THE CRISIS WHICH CAN KILL BRITISH BASED FILM MAKING AND END A 75 HISTORY OF PINEWOOD STUDIOS BEING BASED IN BRITAIN EMPLOYING BRITISH BASED WORKERS.
Update April 2012.
Jonathan Stuart-Brown for Save The British Film Industry.
Many people – even many famous people who work in films – just do not understand what Pinewood and Shepperton Studios are AND what they are not. It is confusing if you do not do detail nor do history.
Pinewood Studios and Shepperton Studios USED to be separate companies. Both companies employed film making staff and equipment as well as sound stages and sets. They used to finance films and even once had a cinema chain distribution outlet. They used to finance, manufacture and retail films without any reference to others. They used to be owned by film makers. They used to compete with each other and police each other’s claims.
1. Now they have no cinema outlet for their own films.
2. Now they do not finance nor make films (this will be qualified later as to grab Lottery Money they technically restarted this in a very minor way in 2012 after a gap of over 35 years).
3. Now they do not employ film making staff nor film making equipment.
4. Now they just own sound stages (essential for big budget films) which they rent out to film makers.
5. They do not own sets, nor essential film making staff or equipment (costumes, cameras, etc). They rent space to freelancers who do have these skills and equipment. These will relocate in a heartbeat if the big productions stop renting Pinewood and Shepperton sound stages. This would leave Pinewood with just empty offices and sound proof warehouses and a greenscreen which can be sold/moved overnight.
6. Many new competitors who rent sound stages are entering the game including China, India, Malaysia, Canada, Paris, Hamburg, Frankfurt. The UK could and should have been using Lottery Money as originally intended to build capital infrastructure i.e. sound stages, sets, giant green screens around the UK. This would have stimulated private investment and new money. It would have given access across the UK for people to enter the industry. As it is this is only open to those with reasonable daily travelling distance of North and West London.
7. The Pinewood and Shepperton companies were merged in 2002 without investigation of this monopoly. It was floated as a plc in 2004 and fell into the hands of property developer shareholders. Their legal and valid interest was the land values. These are much higher for houses, distribution centres, supermarkets, car parks in West London than for film making sound stages. Sooner or later this commercial reality will lead to the land being used for these-purposes. The revenue from renting film making sound stages out is a joke compared to West London houses.
8. The Board of Pinewood Shepperton has the BBC and Government believing is still batting for British based film making as a kind of charity but is in fact batting for Malaysia, Germany, Canada and Dominican Republic. It will soon be batting for India, China and Brazil if negotiations go well. It is quite lawfully taking a fee to persuade the Hollywood producers and financiers to go there rather than to the UK based Pinewood and Shepperton. Over 90% of film production employment is local to the studio facilities used. So The Government’s chief advisors are steering the film jobs outside of Britain, albeit that a very few established British stars and very very few crew will still be in work. The next generation will not.
9. Many people at Pinewood and Shepperton were concerned at this and no longer work there because they voiced their concerns.
10. The present owner may in best case scenario move much production to the North-West of England on 33 000 acres he owns. But he may lawfully just sell off the established Pinewood and Shepperton for land values.
11. The epic victory in January 2012 preventing an additional 105 acres next to Pinewood becoming houses has delayed all plans about Pinewood being sold off / relocated but sooner or later this will be back on the table.
12. Pinewood and Shepperton are being merged with Media City:UK the new home of the BBC in The North. However, this new private company (delisted from The Stock Exchange) can operate in secrecy (perfectly legal) with minimum information available. The next property move will be a shock with no pre-warning.
13. The Government could take a share in the company and ensure the global brand name is used for British based reasons. The EU could ensure it only operates in the EU and only expands in the EU.
14. This brand can be brand lifted and in China overnight. Money talks. The Government should expand the brand across the UK now. How ? Lottery Money ring fenced for the film industry and loans secured against this money. Throw in EU regional grants and local authority regeneration and within five years the UK can have a Pinewood Studios and Shepperton Studios in state of the art film sets within twenty-five miles of every home.
This is one vision.
Another is that Pinewood and Shepperton are sold off to a foreign buyer and relocated outside the EU before the next General Election.
The other points are historic.
Crisis what crisis ?
Because JJB Sport ran into trouble, so the future of Pinewood Studios and Shepperton Studios took a 180 degree different course. A 29% shareholder in Pinewood Shepperton needed cash fast and sold out fast. Had he not, he had a plan to revamp the industry. The new owner has made his money in property development. He had just got the ink dry on his contract to buy the shares before a real wallet (Mohamed Al Fayed) determined to lavish billions on films could get a bid in. Is this any way to run the crown jewels of the UK film industry ? We need a much more stable system.
All Film London and The BFI and Lottery Monies and The Department of Culture plans ASSUME Pinewood and Shepperton Studios are still on their present sites AND still in the UK.
But there is zip guarantee they will be.
The new owner, a property developer, may decide to sell. Nothing then stops very bad guys as regards UK based film industry jobs getting control..
