According to recent stats from the British Film Institute (BFI), spending on film and high-end television production in the UK reached £4.2bn in 2023. While this is great news at face value, Sarudzayi Marufu, founder and executive producer of Euras Films, argues that domestic film and TV producers are being neglected, representing only 11% of the total spend. Marufu believes that the return of private equity could help bring UK indie film back from the brink.

UK independent film producers have found themselves in the eye of a perfect storm. A spate of both long- and short-term squeezes have applied a severe amount of pressure. Now, filmmakers are pushing the panic button. They need to diversify their funding models as soon as possible. And one untapped resource is private equity (PE).


Sarudzayi Marufu, Euras Films

Filmmakers are proven innovators – but this acute funding crisis will push this skill to its absolute limit. They’re going to have to adapt to the world of business and approach the financiers. At the same time, it’s important that PE partners get over initial reservations about investing in films. They can help UK filmmakers and make a serious buck in doing so.

The streaming model has failed to replace pre-digital distribution methods and indie filmmakers have been forced to eat that pay cut. A pre-pandemic survey of producers detailed how 69% earned under £15,000 over two years from producing indie films in the UK. And that was before the pandemic. Since then, costs have soared and profits have plummeted as the cost-of-living crisis bites into audiences’ wallets.

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Old funding faithfuls like BFI grants have not been able to make up the difference. High interest rates and persistent inflation mean that the government is in no mood to increase these. Predictably, the BFI’s new 10-year strategy is a belt-tightening exercise and has seen its budget drop by 28%.

I’m not trying to sound apocalyptic – but underplaying the extent of the crisis does a disservice to just how dogged, determined and tenacious UK indie producers have been to this point. Film producers are a resilient bunch – no one goes into filmmaking expecting riches – but unfortunately, the situation is on a knife-edge.

This is where private equity partners can step in – and it wouldn’t be unchartered territory for them.

Regaining momentum

In 2022, indie film sectors across Europe were awash with PE capital as investors were bullish about indie’s prospects. In 2022, PE and venture capital (VC) firms invested $10.3bn total in the film and entertainment sectors. Global heavyweights like KKR and Blackstone waded in and bankrolled projects.

Then inflation hit, and the Federal Reserve, European Central Bank (ECB) and Bank of England (BoE) cranked up the interest rates. The music stopped, the funding dried up, and UK indie filmmakers were left exposed.

It’s time for filmmakers and private equity partners to rekindle this relationship – if they do, both sides can reap the rewards.

For UK indie filmmakers, PE financing offers several benefits. The first is the scale of funding that immediately becomes accessible. If a PE firm throws its weight behind a project, the financial support is orders of magnitude greater than if you win a government grant.

To put this into perspective, the BFI Film Fund invests £26m per year. During the 2021-22 spending spree, Candle Media, backed by Blackstone, acquired a controlling stake in Hello Sunshine for $900m. That was a single deal. The size of the financial packages that PE brings to the table dwarfs anything that cash-strapped public institutions can offer.

Secondly, PEs bring business experience. There’s a stereotype of private equity partners as vultures, preying on struggling companies to ransack for a quick profit. In reality, this is far from the truth. Today, PEs will hold onto assets for years before exiting, applying their expertise and leveraging their networks to improve a business’ balance. The average holding period has spiked to 6.1 years in the UK.

The business acumen that these firms bring with their investment is invaluable. Especially for filmmakers, who aren’t always so interested in that side of the production pipeline. Some producers, like myself, come from a business background, but many don’t and are less comfortable handling budgets, marketing, and business development. This is where PEs can step in and provide support, leaving the producers to what they specialise in – creativity.

Another benefit that private equity funding can provide is flexibility. The one-size-fits-all grants model doesn’t help everyone – an early career producer who wins a large lump of cash won’t necessarily deploy this in the most efficient way. Whereas PE firms can offer a steady stream of investment, and advice with it, to ensure that the capital’s potential is maximised. And, these could be in equity or loans, tailoring the model to suit the project.

Striking a balance

I’m not arguing that PE financing is the tonic that will immediately cure filmmakers’ funding woes. There are very valid concerns that any producer will have here. Chief among them is balancing originality and profitability – agreements will need to guarantee creative freedom in the face of demands for return on investment. Developing a dependency on financiers would also subject films to the volatility of the markets.

But UK filmmakers are already dependent on government grants, and these are hardly reliable. To grow out of this they need to diversify funding across the board and one string to their bow should be private equity.

Producers will need to move on from the stereotype of voracious PE partners. As long as a level of creative freedom is guaranteed they offer an invaluable well of expertise, experience and, of course, funding.

But financiers also need to recognise that films are a reliable and lucrative investment that should be in their portfolios. Just look at A24, which began with an initial seed investment from Guggenheim Partners. In 2022 it was valued at $2.5bn after a $225m investment led by private equity firm Stripes.

Filmmakers are in survival mode. We need to get creative about funding, and soon. With the right pitch, private equity partners would be only too happy to step into the breach. And we’d be foolish to turn them down.

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