Producers are getting railroaded in deals, says Graeme Mason

18 November, 2016 by Jackie Keast

Graeme Mason.

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Screen Australia has seen too many deals of late in which producers seem to have been “coerced into putting aside business realities”, says CEO Graeme Mason. 

Addressing the Screen Forever conference on Wednesday, Mason said the market was “spooked” and as such, many agents, financiers and distributors were looking for easy targets and ways to defend their positions.  

“As the lines are drawn, some Australian producers are not positioning themselves well,” said Mason. "This must be addressed on projects involving Screen Australia, period. Whilst we would strongly advise against it, you can of course do what you like if you’re not using Screen Australia’s money, but not if you are."

Mason said when he first started at the agency, bad deals were uncommon, but now “every second deal seems bad” in some rounds.

In both film and television, Screen Australia was seeing creativity applied to the naming of financing charges, international partners trying to pass off gap financing as equity, and some distributors and sales agents sneaking through dodgy definitions of certain rights, such as burying airline in ancillaries, Mason said.

“Recently we had a project where a financier was promised final cut. What a terrible precedent. If the film goes into profit, they also get 10 per cent of the producers’ share in perpetuity after recouping all investment, interest and a major premium. And their contribution is just 4.5 per cent of the budget,” he said.

The agency had also seen an increase of producers pressured into asking them to sweep aside its terms.

“No, we don’t actually expect or want to be subordinated when it comes to our equity recoupment position. This should be an exception; perhaps allowable to some degree for a private investor putting in the lion’s share of the budget.”

In particular, Mason expressed concerns that the Producer Offset was being “given away”.

“Yes, like any equity, it can be used as a bargaining chip to get projects financed. Maybe the producer takes a lower position in the recoupment waterfall, or trades it for any number of good, real reasons,” he said.

“But no one should make you give it up or not recognise it at all. It’s not there for studios, broadcasters, financiers or gap lenders. With the offset and direct funding from state and federal agencies, you could be bringing substantial money to the table – 70 per cent of the budget in documentary, 65 per cent in film, 40 per cent in TV. Wield that power. Have this money acknowledged.”

“You could say it is the producer’s prerogative to only work for fees, to not have skin in the game. But isn’t that setting yourself up to fail in the longer term, especially if you’re only producing occasionally?”

Mason said that if there is the perception that the Producer Offset is up for grabs, it has the potential to set a precedent and affect the negotiating position of other producers. This would, in the end, put the intent of the legislation at risk.

“It is imperative that we – and I do mean we – are smarter in our deal making so [that] there is a share of recoupment and, if we’re lucky, a share of profit if it happens. This revenue is a buffer against setbacks and a guarantee you can keep developing and producing material,” he said.

Mason said many producers wanted and expected Screen Australia to police deals. He said it was willing to do this, with the caveat the producers not back out and leave the agency “the enemy of all.”

“Sometimes it’s puzzling, sometimes infuriating, when people ask about Screen Australia’s right to question deals. We hold a lot of knowledge and experience. We will have seen 150 deals in the previous 12 months and you may have only seen a couple. See us early, not after you have broadly agreed [to] a deal, forcing us to reassemble it if we want to positively respond to your application.”

"Script is everything"

Competition for funding at Screen Australia is more intense than ever, with Mason predicting this year's applications would likely double the number coming in eight years ago. 

He urged the audience to recognise the funding pressures placed on Screen Australia and its motivations for investment.

“In general I’d say producers who don’t deeply understand that our reasons for investing can at times be very different to their reasons for wanting us to – make things very hard for themselves.”

He said the agency was looking for quality projects that pushed the envelope, built careers, invested in culture, and in some cases, could offer commercial gain.

At the moment, Mason said, many scripts coming through Screen Australia are not as good as they could be, and some deals, finance plans and production schedules did not make sense.

“Sometimes there’s financial pressure on producers to roll cameras, or the cast has a small window, or the distributor has a hole to fill now, but going into production without the best script does no one any favours. Script is everything. If the work isn’t exemplary we will move on to better projects.”

 

 

 

 

 

 

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