The elephant in the room which the film industry luvvies should grasp is that Pinewood and Shepperton is no longer owned by film makers, no longer owned by committed British based film-making buffs, no longer valued for its 75 year film-making heritage. THE LAND IT IS ON IS THE THING WHICH IS ATTRACTED THE PLC SHAREHOLDERS ESPECIALLY THE MOST PROFICIENT PROPERTY DEVELOPER IN THE UK.
It is in or near West London. The 2012 Olympics offers a highly attractive new housing and property bubble. The land (rid of the sound stages, water tank, cameras, actors, etc) is worth billions as shops, houses, offices, car parks.
The central tension in Pinewood Studios and Shepperton Studios economic model is that no-one ever builds a profitable film factory-for-hire facility on supremely expensive land. The six original Hollywood Studios were built in a desert no-one wanted because it was free land. The cheapest land in the USA at the time. To make it economic, you always build factories (especially film manufacturing factories) on the cheapest sensible option available.
The Board of Pinewood, egged on by property developer shareholders and non-film maker shareholders, unsuccessfully sought planning permission for houses on greenbelt land and the profits from these would have been eye watering. The attraction to profit seekers is obvious to anyone except the most naive film luvvies who believe everyone shares their all consuming passion for movie making.
The lands and the planning permission are in the hands of a man who may choose – perfectly lawfully – to just cash in on the lands for the billions on offer from other property developers.
The South of England ought to see this South Bucks greenbelt as a vital defensive firewall to stop London’s urban sprawl stretching to concrete over every untouchable greenbelt including The New Forest and to the beaches of Sandbanks in Poole and the Royal Dorset Yacht Club.
In fact every greenbelt in the South-East and Oxfordshire is now in urgent threat from new legislation. The first legal precedent that the granting of planning permission on greenbelt land will concrete over the south-east of England.
Pinewood Studios Board only other alternative policy seems to be to quit The UK altogether and set up shop using cheap labour in Malaysia and China.
No consideration has been given to relocating the expansion across The UK to create jobs and regeneration here.
The $200 million TOTAL RECALL movie was put in Toronto with Pinewood Shepperton taking a commission fee, but the whole production could have been put in their UK studio sound stages. The jobs on the production naturally went to actors and crew local to Toronto.
This will rapidly become the normal rule.
They have plans to build tremendous sets in Toronto. These include a series of London sets. These could be built in the Midlands, South-West, East Anglia, The North, Scotland, Wales or at least in an EU country. Instead the jobs will go to Canada, China, Malaysia, places 3000, 5000 and 6500 miles away from The UK.
Even if the present owners are the most noble of men but they have a big dilemma if their wider business empire hits trouble during the recession. They may have to sell Pinewood and Shepperton as lucrative West London car parks to stay afloat.
On October 2 in 2009 the Stock Market valuation of Pinewood Shepperton plc as a film factory for hire facility business was only £59 million. It has been even lower and almost always lower than its 2004 floatation valuation. On its present supremely expensive land, the non-film making valuation of Pinewood Shepperton land is worth minimum twenty times this.
At the last two AGMs the Board again kicked the quality financial press out of the room. No plc does this if things are going well. It is a real tell tale sign that people should examine the accounts with tremendous vigour.
In 2010 the second biggest shareholder asked The Chairman Michael Grade for a definition of “return on capital”, which Crystal Amber said had fallen from 14.2 per cent in 2004, to 6.6 per cent in 2009 BUT Mr Grade failed to answer the question and some think he did not even understand it. Mr Bernstein of Crystal Amber said he had tried to work “for over a year” with Pinewood, to enhance the value of the business, with proposals including greater transparency on the performance of its various divisions, and a revaluation of Pinewood’s property assets. However, these suggestions were rebuffed by the board.
“This is a good brand, this is a business with terrific potential, and our view is that in terms of corporate governance, Mr Grade has been there for more than 10 years,” said Mr Bernstein.
You may well think that his assessment is based on the feeble profits achieved in the industry’s recent exceptionally fat profit years when Pinewood Studios had a far greater competitive edge over European and Far East rivals. Major new competitor film factory facilities for hire are being built in France, South Africa, Germany, Eastern Europe, and it is rumoured China and possibly Libya….of course This Board selling the right to use the Pinewood Brand Name to get Hollywood $2000 million annual contracts to a Canadian, Malaysian and two German factories does not help British based film making.
Although Pinewood Studios and Shepperton Studios magnetise well over $2000 million of Hollywood investment into The UK each year, these monies mostly go to sub-contractors such as actors, crew, lifters, shifters, painters, carpenters, electricians, drivers,caterers, clerical, etc. The Board’s refusal to co-invest in films made on their premises is a massive mistake. No investment, no reward in the staggering profits the movies -made at Pinewood Studios but not by Pinewood Studios – make. No regional expansion means no chance of theme park and merchandising revenues.
Pinewood Studios present business model does not share in the outcome of the products manufactured on its premises. WE ARE 99% sure that 99% of the journalists writing about the film industry, at least those reviewing films, just do not get this nor communicate it to viewers and readers.
