BBC Films Announces Agreement with Pact on Changes to Deal Terms for UK Producers

The BBC announced some key changes to the deal terms offered to UK film producers, a move that has been warmly welcomed by Pact. The changes are intended to support one of the stated intentions behind the Government’s implementation of the UK Tax Credit system - namely to increase UK producers’ stakeholding in the films they make and ensure that film revenues in part flow back into supporting a sustainable film industry in the UK.

When the UK Tax Credit was introduced in 2007, the BBC, the UK Film Council and Film Four signed a joint statement to the effect that, wherever possible, any tax credit that was claimed on a film and used to fund the budget would be treated in the finance plan as if it were equity funding provided directly by the UK producer - it would give the producer a proportionate share of initial receipts alongside the public funders and the other equity financiers.

As many films do not reach the net profit stage, this was seen as an important way to push the producer’s stake-holding in the film higher up the chain and give a financial return on a par with other investors in the film.

In reality, this has proved hard for the BBC and producers to achieve in all cases.

The key change the BBC is making therefore is to create a corridor for the producer from the BBC’s own equity recoupment. This will apply wherever the tax credit has not been treated as producer’s equity even though the funding has been used to help finance the film.

The corridor will be a standard 30% of the actual equity recoupment the BBC receives on a film and is intended to put the BBC back into the position it would have been in if the tax credit had been treated as equity funding from the producer.

The corridor to the producer will be mirrored by a similar corridor to the BBC of the producer’s eventual net profits, if the film is successful.

The BBC and Pact have also agreed a number of other changes: The BBC’s broadcast license in the UK will be for a maximum of 15 years. After five years, if the BBC has no further plans to transmit then either the BBC or the producer may look to exploit those rights elsewhere in the UK, sharing profits 70/30 if the BBC is unrecouped, 50/50 if the BBC’s equity has been repaid.

The BBC is also dropping several of its standard requirements around development, in particular the charge of a 50% premium on development costs incurred to date if the project is turned down by the BBC and picked up by another financier. The requirements for trust accounts at development stage will also be abolished.

Claire Evans, the BBC’s Head of Operations and Business Affairs for Fiction, said: “A healthy and sustainable UK Film industry is of real value to the license fee payer and the BBC therefore has an important role to play in UK film. We believe these changes will deliver tangible benefits to UK producers by helping to significantly recalibrate the producer’s place in the value chain of UK film production and by unlocking the residual value of the films we have helped to create”.

Jane Tranter, Controller, BBC Fiction, said: “Six months ago we created the new Films Board at the BBC and announced an increase in funding to £12m a year. Together with this announcement, these measures demonstrate the BBC’s commitment to British Film. The development slate is in rude health and we are feeling ambitious and excited for the future.”

Andrea Calderwood of Slate Films and Vice Chair of Pact, Feature Film, said: “We’re delighted that the BBC has shown the way forward with this initiative, which will make a real difference to British film producers. Independent producers put a lot of investment - of commitment as well as money - into their films to make them happen, and this will give them the chance to make a proper return on their investment.

“Providing a genuine share of revenues to producers of successful films creates a real partnership between the BBC and producers to support a sustainable British film industry, and allows us to work together to build up the quality and range of British films.”

Source: BBC Press Office

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