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.”