AS Media Studies

Study NotesUnit G322 Section B

Audiences and Institutions

The Film Industry

Part 3The British Film Industry

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The British Film Industry in 2012

2012 marks a particularly strong year for British film. As well as the extraordinary performance of the last of the Harry Potter films, 2011 was also marked by great success in the independent

sector with The King’s Speech and The Inbetweeners Movie contributing to a record market share for British independent films. But if we were to try to define the year in terms of

performance, a good place to start would be to look at how UK film has fared internationally and the strength and success of British talent and creativity abroad...

BFI STATISTICAL YEARBOOK 2012

Summary of the YearUK films earned 17% of the $33 billion worldwide gross box office last year while, in 2010, the UK film industry generated a valuable trade surplus for the British economy amounting to over £1.5 billion. Quite justly, UK talent has been feted at all the key festivals such as Sundance, Toronto, and Cannes, and recognised in the awards season, all of which has helped promote British culture, skills and creativity abroad.

Digital Projection and VoD (Video on Demand)Virtually all screens in the UK are expected to be digital by the end of 2013 and whilst we are yet to see the uptake of VoD grow significantly as a platform for reaching audiences, it remains a priority technology.

Independent UK FilmsUK films enjoyed significant commercial and critical success in 2011, no more so than at home, where British films took the first four places at the UK box office. It was an

exceptional year for independent UK films with The King’s Speech grossing a record £45.7 million at the UK box office, $414 million worldwide, four Academy Awards® and seven BAFTA film awards. The second highest grossing independent film of all time, The Inbetweeners Movie, earned £45 million in the UK and together with a range of films such as, Jane Eyre, My Week with Marilyn and Tinker, Tailor, Soldier, Spy appealed to a wide range of audiences and helped push independent UK films market share to its highest level since records began.

The highest grossing film of the year was the final instalment of the Harry Potter series, Harry Potter and the Deathly Hallows: Part 2, which earned £73 million in the UK and over $1.3 billion worldwide. As the most successful film series of all time, Harry Potter has dominated the global film industry for a decade. Based on UK source material, shot in the UK with British cast and crew and produced by a UK company with finance from Warner Bros, the

series has grossed £442 million at the UK box office ($7.7 billion at the worldwide box office), sold over 30 million copies on all video formats in the UK and has been watched over 212 million times on UK television.

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Some highlights of 2011…

UK films enjoyed significant success in 2011, no more so than at home, where British films took the first four places at the UK box office. It was an exceptional year for independent UK films with The King’s Speech grossing a record £45.7 million at the UK box office, $414 million worldwide, four Academy Awards® and seven BAFTA film awards. The second highest grossing independent film of all time, The Inbetweeners Movie, earned £45 million in the UK and together with a range of films such as Jane Eyre, My Week with Marilyn and Tinker, Tailor, Soldier, Spy appealed to a wide range of audiences and helped push independent UK films market share to its highest level since records began.

The final Harry Potter film was one of 47 3D films released in 2011, up from 28 in 2010, but 3D takings were down from 24% to 20% of UK box office revenues. The use of 3D was particularly memorable in feature documentaries during the year including the UK independent film TT3D: Closer to the Edge, which grossed over £1.2 million at the UK box office. Overall, 2011 was a record year for UK documentaries with Senna breaking the box office record set by Touching the Void in 2003 with takings of £3.2 million.

Q.1 Why do you think 3D takings went down when the number and variety of 3D films increased in 2011?

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The UK remains the third largest consumer market for film in the world, worth £4 billion or 7% of global revenues. Cinema going remains robust but the decline in revenues from DVD sales represents a major challenge for the industry. UK films, including co-productions, accounted for 21% of releases.

The significance of the film industry to the UK economy was highlighted in the recent international trade figures published by the Office for National Statistics. The UK film industry exported £2.1 billion worth of services in 2010. Total UK production activity in 2011 was a record £1.27 billion, with the UK spend associated with inward investment features exceeding £1.1 billion, also the highest yet recorded.

