From the Telegraph yesterday:
Film industry split over merger plan
The British Film Institute, chaired by former BBC director general Greg Dyke, has told the Government the state's vision for a full-blown merger of the BFI and UK Film Council is "not legally possible".
By Amanda Andrews
Published: 7:52PM BST 24 Oct 2009
The BFI governors wrote to Sion Simon, the film minister, and the UKFC addressing their views on the proposal.
The letter, leaked to The Sunday Telegraph, cites legal advice arguing that the much-anticipated, cost-saving deal will only work as a "partial merger".
This viewpoint is set to receive opposition from the UKFC, which is keen to see a full merger. Sources close to the film council said the BFI proposal did not tally with the legal advice the UKFC had received and argued that a large scale merger was possible.
Mr Simon announced in August that the UKFC, whose role is to channel public funds into UK film, was to merge with the BFI, the body responsible for protecting Britain's film heritage, to create a "streamlined single body that represents the whole of the film sector".
The BFI, which is a registered charity and has received £200m of funding from the UKFC since 2000, said it was only legally possible to merge the BFI with the "charity-compatible activities currently being funded by the UKFC".
It said that incorporating the UKFC's commercial activities into the new entity was not feasible. One source familiar with the situation said the film council did not understand the logic of effectively turning itself into a charity. The source said, as a charity, the new organisation would be largely precluded from ensuring the UK film industry meets the challenges of the digital age and delivers for audiences.
The source added that the UKFC would be unable to invest in making films and developing digital cinema in the UK if it became a charity and said the film institute's proposal would be detrimental to the future survival of the industry.
Culture Secretary Ben Bradshaw and Mr Simon are thought to be involved in negotiations amid concern that a deal may not happen by the time of the next election.
With the UKFC's £70m funding – which includes both Grant In Aid (GIA) and lottery funding – set to be reduced by about 10pc from April 2010, the merger has been viewed as a way of achieving efficiencies.
The BFI added in the paper that it might not be possible to merge all the charity-compatible activities into a new charity as this might be "detrimental to the industry need and cause complex conflicts of interest". It suggested that "another smaller body" might be needed to "advocate and lead on industrial policy development".
The UKFC instead wants to create a single organisation for film with a single reporting line. It would hold the charitable assets of the BFI and would have one board. This would facilitate development of unified policy, which appears to be what the Government wants .
The BFI and UKFC refused to comment.