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 June 21 2011.
Before the takeover bid from a property developer, the share price of Pinewood Shepperton PLC told its own story. As the FTSE has seen record rises, Pinewood Shepperton PLC has fallen. When the board sought this planning permission the share price was £2.90 but was now nearing £1.30 and falling. Early trading on October 2 2009 Pinewood Shepperton PLC valued the company share price capitalisation at under £60 million. It was boosted about once every six weeks by Crystal Amber buying a further 1% or so of share, but they have recently called for The Chairman and Board to step down and let new management steer the ship with a new strategy. No one else to speak of has bought a decent amount of shares except Crystal Amber…who publically had no confidence in The Board strategy and leadership. Crystal Amber ran into difficulties regarding their JJB Sport Shop investment and needed to sell their 29% shareholding in Pinewood Shepperton asap. They were offered 200p a share and took it.
Crisis what crisis ?
Because JJB Sport ran into trouble, so the future of Pinewood Studios and Shepperton Studios can take a 180 degree different course. Is this any way to run the crown jewels of the UK film industry ? We need a 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 second biggest shareholder only started buying last week. It is Warren James Holdings, Stockport jewellers who clearly are good guys.
But these shares can be bought by anyone including very bad guys as regards UK film industry jobs.
This share price was falling even before the planning permission was refused on October 21 2009. This nearly fell below annual turnover, even far below. At which point administration and liquidation are matters which are usually considered.
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 ATTRACTING 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, have sought planning permission for houses on greenbelt land and the profits from these are eye watering. The attraction to non-film maker profit seekers is obvious to anyone except the naive film luvvies who believe everyone shares their passion for movie making.
The lands and the planning permission are nearly in the hands of a man who may choose 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 after the legal precedent that the granting of planning permission on greenbelt land in Iver Heath, South Bucks will create.
They snoozed and without urgent political lobbying, they will lose.
http://www.stopprojectpinewood.webeden.co.uk/
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.
Even if all the shareholders and Board may indeed be the most noble of men but they have a dilemma.
The Pinewood-Shepperton plc UK properties can sensibly be valued at well over £2500 million for general commercial use for example : ring and ride car parks to serve West London during the Olympics; a supermarket distribution centre; windmills to create electricity; or residential housing.
However, as a film factory for hire facility business on its present supremely expensive land, the market capitalisation of Pinewood Shepperton plc shares may be far too high at £59 million (October 2 2009 valuation) and average valuation during the late 2009 to early 2011 period.
At the recent AGM 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.
Last year 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 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 £1000 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 £500 million property deal at the end of a planning application rainbow.
In fact every shareholder bar a few minnows has been waiting for the property developer to offer £2 a share to get hold of the lands, which has now happened. They get a 35% return on the shares they bought and sold. No one cares about film making.
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 has spent double 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.
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, Canada, Germany, 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.
http://www.vicarmstrong.com/show-reel/
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 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 Public Inquiry was a foregone conclusion after Pinewood spent zillions on political lobbying.
But now 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, get 250 000 jobs, taxes on a £25 billion annual turnover, regenerate regions with private sector monies, have a BIG SOCIETY…YES OR NO ?
Jonathan Stuart-Brown
www.savethebritishfilmindustry.com
http://omarimccarthy.blogspot.com/
http://www.savethebritishfilmindustry.com/2010/09/aruna-shields-is-the-new-angelina-jolie-and-a-must-for-the-next-007-james-bond-movie/