Production - While a small number of large budget films are responsible for the majority of UK production value, most domestic films produced in the UK are low and micro-budget features. Of the 200 UK domestic features made in 2011, 62% were produced with budgets of less than £500,000. Over 86% of UK films at this budget level failed to secure a theatrical release.

Q.2 Where do you think these films end up being shown?

UK films shared 17% of the $33 billion worldwide gross box office in 2011, up from 14% in 2010 with the final instalment of the Harry Potter story, the top film of the year. Oscar®-winner The King’s Speech, earned over $414 million.

UK films and talent won 30 major film awards in 2011, with eight of these awards being won at the Oscars® and 15 at the BAFTAs. The 295 awards received from 2001–2011 represented 14% of the total of all major awards.

Punching above our weight - of the top 200 global box office successes of 2001–2011, 31 films are based on stories and characters created by UK writers. Together they have earned more than $20 billion (£12.3 billion) at the worldwide box office. Half of the top 20 global box office successes of the last 11 years are based on novels by UK writers. More than half of the top 200 films released worldwide since 2001 have featured UK actors in lead or

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prominent supporting roles. UK directors were behind 24 of the 200 biggest films of the last 11 years.

Distribution - The top 10 distributors had a 94% share of the market in 2011, the same as in 2010. Weekdays (Monday to Thursday) accounted for 42% of the box office, the highest share since our records began.

Q.3 Why do you think there are more people going to the cinema mid-week? Who are more likely to attend the cinema outside of opening weekends?

Opening weekends represented 28% of the total box office. The estimated total advertising spend was £197 million. The average advertising spend for studio-backed UK films was £1.6 million and for UK independent films was just under £0.2 million.

Exhibition - The UK had 3,767 screens, 96 more than 2010, in 745 cinemas. The UK had the second highest number of digital screens in Europe (behind France). The UK had 1,475 screens capable of screening digital 3D features (54% of all digital screens).

DVD Sales & Rentals - Despite falling revenues, DVD/Blu-ray remains the most important element of the film value chain. In 2011, sales and rentals in the UK generated over £1.4 billion. There were 86 million feature film physical video rentals in 2011 (84 million in 2010) and 152 million sales (160 million in 2010). UK films accounted for around 22% of all films sold on video. The most popular purchase on DVD in 2011 was (not surprisingly) Harry Potter and the Deathly Hallows: Part 2. Online rental with postal delivery LOVEFiLM (www.lovefilm.com/) & Netflix (www.netflix.com/UK) accounted for 46% of all feature film video rental transactions in 2011.

Q.4 Why do you think there has been a decline in DVD sales in the last few years?

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Comparison between 2002 and 2011

In 2002, 369 films were released in UK cinemas, compared to 558 in 2011 (a 51% increase). Admissions in 2002 were at a 30-year high of 176 million generating a box office gross of £755 million (while admissions remained on a plateau for a decade the total gross box office for 2011 exceeded £1 billion).

The top UK film as reported in 2002 was Harry Potter and the Chamber of Secrets while Gosford Park and Bend it Like Beckham lifted UK independent share to 6.5% (half the total recorded last year).

As in 2011, the UK’s favourite genre was comedy (27% of box office from 23% releases) but UK audiences were less likely to visit cinemas on a weekday – 68% of the box office was generated on a weekend compared with 58% in 2011. Foreign language films made up 36% of releases but only 2% of the box office (in 2011, there were fewer foreign language films as a share of releases and the box office share remained the same).

In 2002, there were 3,258 cinema screens in the UK but only four of those screens were digital (out of 113 in the world). In home entertainment, DVD players were in a quarter of UK households and a significant number of VHS tapes were still being sold. On demand services were limited to near Video on Demand pay-per-view offers on satellite and cable. Multi-channel television accounted for 22% of the UK television audience and 59% of the population owned a mobile phone.

So what of the future? With broadband speeds increasing, smartphone and tablet ownership on the rise and internet-enabled television sets becoming more commonplace the period of digital transition is by no means complete. The ways in which we choose and watch films has undergone an enormous change in the last decade and the next one is likely to be no different.

Q.5 Summarise what has remained the same about the UK film market over the last ten years and what has changed dramatically?

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How do films get funded in the UK?

The UK does not have the massive studio structure that Hollywood has in terms of producing films but there are now many more ways in which a film can be produced in the UK than ever before and it is almost impossible to find out about in detail, because of the myriad of companies and consortia involved and the legal and financial minefield about rights, loans, investment deals, tax breaks and funding criteria involved.

In the past, there were great British studios that produced successful films, some of which became international hits, for example, Denham Studios, Ealing Studios and the Hammer Studios in Bray. However, during the 1970s and 1980s, film-making in the UK became more and more reliant on Hollywood funding and its cultural and artistic influence.

To change this, in May 1997, the then Labour government announced that £92 million pounds of lottery funding was to be designated from the Department of Culture Media and Sport (DCMS) over six years to create three UK mini-studios to produce successful British films that could compete in the international market place and make a profit for funders and investors.

The three successful bidders were:

1. PATHÉ PRODUCTIONS – Pathé UK has a major presence within the UK film industry, operating as a fully integrated studio. It is involved in all aspects of film-making, from production and development through to international sales and distribution. Pathé UK's productions range from Aardman's Chicken Run to Stephen Frears' The Queen to Danny Boyle's Slumdog Millionaire (2009). (http://www.pathe.co.uk/)

2. THE FILM CONSORTIUM – partners included Scala Productions and Virgin, whose previous hits had included The Crying Game (1992) and Michael Collins (1996). Its last film was produced in 2005.

3. DNA Films – headed by Duncan Kenworthy (producer of Notting Hill and Four Weddings...) and Andrew MacDonald (producer of Trainspotting and Shallow Grave).

The funding given by the DCMS was not to fund all costs for production – each company would have to find the rest of the finance themselves either through co-production deals with other countries (usually Europe or the US), loans, grants from other organisations or private investment.

The companies gained some successes: Pathé co-produced Slumdog Millionaire (2009) with Film4, which took £31 million at the UK box office and they even saw a mountaineering drama documentary Touching the Void (2003) take over £12.4 million.

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DNA Films and The Film Consortium have had varying degrees of success. DNA has released titles including Danny Boyle's horror hit, 28 Days Later (2002), The History Boys & Last King of Scotland (both 2006) and were also one of the many hands in Love Actually. Steve Coogan's comedy The Parole Officer (2001) proved less successful. They are now 50% by Fox Searchlight, the 'Indiewood' arm of 20th Century Fox. They have most recently produced Never Let Me Go (2010) and Dredd 3D (2012)

The Film Consortium has not been as successful as was hoped, although titles such as Michael Winterbottom's acclaimed In This World (2002) fared well (at least critically).

The Lottery franchise project failed as it didn't really set up a permanent studio system creating a series of commercially successful titles for an international market place. Maybe that is impossible to do in the UK with such a diverse range of film-makers, and social and ethnic groups, with many stories and ideas relevant only to a regional or even local environment. Other ways films are funded in the UK, apart from via the three above companies are:

Assistance with funding from one of the Regional Screen Agencies across the UK who may help with finding crews, training or seed/development funding for scripts. The Damned Utd (2009) about Yorkshire based football club Leeds Utd and This Is England (2006) both received help from Screen Yorkshire because of parts of the production and filming taking place there.

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Investment from Europe — Bend It Like Beckham (2002) had assistance from the Hamburg Film Fund in return for shooting some sequences in Germany, Mike Leigh has a deal with CanalPlus in France for part-funding of his films and Ken Loach's Looking for Eric (2009) had investment from Germany and Spain.

BBC Films (http://www.bbc.co.uk/bbcfilms) and Film4 (http://www.film4.com/film4-productions/current-slate) are still an important source of British cinema by funding work for the small screen but which is then released into cinemas. The BBC has invested in films since the 1970s, although on a much smaller scale than Channel Four, whose Film4 channel was made available on digital Freeview in 2006, and screens seasons of British films. Working in partnership with companies, the BBC has funded some significant films. ITV companies have participated in film finance to a lesser extent. The expansion of cable and satellite TV has made more films available on the small screen, but movie channels are in fierce competition with sports and other popular channels.

Q6. How does film production in the UK seem to be very different from the Hollywood model of large, powerful studios?

How do you make a ‘British’ film?

The Secretary of State for Culture, Olympics, Media and Sport (DCMS) is responsible for issuing British Film Certificates on the basis of recommendations made by the Certification Unit. In 2011 this Unit became part of the British Film Institute (BFI) when the BFI assumed responsibility for the majority of the UK Film Council’s functions. Makers of certified British films can apply for tax relief on qualifying films or apply for Lottery funding from the BFI and other sources. (http://industry.bfi.org.uk/qualifying)

Schedule 1 films are films certified as British under Schedule 1 of the Films Act 1985. To qualify, films must pass a UK Cultural Test. Points are awarded for UK elements in the story, setting and characters and for where and by whom the film was made. A wide variety of films qualified as British under the Cultural Test in 2011, from The Chronicles of Narnia: The Voyage of the Dawn Treader, The Eagle and Jane Eyre to We Need to Talk About Kevin and Wuthering Heights.

Films can also qualify as British if they are certified under the various official UK co-production agreements. Official co-productions must be certified by the competent authorities in each country as meeting the certifying criteria, which include the creative, artistic, technical and financial input from each co-producer. Films which received final co-production certification in 2011 include Africa United, The Imaginarium of Dr Parnassus and Route Irish.

In 2011, a total of 189 films (170 in 2010) received final certification as British under the

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Cultural Test. The total budget of finally certified films increased from £1,002 million in 2010 to £2,119 million in 2011. This increase reflects the higher number of big budget inward investment films made in 2010 feeding through to a higher value of final certifications in 2011. So we made a great number of Schedule 1 films in 2011, yet there are few well known 'purely British' films. This paradox becomes more complicated when we start to explore where the money comes from.

For example, if a film is made by a British film company, but that company is owned by a larger American group, is the production financed in the UK? And what is the significance of distribution? If a film is 'purely British' at the production stage but it is distributed in this country by an American company (who then claw back a chunk of the box office profits), is this film really a success story for the British Film Industry?

British studios are used by overseas companies and a number of blockbusters have been produced in the UK, including the Harry Potter films which have British content but are largely

American-financed. For many this situation compromises British cinema, confirming its dependency on American involvement and its inability to develop an independent infrastructure. On the other hand, co-production arrangements are a reality of contemporary film-making and

these do not necessarily prevent interesting films from being made.

Another major problem with defining a 'British' film is that in the main, British cinema has meant English cinema, in terms of language and setting. Scotland, Wales and Ireland all have their own funding bodies and Film Development organisations and a number of diverse and innovative films have been produced there. It is important therefore to consider films such as Ratcatcher (1999), The Guard (2011) and

Twin Town (1997) as very much productions of their home nations rather than just 'British' films.

Q7. What is the benefit to a film producer of their film being branded as British? What is it about ‘Britishness’ that is attractive to investors from outside the UK? What is it about ‘Britishness’ that makes it easy for Hollywood studios to dominate our film market?

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UK Films – the 2005 Crisis!

UK film production experienced a crisis in 2005 and early 2006.

Investment in the making of films dropped, largely due to the rate of the English pound against the American dollar and the availability of low cost studios in Eastern Europe. But later in 2006 and since, investment has returned, and this is related to a new Government policy of tax relief.

This allows producers to be exempt from certain tax payments. Previously there had been a compulsion for films to be mainly shot in the UK for them to qualify for the avoidance of tax, but in March 2006 this was revised to allow for more overseas filming, an attractive amendment for investors.

UK cinema Admissions 2002 - 2009

This is a great example of the importance of politics in understanding the media. It is impossible to critically assess the relationship between British films and audiences by only thinking about cultural reasons why British cinema is more or less successful in relation to Hollywood blockbusters. 'Behind the scenes' there are financial, political and institutional reasons why films do or don't get made and released and seen by a potential audience.

A recent good example of Hollywood's dominance is the record-breaking box office performance of Pirates of the Caribbean 2 (2006), seen by industry commentators as a victory of blanket marketing. Cynics suggest that a film of this scale does not need to be critically well received, as the efforts and dollars put into promoting the film so lavishly will guarantee an audience on the opening few nights and subsequent 'buy first, review later' DVD sales. In this case over £50 million was made at the UK box office, and 1.5 million copies of the DVD were purchased in the ten days after its release.

A study of the ways in which the big Hollywood studios time the release of films is another area of key institutional knowledge for you. The timing of releases in relation to the Oscars, school holidays, the spring/summer blockbuster period and DVD releases at Christmas is strategic, and any British release attempting to get attention amidst this marketing stealth will be at the mercy of this.

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Case Study - BBC Films

British films have experienced a boom since 2006, largely due to a renaissance of television companies' involvement in production and distribution. The BBC and Channel 4 have both invested far more in film than at any time since the 1980s. The recent television licence fee increases has meant that the BBC have had more money to invest in domestic film production - another example of cross-media political/institutional events being hugely important in cultural developments.

BBC films are co-funded with an overseas investor, usually American. The most successful of these in 2006 was The Queen, produced without major Hollywood finance. Clearly The Queen, despite its indigenous qualities, can be seen as following the typical route of making films about English culture with an eye to the US audience, previously achieved by films such as Notting Hill and Bend it Like Beckham.

Q8. How many of these could be considered British films? How many of them are co-productions where the majority of the money leaves the country? What does this say about the scale of the UK film industry?

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In the 1990s, British film makers tried to imitate the Hollywood genre approach, most notably with the proliferation of gangster films in the wake of the success of Lock Stock and Two Smoking Barrels (1998) and Snatch (2001) This is now seen by the industry and its commentators as fatal, as this statement from Ian George, managing director of Twentieth Century Fox UK, demonstrates:

The films that have succeeded have not tried to ape Hollywood. They have been typically British subjects, done in

an entertaining, confident way. (Grant 2007)

The institutional relationship between BBC/Channel 4 and film is always changing, in the last few years it has been in a healthy state with the BBC co-funding Streetdance 3-d, Brighton Rock, An Education, Revolutionary Road and the

TV spin-off In the Loop. With the current financial situation though, funding to TV from both Government and advertising has slowed or even crashed, meaning less money for less films and more pressure on those films to succeed.

In the UK the cinema tradition has been less protective of film culture than other countries and more concerned with commercial viability...Nowadays, television plays an important part in the

process, investing real money in the real marketplace while remaining cushioned from the direct economic constraints of failure by the nature of TV accounting. The 'return' on the investment is represented by the broadcast rights to the film, money that would otherwise have to be spent

to acquire some two hours of programming. (Roddick 2007)

Q9. Which one of these two films recently released in the UK do you think is a BBC co-production and why?

Find out here - http://www.bbc.co.uk/bbcfilms/about/

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Case Study – UK Film Council closed in 2010. Why?

What was it?The UK Film Council (UKFC) was the lead agency for film in the UK, covering the economic, cultural and educational areas, and representing the UK cinema industry abroad.

Established by the Labour government in 2000, the UK Film Council was mainly concerned with the economics of film production, attempting to create a healthy, competitive UK film production base. It has assisted with the funding of a range of titles including in the last year Made in Dagenham, The King's Speech, Centurion (all 2010), Harry Brown (2009), Glorious 39 (2009), Brighton Rock (in production) and Dorian Gray (2009).

What did it do?As well as supporting film production, the UKFC also has a remit to invest in a series of other initiatives including:

Film Distribution and Exhibition

There were two major initiatives here that allowed more people the chance to see a wider range of films (though not necessarily all from the UK).

The Digital Screen Network Fund allowed theatrical and non-theatrical (that is, non-cinema based) venues to project films on DVD or video which will provide greater accessibility for non-mainstream (i.e. silent cinema, classics, foreign language) films for groups like film societies, schools and community groups. It also allowed new film-makers to show their work without having to pay for a massively expensive transfer to 16mm or 35mm film prints. Eventually it is hoped that films will be screened via computers or the web and transmitted 'down the line' without any traditional projection equipment.

The Regional Screen AgenciesNine organisations across England were set up to administer UKFC funding (around £7.5 million) to film projects, cinemas and film clubs, production companies, and training initiatives. One example is Screen Yorkshire (http://screenyorkshire.co.uk/) based in Leeds. Another is Film London (http://filmlondon.org.uk/) which help set up the Microwave scheme that led to the

production of Shifty (2009)

The other major initiative with regard to film distribution was the Prints and Advertising Fund, which can pay for increased publicity and advertising space and also increase the number of prints available to screen. The fund has made grants to a wide range of films, including Oscar-winner The Lives of Others (2006) as well as award winning British titles like the Red Road, Control, London to Brighton and This is England. These films already had a certain amount of cross-over appeal – that is to say they may have played successfully in a small amount of art-house screens – but could also appeal to a more mainstream audience. The scheme has been seen as a great success, as it brought a range of titles to British audiences who may otherwise never have experienced them.

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Film Production

The money UKFC invested came from both the government, via the DCMS, and cash raised from the National Lottery and it is likely that any UK produced film or major UK co-production released over the last 10 years would have had some input from the Film Council at some time.

Films were funded via a series of different channels:1. The Premiere Fund, which looked at financing commercial mainstream titles with a

broad international appeal many of which have already been listed.2. The New Cinema Fund, which helped to support more specialised, independent work

and 'cutting edge film-making' particularly assisting with productions from the English regions. Recent examples have included In the Loop (2009), Man on Wire (2006) and Adulthood (2005).

3. The Development Fund, which assisted film-makers to get ideas off the ground, concentrating specifically on raising the quality of screenwriters. Most UK films of the last few years would have received financial assistance of up to £25,000 for their original drafting from this fund.

Funding feature films is a complex combination of public money, overseas investment, bidding wars between sales agents and distribution and sponsorship deals. What the UK Film Council did for budding movie-makers was to offer them a place to go first in search of

funding.

Although there were a number of successful initiatives funded by the UKFC, as well as a stream of critically and commercially successful films, there were also some criticism of it as an organisation, mainly from areas of the right wing tabloid press attacking the fact the 'public money' has been used to fund a 'vile sex film' such as Sex Lives of The Potato Men’ (2004) or Lesbian Vampire Killers (2008).

Criticism is not just levelled at the content of some UKFC funded films, but the fact that they are not 'value for money', losing money at the box office and unable to compete in the international market.

Prime minister urges British film to be more ‘mainstream’

David Cameron announced in Jan 2012 that National Lottery money:

“will be directed at ‘mainstream’ films that could become commercial successes, rather than ‘art house’ cinema that generates limited box office sales. A strategy for exporting British film-making expertise will also be announced as part of a drive to exploit the potential of the £40billion industry to create jobs. The Prime Minister will outline the plans during a visit to Pinewood studios in west London, where the next James Bond adventure is being filmed. The proposal to focus lottery money on films that are likely to be commercially successful films could be criticised by some independent film-makers, who are already aggrieved at the

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Coalition’s decision to abolish the UK Film Council. Mr Cameron believes that resources should be focused on fully exploiting the potential to make the film industry even more lucrative. He said he wanted to build on “the incredible success of recent years”. “Our role should be to support the sector in becoming even more dynamic and entrepreneurial, helping UK producers to make commercially successful pictures that rival the quality and impact of the best international productions,” he said. “Just as the British Film Commission has played a crucial role in attracting the biggest and best international studios to produce their films here, so we must incentivise UK producers to chase new markets both here and overseas.”

Reasons for scrapping the UKFC

In the government's opinion, the Film Council did not work; or at least not well enough to justify its survival.

