Australians create a crocodile market: Robert Milliken on Paul Hogan's financing lesson for the UK industry

THE BLUEPRINT for the revival of the British film industry may lie in Australia, where the government has offered bold tax incentives to encourage investment in what was already a lively production scene with more than a touch of nationalism to keep it bubbling.

However, Australian film backers are facing their toughest test yet: a one-film company quoted on the stock market. The mere idea was enough to make institutions gulp and, sure enough, shareholders are on a roller-coaster.

After a week of volatile trading, sparked by unflattering reviews from the United States, the share price of the company owning Paul Hogan's latest film, Lightning Jack, closed well down on Friday from its high point a month ago.

The film is attracting close scrutiny from investors and financiers as well as critics. It is the first feature film in Australia, and possibly anywhere else, to be funded by raising the bulk of its budget from the public through shares on the stock market.

Mr Hogan co-produced and wrote the screenplay for Lightning Jack, in which he plays an Australian cowboy in the American west. The film is Mr Hogan's latest bid to relaunch himself after an earlier movie, Also an Angel, failed to repeat the huge success of his two Crocodile Dundee films, which made him a household name in America.

Lightning Jack's budget of Adollars 36m (pounds 17m), fairly modest by Hollywood standards, was raised through a trust in which 36 million units at Adollars 1 each were offered to about 6,000 investors on the Australian stock exchange. The two largest investors are Mr Hogan and Village Roadshow, the film's Australian distribution company, with 2.3 million units each. Most of the others are small investors, for whom the main incentive was a tax deduction of 45 per cent of the subscription price for the year ending June 1994, and another 45 per cent in June 1995.

For the producers, there were additional advantages in the scheme. Tony Stewart, executive producer of Lightning Jack, said: 'It was a punt on Hogan, a big name with a strong track record. A fundamental reason why we raised the money this way was to retain complete creative control, which may not have happened if we had gone through the usual Hollywood finance circles.'

Mr Stewart said the scheme also allowed the producers greater flexibility in doing deals with the distributors, Savoy Pictures Inc in the US and Walt Disney for the rest of the world apart from Australia. But then came a string of disastrous reviews after Lightning Jack opened on 1,700 screens across America a week ago.

A month ago, in anticipation of the film's release in the US followed by Australia in a fortnight and Britain in July, Lightning Jack units were trading at Adollars 1.90, almost double their issue price. When Australian newspapers splashed reports of scathing US reviews, the price plunged to Adollars 1.15 on Monday before climbing back to Adollars 1.27. On Friday, it closed at Adollars 1.18. Despite the reviews Lightning Jack did excellent business in America last weekend, taking USdollars 5.4m (pounds 3.6m) at the box office, according to the producers. This was second only to Shirley MacLaine's new film, Guarding Tess, for the same two days.

If the film goes on to be a hit, the investors stand to gain from any profits, after deferments are met, which will be paid into the trust up to a maximum of Adollars 36m. Mr Hogan himself will receive a producing and acting fee of dollars 2m, plus another dollars 2m if the film goes into profit. He will also be paid dollars 235,000 for writing the script, and his company, Lightning Ridge Productions, will receive management and marketing fees together with 50 per cent of any profits.

The trust itself will continue to operate until 2001, although there are provisions for an earlier winding up 'if the film doesn't generate enough revenue to keep expenses going', said Mr Stewart.

If it works well enough, the share scheme pioneered by Lightning Jack may be taken up by other film producers. Mr Stewart said Australia's regulatory bodies, the Australian Film Commission and the Australian Tax Office, were 'tough but co-operative' in helping the producers to set it up. 'It's been unique and ground-breaking because the market is determining our share price based on emotion more than anything else. I don't think you could launch such a scheme unless you had a big-name star or director. We couldn't have done it without Hogan.'

(Photograph omitted)

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk