The planned relocation of BBC Films back to BBC headquarters has provoked a panic in the UK, where producers fear the future of one of the territory's most important financiers is under threat. Geoffrey Macnab reports.

At Cannes last month, BBC Films arrived with what its boss, David Thompson, has called 'the boldest and most exciting slate of projects we have ever had'.

However, the talk on the Croisette was not of high-profile titles, such as Revolutionary Road, starring Kate Winslet and Leonardo DiCaprio, or Eastern Promises from David Cronenberg, or its new development slate with Pathe UK, or even that it is poised to join forces with Graham King's nascent GK Films to make the long-gestating adaptation of 1980s mini-series Edge Of Darkness. Instead, what preoccupied UK producers were rumours that BBC Films was (perhaps) about to have its wings clipped.

The source of the concern is the news that BBC Films is planning to move from its independent office on the outskirts of London's Soho back to BBC headquarters at Television Centre in west London. What seems like a simple change of address to the industry outside the UK appears, to alarmed UK producers, to signify a retrenchment in the BBC's commitment to theatrical film production.

With a move away from Soho, some observers argue, BBC Films risks reducing its influence and impact. 'It sends a message to the rest of the world that the BBC is going backwards,' suggests one.

'BBC Films is crucial to independent cinema in the UK'
The UK is an industry with just three main film financiers: the UK Film Council, Film4 and BBC Films. Although not huge, the $20m (£10m) that BBC Films invests annually in feature projects is vital to the always struggling local industry and would be sorely missed if reduced or cut completely.

'BBC Films is a crucial component to independent cinema in the UK,' notes Jeremy Thomas, one of Britain's most senior producers, who most recently worked with BBC Films on Fast Food Nation.

What exacerbated the uncertainty in Cannes was the BBC's unusual silence. In previous years, Thompson has always used the festival to announce new projects and alliances. Suspicions rose that something was up. In the hothouse atmosphere of the festival, it was inevitable that gossip and speculation would mount.

Three weeks on, and the picture is becoming clearer.

The background
As a public broadcaster, the BBC always faces questions about investment in a non-broadcast activity such as feature film production. The BBC is funded by a licence fee, paid for by every UK household. Although not controlled by the government (the BBC Trust is answerable to a royal charter), the government has the power to say how much the BBC can charge for its licence fee.

At the beginning of 2006, BBC Films announced a huge increase in its planned investment in film production and acquisition. BBC Films was promised an increase to $30m (£15m) in 2007 and then, potentially, $40m (£20m) in 2008, subject to a favourable licence fee settlement in 2006.

But the settlement was far from favourable and swingeing cuts are being planned across the BBC. For her part, Jane Tranter, the BBC's head of fiction, who oversees BBC Films as well as the drama commissioning, comedy commissioning, and programme acquisitions departments, has said 'there is absolutely no sense of anything other than an eventual increase' on BBC spending on its film-related activities.

However, it is now far from clear that the $600m (£300m) the BBC hoped to invest in British film over the next 10 years will materialise.

The present situation
Tranter is keen to reassure the industry of the BBC's continuing commitment to British cinema. 'The move is part of a desire to see all the different areas of fiction working more closely together,' Tranter says. 'BBC Television Centre (TVC) is a big iconic building that is at the heart of the BBC, and the move ... will help underpin the enormous importance of BBC Films for the BBC and remind everyone of the 'BBC-ness' needed for a BBC film. The move is also symptomatic of the current success and profile of BBC Film. It is strong enough to be able to operate from anywhere, so why not operate from the heart of the BBC''

At a time of job losses and severe cutbacks, it was inevitable that BBC Films would feel the heat. 'Major structural change and cost cutting are on the agenda throughout the BBC now, and it would be foolish to think BBC Films could be immune from all this,' Thompson acknowledges. 'So there has been lots of uncertainty in the air. But as can happen in these times, rumours are often wide of the mark.'

Moving forward, Thompson's own position remains uncertain. Then again, he is one of the BBC's great survivors. Since he became head of BBC Films in 1997, there has been frequent speculation that he will move on.

Thompson is also backed by one of the most respected business affairs and development teams in the business, led by Jane Wright, the head of film rights and commercial affairs, and former Miramax executive Isabel Begg, the head of business and legal affairs. Despite Tranter's emollient words, the threat is that a move to Television Centre will dilute their impact.

'There are currently some structural changes going on in the commercial and business affairs area,' Tranter explains, with the TV section of BBC Films being integrated into the TV drama department.

