PRESENT VALUES - Why FDs need a 'Cannes do' attitude

Last month, the entire film world descended on Cannes for the 50th anniversary celebrations of the world’s greatest film festival. The town was filled with stars – and tourists, photographers and fans gawping at them. But it is one of the most enjoyable experiences I have had in my position as finance director of Guild Pathe Cinema.

It is a wonderful place to meet people in the same industry. All concerned, including those who are there to do serious business, work extremely hard, still doing deals at four in the morning in various hotel bars …

Most of the world’s bankers who are involved in film financing were present, and various accountancy firms were also there in force (both KPMG and Ernst & Young held parties on their yachts).

I joined the fray during the second week of the festival and visited many of the independent production companies during that time, along with my colleague Sonali Wijeyratne, head of legal and business affairs at Guild Pathe.

But what surprised me most on these visits was the lack of finance directors present. There were sales directors, publicity people, acquisitions executives and the various heads of legal and business affairs – but very few finance people. Is it any wonder that film companies are notorious for going bankrupt?

No British films

The two problems that the UK film industry has had to deal with in the past have been the fragmentation between the different sectors – production, distribution, exhibition and sales – and the difficulty that producers have had in raising finance for their films in this country.

We have the talent (writers, directors, producers) and the world’s best technicians (the new Bruce Willis blockbuster The Fifth Element was filmed at Pinewood Studios) but most of the successful ‘British’ films in recent years were actually financed outside this country – and that is where the profits eventually flow. Even The English Patient, which recently won 12 Oscars, is not a true British film.

To assist in the vertical integration of the industry, the Arts Council of England decided late last year to award National Lottery money to four film franchises to create mini-studios along the lines of the US models.

Available funding amounted to u156m – approximately 20% of the financing required to produce the films, with the remainder still to be raised from private investors.

The winners are …

In Cannes, on 15 May, the new heritage secretary, Chris Smith, announced the winners – but only awarded u92.25m.

Out of 37 applicants, three winners were selected, with u33m being awarded to Pathe Pictures (a consortium of six internationally recognised British producers, responsible for Ghandi, The Commitments and Dangerous Liaisons), Guild Pathe Cinema (distribution, with financial backing from French group Pathe, BZW and Coutts Bank). Another #29m went to DNA Films, made up of Duncan Kenworthy and Andrew MacDonald (responsible for Four Weddings and a Funeral and Trainspotting), and #30.25m was given to The Film Consortium, which includes Nik Powell and Steve Woolley’s Scala Productions, responsible for The Crying Game.

At the press announcement in Cannes, Alexander Walker from London’s Evening Standard tore into the Arts Council for awarding one of the franchises to The Film Consortium because Nik Powell and Steve Woolley used to run Palace Pictures – which went bankrupt about five years ago (what was that I said about lack of financial representatives at Cannes?).

Despite the criticism, let’s hope that the ‘creative’ side of the industry begins to realise the importance of involving finance executives more in the decision-making process.

We all hope the film franchises will be the dawn of a new era in UK film making and that each of the consortia will make films that the British public want to see.

Felicia Lane ACCA is the FD of film distribution company Guild Pathe Cinema. In the 1980s, she was a professional musician, playing percussion with most of the major British orchestras. She will be writing a regular column for the Business page.