Magazine article Screen International

First Odeon, Now Pinewood-What the Sale of Two Cinema Icons Says about the UK Industry

Magazine article Screen International

First Odeon, Now Pinewood-What the Sale of Two Cinema Icons Says about the UK Industry

Article excerpt

It was a sign of the times.

News of the deal to sell iconic UK film studio Pinewood to a property fund run by asset management firm Aermont (an offshoot of Perella Weinberg's US private equity business which split from its parent company last year) came on the same day that French energy firm EDF - aided by Chinese backers - was attempting to tie up a deal to build the first nuclear power plant in the country in 20 years.

Hinkley Point would provide an estimated 7% of the UK's electricity.

While some welcomed employment opportunities offered by the nuclear project, others questioned its exorbitant cost and wondered why the UK needed to outsource such a colossal undertaking to a French company and the Chinese government.

As it transpired, Theresa May was among those with misgivings and the long-gestating deal has once again been put on ice.

The £325m London-based Aermont could pay for the Pinewood Group (the deal has been approved by the Board but is not yet finalised) barely scratches the surface of the £18bn the French energy giant was proposing for Hinkley, but both deals raise questions over sustainability and contexts for investment.

Success story

Pinewood is a magnificent British brand and a tremendous success story for the UK industry.

The historic studio, which dates back to the 1930s, has played host to UK and US franchises including James Bond, Carry On, Alien and Batman.

In recent years, Pinewood has become the poster child for the previous government's film (and TV) tax incentives, hosting dozens of major US productions, which contribute millions to the UK economy through 'inward investment' and keep thousands of crew across the production spectrum gainfully employed.

Slower periods in the 1970s and 80's have given way to near constant occupancy. Recent US blockbusters to set up home in Iver Heath include Star Wars: The Force Awakens, Avengers: Age Of Ultron and Cinderella.

The impact has been huge. Films made in the UK grossed $9.4 billion worldwide last year, the highest market share ever of global box office.

Meanwhile, Pinewood has been voracious in its quest to build further shoot space, both at home and in international markets including Malaysia, the US, Canada and the Caribbean.

Frailty

However, surging inward investment to the UK has also masked frailty in the country's indigenous film sector.

The UK - the world's fifth largest economy - remains dominated by US content. Cinemas, supermarkets and living rooms are awash with US film and TV. The six US majors alone accounted for more than 75% of the UK box office in 2015.

By contrast, in the same year, production spend on UK domestic titles was down 7% and the 11% market share for UK independent films compared with 55.4% in Japan, 35.2% in France, 25% in Germany, and 18.9% in Spain.

The US, France, Germany and Japan lead the way in terms of vertically integrated studio-level companies. Meanwhile, UK TV companies have been bought up leftright and centre by US and European outfits.

"The UK film industry is a powerhouse for growth," then culture secretary Sajid Javid said in 2015.

But what kind of growth did Javid have in mind?

Trend

Pinewood executives hope new investment will kick-start the second phase of its expansion plan Project Pinewood, which according to sources has been in need of a cash injection to fulfil its next steps.

Positively, London-based Aermont is understood to be in favour of maintaining the existing Pinewood management team to see through those expansion plans.

The deal has also raised concerns, however. …

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