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WORLD CINEMA REPORT: Four Years and a Funeral: British and U.S. Industries Mourn Loss of FilmFour

Indiewire By Indiewire | Indiewire July 22, 2002 at 2:0AM

WORLD CINEMA REPORT: Four Years and a Funeral: British and U.S. Industries Mourn Loss of FilmFourby Anthony KaufmanAfter just four years in operation, FilmFour, the stand-alone film division of British public broadcaster Channel 4, was effectively shut down two weeks ago. With international connections, a roster of exciting new projects (from the likes of Jonathan Glazer, Lynne Ramsay, Walter Salles, and Thomas Vinterberg, among others), and an annual operating budget of some $46 million, FilmFour had gained a reputation as the most dynamic film company in the U.K. But corporate consolidation, bottom line concerns, and cold feet have changed all that -- and one of the British industry's brightest stars has gone dim.As of July 9, the company has been in a 30-day holding pattern, where the specifics of the shutdown will be worked out. But Channel 4's proposed restructuring plan consists of an in-house film division with an annual budget of around $15 million and a spotlight on British talent. While the shift sharply cuts short the company's potential to be an international player, it may also return the broadcaster to the kinds of small movies for which it was once known, such as "My Beautiful Laundrette," and later Brit hits like "The Crying Game," "Four Weddings and a Funeral," and "Trainspotting."As a separate subsidiary, FilmFour, led by executive Paul Webster, had recently tried to capitalize on those past successes, undertaking an ambitious slate of aesthetically-driven low-budget local films ("The Low Down," "Sexy Beast," "Gangster No. 1") and more commercially minded mid-budget pictures that could compete in the world arena ("Charlotte Gray," "Lucky Break"). But Channel Four axed the outfit, many are claiming, before it had time to find its stride."I'm sorry that the whole environment is so cost-conscious," says John Hart, of New York-based Hart Sharp Entertainment, which had a two-year development and co-production deal with FilmFour to produce up to three films a year. "I think the decision was hasty and Paul didn't have the chance to properly do his job." Hart Sharp will now have to look elsewhere to produce their upcoming project, "Leigh Bowery: The Life and Times of an Icon.""The skies are a little bit grayer for independent film," continues Hart. "It just makes what we do a little harder, because there's one less player in the field."FilmFour also provided Hart Sharp -- as well as other U.S. companies -- with a key entry into the European market. "The deal involved not only development and shared production costs, but also you'd have an allocation against the U.K., based on the budget, a deal with a German company, and you'd have foreign sales for your project when you finished it," Hart continues. "And the combination of those things is very attractive."The loss of FilmFour's international sales division may adversely affect those FilmFour projects currently finishing production, such as Conor McPherson's "The Actors," which could be left high and dry in the world market. According to a Channel 4 press release, the company will meet existing commitments on films prepped to shoot, including Salles' "Motorcycle Diaries" and Damian O'Donnell's "Edgardo Mortara," but distribution and international rights will likely be farmed out. Projects earlier in development, such as Ramsay's "The Lovely Bones," Glazer's "Under The Skin," and Terry Gilliam's "Mondo Beyondo" are also likely up for grabs.Channel 4's Matt Baker says the company came to the realization that FilmFour's business strategy could not work. "We didn't think we'd be able to make a success of the model of making larger budget films focused on the international market," he says.Baker points to British rival Working Title, the romantic comedy superpower that is owned by Vivendi-Universal (the conglomerate that also recently swallowed U.S. film company Good Machine), as an example of what it takes to make it. "Vivendi-Universal gives Working Title muscle in the marketplace and broader relationships," he says. "And without that, we just didn't think we had the resources to make a successful model."While many industry insiders praise FilmFour's efforts to expand into international markets, thereby creating a significant U.K.-based mini-studio, others believe it lead to their downfall. "There's an attempt by British filmmakers to try to catch up to the American market," says British film editor and critic Graham Fuller. "It was trying to get into bed with the majors that caused problems for FilmFour." Fuller refers to the company's deal with Warner Brothers, a year 2000 co-production pact that helped finance "Charlotte Gray" and "Death to Smoochy," as "a mistake." Hart agrees: "That's what came back to bite them. Those investments didn't pan out."But FilmFour's losses were small compared to the kinds of deficits we've become accustomed to in the entertainment business. Last year, the company was in the red for about $8 million and in 2000, the company lost roughly $4.5 million. In 1999, the company saw profits of around $750,000. Compare those figures to French company Canal Plus, for example, which is still running after reported losses of nearly $700 million, and FilmFour's books look relatively cheery.But as a public broadcaster, Channel 4's Baker attests, without public government money like the BBC or private shareholders like their other rivals, "those were losses we could not afford to ignore.""In the grand scheme of things, FilmFour did not lose much money," argues Colin Brown, editor-in-chief of Screen International. "Look, there is no business model in film that works," continues Brown. "The worst business models work if you have a hit; the best business models fail if you don't. It's not about business models. You either decide you want to be in the film business or you don't. So this decision tells me that Channel 4 didn't want to be in the film business. They didn't have the stomach for it."With FilmFour now out of the picture, who will fill the gap? Government-funded organizations like BBC Films and the Film Council continue to push new work, and industry executives cite other newly successful British players like sales agent Capitol Films (Cronenberg's "Spider") and distributor-financiers such as French-British entity Pathe (which financed Jane Campion's latest "In the Cut"), Momentum Pictures, and Entertainment Film Distributors.But Brown notes that it's the powerful U.S. industry that will likely swoop in when given the chance. "This has always been the case," he says. "If you leave the marketplace to its own devices and Britain doesn't take responsibility for its own talent, others will. Miramax, Focus, UA, you name it. That's what replaces it. And the question is always: Why isn't that money going back into the British infrastructure?"What makes matters worse for the local industry is the widespread belief that the U.K.'s three National Lottery studio franchises (Film Consortium, DNA Films, Pathe Pictures), which each have about $8 million annually to spend on films, will expire next year. "I don't think there will be any attempt to replace them," explains Brown, "which is why the FilmFour thing is such a hammer blow."The British also recently weathered another hit when a group of major U.S. and U.K. sales agents agreed to forgo this fall's London Screenings, an annual market held every October, in favor of MIFED, the Milan market that immediately follows the London event. Many of the same forces that have led to FilmFour's problems -- declining television sales, foreign pre-buys, and advertising -- will lead to a more general trend towards consolidation and cautious spending in the world market.At a time when U.K. films recently staged a comeback at Cannes 2002, with well-regarded new works from Michael Winterbottom, Ken Loach, Mike Leigh, Lynne Ramsay, and Shane Meadows, the region's momentum may be stalled, momentarily."I'm sure people are depressed about FilmFour and about the three franchises losing their mandate," says Brown. "I'm sure they're depressed that their bread-and-butter television-supported business has been affected by the ad slowdown -- all these things put together may be returning Britain to where it was a few years ago."But as Graham Fuller notes, mildly optimistic, "This shouldn't really be seen as too much of a tragedy, given that the British film industry exists in a state of crisis; it always has."
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WORLD CINEMA REPORT: Four Years and a Funeral: British and U.S. Industries Mourn Loss of FilmFour



