The problem with the 7% stat, and why UK producers need more support

A number of UK producers were upset at the recent data presented by the BFI at the Screen Film Summit that only 7% of UK films were profitable (Click here to read the original story and to see how the data was compiled).

Screen asked producer Ken Marshall of Steel Mill Pictures (Filth, Song For Marion) to explain why he thinks these stats don’t paint the whole picture of a film’s success.

These figures portray the business of filmmaking in an incredibly negative light. It is incredibly hard raising equity for film in the current economic climate, and these kind of headlines definitely do not help the cause. Why invest in film when there are so many other safer bets out there for investors?  

While I appreciate the hard work that has gone into calculating these numbers and the desire to be transparent, I also feel it is rather irresponsible to release these numbers to the public without consulting with established filmmakers first to determine how best to calculate and evaluate the merit of some of the films that are being examined for their profitability.

And if the BFI is to release depressing statistics such as these, then they should be responsible for finding a press angle to make sure there is equally a positive spin on the British industry and not to dissuade potential investors.

What titles exactly have been used to make an overall assumption of that only 7% of films are profitable? What genres are more profitable than others? What were the finance structures for these films? What percentage had broadcaster and/or BFI backing, and did this affect profitability?

How many of these films were directed and/or produced by first-time filmmakers? Did any of these films have a distributor and/or sales agent attached before they went into production? What percentage of films were perhaps not profitable but actually generated a lot of income to financiers via premiums and interest?

What percentage of films had to take out bridging loans or borrow expensive money in pre-production, to cash-flow prep and guarantee the film doesn’t stall during the legal closing process?

Also, at what stage of the film’s life cycle are we looking at?  Films can take one or two years to become profitable, or even longer, with the very slow accounting process with distributors, vendors, VOD distributors, etc.

Perhaps the most important study that the BFI could conduct is doing some comparative research relating to profitability of films that were financed via multiple expensive financiers, and then conducting test-case scenarios whereby what would the chances of a film being profitable if they had been fully (or majority) financed by a single EIS company?  

What we need to be showing is that there are also reasons why many films aren’t profitable: that is because financing is usually incredibly expensive.

And finally, one of the main reasons a lot of films aren’t profitable is because the producer is not supported enough in this country. I would also love to know how a producer is being protected and nurtured in the UK… on the one hand we talk about how the massive studio films are coming to the UK, spending lots of money to help our economy and are training all our crews, but it does nothing for the UK independent producer.

And at the lower end, film budgets are shrinking and the BFI wants to primarily back first and second time filmmakers, but how is the producer meant to survive on paltry fees, inevitable deferments, and the threat that if a filmmaker does very well, they will just go to America?

Most importantly, why is there no form of levy from big studio productions or an incentive system based on admissions (such as done in France) or a way to encourage/incentive audiences to watch British films at an exhibition level?

The Tax Credit is not enough, because this is now usually a piece of the finance plan with a bank or institution lending against it. If a producer does not get more support, then he/she will continue to have to scrape around for development money and not have funds to help cash-flow films during tricky stages of pre-production, and this in turn leads to having to take money from aggressive and expensive financing entities.

BFI executives also respond to the numbers, and agree with many of the points above, in an article here.

Ken Marshall, founder, Steel Mill Pictures