of corporate gladiatorial combat. It feels very different out there in the dark at the multiplex, surrounded by a silent rapt crowd. Being a crowd-pleaser doesn’t necessarily mean that a film plays to the lowest-common denominator. It can mean that, but it doesn’t have to. If a film works, it works, and if it works for a large number of people, so much the better. Shakespeare wrote for the groundlings in the pit as well as the aristocrats in the balconies.

The Weinsteins have managed the trick of winning on the ground and in the air, sometimes awkwardly, sometimes brutishly. At the end of the day, though, it’s what’s up on screen that matters. All the marketing in the world can’t make a film that an audience truly loves. But the Weinsteins can, apparently.

Independent Film Finance Success Study - The King's Speech

If we want investors for our independent films then there is only question to consider:"What benefit will the investors get by putting money into this film?"

I've read plenty of indie film offer documents and prospectuses recently, and it's clear that they are doing their best to talk up the possibility of box office return.

But, sadly, we know that the reality for independent films is harsh.  Really harsh.  Even if the film gets international distribution and great box office returns we know most of that money won't filter back to the investors.

It is sobering to read the prospectus of a respected independent film fund only to find that 'You can be an extra!' and 'You get movie memorabilia!' are still being touted as serious benefits.  And this is a film fund which, by definition, is only open to high net worth individuals

So I thought I'd look at some reasonably recent film funding decisions to see what I can learn.  Why did investors put money into these independent films?

I'll start with a recent success story: "The King's Speech"

Investor 1: Prescience Film Finance/ Aegis

They funded the bulk of this - putting in almost $10 million.  So how do they make profit from their investment?

The answer is simple - they make profit by lending at 15% against the UK tax credit and against presale contracts.  They also loan against distribution in territories that aren't presold - at a higher rate of about 20%

This ensures that their return isn't really based on box office.  The investors can expect about 14% income from their investment based on fees ... and even the MASSIVE success of the King's Speech is only going to push this up to about 24% !  It is very telling that their business model is organised so that the difference in ROI between funding a failure and a hit is only 10%.

It's also interesting to see how Prescience Film Finance estimate the share they will get from box office return.  To quote one of the company directors:

"The U.S. is now worth exactly the same as the Philippines - but at least you know you’ll get a good deal out of the Philippines.  The U.S. market used to be worth 40%, but now it has to be discounted to zero."

So it seems that the key is that the 'investor' is simply loaning against presales.   That might be possible for $15 million productions - but how relevant is it to an indi film with a tenth of that budget?

It so happens that I recently chatted with a producer behind a direct to DVD title that fitted that description perfectly - it had a $1.5 million budget.  It even turns out that one of the presales was with Transmission - who was also one of the presales behind 'The Kings Speech'.

So I asked him, and his attitude was interesting:

"Presales are a tricky thing. We are producers with our own financing and presales are a must for us to internally green-light a project. 

As well, if a project can’t get acceptable presales based on cast, key crew and script, that would be an indicator that there is not a strong market for your film or it needs to be re-tooled.  

It is also a great check on whether the budget is realistic or not, examining the sales estimates vs. the actual sales numbers.  

Why is it expected [that investors have such a high risk of no return] in the film business?Financial discipline is the key."

The most curious outcome is that this seems to be in direct contradiction to everything I read - which talks about how presales have dried up completely in the last five years!

Investor 2: Molinare
They invested about $320k in the film.  The reason for this investment was one I hadn't considered before.

They invested the money as a post-production company to help get the work of post-production.

At first this seems to be the financial equivalent of a perpetual motion machine ... but if we think of it as a way of putting the post-production costs onto a deferred payment plan it makes more sense.

Mark Foligno started doing this to help his SFX company during the recession.  It was successful - which doesn't mean that they recovered their money in all the films they worked with, but they certainly recovered more than their total investment.  As well as this the company had enough post-production work for them to flourish during the lean times.

---

What I learned from this:
1. Post production companies can be a source of investment
2. Investors don't have to rely on box office returns for recoupment

For the second point to apply there is the problem of having sufficient pre-sales ... which is a major undertaking.  But it is possible for the right project.

https://www.youtube.com/watch?v=9liworj7pVk

‘The King’s Speech’: A Royal Return for Film Financing Fund

 

Harriet Agnew, of Financial News, reports:

“The King’s Speech” the Oscar-winning period drama being dubbed the most successful independent British film ever, almost didn’t get made at all. A host of high-profile production houses turned down the opportunity to back the project, but their loss has become one London investment boutique’s gain.

Associated Press

Iain Canning, Emile Sherman and Gareth Unwin accept the Oscar for best motion picture for “The King’s Speech” at the 83rd Academy Awards on Sunday.London’s Prescience Film Finance stepped in to provide two thirds of the film’s £9 million ($14.5 million) budget using its £25 million Aegis Film Fund.

Then the film, which already grossed $245 million world-wide, scooped a host of prizes at the 83rd Academy Awards in Los Angeles on Sunday, including the awards for Best Film and Best Director, while Colin Firth took home Best Actor for his portrayal of the stammering monarch George VI. James Swarbrick, commercial director at Prescience, believes that cinema takings will hit $330 million. He added that DVD revenue typically is the same.

Aegis began funding the film in November 2009. Swarbrick said: “We act like a media bank, raising finance for independent films.”

Aegis’s model is to securitize an up-front loan to a film producer against guaranteed future revenue streams, such as tax credits and distribution sales, which are payable once the film is completed. For “The King’s Speech,” the fund lent money against the U.K. tax credit at a rate of 15%, against presales contracts at 15%, and at a rate of 18-20% against distribution in territories that hadn’t been presold.

Equity film financing is notoriously risky – according to data from the UK Film Council, only 35 of the 333 UK films released internationally from 2003 to 2006 turned a profit for investors.

But Swarbrick said the Aegis fund is structured so that its returns are not dependent upon the box-office success of any individual film. “We make all of our returns from interest and fees charged from the loans,” he said.

Still, fund will share in the success because the terms of its loan entitle it to a share of any net profit–something Swarbrick said was “an unexpected bonus.”

Once the entire budget has been recouped, the profit is divided up, with half shared between the producers, directors and actors, and the remainder shared between the film’s financiers.

The Aegis fund launched in March 2009 and returned 13.8% after fees in its first year. Swarbrick said that its second year is expected to post similar returns, not including the profit share in “The King’s Speech” that Swarbrick estimates will add another 10% to the fund’s performance.