Showing posts with label tax. Show all posts
Showing posts with label tax. Show all posts

Friday, July 21, 2017

FUNDING Baby Driver part of £415m tax relief benefit bill

For Indies such as Warp government finance through the BFI (previously the UK Film Council) and the still-operating regional arms of the old UKFC such as EM Media and Screen Yorkshire (significant distributors of EU finance which will soon disappear thanks to Brexit) are absolutely central to their ability to produce feature films. Without money in the form of non-repayable grants there would be no '71, This is England, Tyrannosaur and so forth.

The BBC and Film4, terrestrial public service broadcasters (with Sky, and its Sky Atlantic channel key to Warp's high-budget TV series The Last Panthers) are also crucial at this level of budget, very rarely exceeding £5m ('71 did, at £8m).

For the big six, and their subsidiary production arms, such as Working Title, just as crucial is tax relief, which will typically far exceed the entire budget of Indie films. 20 years after the Tory free market PM Thatcher scrapped the quota system that ensured cinemas screened a minimum proportion of British films (most European countries, notably france, still have such laws in place), the Labour government recognised the struggles of the industry with a range of tax relief measures, that the current Tory government has (reluctantly) kept in place.

The extent of this varies across the UK, with additional relief available in Northern Ireland (though even more is available in the Republic of Ireland), and indeed there is fierce international competition to attract film productions through tax deductions, including several US states offering high levels of relief.

The scale of this tax relief is clear from the report on 2016 payments, hitting £600m in 2016, including WT's Baby Driver. The tests for determining the 'Britishness' of productions are controversial, with minimal cultural consideration, more raw economic factors determining eligibility. If you read the BFI's annual reports (you should - an amazing source of learning) you'll find many clearly American films accordingly categorised as British.


Big-budget films receive increase in tax relief to almost £600m.
The government paid out almost £600m in tax relief last year to the makers of blockbusters including Baby Driver, Star Wars and T2: Trainspotting, as well as big-budget TV dramas including The Crown. 
The payouts were part of £751m that the Treasury awarded in tax relief to films, high-end dramas, video games, animations, children’s TV shows and theatre productions that passed a “cultural test” that qualified them as British. 
The government’s figures showed that the total awarded in tax relief in the creative sector rose by a third year-on-year from £564m in 2015. The test includes criteria such as the cultural content of a production, how much of it is shot in the UK and the proportion of stars and crew who are from Britain or Europe. 
The government’s tax credit system has proved hugely successful in stopping big-budget film and TV productions, as well as talent such as games makers and special effects workers, going to cheaper locations such as eastern Europe or to other countries offering bigger incentives.
It has also helped attract investment from the deep-pocketed newer arrivals on the film and TV scene, such as Netflix and Amazon, which have backed productions in the UK including The Crown, which had a total budget of £100m, and fashion drama series The Collection. 
Last year there were 175 films completed in the UK that claimed tax relief, with the Treasury paying out £415m, up from £339m the previous year. Relief payouts for high-end TV – dramas that cost £1m or more per episode – rose from £104m to £163m. 

Wednesday, July 27, 2016

Gant Rule, British exceptions and the China factor

UK box office of $60m rivalled the US ('domestic') take

Cinema is at once BOTH a highly globalised industry utterly dominated by the big six US conglomerates AND a highly localised industry in which local stars, settings, even IP/cultural reference points, sell.

The Gant Rule is a useful means of explaining the US dominance, even as this is swiftly undermined by the surging scale and value of the Chinese market, pushing the typical US box office share of a typical global hit to well below the traditional 50%+ (closer now to 40% and falling). This has seen Hollywood squeeze in Chinese stars and settings, shoot alternative endings and extra scenes for different markets, buy up or partner with Chinese firms (with the complication of strict Chinese laws on exporting money), and generally be more sensitive about portraying Chinese as villains or simply the traditional crass stereotype of inscrutable, unemotional, indistinguishable masses (not that this has entirely disappeared).
Headline from  The Wrap
Universal spent millions altering the plot of World War Z (reshoots) so that the epidemic didn't start in China in a doomed attempt to get into the Chinese market. Censors there frown upon horror ('The country has strict laws outlawing any movies that deal with magic, horror or superstition.'). China limits the number of non-Chinese productions allowed in cinemas to just 34 a year - though this may rise in 2017 following negotiations with the WTO (World Trade Organisation). It is not making it easy for Hollywood to extend its global dominance:
...in other cases studios don’t alter their movies until post-production. Chinese censors cut large chunks out of several movies released last year, including 40 minutes from “Cloud Atlas” and 12 minutes from “Men in Black 3,” excising all scenes in Chinatown.
They also cut parts of the latest James Bond film, “Skyfall,” including a scene that featured the assassination of a nameless Chinese security guard.
Marvel had initially planned “Iron Man 3” as a Chinese co-production, a tactic that has been taken with films like “Looper” and “The Karate Kid,” in part because co-productions are not subject to China’s quota for imported films. Chinese censors must still approve them. [The Wrap]
Just 20 years ago China banned all foreign cinema:
China only opened its market to the Hollywood studios in 1994, when its own film industry had reached its nadir. “It wasn’t out of admiration for Hollywood but to save the Chinese film industry,” Rosen said. “People weren’t going to the movies.”
At the time, China only permitted 10 foreign movies to screen, then increased it to 20 before the current total of 34. Those additional 14 slots are all reserved for IMAX or 3D films. [The Wrap]

