Euras Films founder: “Sony Paramount merger will harm UK film”
May 9, 2024
Sarudzayi Marufu, executive producer and founder of Euras Films, has warned that M&A deals in the US media and entertainment sector could significantly harm the financial viability of grassroots film productions in the UK.
Marufu’s statement follows Sony’s $26 billion bid for Paramount, which if successful, would make the Japanese conglomerate a majority shareholder. Paramount has been affected by strikes from Hollywood writers and actors, a weak advertising market, and falling cable subscriptions in the US. The deal would join a succession of media mega-deals, including Warner Bros’ merger with Discovery and Disney’s acquisition of 21st Century Fox.
But Marufu, whose independent film All the Wives in Attics was selected for awards at global film festivals, believes that the recent surge in M&A activity could have a direct impact on grassroots productions in the UK. She believes that the UK’s visual TV and film sectors are already too dependent on US-based companies for productions. And cites the economic factors that led to Paramount’s drop in performance, including the 2023 Writers’ Strikes, as examples of the UK sector’s overreliance on the US.
Marufu fears that as US firms consolidate and expand, the UK’s film sector could be reduced to a ‘services hub’ for the US, increasing the cost and viability of domestic production for independent filmmakers. In 2023, 77 per cent of the UK’s total film expenditure came from overseas, indicating the severity of the trend.
Marufu believes that US media giants increasing their influence in the UK film sector could be detrimental for UK independent film. The UK is a choice location for US productions because of its tax breaks, state of the art studios and abundance of industry talent – from colour graders right through to producers. As a result, this is drawing away capital, resources and talent from the UK.
Marufu said: “I think it’s fantastic that we have world-class studios, post-production facilities, skilled crew members, and fantastic cultural landmarks to attract investment from the US. But at the same time, competition for these resources and talent has caused costs to go through the roof for independent companies. Media giants have established distribution networks and marketing power, and often secure preferential treatment for theatrical releases, streaming deals, and promotional opportunities. We cannot compete with these enormous economies of scale.”
Domestic film production spending fell by more than 30 per cent last year. Marufu fears that as M&A rises, the capacity and spend for domestic film will only plummet further.
Marufu continued: “I recognise the benefits that US film investment brings to the UK, but our domestic independent film sector isn’t reaping the rewards. It’s becoming more and more expensive to make independent films, and ultimately, get commissioned.”
Independent productions in the UK have historically received support from institutions such as the British Film Council, the BFI Film Fund, and Film4 to develop and co-finance films. However, in light of recent funding cuts, such as the £7 million reduction by the BFI for the fiscal year 2023/24, Marufu urges the industry to explore funding alternatives, such as through private equity.
Marufu continued: “Independent filmmakers will need to start looking for new opportunities to get their films produced and distributed. They can no longer solely rely on traditional financing options, with funding bodies now cutting their spending, and traditionally British institutions like Film4 increasingly partnering with US studios like Fox Searchlight. Private equity funding is a great alternative. I think it’s an untapped resource. At the moment, there isn’t much dialogue between people in the film sector and people in the private equity sector. There is a great deal of scepticism from indie filmmakers about private equity. We’re used to seeing the headlines of PE ‘sharks’ stripping out companies and selling their assets, but I think that’s a bit overblown. There are so many synergies that could be created between private equity firms and independent film companies. Independent filmmakers get a reliable source of funding, but also operational level expertise and guidance too. PE firms often introduce talent to help with core business functions such as accounting and marketing, leaving the creative talent to focus on creating an awesome production that audiences will love.”
Marufu notes that private equity investment in the film sector is tried and tested, and points to Stripes’ $225 million equity investment into A24, the Oscar-winning indie studio behind such movies as Moonlight and Minari. The firm used the capital to expand production and distribution worldwide.
Marufu said: “If the UK doesn’t pivot from becoming entirely co-dependent on overseas productions and find ways to support our independent industry, it will only continue to stagnate, and fresh, original, and progressive content will become a rarity. This can’t be allowed to happen. The potential for investors to make good returns on capital on UK film is enormous. This year, I’m keen to strike up new conversations with PE firms, and help educate up-and-coming talent in the sector that there are new ways to finance films and kickstart their creative career.”