So in 2008 film products manufactured in The UK made £2.5 billion pounds at cinemas around the world but Pinewood Studios and Shepperton Studios received no more income as a result. Add in DVD, merchandising, gaming, TV and this pot for 2008 was £7 billion but this plc got only around £40 million turnover of which the profits were well under £10 million. Clearly a better business strategy could and should do much much much better.
Cinema ticket sales for products manufactured at Pinewood and Shepperton Studios was 15% of the total global cinema market in 2008. With Pinewood’s 20 set expansion plan implemented properly, this could easily be over 30%. If a more ambitious expansion plan was implemented in Wiltshire, The West Midlands, East Midlands, Wales, East Anglia, Dorset, Scotland, etc this could be well over 50% of all global cinema production and all international TV drama production in every language.
This would put Britain at the very top in a global industry which grew EVEN during the recession and credit crunch.
Pinewood Shepperton has almost been run as a not-for-profit business by providing its factory for hire manufacturing facilities for the benefit of the nation BUT not really getting much benefit for shareholders other than their patient hope of an overnight £1000 million property deal at the end of a planning application rainbow. They spent £15 million on legal costs, PR and wining and dining most MPs and Ministers and Civil Servants in Westminster. They still failed to get planning permission for their housing scheme. But now planning laws are being changed, they will succeed next time.
Pinewood Shepperton plc Board has invested over 15% of its company assets on chasing a planning permission for a greenbelt housing expansion.
If only they had invested 15% of their assets in financing films.
Pinewood Studios spent treble its annual profits seeking not film success but a housing deal. During this bid, Pinewood Shepperton PLC share price market capitalisation was nearly below annual turnover. In a healthy company market capitalisation is taken to be 10 to 15 times profits.
In fact every shareholder bar a few minnows had been waiting for a property developer to offer £2 a share to get hold of the lands, which finallyhappened in 2011. They get a 35% return on the shares they bought and sold. Not one cared about film making.
It is amazing the UK luvvies and/or Government had not bought the shares.
The commercial need for the Pinewood Studio expansion was not the £200 million spend on twenty magnificent film sets recreating (Venice, Paris, New York, Amsterdam, Chicago, Lake Como, etc) to blow away the new competitors building new studio facilities being built in France etc. It was also the £1 billion immediate cash injection from being able to sell 1400 houses on greenbelt land with the prospect of getting to build many more houses in future years.
Without this immediate £1 billion cash injection (from people who HOPE to watch James Bond and Star Wars movies being made, bump into film stars everyday, live next to Paris and Venice, be thirty minutes from The West End of London), Pinewood Shepperton PLC may have no commercial future as a film manufacturing facility in South Buckinghamshire and is mooting abandoning The UK altogether.
Of course if they stop making films there, they would not buy back the houses from the purchasers who HOPED to live near where 007 is made.
As Pinewood has now made deals to be sales agent for the rivals in Canada, Malaysia, Germany, Dominican Republic (and get ready to hear China), and they have sold the use of the Pinewood brandname to them THEN the brand is diluted and the quitting the UK scenario is strong.
Pinewood Studios and Shepperton Studios taking its 75 year British heritage and its James Bond, Bourne Identity, Star Wars, Superman, Batman, Mama Mia, Slumdog Millionaire, Mission Impossible, and several thousand major movie film catalogue with it.
It is axiomatic in hard nosed business terms that Pinewood Studios can be rebuilt much cheaper, much better, with far lower labour costs in Malaysia and China. They are off to Malaysia in 2012, transfering work and employment to Canada now, and soon Germany as well…but after that….The Sunday Telegraph reported that The Pinewood Shepperton PLC Board have active plans to open IN China. It is also axiomatic that this will leave 98% of British based actors, creative, crew and blue collar film workers unemployed.
The reason American actors and crew do not work much at Pinewood Studios, and British nationals get lots of work, is that they can not get work permits even for Hollywood financed products. British based workers without visas and work permits will similarly be kept out of working in China, other than the super-elite global acting stars and super-super-super-elite crew such as Vic Armstrong.
Only crew members of this supreme standard can be guaranteed work if Pinewood Studios and Shepperton Studios quit The UK.
For most British based workers already in the film and TV industry, it will be like the passengers on the Titanic who could not get in the lifeboats. The film career is over.
SAVE THE BRITISH FILM INDUSTRY.com urge the British Government to intervene. This is not one that can be left to lament after the event.
The Government MUST see that they can be employing 250 000 people and have an annual revenue of over £25 billion across The UK if the brand is expanded across The UK. But it can also quickly be an industry employing fewer than 2000 people with an annual turnover well under £50 million if Pinewood and Shepperton lands are sold off for shops and houses. The Government if nippy and quick can get the former and its tax revenue…not the latter.
Vince Cable Business Minister, Ed Vaizey Culture Minister WAKE UP…this is your hour.
David Cameron Prime Minister, Nick Clegg Deputy Prime Minister…do you want to save 007 in Britain because James Bond 24 will probably be made In Canada, Malaysia or China or Dominican Republic or Paris ? Do you want to get 250 000 jobs, taxes on a £25 billion annual turnover ? Do you want to regenerate regions with private sector monies, have a BIG SOCIETY…YES OR NO ?