There is no questioning the ongoing utter dominance of the UK market by Hollywood - for figures read the annual BFI reports. BUT ... localised content still often retains an edge.
The US star helped market the film globally, but the British setting did not help US box office: boxofficemojo.



Localised here is a very broad concept - as is the legal definition of 'British production' for tax purposes:
The UK box office has consistently punched above its weight with family films adapted from British-authored material, fromCharlie and the Chocolate Factory (£37.8m) and Alice in Wonderland (£42.5m) toThe Chronicles of Narnia: The Lion, The Witch and the Wardrobe (£44.4m) and, of course, Paddington (£38m).
These are mainly Hollywood productions, but with enough of a lingering element of Britishness to give them a home market boost, and so undermine the Gant rule. The Bridget Jones franchise is a more direct example, although it too is ultimately Hollywood fare (Brit producer WT being an NBC-U subsidiary, Polygram at the time of the original).

Gant's latest box office column highlights The BFG as the latest to benefit from this element of Britishness.

He also noted the latest example of event cinema, an annual classical concert now programmed in an incredible 534 screens, plus a stylized limited re-release earning more than the original run:
Also flying the flag for event cinema was Secret Cinema’s presentation of Dirty Dancing. ...  The run of just six dates delivered a final box office of £1.90m. That’s more than the combined runs of the original 1987 release (£1.62m) and the 20th-anniversary rerelease in 2007 (£224,000).
The BFG towers over UK box office while Star Trek Beyond fails to prosper.

A little bit more on the rising influence of the Chinese market, from an article which looks at directors outraged by remakes of their movies, in this case Red Dawn. The original 1980s flick saw Russians invade a US town, the recent remake swapped Chinese forces for this...until it dawned on the money men that they'd lose out on the Chinese market...so this was belatedly switched to North Korean forces:

Milius was partially vindicated when MGMchanged the invading aggressors to North Koreans for the final cut, though that move was made to appease the lucrative Chinese market more than to cheer up the original film’s director.

How dare you remake my classic! When directors attack

http://www.theguardian.com/film/filmblog/2016/sep/16/how-dare-you-remake-my-classic-when-directors-attack?CMP=Share_AndroidApp_Copy_to_clipboard

Saturday, April 13, 2013

2011 UK Cinema report: key facts

Each year the BFI (British Film Institute, who have taken over duties from the UKFC) publishes a report on the UK film industry, highlighting trends and changes: the share of UK productions v US-backed UK productions v Hollywood imports; the share for Indies; the box office % for 3D; the rise of digital production etc, and more.

Below, I pick out the key points and include analysis (+ further links/quotes) to help you include this in your exam prep. There's a full list of definitions at the very end, but this one is especially useful: A UK film is a film that has been certified as British by the DCMS or by the Certification Unit of the BFI (acting on the authority of the Secretary of State for Culture, Olympics Media and Sport) or which is a de facto UK film by virtue of being made in whole or part in the UK by a UK production company. You can see from this that the definition of a British film, as far as the government is concerned, includes basically US films which are partially shot in the UK. Both Warp and WT are treated as British companies, despite WT being majority-owned (67%) by NBC-Universal
Here's some links to their latest reports:

Statistical Yearbook 11

The 2011 Statistical Yearbook offers the most comprehensive and accessible picture of film anywhere in the UK
New reports
Statistical Yearbook Archive
Our Publications A-Z contains a pdf archive of all of our Statistical Yearbooks to date:
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SOME KEY POINTS FROM THE REPORT

The points/data below are taken from Film production in the UK - full year 2011 report (76KB, PDF), 31 January 2012 - I've also added some further analysis and links.
  • Admissions (the number of tickets sold) rose to 171.6m
  • the total box office from this was £1.4bn, up 5% from 2010, with Indie hits The King's Speech and The Inbetweeners Movie a key factor: both took over £45m  making them the biggest UK Indie hits ever
  • Harry Potter and the Deathly Hallows Part 2 became the 3rd biggest UK hit of all time with £73m after Avatar and Toy Story 3
  • there were 6 movies over £30m (compare that to the US where many of the top 10 in a typical week will have exceeded that), the above + Pir.Carbn: On Stranger Tides; The Hangover 2; The Twilight Saga: Breaking Dawn Part 1. Its unusual for big 6 flicks not to take the top spots!
  • the surprise £23m success of Bridesmaids showed the strength of female-centred movies [DB: prospects for a 3rd BJD movie look good right now]
  • WT's biggest UK hit was #12: the £20.6m (1 of 13 in UK to top £20m) Johnny English Reborn (its final total is higher still, as it overlaps with the 2011 figures), tho' parent company Universal also had #9 Bridesmaids and #14 Fast and Furious 5
  • WT also had #12 in 2010 with Nanny McPhee and the Big Bang (£16.53m) - this shows the importance of franchises to film producers and distributors; again, with BJD3 imminent this trend is not going away
  • over the past decade UK films account for 24% of UK box office, but 18% of this is US-financed productions; only 5.5% of UK box office came from UK Indies - that average was doubled to 13.5% in 2011
  • WT are classed as a UK Indie, which suggests that the genuine % for actual Indies is much, much lower! Tinker, Tailor, Soldier, Spy was the 3rd biggest 'UK Indie' hit of 2011. Warp X made it into this chart, #14 with the brilliant Submarine (£1.46m); Four Lions was 5th biggest Indie hit in 2010. Only 5 'UK Indie' releases earned over £5m in 2011, again showing why their releases rarely exceed £5m in budget
  • The Harry Potter sequel took 48% of its money from 3D screenings. There were nearly twice as many 3D films as in 2010, 3 times as many as 2009 ... BUT, perhaps the 3D bubble is finally bursting? In 2010 3D took 24% of UK box office, this was down to 20% in 2011. More and more '2D-to-3D conversions' (where software is used to reprocess films not shot in 3D into 3D) are being released, and perhaps the novelty is wearing off - maybe Avatar will prove the absolute peak of 3D? While you can still double ticket prices, though, 3D will remain a tempting proposition: right now a 3D conversion of The Phantom Menace is doing well worldwide, and Titanic is soon to be re-released as 3D as well. We've yet to see any WT 3D (and its far too expensive for Warp to consider). Cinemas have been desparate to compete with the growing trend of home cinema, expensive large-screen/surround-sound living room set-ups that many people now use in preference to cinema, with its (sorry, but its true!) noisy teens, over-priced tickets and horrid food:
Cinemas are obliged to split money from ticket sales with the film studios, but get to keep almost all the cash they make from selling food. That means that the "concessions" (popcorn, sweets and the like) make up 20% of a cinema's revenue but 40% of its profits. A box of popcorn is around 85% profit to the cinema, and salty foods of course encourage people to buy more soft drinks, increasing receipts further. "Without the hefty concession profits," declared an article in Time a few years ago, "there would be no movie theater business". (http://www.guardian.co.uk/lifeandstyle/wordofmouth/2012/mar/07/cinema-snacks-a-view-to-a-killing)
see also prev posts on 3D/digitisation:

  • Despite the apparent promise of digitisation to open up the film industry to low and micro-budget productions, with reduced distribution costs also helping, the number of films produced in the UK in 2011 actually fell from 322 (2010) to 237. In 2010 there were 184 UK films made for under £500k, in 2011 just half that at 98, again, not what we expect from the benefits of digitisation. Will the closure of the UKFC further damage the prospects of low-budget UK Indie releases in 2012? The total spend (all the budgets added up) actually increased slightly, to £1.26bn, though most of this was US money.  


The terms used by BFI:

A UK film is a film that has been certified as British by the DCMS or by the Certification Unit of the BFI (acting on the authority of the Secretary of State for Culture, Olympics Media and Sport) or which is a de facto UK film by virtue of being made in whole or part in the UK by a UK production company.
A US studio film is a film that is produced in whole or part by one of the major US studios or one of the major US studios’ specialist subsidiaries.
An independent film is a film made by an independent production company or group of independent production companies.
US studio films are generally distributed in most territories by the parent studio. Independent films are usually distributed by different distributors in different territories. 
[Source: The UK box office in 2011 (112KB, PDF), 31 January 2012]