Will UK Film “shrug” off Brexit or will it be “devastating”?

So, four months of campaigning are over. The counting is complete. The result was leave. So, will it make a difference to Britain’s thriving film industry?

How will Brexit affect British-made films in the market?

Much like other areas of life – and other sectors of the economy – experts pontificated in the run-up to the referendum and told us their predictions, thoughts and fears. But unlike other sectors – where the so-called experts came from such respected bodies as the International Monetary Fund, the Institute for Fiscal Studies, the Bank of England or even the White House – from the culture and arts, there was a letter published by a few dozen industry figures – dominated by actors, warning of the dangers of Brexit. But in truth, are actors the best people to be commenting on whether British film producers will still be able to finance films or whether British studios and facilities would still be able to attract inward investment?

At this year’s Cannes Film Festival, I was trying to get a sense from British industry figures and foreign producers about what they thought might happen. Quite rightly, public bodies such as the BFI, Creative Scotland and the British Film Commission declined to give an opinion on the record, but strong views were expressed by many producers and sales agents. Most of my conversations were off-the-record, since with my other hat on – a BBC radio journalist – I was told by my editor that no-one was interested in the story, so I stopped chasing formal comments.

Films minister Ed Vaizey at the UK Film Centre
Films minister Ed Vaizey at the UK Film Centre

On the record, I was told by the Films Minister Ed Vaizey, “The benefits we get from being part of the European Union are that British films can be shown in the EU … and you have a talent pool of 500 million people you can draw on to make a film. I think we would find it harder if we had to say ‘Come and make your film in the UK, but actually getting your people in will be quite difficult when you could go to France or other countries and draw on that talent pool.'” I didn’t bother asking him what his boss, the Culture Secretary and prominent Brexit campaigner John Whittingdale, might say about that, since he’s far too skilled a politician to fall for that.

Rebecca O'Brien has been producing Ken Loach's films for nearly 30 years
Rebecca O’Brien has been producing Ken Loach’s films for nearly 30 years

And insisting that “we’d be bonkers to Brexit,” Rebecca O’Brien – the producer of Ken Loach’s Palme d’Or winning I, Daniel Blake – said she was completely dependent on the fact that their films had bigger audience in the EU than in Britain. While acknowledging that the convention under which she co-produced films with France was a treaty that wasn’t linked to EU membership and so would stay in place, she stressed, “It would be a lot less attractive for my partners to work with me because we wouldn’t be part of MEDIA, the programme which gives us development funding and distribution support.”

I got similar responses from other producers who rely on EU funding for their films, while producers who use more hard money were less fearful. The most pithy response I received from one financier and sales agent, when I asked him whether he was worried about Brexit was, “No,” before adding with a wry smile, “Because it’s not going to happen.” I might, in the circumstances, send that wry smile right back to him, next time I see him. That said, he – like many others I spoke to – he expressed confidence that film-makers in Britain and beyond would just get on with their jobs with whatever tax incentives or other regulations are around at the time.

IMG_0432There was more concern from a group of sales agents I spoke to at their base during the market, at the Plage Royale, an exclusive beach-side private members’ club. Their over-riding feeling was that while personally, they’d prefer to stay in the EU, their branch of the business – those who buy films from the makers and sell them to distributors – was particularly worried about the EU’s new Digital Single Market, under which they would no longer be able to sell the rights to a film 28 times in 28 countries – the whole EU market would be treated as one. But rather than expressing optimism that a Brexit could help them escape the DSM, they were rather hoping that from within the EU, Britain might at least have a chance of scuppering the idea, whereas outside, they’d still end up with one single market representing the 27 remaining EU members.

They directed me to one of the most vociferous campaigners in their field, Michael Ryan, a partner in GFM Films and the Chairman of the Independent Film & Television Alliance. He spoke on panels about this in Cannes and writing only a week before the referendum on politico.eu, Ryan wrote “The Commission is proposing to do no less than abolish the mechanisms that maintain a sustainable financing and distribution ecosystem for audiovisual content — soon enough, consumers would have improved cross-border access… to online stores bereft of new original European content, because our ability to finance it will have been crippled.”

But frustrated as he was by the Digital Market, it was a quote from Michael Ryan that gave one of the industry bibles, Screen International, the headline that’s been plastered across my facebook feed by worried film-makers: “EU referendum result “devastating” for UK film and TV.”

Screen International suggests that a weaker pound could prevent American studios investing in the UK
Screen International suggests that a weaker pound could lead to less rather than more US investment in the UK

Setting the scene, (1) Screen describes the European Union as “the major trade partner of the UK … which provides millions of pounds in subsidies to the UK market as well as a number of frameworks for coproduction.” It goes on to (2) warn that the “uncertainty over the current strength of the pound, which has dipped significantly overnight, may also pose short-term questions for US and international productions considering the UK as a shoot destination.” The article adds that (3) the EU MEDIA programme, referred to by Rebecca O’Brien above had provided about €100m – or about £80m, give or take fluctuations in the exchange rate – to the UK audiovisual industry (so more than just cinema) over the six years from 2007 and 2013, so that amounts to about £13m a year.

I don’t profess to be as expert in the field as Screen International, but just to quickly run through the journal’s concerns;

(1) The EU could perhaps be described as A major trade partner, but THE major trade partner? The investment from the US to make films such as Star Wars: The Force Awakens dwarf the combined investment from other EU countries and how many UK cinemas are full of EU products, compared with those showing Hollywood blockbusters? It’s American films that keep British facilities and exhibitors in business. To put some figures on it, in January, the BFI revealed that in 2015, £1.4 billion was spent on film production in the UK, of which £1.2 billion came from outside the UK, of which £1.1 billion came from the US.

(2) It is indeed the case that “there is uncertainty over the current strength of the pound” – but the one certainty is that the pound is weaker. Anyone watching the news on the morning after the referendum would have heard about the record daily fall in the pound against the dollar of 10%, from about $1.5 to about $1.35. It doesn’t take a maths graduate to work out that this level of fall would make American films 10% cheaper to make in the UK than previously. Of course there is uncertainty and the pound might recover, but if you believe the scare stories, the likelihood is that it will be a while before it rises past its pre-referendum levels, so this uncertainty is almost certain to cut the cost of shooting American productions in the UK.

(3) A reminder of those numbers. While it’s true to say that the European Union provides millions of pounds in subsidies, around £13 million a year from the EU wouldn’t go far against America’s £1.1 billion – or £1,100 million, to make the comparison crystal clear. It is of course true that the EU subsidies generally help smaller films – and more of them – but these smaller films will generally also be backed by the BFI (lottery funding is not affected by Brexit) or a major broadcaster, such as BBC Films or Film4. Of course this money is tremendously important to those who receive it, but it’s not £1.1 billion.

Before I Go To Sleep was one of the many higher profile UK-shot films from Millennium
Before I Go To Sleep, one of the many high profile UK-shot films from Millennium

And some factual evidence to back up my response to points (2) and (3) above, from my interview in Cannes with Mark Gill, the President of Millennium Films, which has recently shot London Has Fallen, Criminal and Before I Go To Sleep in the UK, among others, and is preparing to shoot Belles – what he describes as a female version of The Expendables (another of his franchises) – in Britain. “I worry about a Brexit for the purposes of international stability and European cohesion and all that,” he admits, before continuing, “But selfishly in terms of the film industry, it won’t make any difference as long as we can work with a reliable UK government, which it has been for the last many years, we’ll be fine. If the tax incentives did change as a result of Brexit, obviously that would be calamitous for us but I’m assuming that’s not likely, so we’ll still be coming.” I asked him whether he was concerned that it might then be more difficult to sell on the films to other EU countries, to which he replied, “It’s entirely about what’s in the UK – which is the world class talent, the best crews in the world, the locations obviously, and a very reliable government incentive programme that works and is good for its word and pays on a timely basis and understands the value of the investment.”

Gill clearly represents just one company, but it’s a big one and arguably illustrative of the fact that a Brexit might not be as frightening – or as “devastating” – for the UK film industry as the headlines might suggest.

So back to Screen’s headline, from Ryan’s killer quotes: “The decision to exit the European Union is a major blow to the UK film and TV industry. Producing films and television programmes is a very expensive and very risky business and certainty about the rules affecting the business is a must. This decision has just blown up our foundation – as of today, we no longer know how our relationships with co-producers, financiers and distributors will work, whether new taxes will be dropped on our activities in the rest of Europe or how production financing is going to be raised without any input from European funding agencies. The UK creative sector has been a strong and vibrant contributor to the economy – this is likely to be devastating for us.”

Admittedly, Screen International has a more British perspective on the film industry, but it’s US-based rival publication was considerably less gloomy in its assessment of Brexit. Its article, from its journalists in France and Italy, is entitled “Some European Film Players Shrug at Brexit.”

“Within the film industry, several players in Continental Europe said they didn’t expect much of an immediate impact on deal-making and co-production opportunities. In France, Europe’s second-biggest film market, Xavier Lardoux at the National Film Board greeted Britain’s referendum result with something of a Gallic shrug,” it begins, noting that – as Rebecca O’Brien conceded, the “co-production treaty between France and the UK will be unchanged, because it’s a bilateral agreement which isn’t officially related to the European Union.” Luc Besson’s EuropaCorp tells Variety that its business model won’t be affected by Brexit, as its decisions are already made in Paris and LA and the UK represents just another market for the distribution of its films. Echoing comments from some of the UK producers I spoke to in Cannes, another executive, David Grumbach, from Paris-based Bac Films – which produces, sells and distributes films in France – tells Variety that his company will learn to adjust to the new reality. “It will take at least two years of negotiations before Britain is completely detached from the EU, during which time the industry can prepare for the coming changes.” He says he’ll still be able to co-produce with the UK “the way we co-produce with countries like Norway, Switzerland and Canada, which aren’t part of the European Union either.” Grumbach concludes that “Business-wise, it was already complicated to work with the UK, so it won’t get worse.” And Variety goes on to note that “Britain already operated outside the EU institutions to some degree, such as not being eligible for funding from Eurimages, one of the EU’s biggest sources of public money for film and TV productions.” This is a point also made by Andrea Occhipinti, who Variety describes as the president of Italy’s distributors. “What I think is significant is that there is lots of anti-Brussels sentiment, because they are bureaucrats. This is a political consideration, but one that we all need to think about,” he concludes.

I, Daniel Blake's Italian distributor
I, Daniel Blake’s Italian distributor thinks little will change for British film-makers

Variety also notes – as I did earlier – that with the pound “flirting” with 30 year lows against the dollar, Brexit “could even prove an opportunity for some industry players.” Nicolas Brigaud-Robert, from sales agents Films Distribution,  explains to the magazine, “You want to buy in the weaker currency and get paid in the stronger one. If the pound remains weak, we will be able to invest in British movies with an advantage as long as we sell in dollars or euros after.”

And echoing Mark Gill’s comments above, the veteran Italian distributor Valerio De Paolis, who will be releasing Loach’s I, Daniel Blake, said, “All the British directors and talents continue to be top notch, Brexit or not. They will continue to work in U.S. movies, just like they always did. I think the U.S. [studio] investments in the U.K. will continue.”

To balance its article, Variety did find someone who expressed more concern. Martin Moszkowicz, from the Munich-based Constantin Film, told Variety that the referendum result would “have massive effects on the UK and European film and TV business. It is difficult to predict the exact consequences but I am afraid none of them are good.”

So in this sector, as in all the others, there were conflicting opinions before the referendum and conflicting opinions afterwards. Thankfully, it’s one of those subjects where I can’t resort to the lazy journalese of ending this think-piece with “we’ll have to wait and see,” because in truth – as with every other area in this debate – not being able to experience being both in AND out for a few years, in truth, we’ll simply never know whether Brexit is bad, good or otherwise for the UK Film Industry.

The one thing that can be said for certain is, as the Oscar-winning writer William Goldman said, in summing up the entertainment industry in his memoirs, “Nobody knows anything.” And he wrote All the President’s Men, Butch Cassidy and the Sundance Kid, Marathon Man, Misery and The Princess Bride, among others – so he should know.