Foreign money pledge to Aussie producers

26 August, 2014 by Don Groves

Screen Australia will be more pro-active in helping producers raise money from the Hollywood studios and other international sources.

That was one of the key points to emerge from a Screen Australia forum at the Chauvel Cinema on Tuesday evening, part of a national roadshow following the revised terms of trade, guidelines and funding priorities unveiled in Taking Stock document.

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Among other issues raised were the agency’s funding for projects from foreign-owned production entities, the need to find a new model for distributing Australian films, changes to the documentary guidelines and the phasing out of support for state film resource bodies.

CEO Graeme Mason said, “We as a sector need to find cash and we need to look offshore for that investment.”

Mason suggested the US majors should be a greater source of funds, recalling that when he was with Universal 21 years ago the studio put up half the money for The Adventures of Priscilla, Queen of the Desert.

“We need to take the lead” on the drive to attract more international investment, he said. “We should help you to open more doors.”

Mason gave an upbeat assessment of the current state of the screen industry and said he was bemused by the high degree of negativity in some quarters.

The agency supported 22 features, including some which only needed completion funding, and 90 hours of factual programming in the last fiscal year. There is more Australian TV drama on screen than he can ever recall.

“The sky is not falling,” he said. ”Production is up by 50%-60% in most areas except children’s drama. Cash is up because of the offset.”

Noting the offset has raised $1 billion since its introduction, he said the federal government sees the offset and direct support for screen funding as one pot.

The exec acknowledged he had not anticipated the government’s $38 million budget cut, which prompted a 10% reduction in staff numbers, cuts to documentary funding, a $500,000 drop in development investment and the end of support for screen resource centres in 18 months.

Documentary filmmaker Simon Nasht launched a spirited attack on the funding of TV projects from companies fully or partly owned by foreign players, alluding specifically to Fox’s Shine Group and NBCUniversal’s Matchbox Pictures. He estimated  at least 40 hours of programming with total budgets of $10 million in this category were funded last financial year.

Mason said the agency evaluates projects on the basis of significant Australian content, not the ownership of the production company. The board reviewed its policy in July and saw no need to change. “It’s not a closed subject [but] I don’t see it as a problem,” he said.

Sitting in the audience, Bob Campbell, MD of the French-owned Screentime, rebutted Nasht’s argument by stating that productions would not be made without Screen Australia’s investment and the producer offset.

Afterwards Nasht told IF, "Shine, Endemol etc have no long established track record in the genre and are simply muscling in to take advantage of the open-door policy on direct investment. Given their direct distribution links and financial muscle to cash flow and fund the offset this is distorting the market. Whatever the argument over screen drama, it is patently ridiculous to argue that there is a lack of Australian-owned expertise in documentary, or that we haven’t been highly successful in exporting our projects and bringing in international money.

"It’s a case I will be making strongly to Screen Australia on behalf of a large number of producers who are concerned about this, given documentary has just had $1.5 million slashed from its SA budget (while narrative film remains unscathed). My suggestion by way of compromise is to separate the policy on TV drama and documentary, returning the factual area to the pre-2010 situation."

Mason said the traditional theatrical distribution model is not working for Australian films or for most art house titles with a few exceptions such as Transmission Films’ Calvary.

Head of production Sally Caplan referred to the “intransigence” of some exhibitors and distributors on the 120-day window between theatrical and home entertainment but said, “We will see new distribution models evolve and break down windows and use VoD more agilely.”

Asked by producer Heather MacFarlane about the agency rejecting some independent distributors who had been attached to projects, Caplan responded, "We are being more flexible about distribution. We look at the right distributor for each project.”

Despite the $500,000 cut to development, Caplan said the agency will invest more than $70 million in screen content this financial year. She reminded producers that Screen Australia will need to assess all applications for grants of up to $500,000  (up from the previous cap of $200,000), referring to the mistaken belief that  funding up to that level is automatic.

She described the guidelines for accessing co-production treaties (there are 11, with another three in negotiation and three at the M.O.U stage) as "too restrictive" and said they would be amended.     

 Liz Stevens, senior manager of Scroz’s documentary unit, said she is presenting new draft guidelines to Mason this week. She expects the guidelines will be released to the industry in mid-September and to publish them in November.

That prompted Kingston Anderson, executive director of the Australian Directors Guild, to ask whether there will be sufficient time to address any concerns the ADG has with the revised guidelines.

