CJZ MD Nick Murray has a cautionary message for those who are calling on the Federal Government to double the Producer Offset for TV productions to 40 per cent: Be careful what you wish for.
Murray opposes that move, arguing it will increase producers’ borrowing costs and risk losing the Screen Australia-mandated margins to producers on the Offset: 10 per cent for dramas and 15 per cent for documentaries.
“I don’t see the benefit to producers,” Murray told Screen Producers Australia CEO Matt Deaner in a webinar today.
CJZ funds the Offset on its shows via a bank credit line secured against the houses of Murray and CJZ partner Michael Cordell. If the Offset were doubled, he says that would mean doubling the credit line, which he doubts the bank would approve.
For producers who cash flow the Offset from Australian and UK lenders, he predicts the higher borrowing costs would not be sustainable.
As for the producers’ margins, he fears they would disappear because Screen Australia would not be allowed to co-invest in productions which get the higher Offset, so the networks would demand the entire Offset is spent on the production.
Murray put the view that producers will need to rethink the way they structure productions, especially dramas, in the post-pandemic era as the pool of available funds will shrink.
One suggestion is to scrap overtime payments to actors who may be earning $10,000-$20,000 per week. Paying overtime for an extra half hour’s work to those individuals is “fucking insane,” he said.
Illustrating the economics of indie producers, CJZ’s annual spending on office rent and associated costs amounts to $400,000 a year.
Last year the firm had 1,600 people on the payroll across 15 shows, the equivalent of 350 full-time employees. In a normal year it expects to derive 30 per cent of its revenues from exports.
Deaner raised the question of the loophole which enables the commercial free-to-air broadcasters to use cheap New Zealand shows to help meet their local drama obligations.
Murray pointed out the networks buy shows from such Kiwi producers as South Pacific Pictures for as little as $10,000 an hour and get full drama points, a bargain compared with spending $450,000 an hour on Australian dramas.
His solution: Change the rules to base the drama points on the licence fee.
Deaner asked whether he was in favour of a push by the multinational production companies to extend the Offset to reality and light entertainment shows.
Murray is not in favour, declaring: “If MasterChef gets the Offset, so should Gruen.”
The exec renewed his criticism of the multinational companies which use money from the Producer Offset to pay dividends to their shareholders.
‘Murder in the Outback: The Falconio and Lees Mystery’.
CJZ’s four-part documentary Murder in the Outback Murder: The Falconio and Lees Mystery premiered in the UK this week on Channel Four, which commissioned the program.
The series re-examines the case of British backpacker Peter Falconio, who went missing in the Australian outback in 2001. Bradley John Murdoch was convicted of his murder in 2005, but Falconio’s body has never been found.
Murray said it’s the top-rating documentary of the year in the UK, trebling the ratings in its timeslot; it will air here on the Seven Network.
CJZ was about to start pre-production on Reputation Rehab for the ABC and it was forced to call a halt to shooting several episodes of Julia Zemiro’s Home Delivery when the virus flared.
Deaner asked about the submission from Murray and See-Saw Films’ Emile Sherman urging the Federal Government to underwrite the risk of productions having to shut down or replace the director or key cast due to COVID-19.
“We can’t get going again with dramas, documentaries, factual and light entertainment productions until we sort out the COVID-19 insurance risk,” he says. “The cost of stopping would be more than the profit margin you make on the show.”
Murray adds he’s optimistic there will be a relief package for the arts and entertainment sector, observing: “Our industry was the first to be shutdown and it will be the last to go back.”