Are high-net-worth individuals involved in British film finance schemes secretly stashing money offshore? Revenue & Customs, the UK equivalent of the IRS, believes that “billions of pounds in tax revenue have been lost” as tax breaks are sold to wealthy investors enabling them to avoid or defer tax, according to an article in today’s Times Of London. Revenue and Customs told The Times that 600 film schemes are under inquiry with one official saying that overall they are “a £5B risk for us at least… Someone puts in money, and then the film scheme promoter says, ‘We’re going to lend you ten times that’… so all you do is generate tax relief and make a shedload of money for nothing.” The report has stirred the ire of one company mentioned, Ingenious Media, which surmises the anonymous Revenue source is “a rogue inspector who has no authority to make such a misinformed statement.” Ingenious says it has instructed its lawyers “to take appropriate action.”
EXCLUSIVE: Ingenious, the UK private-equity fund that backed Avatar, has poached Lucas Webb, The Weinstein Company’s man in London, to run its Fox Searchlight arm. The financier announced in January that it was going to make between two and three Fox Searchlight movies each year in the $10M-15M range, injecting up to $14 million annually into the deal. Webb, who Harvey Weinstein himself tempted over from Miramax, is known for his work ethic. He has been keeping a close eye on TWC’s latest UK production, My Week With Marilyn, which is already being talked about as next year’s Oscar push from Harvey. Fox Searchlight and Ingenious worked together most recently on 127 Hours, Never Let Me Go and the forthcoming The Best Exotic Marigold Hotel, which Fox Searchlight will release this fall.
London-based Ingenious Media, the private equity fund which backed Twentieth Century Fox’s Avatar, has struck a deal with Fox Searchlight to make between 2 to 3 movies in the $10M-15M range. Ingenious could inject up to $14 million annually into the deal, providing 20%-30% equity per movie. Fox Searchlight will guarantee U.S. distribution, the Holy Grail for most UK indie producers. Both companies worked together most recently on 127 Hours, Never Let Me Go, and the forthcoming The Best Exotic Marigold Hotel, which Fox Searchlight will release in the Fall. Ingenious has backed more than 30 Fox movies but until now under a loose arrangement, financing between 5 and 10 of Fox Filmed Entertainment’s movies each year. Recent investments include Gulliver’s Travels, Unstoppable, The A-Team, and Percy Jackson.
James Clayton, CEO of Ingenious Investments, tells me he first approached Fox Searchlight presidents Steve Gilula and Nancy Utley and production president Claudia Lewis back in November about formalising their relationship. “The UK independent sector has been going through a very tough time I told them I think there’s something more ambitious we can do in the UK. Given our position, we get to see pretty much every UK project in development. And Fox Searchlight wanted to make a greater commitment to the UK business.” The new deal, notes Clayton, takes advantage of “Fox Searchlight’s great taste, superb marketing and the economics of global distribution [which] are much more interesting from a financing perspective than …
Eric Fellner, co-chairman of Working Title, is backing a new online game being created by the UK producers of Kate Modern. The game, which will launch in November, claims to blur the lines between film and gaming.
Tom Thirlwall, co-founder of We R Interactive, tells me: “We’re bringing together the worlds of the movies and online play.”
Investing with Fellner are ITV’s new commercial head Fru Hazlitt and Peter Mead, co-founder of one of London’s most respected ad agencies, Abbott Mead Vickers.
Founders include Thirlwall, CEO of Bigballs Films (Kate Modern), and ex-Eidos executive David Rose (Hitman). Other executives have been drawn from ITV and Ingenious Media.
Console games such as Red Dead Redemption or Bioshock increasingly use stories as part of the shoot ‘em up action. These games can cost $50 million each to produce over a three year period. We R Interctive’s new game will cost less than that because its makers plan to keep improving it over time. Rather than pay up to $60 upfront in a gaming store, online players will fund the game’s development using micro-payments. Players will play the game through social networking sites such as Facebook. Gamers must constantly upgrade if they’re to stay playing the game (groan, tell me about it. I’m losing track of the map-pack upgrades my teenagers keep pestering me for while playing Modern Warfare 2).
Thirlwall tells me, “We caught Eric’s eye one year ago. We showed him the demo, which shows how you …
Kip Meek, head of Ingenious Media’s consulting arm, is set to be named chairman of Project Canvas later this week, according to the Guardian. Project Canvas is the groundbreaking TV service that’s being launched by the UK’s terrestrial broadcasters. Canvas declined to comment.
Meek is seen as a good choice, having been senior policy partner at communications regulator Ofcom. He also has strong ties to the government, having sat with Liz Murdoch on the Conservatives’ creative industries review panel, chaired by ex-BBC boss Greg Dyke.
“He’s a very capable bloke, especially in areas such as broadband,” one media analyst tells me.
Canvas has been rocked by Five dropping out of the project – although its programmes will still available when the service launches early 2011. Five has left the other partners – BBC, ITV and Channel 4 plus telcos BT, TalkTalk and Arqiva – to shoulder its share of the £116 million cost. Five was expected to contribute £16 million a year to help pay for Canvas. But now it’s being fattened up for sale. It may be that Five’s new owner doesn’t want to be saddled with that kind of financial commitment.
Set to be called YouView, Canvas could transform the way we watch TV here in Britain. Canvas will convert your TV into an on-demand portal, where you can watch the output of the BBC, ITV, Channel 4 and Five whenever you want. The idea of having linear TV channels could disappear completely.
EXCLUSIVE: The sales agent has closed a multi-million dollar facility it wants to use for bigger films. Protagonist can use the money for either minimum guarantees or development funding. It’s already eyeing one ambitious yet-to-be-announced Film4 project. Protagonist was set up in January 2008 to sell films backed by Film4, Vertigo Films and financier Ingenious.
Broadly speaking, Protagonist handles two or three films a year from Film4. At the moment it is selling Submarine, currently in post-production, and Tyrannosaur, the directorial debut of actor Paddy Considine.
Its slate includes Bel Ami, starring Robert Pattinson, which came through its relationship with Ingenious and executive producer American Idol creator Simon Fuller. Bel Ami has sold everywhere apart from North America, Spain and Japan. Ingenious, co-financier of Avatar, is financing fewer independent films these days. Partly this is because the way UK tax rules work means that investors have to spend a minimum 10 hours a week producing projects. Roberts says Protagonist can still take films to Ingenious to cash-flow pre-sales though.
And it has just taken on Snowtown, the grisly true story of a serial killing family, which starts filming in Australia this summer. This is a co-production between Warp X Australia – the Oz offshoot of the UK label — and Screen Australia.
Roberts says: “There are too many sales agents chasing too few projects. The hardest thing about establishing a new company such as Protagonist is establishing your reputation with banks.”
On the Vertigo side, it is starting pre-sales on its Streetdance 3D sequel. The …