Over the past decade, it has ploughed £160m of Lottery money into more than 900 productions (some good, some awful!). It has also funded the British Film Institute and Skillset, which furnishes the industry with a steady supply of trained technicians. Veteran producer David Puttnam has hailed it as the strategic glue that binds a disparate sprawl of auteurs, craftspeople, circus barkers and market traders and its abolition sparked fierce criticism, both here (where 50 big-name actors signed a letter of protest) and in the US (where Clint Eastwood and Steven Spielberg waded into the fray).

Even its most ardent supporters, though, will concede the UKFC was far from perfect. It has been accused of cronyism, arrogance and waste. It has been attacked for throwing public money at the art house (courtesy of its New Cinema Fund) on the one hand and for backing mainstream work (courtesy of its Premiere Fund) that would surely find funding elsewhere on the other. Its foes, meanwhile, revile the UKFC as a classic example of state bureaucracy – an all-powerful quango that presumes to tell businesses what films they can and cannot make. For the film-maker Julian Fellowes, the body is a "behemoth" that epitomizes "the anti-commercial mindset of the film elite". For Michael Winner, that bumptious remnant from the unregulated days of British film production, it's a needless extension of the welfare state. "The council gives a lot of work to people who are out of work and who probably deserve to be out of work," he says.

So what happened next?

31 March 2011 was the final official day of business at the UKFC's offices in Little Portland Street, London, and former Film Council staff today find themselves working for the British Film Institute, which will take over many of the abolished body's functions. Others, including the office of the British Film Commissioner, have been transferred to regional agency Film London, which will oversee the task of promoting the UK as a film-making destination.

The decision to hand the BFI responsibility for distributing lottery funding to film-makers came in November, partly assuaging widespread concern that the government had not considered the future of public investment in British movies when making its decision to axe the council. At the same time Ed Vaizey, the culture minister, further sugared the pill by announcing that the £28m lottery grant the industry receives would be increased to around £43m by 2014.

If ministers were rattled by the vocal support for the council, they might have been cursing their luck in February when The King's Speech, a film part-funded by the UK Film Council,

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took four Oscars at the annual Academy Awards ceremony in Los Angeles. Other productions in the last five years alone that might never have made it to the big screen without the council's support include Nowhere Boy, Fish Tank, In the Loop, Man on Wire, Hunger, Happy-Go-Lucky, This is England, Vera Drake and The Last King of Scotland. Of movies recently in cinemas or due to arrive on the big screen, Richard Ayoade's critically acclaimed first film Submarine, Andrea Arnold's Wuthering Heights and the forthcoming Joe Cornish-penned comedy Attack the Block all received UKFC funding.

Three weeks ago, a National Audit Office report roundly criticised the UKFC's axing, suggesting it was "not informed by a financial analysis of the costs and benefits of the decision". The UKFC's entire annual budget was a reported £3m, while the cost of closing it down and restructuring is estimated to have been almost four times that amount.

Q6. Why do you think the Coalition government decided to close down the UKFC?

How does a film make a profit?

Box office income does not all go back to the film-makers. After tax is deducted, a percentage is given to the film distributor which could be between 35-60 % and the cinema exhibiting the film is left with the rest. So, if a film makes £l million at the box office, the rough sums would look like this:

• £1,000,000 in gross UK box office takings minus VAT @ 20 % (£200,000) leaves £800,000

• minus distributor share of 45 % (£360,000) leaves £440,000• minus UKFC investment payback of £200,000 leaves £240,000• minus payback for other investors of £120,500 leaves £119,500

• So a film that takes £1 million gross box office will leave a profit of £119,000!

There might also be other payments such as bank loans, outstanding bills and payments, or percentage cuts for some cast and crew who have deferred on a salary and opted for profit share in the profits.

Unless a British film has the backing in terms of money, resources, expertise and sheer clout from a major US studio (Working Tide films has Universal, Harry Potter has Warner Bros., the Bond movies have MGM, United Artists and 20th Century Fox) it will be very hard for it to make a profit.

Q7. Do you think the UK film industry needs a body like the UKFC/BFl? Why?

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