Penny-share ticket to the movies

Investment in Metrodome demonstrates revived interest in UK films, writes Richard Phillips

A SHARE issue by Metrodome Films, the company behind the hit Leon the Pig Farmer, is the latest sign of renewed optimism in the British film industry.

Metrodome, through the medium of the Rule 4.2 market, the junior speculative share market, is seeking to raise pounds 2.3m in an offer of 11.5 million shares at 20p each. The minimum amount of pounds 1.3m has already been raised, says stockbroker Durlacher, sponsor of the issue. The offer closes by 27 June.

Pointers to the revival come not only from the headline-grabbing success of Four Weddings and a Funeral, which to date has taken pounds 160m at the box- office on a budget of pounds 2.6m, but also from some lower-key winners, such as the BBC's Priest, with Linus Roache.

Filmed for a mere pounds 1.25m, it has nevertheless grossed $3.8m (pounds 2.4m) at the US box-office in its first two months on release, and pounds 1m in the UK.

It is this type of movie Metrodome sees as its bread and butter. It has also developed a style of financing which improves the chances of at least a modest return, by injecting hard-headed commercialism into the otherwise frequently nebulous world of film finance.

Leon the Pig Farmer was an example. The producers took the innovative step of making the production qualify as a Business Expansion Scheme investment, giving tax advantages to investors. Its success, and the returns it provided, led to the formal establishment of Metrodome. The background of the directors in the hard-nosed property business may well help. Paul Brooks, now Metrodome's chairman and chief executive, was once a director of a property developer, as was its managing director, Alan Martin. It was through this common interest that they met.

Mr Martin is an enthusiast for the pragmatic, business-like approach. "When we looked at going into film, it seemed to us that everybody in the UK into making films does it either for the lifestyle, or for art. But nobody seems to be in them for the money. Which is how we differ," he explained.

Metrodome intends to limit its risk in production ventures, by committing no more than 20 per cent to the budget of any one film.

Mr Martin emphasises that the critical information on which the decision to invest is made is down to the numbers.

"Of course we read the scripts, but what matters is the financial figures."

Metrodome analyses pre-sales forecasts of distribution agents for each project, and then will invest only if the projected net sales are at least 50 per cent above the expected production costs. Metrodome's latest production, Clockwork Mice, has a charity premiere on Tuesday.

The case for a healthier film industry is made in a lengthy report by Durlacher. The UK has the largest collection of film talent and production facilities outside of Hollywood. Several factors, taken together, herald a renewal.

Richard Rosen, author of the report, says there is higher demand for quality, low-budget, British-made films. US studios are increasingly aware of the attraction these films can have in the American market.

Neil Jordan's The Crying Game, for instance, cost pounds 3m to make and took $68m in the US. The Madness of King George cost pounds 5m, has grossed $15m in the US and is still in cinemas

UK film studios are full to bursting with productions, many of them American. Paul Olliver, studio manager for Shepperton Studios, says that complex is already fully booked for the rest of the year.

On the floor are The Muppets' Treasure Island and Gulliver's Travels, a made-for-television production for NBC of the US. The go-ahead has also just been given for another Disney production of 101 Dalmatians.

Some people in the industry are disappointed that the Heritage Secretary, Stephen Dorrell, recently refused to contemplate tax breaks for the industry, saying it was a matter for the Treasury. But he did promise the film business pounds 84m over the next five years, funded by National Lottery ticket sales.

Over the years, sporadic waves of enthusiasm have washed over British film, only to recede as the money, the talent, or both, headed for Hollywood.

Investors will have to accept there are risks putting money into a company like Metrodome. But perhaps the new-found commercialism it stands for signposts the way ahead, not just for the business, but for shareholders.