 Acknowledging the $1.5 million cut to documentary funding, Stevens said, “We need more money to grow the pie.”

 

 

 

 

 

 

 

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  • David Steinhoff – Presence Films

    SA should be applauded for seeking to secure funds from OS yet there are fundamentals that are not being addressed.

    Capital exists right here with the proper employment of the Producer Rebate.

    Banks still do not view the Producer Rebate as something they can lend against without provision of security such as a producer’s home. SA and the Feds could go a long way to improving this if they could legislate that banks have to lend against the ATO rebate at home loan rates.

    It is a Government guarantee. It can be placed in an account with a fixed and floating charge over it. What is the problem?

    Addressing that would release a significant amount of real capital for production and empower Producers to leverage far greater outcomes that available from the value of their homes.

    Secondly, releases in the US and theatrical outcomes in general will continue to decline. We no longer produce for the big screen. We produce for a number of screens, of which the strongest is a mix of TV and interactive tablet and phone.

    This is where the future and the revenue lies. Product must be configured away from the old THEATRICAL release model to a new transmedia model and where possible, with GAMES and APPs in mind.

    If we wish to attract US studios and OS cash, bare this in mind.

    The old concept of risk offset using SLATES is dead. The new model is more likely to see investment raised as part of a total fund including real estate, shares, super, bonds and cash combination. You may even see film and TV derivatives emerge.

    It requires more sophisticated funds to emerge that contain a speculative percentage rather than be wholly speculative.

    The US Studios, will fund the suppliers that deliver outcomes at the cheapest rate or with the maximum tax benefits. So Bulgaria, Canada and states like New Mexico will continue to see growth. To compete we need to procure more innovative approaches to film funding and that also requires government to incentivise IP development through tax legislation that sees funding for development as a starting point.

    We also need to seize the high ground re controlling profit. No one wants to see another fiasco such as what happened to the Matrix investors. Amortised slates and un-contained distribution budgets must be a thing of the past. Investors must be able to achieve a tax offset and be able to realise a profit. They cannot possibly do that with independent film or with the current structure in place.

    Sort the fundamentals. Address the new paradigm and focus on emerging media and we can begin to turn this around.

  • eddie

    Graeme Mason is being a little obtuse saying Universal Studios invested in Priscilla. It was Polygram, which was owned by its Dutch owner Phillips. This was before Phillips pulled out of film and sold the company to the US Studio. But the reality is that for many years now the US Studios have waited until a film is completed and screened, usually at a festival before it buys it. It is lower risk. Hollywood has displayed no commitment to an ongoing involvement in Aussie films despite Australia being a top ten market for Hollywood movies. They have always been all take and no give. This why the 40% Producer Offset being available to US cultural product such as The Great Gatsby and many more is so offensive and such poor government policy.

  • pete

    I was at the event, and I asked a question about the very significant cuts to the programs for emerging filmmakers. This was particularly around the roughly $2M in aggregated cuts to funding for emerging filmmakers’ project funding (The Hot Shots Program) AND the support for state film resource bodies, who support emerging and early career filmmakers. I noted that, when I explained how significant an impact this will have on the future talent pool, and therefore the health of the industry, Mr Mason simply avoided the question on what logic or analysis he used to come up with this very damaging policy change. He closed off any meaningful discussion with a simple, ‘we have decided not to play in that sector’. Why has this meaningful exchange, nor even the fact that the issue was raised, been considered not worthy of your recap of the event?

  • Graeme Bond

    My experience has been that US studios want American stories for American audiences. Period. I recall when the Spierig brothers showed their no-budget creepy ‘Undead’ to US producers the producers wanted them to dub the Australian accents in ‘English’. Now the Americans have ‘English’ as a second language. Where to from here?
    Graeme Bond, Birdsong Press, WA

  • Richard Moss

    I know practically nothing about funding or tax breaks etc, but I do know that now, more than ever before, we need to fund our own films, and begin to produce real theatrical dramas that people want to see and will want to see more and more.

    It makes sense to me that anyone who invests wants something in return. The US investors will only want a product that fits the bill in the USA, if they invest before production begins, they will surely want to manipulate the game and determine the outcome. The US film industry is concentrated upon selling US films to the world audiences, not the other way around.

    The US film distribution in this country, is like the Emperor’s new clothes, only by developing a sense of Australian style and good taste in the eyes of our own audiences, will they see the Emperor’s nakedness.