By Staff Reporter Marie McNicholas

Public film-funding agencies bailed out of their share in "Whale Rider" just weeks before it became a multi-million-dollar box office hit overseas.
By Staff Reporter Marie McNicholas

Public film-funding agencies bailed out of their share in "Whale Rider" just weeks before it became a multi-million-dollar box office hit overseas.
Whale Rider has grossed $60 million since its release in January, most of that from overseas audiences.

It cost $10 million to make, more than a third coming from the public purse through a 45 percent stake taken by the Film Commission, New
Zealand on Air and the Film Production Fund.

However, in late April, a few weeks before its first overseas release, the New Zealand investors agreed to sell their stake back to the producer, South Pacific Pictures.

It was the first time the Film Commission had sold its investment in a film.

Associate Arts Minister Judith Tizard says the decision was made on grounds of good commercial sense.

In April, when South Pacific Pictures approached the New Zealand investors to see if they would sell their interests, it was clear they would not recoup their investment from international sales
advances, she says.

Whale Rider was released in Australia in early May and soon after in the United States where it soared into the box office top 20. It is still awaiting release in Scandinavia, South America and parts of Europe.

Ms Tizard explains the reason for the sale in written answers to parliamentary questions, where she says that by selling out before the film's international release, the local investors had a guarantee of getting their money back plus a premium.

It was considered "prudent and appropriate" to get an immediate and guaranteed amount, so they could reinvest in new projects.

"The alternative of retaining their equity in the expectation of greater returns than those indicated by sale advances at the time, was considered to be less prudent commercially," she says.

"The film would have had to be highly successful in a large number of international territories and notwithstanding the quality of the film, and its success in New Zealand, such returns could not be
guaranteed."

The Film Commission had a 5 percent stake, and got back $703,429 on its $632,000 investment.

Ms Tizard says the commission did not advertise or tender the sale of its share because the local investors were approached on a confidential basis by the producer.

"The investors were confident that the negotiated settlement was advantageous to them and that there would have been no other parties
with whom a more beneficial deal could have been achieved," Ms Tizard says.

South Pacific Pictures chief executive John Barnett said he bought out the state funders because he had spent 14 years on the project
and he was emotionally attached to it.

"I created that project, I didn't make it to be a work for hire . .. I made it with the intention it would be mine one day," he told NewsRoom.

The film was not yet in profit and the funding bodies would have had no guarantee of making millions if they had remained in the project.

Of the $60 million earned so far, $36 million would go to exhibitors, $12 million to distributors, and the cost of release was $24 million.

A German investor has retained its 55 percent stake in the movie.

At the time he negotiated the sale, he said he did not know if he would make any money from the film. "That didn't worry me, I wanted to own the picture. I didn't want to have to deal with bureaucrats."

He argued that the sale made sense for the Film Production Fund, in particular.

The fund only had an eight year life, he said, yet Whale Rider's total revenue could take up to four years to come in. The fund could use the sale money now to invest in other films.

The fund had put in $2.5 million and New Zealand on Air $400,000.

Under the deal all the New Zealand funders got their original investment back plus more, but Mr Barnett would not disclose the value of the premiums.

The film had ongoing costs that the funders had not wanted to pay for, while he was prepared to, he said.

"I wanted to be free to be able to spend more money where required and to generate more money where required."

The film would also have been made ineligible for tax credits in some countries if it had remained in the hands of a state funder, Mr Barnett said.