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I'm indebted to a correspondent who passed me on a clipping from today's Financial Times.

In it Political Editor George Parker asserts that UK Chancellor George Osborne will introduce a new tax break for UK TV production in next week's budget.

His article refers to the high volume of British television drama that has been shot in other countries, including Ireland. Camelot and Game of Thrones are both referenced in the piece although they missed the fact that the latter, while filmed in Northern Ireland, did considerable post production in the Republic backed by Section 481.

There can be no doubt that if this new tax break is introduced in the UK the volume of high-end TV work coming to Ireland will almost certainly dry up.

So what to do? It calls to mind former minister John O'Donoghue's references to the 'dutch auction' character of competition for offshore production among European Union member states.

If we're not careful we just race to the bottom in terms of state munificence to producers. Added to which is the prospect of 'double-dipping' where subsidies are hoovered up in multiple jurisdictions by producers.

The main problem for us as a country, as always, is that little of lasting value is created in terms of rights or sales revenue for Irish companies doing this co-production work. They earn fees. There's periodic employment for technicians. Then the circus moves on and leaves a bare patch of grass in its wake.


The first three pars of today's FT article.

Magma... the brand that keeps on taking

I hear from a few sources that industry concern about Magma has now become so widespread that enquiries are being conducted, belatedly, in various official quarters.

The shoot in Galway and Bremen of the latest instalment in the 'Jack Taylor' series was fraught with what one might for the want of a better term call 'cash flow' issues. Delayed or non-payment of service providers and crew came to a head when, as a last resort, drastic action was taken by some crew to ensure they were paid.

It now appears that a further episode may not be shot, in Dublin, as was planned. Some crew have expressed concern about invoicing procedures and paperwork, particularly where VAT is involved. And, in the absence of credible explanations for the manner in which suppliers have been treated, there are serious questions about the unavailability of production funds to the project despite its being, supposedly, Section 481 certified.

I believe representations have been made by a number of people to some or all of SPI, SIPTU, the Film Board, the Revenue Commissioners, TV3, MEDIA and others, such is the level of anger. There is also a well-founded anxiety that the circumstances could be very damaging to the wider industry.

I have written about Magma issues from time to time over the last 12 months (enter Magma in the search box, top left). No one in authority can have remained ignorant of the situation, and it's doubtful they could have been ignorant to begin with. That the issues remain unresolved for long-standing creditors and have been added to by new creditors is an indictment of official procedures and the due diligence that ought to be carried out in the public interest.

Someone concerned about the Magma situation asked me what the status of a 'Shadow Director' is in Irish company law. I have no idea if the circumstance applies but here is the relevant info from the Institute of Directors website:
While not a member of the board of directors, a shadow director is significantly involved in the running of the company. From a distance, he/she dictates to someone who is an actual director how he/she wants the company to be managed.
Prior to 1990 the position of shadow director did not carry the same liabilities and obligations as that of the other directors. Now the position carries the same onerous duties across a range of areas including fraudulent or reckless trading. S.150 of the Companies Act 1990 made shadow directors liable to restriction in the event that he/she fails to act in accordance with the highest standards. S.138 of the 1990 Act amended S.297 of the principal Act and imposed liability on a shadow director who is deemed to have behaved in a reckless or fraudulent manner in his role as an officer of the company. As a result of this Act, a shadow director is under an obligation to disclose, in writing to the company, any interest he/she has in contracts, or proposed contracts, with the company. {S.27(3)}
Failure of a shadow director to disclose any involvement he/she may have in business carried out with the company of which he/she is a shadow director makes that person liable to prosecution by the Director of Corporate Enforcement.
It is not possible for a person to evade responsibility and liability by not being formally appointed a director if he/she comes within the definition of shadow director.
In general, it is very unsatisfactory for a board to be in a position where an individual can exercise such authority within the company without being an appointed member of the board, although he/she is, de facto, a member of the board.

Arts and Film - Campaign meeting

FilmBase and the National Campaign for the Arts (NCFA) are inviting members of the filmmaking community to an information and exchange meeting at FilmBase on March 22nd from 5-6.30pm.

The organisers hope to update the filmmaking community on the campaign's work to date, and to open up a dialogue between the campaign and filmmakers.

The NCFA will talk about its lobbying, fundraising, and research goals for 2012, followed by a discussion with the filmmaking community about how the NCFA can support its work.

The session is open to all, but attendees are asked to contact Jennifer Killelea by e-mailing venueATfilmbaseDOTie so they can get an idea of numbers.

