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certainly make his direct involvement more difficult.
Between 1975 and 1981 the company made approximately
14 films a year of which about 8 were major
international productions. It bought the Classic
chain of cinemas and set up distribution outlets in
both Britain and the USA. In June 1981 it was
revealed that the company’s pre-tax profits for the
year had plummeted be £2 million (from over £11
million in the previous year) and that the film division
had lost £26.4 million.
At the time press coverage tended to give a lot of
attention to the unsuccessful ‘Raise the Titanic’. The
decision to make this film had been pushed through
by Lord Grade himself despite a widespread lack of
enthusiasm within the industry which meant he
was unable to find anyone prepared to co-finance
the project. Always intended as a high budget film,
technical problems during its shooting led to a considerable
escalation in costs. Upon its release, ‘Raise
the Titanic’ proved both a critical and, more importantly,
commercial failure, resulting in the company
having to write off approximately £8 million (before
interest charges). Admittedly this was a large sum
but the trends have been towards bigger budgets, so
losses, when they occur, are greater and most of the
major film companies have been faced with similar
u n p l e a s a n t ly costly mistakes in recent ye a r s .
Unfortunately for Lord Grade and ACC, the problem
was more deep-rooted than a single error of judgement.
‘Raise the Titanic’ was one of a long series of films
which failed to attract audiences. Although all the
majors operate on the basis that profits from each
film which registers at the box office will have to pay
for several which do not. Lord Grade’s batting average
was particularly low. For the first few years the
poor performance of his films had surprisingly little
effect on the company’s profits, as he was highly
skilled at spreading the risk: he made films in coproduction;
there would be pre-sales to television
and video companies; he pre-sold territorial rights
for theatrical release; he took maximum advantage
of any tax incentives available. Furthermore, thanks
to his immense flair for publicity. Lord Grade managed
to give the impression that everything he
touched was done on a large scale, an impression
reinforced when his investment in production was
put into the context of a British film industry starved
of cash. But in international terms many of his
f i l m s , though possessing certain technical standards,
had medium budgets. So the amount of ACC
money put at risk was less than appearances would
seem to suggest.
His really big losses did not occur until Lord Grade
attempted to extend his involvement in film from
production to exhibition and distribution. Both of
these require large capital outlay. The Classic chain,
for instance, cost £12 million, and at a time when
audiences were falling, could only bring in a slow
return on investment. The most ill-advised of all
Grade’s undertakings was the setting up of a major
distribution outlet in America. It was never really a
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viable proposition and the costs involved, such as
making several hundred prints for each release and
paying for saturation advertising campaigns on television,
put a seemingly endless drain on the company’s
resources. The success of the venture depended
on the one thing which had always eluded the company
- the ability to find and develop commercially
attractive projects. The performance of ACC films at
the box office had been consistently poor. Previously
this had been of little importance as the cost of making
the films themselves had been largely offset
through other means; now it became crucial as other
means could not be stretched to also cover the cost
of distribution. Only large box office receipts could
have ever justified the enormous expenditure the
distribution operation demanded and the absence of
these ensured that even without ‘Raise the Titanic’
the losses made by ACC would have been unacceptable.
Right from the beginning there had been deep
unease among some stockholders about ge t t i n g
involved in such a volatile and unpredictable area as
film. But the company had always been very much
dominated by Lord Grade, the owner of the largest
single block of voting shares, who made the company
into one of the most successful in Britain. While
things generally were going well for ACC and the
film division did not cost too much. Lord Grade was
able to quieten any misgivings (or at least nobody
was in a sufficiently strong position to launch a
direct challenge to his leadership). However, by 1981
ACC was facing a number of serious difficulties: the
record division had been badly hit by the recession
and was also making a loss; interest rates were at an
unprecedented high and the company had been borrowing
heavily; the IBA had ordered the company to
sell half of its holdings in ATV, its most profitable
subsidiary; in addition, it was to help pay for the
building of a new studio in the East Midlands. The
‘Raise the Titanic’ disaster, occurring when it did,
provided perfect amnunition for Lord Grade’s critics.
It was argued that any continuation of the film programme
would inevitably end in another such experience.
Hot even Grade’s promise to withdraw from
American distribution and only make films which
were fully pre-financed could save the situation.
The film programme was terminated and Lord Grade
ousted from the company.
BRITAIN’S ENTRY INTO THE EEC
So far joining the Common Market has had very little
effect on the British film industry. Although EEC
films are now counted as British quota, with the
exception of some sex films, there is no extensive
distribution or exhibition of these in Britain.
Te chnicians and actors/actresses from Member
States are counted as British when estimating the
proportion of labour costs for the purpose of registration;
but due to practical problems such as language
difficulties and a superfluity of good British
technicians, there has not been a sudden influx of
EEC personnel into British film production.