The British film industry – and the wider entertainment and media business – is booming. Combined spend in film and high-end TV reached £5.64bn in 2021, the highest level ever reported, according to figures from the British Film Industry’s Research and Statistics Unit. In an age for which the demand for content has never been greater, British has enjoyed a once-in-a-generation growth in production, fuelled in part by a dramatic increase in inward investment and co-productions.
Whilst this is wonderful news, there are also challenges that accompany this influx of foreign capital in the form of increased foreign exchange exposure. For these reasons, British studios can benefit from our array of FX hedging tools and options.
What contribution does the film and media industry make?
The film and media industry makes a considerable contribution to the UK economy, with the direct economic impact of UK film estimated to have been £2.91 billion in 2019, up 19% on £2.44 billion in 2016. In 2020, the UK’s film industry employed 86,000 people, around 66,000 of whom were employed in film production and distribution. British film also offers several other, more indirect, benefits to the UK; the consumption of British films around the world stimulates interest in the British Isles, enhances its reputation and helps promote tourism.
The picture is even more impressive as far as the broader entertainment and media market is concerned: revenue from the entertainment and media market, which is expected to reach £83bn this year, is expected to hit £97bn by 2026, according to PwC’s report entitled Global Entertainment & Media (E&M) Outlook 2022-2026. This would put the UK ahead of Germany, making it Europe’s biggest entertainment and media market.
How currency exchange can affect the film and media industry
British filmmakers have succeeded in producing box office draws to great critical acclaim in recent years. As a consequence, they have attracted substantial foreign direct: in 2019, the UK became the world’s leading destination for studio investment for new productions, with international productions spending just over £3bn in the UK.
Whilst this inward investment is fantastic news for the UK film industry – and for the UK itself – there are a number of ways in which the issue of currency risk can complicate matters. As foreign investment comes in the form of foreign currency, the beneficiaries of this money in the UK need to convert these inflows of cash into sterling. If the pound strengthens in the time that it takes for the money to arrive in the bank accounts of British studios, those studios are in danger of receiving far less money than they would have otherwise upon converting it to pounds sterling.
There are also potential downsides to the pound weakening, of course. Whilst it might make the UK a more attractive investment destination, as foreign studios get more for their money, purchasing film equipment from abroad becomes more expensive.
Other issues that might arise include having to pay the film crew, from the actors and writers to the camera crew and assistants; many of these people may require payment in a different currency should they live overseas or want to repatriate their money.
Each of these transactions, as you can see, are affected by fluctuations in the foreign exchange market. It isn’t hard to see how swings in currency values can have a significant impact upon the costs of your business or production.
How we can help your business
If you’re looking to embrace the many international opportunities that the entertainment and media industry currently has to offer, we can help you manage the costs that might be incurred from exchange rate fluctuations, Having a good understanding of currency exchange volatility and how it can impact the media and film industry will help you make the most of the soaring inward investment into the UK film and media industry.
We offer access to an online multi-currency account that allows you to manage your payments and receipts from overseas partners. With Moneycorp, you can benefit from the most competitive rates and low fees on your currency exchange transactions, and a range of FX contracts are also available should you wish to further limit your currency exposure.
You will be assigned a dedicated account manager who understands the issues affecting the film and media industry. We will help guide you through periods of currency volatility to ensure that you are offered payment solutions that are tailored to your business needs.