Information about the NCFA is available here.

IFB accounts 2010

Back in February - about the 22nd if I'm not mistaken - the Film Board published its latest funding decisions (see list below). Appended to the listings are the following clarifications, I don't recall having seen them previously.

Funding decisions are announced on a quarterly basis and reflect development awards approved by the Board of BSÉ/IFB rather than applications received within the period. Please note that it takes 6-8 weeks from the relevant deadline to process development applications.
And...
Funding decisions are announced on a quarterly basis and reflect production/distribution awards approved by the Board of BSÉ/IFB rather than applications received within the period. Please note that it takes 3-5 weeks from the relevant deadline to process production and distribution applications.

There are several connected issues here - turnaround time (are the relevant deadlines always published?), timeliness of information, and transparency.

If you were unsuccessful in an application made in August or September for development funding (which would be decided upon between October 01 and December 31) it would be mid/late February before you would learn what projects had been successful. Should it really take that long?

Those long enough in the business will recall that when the IFB was re-constituted in 1993 it was admirably clear, and prompt, about the dates of application rounds, the number of applications received in each round in each funding category, and the amount of each successful funding award. Furthermore, it was not open to members of the Board, or their companies, to apply for funding.

There were far fewer staff at the IFB at the time and, I believe, far more applications, especially for production funding, and yet the information provided was both more complete and published far more quickly than is the case today.

Somehow, despite everything that has happened in this country as a result of public agencies applying 'light-touch' regulation behind a veil of secrecy, the Irish Film Board is becoming even less transparent in its dealings. Why is that the case?

In the absence of full or timely information one begins to wonder if many loan applications are effectively approved verbally, or in principle, before the agency receives them in writing? And if many non-indigenous projects have been offered funding, in principle, before an Irish co-producer has become involved?

The IFB Annual Report for 2010 (published March 6th) does not even tell us how many applications were received in each funding category over the course of the year. It does tell us that Board Members had a direct interest (it does not report areas of indirect interest of Board Members or staff) in loan decisions amounting to €3.4m (not including an unspecified commitment amount) from a total film investment provision for the year of €12.9m.

Is it acceptable that an amount equivalent, possibly, to one third of all monies disbursed in film investments should be offered to members of the Board or companies with which they are directly associated, even if those offers are not eventually utilised?

Or that this should happen in a year when the Board met only nine times?

At least the annual report does tell us the CEO's salary in 2010 was €110,844 and that the then incumbent incurred a further €48,153 in expenses. This may be explained in part because the CEO was out of the country on IFB business for 77 days, down I believe from 98 days in 2009.

The annual report does not offer any policy basis for the €1.05m funding granted outside its core loan activity. It doesn't say why it gives €50,000 to Screen Producers Ireland (as a subscription) under a different heading to the funding it gives to the directors' and writers' guilds. Nor does it explain the virtue of offering the Volta VoD platform €225,000 under the Distribution - P&A/Marketing support subhead.

Here's the list of 'other capital' payments although, realistically, they should be called non-recoverable grants.

Film Board Loans - 31/Dec/2011
Project Director Writer Production Company Funding Award

Development
First Draft Loans
Kidsmoke Sean Smith €12,000
RPG Niall Heery Niall Heery & Brendan Heery €16,000
Fiction Development Loans
The Gee Gees Kevin Barry Element Pictures €40,000
Death & Nightingales Allan Cubbitt Soho Moon Pictures €12,500*
The Fast & The Dead Richie Smyth Richie Smyth Perfect Weekend Ireland €20,000
Pilgrimage Brendan Muldowney Jamie Hannigan SP Films €20,000
Last Days On Mars Ruairí Robinson Clive Dawson Fantastic Films €50,000
Animation Development Loans
Curly Hare Alan Shannon Alan Brenner Jam Media €50,000
Pillage & Sons Nicky Phelan Nicky Phelan Brown Bag Films €35,000
The Wooden Sword Paul Bolger FM DeMarco Brown Bag Films €35,000

Production
Fiction Feature Films
An Bronntanas Tom Collins Paul Walker & Eoin McNamee ROSG and DeFacto Films Provisional Offer Of Commitment
Citadel Ciaran Foy Ciaran Foy Blinder Films €17,568
Fiction Creative Co-Production
Dark Touch Marina De Van Marina De Van Element Pictures €200,000
Fiction International Production
Loving Miss Hatto Aisling Walsh Victoria Wood Octagon Films €90,000
Animation
Cosmo Jason Tammemagi Jason Tammemagi Monster Animation & Design €300,000
Documentary
The Land Of The Enlightened Pieter Jan De Pue Fastnet Films Provisional Offer Of Commitment
Silence In The House Of God Alex Gibney Jigsaw Productions Provisional Offer Of Commitment
Under The Hood Mark Byrne & Robert Dennis Planet Korda Pictures Provisional Offer Of Commitment
K2: The Summit Nick Ryan Image Now Films €15,000
Dreaming the Quiet Man Sé Merry Doyle Loopline Films €13,000

Distribution
Marketing Support
Haywire Steven Soderberg Paramount Pictures €20,000
Direct Distribution
Ballymun Lullaby Frank Berry Pulp Productions €15,000

*I may come back to this - it was formerly a development asset of Little Bird.

Ardmore RIP?

Report today in the Irish Times by Business Correspondent Ciarán Hancock that Ardmore Studios are about to close after World 2000's Vikings has decided to shoot at Ballyhenry Studios, Ashford.

This has been on the cards for some time so it's not entirely unexpected, particularly since a second series of Camelot was not greenlit. Morgan O'Sullivan of World 2000 was the person who obtained planning permission in 2009 for studios at Ballyhenry after two previous attempts failed in 2004 and 2006.

I have written previously about Ardmore here and about Ballyhenry here.

In recent years Ardmore has been getting quiet little funding bail-outs from the Film Board (€500,000 in 2006/7) and the Department of Arts, Heritage and the Gaeltacht (€221,970 in 2010). Anyone in the business will be aware that the old sound stages were no longer adequate for the major off-shore productions that the tax break has been generously re-designed to capture.

I believe it is currently owned 32% by the state through Enterprise Ireland with the remaining 68% being held in equal 34% shares by Ossie Kilkenny and Paul McGuinness. The facility has suffered from a lack of investment over the years and as a result it has become somewhat obsolete.

Successive Ministers - John O'Donoghue, Seamus Brennan, Martin Cullen, Mary Hanafin and Jimmy Deenihan - have arrived in office to find an Ardmore file on their desk and, I've no doubt, it will have contained a worryingly potted history of its cost/benefit to the state since it was first founded over fifty years ago.

Time and again the state in various guises has had to step in to throw it a lifeline and it has also benefitted indirectly from Film Board production funding decisions, particularly in the case of 'international production fund' backing for TV projects. With a new studio opening one would have to presume that Ardmore can no longer count on this indirect subsidy.

There was a real opportunity to capitalise on Ardmore's real estate value during the height of the property boom and to reinvest the sale price in a new green-field facility. There was a proposal at one stage to buy out the private sector interest, sell the property and develop a new studio as a PPP project with capital from the NDP.

This was stymied on the one hand by political and planning concerns in Bray and on Wicklow County Council, and on the other, arguably, by the possibility that none of the shareholders were entirely committed to the business of running a film studio. And then the property boom ended.

There are a range of ancilliary businesses and company offices at Ardmore and presumably they will remain in situ at least until the facility is sold, if that is what is to happen.

As to Ballyhenry's long term prospects - one would have to be very optimistic. Studios are booming across the water in England, so much so that Warner Brothers are building their own new facilities at Leavesden at a cost of $200m. It has a 100 acre backlot and 115,000sq ft of workshop, office and facility space in addition to its several enormous sound stages.

Competition is fierce in this business and, as Ardmore has discovered, there's no point in half measures. It would be a shame if it were to turn out that Ballyhenry is merely a better facility for large-scale TV production than Ardmore.

[PS - I take it that the use on RTE News of a clip from Song For a Raggy Boy was not intentionally ironic - it was deliberately filmed 'off grid' in a disused school in West Cork]

[PPS - Albert Reynolds speaking in the Dáil on the closure of Ardmore 30 years ago: Ardmore Film Studios were purchased by the Government in 1973 at a cost of £.5 million in the belief that this was an essential prerequisite to the development of the film industry in Ireland. The total employment in the company was 46. Total Exchequer grants of £1.5 million were paid since the company were set up. The company incurred losses of the order of £.5 million per annum before grants, due to their inability to attract sufficient business and the lack of a proper capital structure which resulted in heavy interest payments. The losses projected for this year alone were approximately £780,000. Indebtedness to the banks had reached almost £2 million. That puts the loss situation into perspective.]