Film Finance Corporation of Australia, total investment versus recoupment, 1988-2008. Source: FFC 2007-08 Annual Report
One of the key themes of Richard Caves’ 2000 cultural economics monograph, Creative Industries: Contracts between art and commerce is his detailed exploration of the idea that “nobody knows.”
The quote comes from Hollywood screenwriter William Goldman, who famously opined that when it comes to the entertainment industry, “Nobody knows anything.” (Goldman, by the way, also penned the line “Follow the money” in All The President’s Men – a phrase that doesn’t appear in Carl Bernstein or Bob Woodward’s notes or articles).
If high-powered Hollywood moguls struggle to predict the successes and failures of the films they finance and produce, how well do Australian screen bureaucrats do?
Not very well, if figures from Australia’s Film Finance Corporation are any guide. The FFC, an Australian government film agency, existed for 20 years between 1988 and 2008 before being amalgamated into Screen Australia last year. Unlike arts funding bodies in this country, the FFC was specifically set up to finance film and telelvision projects along commercial lines. As film critic Lynden Barber points out, “FFC production funding was triggered when a project reached a minimum level of pre-sales from mostly private sources.”
The FFC acted as a kind of automatic co-investor. If a producer could arrange seed capital for a promising screen project, the FFC would then top up this private investment with government funding. This meant it acted as a public-sector but commercial investor, taking a cut of the intellectual property and box office returns of projects it financed. In other words, the agency didn’t just hand out money: it actually recouped returns on its investments.
The problem was, these returns were meagre. Over two decades, the agency supported 1165 productions and spent $1.345 billion (these figures are from the FFC’s final Annual Report in 2007-08). Many were critical successes and some of them even won Oscars. But only a few made money. The FFC states in its “20 years” brochure that this investment translated into a total screen production value of $2.872 billion, a multiplier of roughly two. But total recoupment to the FFC was a paltry $274.2 million. That’s an astonishing cumulative return of -80%.
No wonder Barber points out that “many of the failures of the local industry have been the result of commercial misjudgments — not only by the federal and state funding agencies, but also by private investors, distributors and filmmakers.”
A Cultural Policy Blog 
That is terrifying. Though if there is a bright spot is that ‘Government funding doesn’t work’ is less of a analytical possibility here than ‘private investment is really not working’. Is there a case here for a film production incubation / business case surgery?
Several people need to , I dare say it, stop some of these films from being made. The brand of Australian cinema could not be more diluted at this point. The very idea is synonymous with an anti-popular rhetoric. That is, I’m afraid to say, no longer a culture. Or, it would seem, an industry.
Christian, I think the whole basis of screen funding should be reviewed and reformed.
The whole problem of the cultural industries is the extreme riskiness of cultural production. Therefore we shouldn’t be surprised if commercial investment activities in the industry lose money. Hollywood’s figures aren’t much better, by the way; studios have collectively lost pots of money over the decades. Screenn funding bodies have argued this is market failure and should therefore be addressed by government investment; I’m not so sure this is the right response.
Another way of thinking about government support for screen culture is to ask: what if we’re funding the wrong thing? For instance, in innovation policy, the Australian government acknowledges it largely supports basic and non-commercial research, leaving commercial R+D to the private sector. An analagous funding strategy in screen might mean funding script development and emerging and mid-career creative directors, supporting projects in their early stage and then leaving it to the marketplace to fund the commercialisation of these creative inputs. Another approach would be to spread the risk specturm by funding a larger number of cheaper projects.
Would that lead to a collapse in local production? Perhaps it would. But much screen production is finance from overseas studios or commercial broadcasters anyway. It might also incubate talented outliers who have yet to break into the commercial industry.
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