The VFX industry has seen recent mass migrations to tax-friendly locales overseas. Until now Belgium hasn’t been one of those major runaway destinations. But European film company uMedia has unveiled a new financing deal through its VFX division uFX offering up to 40% of a project’s VFX budget for work done in-house. CEO Adrian Politowski announced the sizable offer today in Cannes. Brussels-based uMedia has additional international offices in LA, London, and Paris but its new scheme is made possible by a Belgian tax shelter. Eligible productions must spend a minimum of €50,000 through Belgium and must be a feature film, a TV movie, a TV series or documentary with a majority of European cast, crew and financing in place. The company’s recent credits include work on the Weinstein Company’s Grace Of Monaco and DreamWorks’ WikiLeaks pic The Fifth Estate.
It’s been a tense month-and-a-half for troubled VFX studio Rhythm & Hues. After filing for Chapter 11 in February, bringing global scrutiny to the tough economics of the US VFX industry, a federal bankruptcy judge today approved the company’s sale to an affiliate of India-based Prana Studios, 34×118 Holdings Inc. The new buyer won a drawn out auction for the Oscar-winning Life Of Pi company late last night with a winning bid valued at about $17 million. Prime Focus and Chinese company Brave Vision, represented by China Lion President and co-founder Jiang Yanmin, were also in the running, with Brave Vision tentatively approved today as backup bidder, pending documents to be provided to the court before final sale. (Other outlets misreported China Lion as a bidding company yesterday, but it was not involved.)
UPDATED: It’s coming down to the wire for bankrupt VFX house Rhythm & Hues. Today at 5 PM is the deadline Federal Court Judge Neil Bason set for interested buyers to submit qualified bids for the company ahead of a March 27 auction. I’m told at least four bidders will be entering the fray, including Prime Focus, Prana Animation, Psyop, and Rocket Science 3D, and possibly others. Korean company JS Communication this week dropped out as the court-approved stalking horse bidder, which would have guaranteed Rhythm & Hues a minimum bid at auction. That surprise hiccup sprang from recent failed talks between JS and studios Fox and Universal, which last month teamed to bail out Rhythm & Hues with a $17 million DIP loan. JS rep David Shim told Deadline the two studios were uncooperative when he asked for a non-binding handshake agreement to $60 million worth of work per year for three years to ensure Rhythm & Hues had financial lifeblood through a post-sale rebuilding phase. He also says he agreed to pay an additional $3M to cover operational costs for the company. But a source with knowledge of the talks claims Shim was asking for a binding guarantee as well as additional financial commitments, a tall order in an industry where production and release schedules for studio films are always potentially in flux.
Prime Focus Pulls Into China; UK May Shore Up VFX Industry
The gloomy VFX scene saw a few bright spots in the international market today. In the UK, the 2013 budget was unveiled and along with it, news that the Treasury will launch a public consultation on options to provide further support for the VFX industry via the tax system. In total, the creative industries received an extra £25M to help boost economic growth. Meanwhile, VFX specialist Prime Focus said it is setting up a Chinese joint venture with Hong Kong–based private equity group AID Partners and local partner Zhejiang Jingqi Wenhua Chuanbo Company. Prime Focus, which is listed on the Bombay Stock Exchange and has offices in the U.S., Canada, the UK and India, will invest $3M in the new operation which will provide services including 2D/3D conversion, VFX and post-production services on the mainland and in Hong Kong, Macau and Taiwan. At the same time, AID, whose investments include Legendary Pictures and HMV Asia, has invested $10M in Prime Focus’ Netherlands subsidiary, Prime Focus World NV. The group’s credits include Shrek, Transformers 3, Harry Potter And The Deathly Hallows Part 2, The Smurfs and Men In Black 3.
Unionization and the creation of a trade association topped the priorities at a visual effects biz town hall meeting Thursday in Los Angeles where hundreds of VFX professionals gathered to discuss the state of their troubled industry. Despite calls for solidarity within the global community and a general sense of accord, a tense volley of boos erupted halfway through the panel when Visual Effects Society rep Mike Chambers took the mic and mentioned the organization’s call for larger California subsidies made in an open letter last month. In the letter the VES had announced plans to hold a VFX Congress, which has yet to materialize. “What are you going to do?” shouted one audience member to Chambers, who had no answer for his group.
The exchange highlighted the most crippling challenge currently facing VFX workers: With no organized body other than the strictly honorary VES, artists have no leverage as the current system continues to squeeze their employers for slim profit margins. Among the industry wide issues identified by keynote speaker Scott Squires: A flawed studio-VFX house business model, too much competition, and job-migrating subsidies. Panelists and audience members also decried the strains on health and home life endured by individual VFX artists at the bottom of the VFX food chain. Unpaid overtime, long work weeks and a lack of healthcare benefits are common for visual artists, who comprise one of the last remaining sectors in Hollywood that is not yet unionized.
In an open letter issued Tuesday, the Visual Effects Society (VES) officially joined the growing crisis accelerated in recent weeks by the bankruptcy filing of Oscar-nominated VFX studio Rhythm & Hues. The missive calls for Governor Jerry Brown to expand post-production tax incentives in California and announces a VFX Congress to be held in the coming weeks to give artists a means of focusing their collective messages and goals into a united, focused strategy. “There’s a lot of energy and upset and desire on part of artists to say the industry is going through huge changes, and we all want to get together and get recognition at a much higher level”, Roth explained to Deadline. “But once you get there, what do you do with it?”
The VES is an honorary society of VFX professionals that counts just under 3,000 members in 30 countries. However, the industry lacks a VFX trade organization or union. Roth tells Deadline the VFX Congress is still being organized but will take place within the next few weeks. The VES aims to tap feedback from all stakeholders in the VFX industry including studios and facilities, although it is still to be determined who exactly will be allowed to participate in the Congress meeting. Read Roth’s open letter: