A coproduction conundrum

Genevieve Dexter, commercial director, CAKE Entertainment

One of the hot topics currently in the UK is the need for increased funding to sustain the UK children’s content production industry. Bringing the production back to the UK is not helped by producers groups that specialise in children’s television programmes lobbying for, what is ultimately, self interest. The problem is that the affected group – the kids and parents – are unlikely to take to the streets asking for more British programming, even though they may notice there is less and miss it.

What is being bypassed here is the fact that we live in a global economy. Most types of independent high-end programming is coproduced and/or financed between a number of countries. As a rule producers are never going to get more than 20-30% out of a UK broadcaster for a kids show and we have to find the rest elsewhere.

At CAKE we turn immediately to the international market for independent finance models, to Ireland where you can get a 25% tax credit, to France where you get CNC subsidies and regional incentives, to Canada where tax breaks are boosted by the CTF qualifying criteria – which in turn boost licence fees – and to Singapore or Malaysia where equity investment structures abound. We create financial structures for each show that compliment the global talent pool, where we put the best that every country has to offer into the mix whether that is technology, design, music or writing.

Official coproductions seem to be going out of fashion right now as countries including France and Canada introduce new legislation that outweighs the benefits, through additional subsidy or penalty for non-inclusion or inclusion of an overseas coproducer. This makes new finance models even more important. The instances of a broadcaster commissioning a show from overseas – for example France TV’s commission for Pinky & Perky or BBC’s commission of Skunk Fu – seem to be few and far between these days. Germany is withdrawing from large copros because, in order to amortise their investment, broadcasters must transmit the show over the 7-to-10 year licence that justifies the increased investment – even if it is not rating for them.

Currently all the big European channels seem to be commissioning local produce, which means that they have a hard time bringing on coproducers since their budgets are already locally committed, which is of course a Catch-22 position. This is encouraging more homegrown productions that don’t seem to sell internationally. There were attempts in the recent past to form coalitions to decide what to commission (e.g. the TF1, Nickelodeon & YTV triad meetings, but this didn’t reach fruition, and the France Television & BBC coalition which, again, proved unworkable). The European Broadcast Union does achieve a production every now and again but you can’t help feeling that the result, by way of attempting to make too many people happy, only just raises a smile.

The UK government has introduced tax breaks in the past (e.g. sale and leasebacks schemes to help UK production) though unfortunately, on occasion, it has been abused by those that seek to benefit from it. I do think there is a fairly water-tight and easy way to stimulate the kids sector of the production economy however: by extending to the UK animation industry the current 20p tax rebate for every £1 spent in the UK on feature films. It could be extended to animation with some refinement – that just needs a stroke of a pen.

CAKE is unable to contribute too heavily in the coproduction arena because of the lack of incentives to bring work into the UK. It is always difficult when one of the ‘big five’ coproduction countries catches a cold; in the past Germany suffered the crash of the new media stock market. Big changes brought in to France Television in 2009 have slowed production and the fall in ad revenues worldwide affect us all. Losing ITV and C4 as clients in the UK for the kids industry has also had a great impact internationally.

The net result of all is this is that UK companies, like CAKE, are pushed much more into the distribution sector, while others are pushed towards types of production that are fully-funded by the broadcaster. We are not able to contribute internationally as fully-fledged coproduction partners, except in exceptional circumstances, which is a shame not only for us but for the global economy.