GRADE PREPS PINEWOOD FOR NEW GROWTH
Copyright 2004 www.tombraiderchronicles.com

[ April 25th 2004 ]

For a man who has headed Channel 4, was a director of Robot Wars-maker Television Corporation and has been appointed chairman of the BBC, you might have thought Michael Grade would sound jaded about television and film productions. Not a bit of it. "When I go into the studios I'm still wide-eyed," he says of Pinewood Shepperton, the studios he hopes to float this summer and home to Carry On and Harry Potter as well as James Bond. "You go over to one stage and they're making the latest Bond and round the corner they're on Tomb Raider. You can't help but be excited."

Now, he's sounding as bullish about the British film industry as you'd expect from a man trying to convince investors of the value of Pinewood. Last week, he and his chief executive Ivan Dunleavy kicked off the marketing and book-building process to raise £50m and float the company on the stock exchange. The investment argument, he believes, is that the studio offers exposure to the industry - Pinewood Shepperton is the biggest studio in the UK with 36 stages - without the risk inherent at a single content house. The growth in multichannel TV means the need for facilities will only get bigger.

Analysts are a little more circumspect, reckoning Pinewood is a straightforward play on the film industry and so has greater exposure to tax breaks for film financing than to content providers. The prospectus, out last week, highlights the importance of big budget Hollywood movies to the company's trading prospects and cites changes to the fiscal regime as a major risk. This year, the Government closed a film finance loophole the rich were using to avoid tax. The Chancellor then promised to extend other tax breaks in the Budget and film makers appear to be happy.

For now, the market looks rosy, Mr Grade says. Productions in the UK have doubled since 1997 and inward investment between 2002 and 2003 rose from £221m to £410m, according to the UK Film Council. Another view might be that his private equity partner 3i has chosen a prudent moment to dispose of its holding. The accounts show that the company made profits of £2.63m last year against £643,000 in 2002 and a £3.52m loss in 2001. Nevertheless, Mr Grade has big designs for Pinewood. He wants it to become the largest studio in Europe by expanding 55pc by 2014.