by Anthony Kaufman



After just four years in operation, FilmFour, the stand-alone film division of British public broadcaster Channel 4, was effectively shut down two weeks ago. With international connections, a roster of exciting new projects (from the likes of Jonathan Glazer, Lynne Ramsay, Walter Salles, and Thomas Vinterberg, among others), and an annual operating budget of some $46 million, FilmFour had gained a reputation as the most dynamic film company in the U.K. But corporate consolidation, bottom line concerns, and cold feet have changed all that -- and one of the British industry's brightest stars has gone dim.


As of July 9, the company has been in a 30-day holding pattern, where the specifics of the shutdown will be worked out. But Channel 4's proposed restructuring plan consists of an in-house film division with an annual budget of around $15 million and a spotlight on British talent. While the shift sharply cuts short the company's potential to be an international player, it may also return the broadcaster to the kinds of small movies for which it was once known, such as "My Beautiful Laundrette," and later Brit hits like "The Crying Game," "Four Weddings and a Funeral," and "Trainspotting."


As a separate subsidiary, FilmFour, led by executive Paul Webster, had recently tried to capitalize on those past successes, undertaking an ambitious slate of aesthetically-driven low-budget local films ("The Low Down," "Sexy Beast," "Gangster No. 1") and more commercially minded mid-budget pictures that could compete in the world arena ("Charlotte Gray," "Lucky Break"). But Channel Four axed the outfit, many are claiming, before it had time to find its stride.


"I'm sorry that the whole environment is so cost-conscious," says John Hart, of New York-based Hart Sharp Entertainment, which had a two-year development and co-production deal with FilmFour to produce up to three films a year. "I think the decision was hasty and Paul didn't have the chance to properly do his job." Hart Sharp will now have to look elsewhere to produce their upcoming project, "Leigh Bowery: The Life and Times of an Icon."


"The skies are a little bit grayer for independent film," continues Hart. "It just makes what we do a little harder, because there's one less player in the field."


FilmFour also provided Hart Sharp -- as well as other U.S. companies -- with a key entry into the European market. "The deal involved not only development and shared production costs, but also you'd have an allocation against the U.K., based on the budget, a deal with a German company, and you'd have foreign sales for your project when you finished it," Hart continues. "And the combination of those things is very attractive."