'BBC Films will continue to have a dedicated business affairs team, and it will continue to have Jane Wright in a broader general management role and a 100% focus on film,' Tranter says. 'It should feel like business as usual for producers and other organisations working with the commercial and business affairs team, but with the added opportunity to access a broader relationship with fiction where that makes sense.'

BBC Films makes for shrewd partnerships
Whether Thompson stays or goes, the arguments for the broadcaster keeping its ties with the film industry remain compelling. As a minority investor, the BBC acquires films it can show on TV again and again. By being involved in film production, it holds on to talent which might otherwise stray elsewhere.

Some believe the BBC could simply acquire more films without going to the inconvenience of producing them. In recent months, it has pre-bought UK TV rights to local titles including Julian Jarrold's Becoming Jane, starring Anne Hathaway, Vicente Amorim's Good, now shooting in Hungary, and Tom Hunsinger and Neil Hunter's comedy Sparkle.

'Where we can, we will do that if it makes sense for us,' explains Steve Jenkins, head of films at BBC programme acquisitions. 'The advantage to us is that we'll get better rights. By spending our money earlier, we'll get a longer licence period and more runs. In the long term, that makes sense for us. It is not new and it does not reflect anything that is happening for BBC Films at all.'

In its present guise, BBC Films does not just commission and invest but also helps producers put together films, both creatively and commercially. 'Unlike most other parts of the BBC, we are totally a partnership business,' says Thompson. 'We fund almost nothing by ourselves. We have been particularly successful recently raising, for instance, more than $139.5m (£70m) for projects we developed.'

Producers who work with the BBC defend its set-up. 'There are very few organisations left who really understand the whole production process from both a creative and a business point of view,' says producer Sarah Radclyffe, who is shooting John Maybury's BBC-backed The Edge Of Love. 'I'm sure we're not alone in saying we wouldn't have been able to do this without them.'

US producer Scott Rudin has worked with BBC Films on a slew of projects, including the Oscar-winning Iris, Richard Eyre's Notes On A Scandal, the forthcoming The Other Boleyn Girl and now Revolutionary Road.

'They're great partners, creatively strong and aggressive, with high standards and a real desire for excellence,' he says from the US set of Revolutionary Road.

'They're also shrewd about the marketplace and how they fit into it, in a pragmatic and realistic manner. I've always enjoyed the films we did together - always - so whatever the internal issues are at the BBC, I hope the method of working with outside producers remains as strong and easy as it's been.'

The sentiment is echoed by Daniel Battsek, president of Miramax, which is working with the BBC on Brideshead Revisited: 'It (BBC Films) is certainly one of the major ports of call in the UK from a film production and talent pool environment.'

Such enviable links to the US remain a prime asset: 'They have become synonymous with running an eclectic slate of the highest quality that performs equally well in the US and the UK,' says John Lyons, president of production at Focus Features.

The future for BBC Films
At the same time, the attractiveness of BBC films in the US market raises questions about policy and structure, not entirely answered in Tranter's upbeat assessment that 'BBC Films provides the most creative and productive environment for the UK's film-making community to do its best work.'

What kind of movies should BBC Films be backing' Is its mandate to support independent British features, or to back films that will do well on TV' The outfit has a strong recent record of nurturing first-time feature directors such as Sarah Gavron, Pawel Pawlikowski, Andrea Arnold, Justin Chadwick and Dominic Savage.

However, if the ultimate goal is to provide films that mainstream audiences want to watch on BBC1, it also makes sense to work with international talent to develop and co-produce movies such as Revolutionary Road and to foster relations with US studios.

'Of course, most of what we do will be based here,' says Thompson. 'But many British writers and directors naturally want to work on a big international canvas - just as British authors don't necessarily set their novels here. Lynne Ramsay's We Need To Talk About Kevin, set in the US, is one such example.'

BBC Films is not a huge drain on the BBC's resources. The overall BBC budget for drama in 2006 was $851.2m (£427m). The $19.9m (£10m) per annum currently allocated to BBC Films seems small regardless of the licence fee settlement.

There is a clear sense that the debate about how BBC Films should operate is yet to be resolved. The irony is that this uncertainty comes at a time when the company is perceived by the rest of the UK film industry to be stable and doing well.

'I'm really proud of the way we've grown to punch above our weight,' says Thompson. 'We are a tadpole in the film industry in terms of what we invest - but a tadpole with a big punch. I believe we have had a significant impact because of how we develop projects and raise funds. People are often amazed to learn we are only spending $20m (£10m) a year; our impact seems far greater.'

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