Film Financing

20th Century Fox and other film companies are funded for their films by things such as government grants and tax schemes. Government grants is where government programs are made especially for the funding of films provided certain conditions are met, the UK Film Council provides funding for films being in the UK as long as certain conditions are met. US States such as New York, Oklahoma and New Mexico, will provide a subsidy provided all or part of a film is filmed in that state, for example; Die Hard 3 takes place in New York so the government may give them funding because it is such a popular film and could promote New York to viewers. Governments are willing to provide these subsidies because it will attract creative individuals to their territory and maybe influence them to work there and it can advertise that place internationally. Government subsidies are pure grants and the government expect no financial return. Another way of financing films is debt finance and there are a few types of debt finance, one of which is pre-sales. Pre-sales is when the film company get a script and cast together and if the script is good and the cast has a few big stars in it then companies will want to buy the rights to the film and to distribute it in different countries before it is produced. An example could be Toy Story 3 which was expected to get a massive amount of viewers because of how popular the previous two films were and how popular the franchise has become. This is done because then they will receive some of the profits the film makes if it successful. Debt finance can also mean television pre-sales which is selling the rights to broadcast the film on TV after the film has been made, sometimes it’s possible to be sold in advance so the money can be used on the film.

Another method of film financing is British Tax Shelters which means selling the same copyright again to a British company and a further $10 million could be raised, but UK law insists that part of the film is shot in Britain and that the production employs some British actors and crew, this could help attract creative film makers/producers to Britain and could lead to the creation of some good British films in the future. The final method of film financing is tax schemes which are basically schemes which are created to sell the enhanced tax deductions to rich people with large tax liabilities. In 2007 the United Kingdom government introduced the Producer's Tax Credit which results in a direct cash subsidy from the treasury to the film producer. These are the four most common methods for film financing and are probably all used by big film companies like 20th Century Fox.

There are a few other methods of film funding used by film companies that are not so common. One of these is product placement which means basically advertising a product within a film and getting paid by the company for advertising the product, a big example of this is the James Bond films and Aston Martin cars. James Bond is always seen driving an Aston Martin in the films and it advertises the car and makes it look good. Aston Martin pay the film companies to advertise their cars within the films. Another example is something like Coca Cola, a character in a film could be seen drinking Coke and promoting in by saying it’s tasty or something like that, Coca Cola would pay the film company to advertise Coke within the films. Another method is private equity finance, this is where producers pitch their film idea to a private investor and if they like the script, cast, locations etc and think it will make a lot of money, they will provide the funding for the film but the investors get a certain amount of the profits. It’s a lot like Dragons Den and the investors can make a good profit if the film is successful. Boston Financial Trust is an example of a company who make investments into film production. Companies like that have to be careful with investments though in case they invest in a film that is not successful and they do not receive more money than they spent.

20th Century Fox

Twentieth Century Fox Film Corporation or 20th Century Fox as it’s known, is a film production company based in America and is among the largest and most successful in the world. The company was founded May 31 1935 when Fox Film Corporation and Twentieth Century merged together and created 20th Century Fox. Some of their most famous films include: Avatar, Star Wars, Garfield, X-Men, Die Hard, Alien, Speed, Revenge of the Nerds, Planet of the Apes, Home Alone, Predator, The Chronicles of Narnia and many more films and some famous TV shows like The Simpsons and Family Guy. Some of the most famous actors to come out of this studio were Shirley Temple, who was 20th Century Fox's first film star, Betty Grable, Gene Tierney, Marilyn Monroe and Jayne Mansfield. Their most commercially successful production partners in later years have been 1492 Pictures, Lucasfilm, Lightstorm Entertainment, Davis Entertainment, Walden Media, Regency Enterprises, Blue Sky Studios, Troublemaker Studios, Marvel Studios and many more.

The Fox Film Corporation (one of the two film companies who merged to make 20th Century Fox) was formed in 1915 by the theatre chain pioneer William Fox who formed Fox Film Corporation by merging two companies he had established in 1913: Greater New York Film Rental, a distribution firm, which was part of the Independents; and Fox (or Box, depending on the source) Office Attractions Company, a production company, this is called vertical integration and was one of the first times that it had been done. Fox Film Corporation then merged with Twentieth Century Pictures which was a Hollywood motion picture production company and was created in 1933 by Joseph Shneck, Darryl F. Zanuck from Warner Brothers, William Goetz from Fox Films and Raymond Griffith. In 1935, Fox Film Corporation and Twentieth Century Pictures agreed to a merger and Spyros Skouras who at the time was manager of Fox- West Coast, helped in the merger and eventually became president of the new company. Although it was much smaller than Fox at the time, Twentieth Century was the senior partner in the merger, at first, it was expected that the new company would be called Fox-Twentieth Century however an agreement was made on the name “Twentieth Century-Fox Film Corporation”, and they began trading on May 31 1935, the hyphen was dropped in 1985.

20th Century Fox for many years was a privately held company meaning they were owned by non-governmental organizations or share holders and all their trading was done privately. Then in 1985, the two owners at the time, Marc Rich and Marvin Davis, fled the USA after evading $100 million in U.S. income taxes and as a result sold their halves of the company to Rupert Murdoch’s multi-media conglomerate News Corporation, there was a six month gap between Rich and Davis selling their halves of Fox to News Corp meaning for those six months, News Corp only owned half of the company but now fully own it. To run the studio, Murdoch hired Barry Diller from Paramount. Diller brought a plan with him which Paramount's board had refused, it was a studio-backed, fourth television network that was financed by advertising. It is believed that 20th Century Fox was actually founded in 1915 and although the company itself revealed the found date to be May 31 1935, most historians agree it was 1915. The first film produced by 20th Century Fox would be “Regeneration” if the company were formed in 1915. Regeneration is a silent film from 1915 and one of the few films from that era that were not lost. If they were founded in 1935, their first film would have been Dante’s Inferno. As a result of Fox being a subsidiary of News Corporation, on numerous occasions, 20th Century Fox’s sister company Fox Broadcasting Company has received criticism and their news channel Fox News has been accused of media bias on many occasions. 20th Century Fox film company has never really been criticised though, it’s been said that its future may be in doubt however due to the recent News Corporation phone hacking scandal but it is supposedly much better off than News Corp’s other holdings. 20th Century Fox has a few other sister companies which are mainly TV based including: 20th Century Fox Television, 20th Century Fox TV Studios, Fox Broadcasting Studios and others of which are all owned by Rupert Murdoch’s News Corporation

I think 20th Century Fox are a very good film company and have produced some films of really good quality over the years, they’ve become successful enough to get some major actors to play in their films and raised a lot of money through these films. They are one of the best film companies in the world and have made some of my favourite films in the past.

TV Funding

TV companies are all different and all get their funding money from many different ways. For example BBC is funded mainly by the license fee which is a fee that must be paid in order to own a television; license fee is £145.50 for colour and £49.00 for black and white. This gives the BBC millions of pounds every year for them to spend. However because they are funded by the license fee, this means that the BBC are a public service broadcaster, this means that they must produce original programs as well as show programs from other channels, they are not allowed to advertise on any BBC channels, radio stations or websites in any way and they cannot show any media bias whatsoever. BBC is also funded by syndication which means selling BBC original programs such as Top Gear and My Family to other channels worldwide. As well as this, they are funded by competitions which sometimes appear after or during certain programs such as Newsround where people can phone or text in with an answer to a question in an attempt to win a prize advertised, phoning or texting in will cost money all of which goes to BBC’s funding. Merchandising is another way in which the BBC are funded, selling merchandise based on some of their shows, e.g. a t-shirt with a character from a program such as Tracy Beaker on it. The money spent on items like these will go to the BBC.

Commercial channels such as ITV and Channel 5 are funded mainly by advertisements during the breaks of their programs, companies will give money to ITV/Channel 5 to advertise their product on the channels so more people will be aware of the product and what it does etc. ITV and Channel 5 do not get any of the license fee. Likewise to BBC, ITV also raise money from syndication, competitions and merchandising. Competitions are used on major ITV shows such as X Factor and Britain’s Got Talent to attract more people to phone/text in with their answers in order to make ITV more money, X Factor based merchandise can also help raise money for ITV. Also programs like X Factor can raise massive amounts of money from viewers phoning in to vote their favourite contestants, X Factor is such a popular show that they raise millions from votes especially as it comes closer to the final. Also with events like the X Factor final, World Cup games, and Champions League finals, because there will be so many more viewers than normal, companies must pay extra money to have their products advertised because so many more people will see them, this gives channels like ITV and 5 even more money on top of the current methods of funding. Channel 4 is a unique channel because it is partially a public service broadcaster like the BBC, but also partially commercial like ITV and Channel 5. It receives some of the license fee but not nearly as much as the BBC because it can be funded by advertisements which is another major form of TV funding. As well as the license fee and advertisements, channel 4 is funded by syndications, competitions and merchandising.

TV companies such as Sky and Virgin that people subscribe to, earn their money mainly from customer subscriptions. If people want to watch the channels that these companies are showing then they must pay a certain price, and for extra channels like Sky Sports and Sky Movies, even more money must be paid and because the premier league is broadcast only on Sky Sports, it massively increases the amount of subscribers because the premier league is so popular. Sky Sports also broadcasts other major sporting events and most recently has acquired shared rights to broadcast Formula 1, shared with BBC who are the current broadcasters. Typically Sky Sports subscribers cancel their subscriptions at the end of May when the football season finishes and renew it in August when it restarts, but the Formula 1 world championship has races through this period so it may stop so many people cancelling their subscriptions. Sky/Virgin also raise money from syndications, selling original programs such as Dream Team to other channels for them to broadcast. Advertising is also used to raise money for Sky/Virgin as well as the usual methods; competitions and merchandising.

I think the license fee is a good idea because the UK needs a public service broadcaster and the BBC is a very good one so it’s fair enough that the community have to pay for it, but I don’t think a fee should have to be paid just to own a TV, I think you should have the option to not pay the license fee but have no access to BBC channels but be able to watch other channels not operated by BBC. I also think the license fee is a bit too expensive and should be reduced.