The loss of FilmFour's international sales division may adversely affect those FilmFour projects currently finishing production, such as Conor McPherson's "The Actors," which could be left high and dry in the world market. According to a Channel 4 press release, the company will meet existing commitments on films prepped to shoot, including Salles' "Motorcycle Diaries" and Damian O'Donnell's "Edgardo Mortara," but distribution and international rights will likely be farmed out. Projects earlier in development, such as Ramsay's "The Lovely Bones," Glazer's "Under The Skin," and Terry Gilliam's "Mondo Beyondo" are also likely up for grabs.


Channel 4's Matt Baker says the company came to the realization that FilmFour's business strategy could not work. "We didn't think we'd be able to make a success of the model of making larger budget films focused on the international market," he says.


Baker points to British rival Working Title, the romantic comedy superpower that is owned by Vivendi-Universal (the conglomerate that also recently swallowed U.S. film company Good Machine), as an example of what it takes to make it. "Vivendi-Universal gives Working Title muscle in the marketplace and broader relationships," he says. "And without that, we just didn't think we had the resources to make a successful model."


While many industry insiders praise FilmFour's efforts to expand into international markets, thereby creating a significant U.K.-based mini-studio, others believe it lead to their downfall. "There's an attempt by British filmmakers to try to catch up to the American market," says British film editor and critic Graham Fuller. "It was trying to get into bed with the majors that caused problems for FilmFour." Fuller refers to the company's deal with Warner Brothers, a year 2000 co-production pact that helped finance "Charlotte Gray" and "Death to Smoochy," as "a mistake." Hart agrees: "That's what came back to bite them. Those investments didn't pan out."


But FilmFour's losses were small compared to the kinds of deficits we've become accustomed to in the entertainment business. Last year, the company was in the red for about $8 million and in 2000, the company lost roughly $4.5 million. In 1999, the company saw profits of around $750,000. Compare those figures to French company Canal Plus, for example, which is still running after reported losses of nearly $700 million, and FilmFour's books look relatively cheery.


But as a public broadcaster, Channel 4's Baker attests, without public government money like the BBC or private shareholders like their other rivals, "those were losses we could not afford to ignore."


"In the grand scheme of things, FilmFour did not lose much money," argues Colin Brown, editor-in-chief of Screen International. "Look, there is no business model in film that works," continues Brown. "The worst business models work if you have a hit; the best business models fail if you don't. It's not about business models. You either decide you want to be in the film business or you don't. So this decision tells me that Channel 4 didn't want to be in the film business. They didn't have the stomach for it."


With FilmFour now out of the picture, who will fill the gap? Government-funded organizations like BBC Films and the Film Council continue to push new work, and industry executives cite other newly successful British players like sales agent Capitol Films (Cronenberg's "Spider") and distributor-financiers such as French-British entity Pathe (which financed Jane Campion's latest "In the Cut"), Momentum Pictures, and Entertainment Film Distributors.


But Brown notes that it's the powerful U.S. industry that will likely swoop in when given the chance. "This has always been the case," he says. "If you leave the marketplace to its own devices and Britain doesn't take responsibility for its own talent, others will. Miramax, Focus, UA, you name it. That's what replaces it. And the question is always: Why isn't that money going back into the British infrastructure?"


What makes matters worse for the local industry is the widespread belief that the U.K.'s three National Lottery studio franchises (Film Consortium, DNA Films, Pathe Pictures), which each have about $8 million annually to spend on films, will expire next year. "I don't think there will be any attempt to replace them," explains Brown, "which is why the FilmFour thing is such a hammer blow."


The British also recently weathered another hit when a group of major U.S. and U.K. sales agents agreed to forgo this fall's London Screenings, an annual market held every October, in favor of MIFED, the Milan market that immediately follows the London event. Many of the same forces that have led to FilmFour's problems -- declining television sales, foreign pre-buys, and advertising -- will lead to a more general trend towards consolidation and cautious spending in the world market.


At a time when U.K. films recently staged a comeback at Cannes 2002, with well-regarded new works from Michael Winterbottom, Ken Loach, Mike Leigh, Lynne Ramsay, and Shane Meadows, the region's momentum may be stalled, momentarily.


"I'm sure people are depressed about FilmFour and about the three franchises losing their mandate," says Brown. "I'm sure they're depressed that their bread-and-butter television-supported business has been affected by the ad slowdown -- all these things put together may be returning Britain to where it was a few years ago."


But as Graham Fuller notes, mildly optimistic, "This shouldn't really be seen as too much of a tragedy, given that the British film industry exists in a state of crisis; it always has."