LONDON -- U.K. studio facilities operator Pinewood Shepperton may have recently attracted Star Wars: Episode VII as its latest big Hollywood production, but the company continues to feel it must expand its capacity to remain competitive, CEO Ivan Dunleavy told The Hollywood Reporter on Thursday.
"We work in a world where there is a finite amount of capacity, but the market continues to grow," he said. "At some point, it is pretty clear that we must add more capacity."
He added: "We are most associated with big-budget film production. Those movies not only get bigger in their requirements, but we also have the potential of high-end television coming to the U.K., and our domestic television production continues to get bigger. For example, we just had The Voice with us on Saturday for their finale. All of that points to a world where Pinewood needs to expand, and if we don't, clearly we'll miss opportunities."
Pinewood expansion plans have so far been blocked. Last month, a district council rejected Pinewood's application for a planned $300 million-plus expansion, the second time the company's growth attempts have been held back. It has appealed the decision to the national government, focusing its argument on its ability to create jobs, and a public inquiry is set to kick off Nov. 19.
"Our customers are concerned that the company has sufficient capacity to meet their needs," Dunleavy had said in the company's latest earnings report earlier on Thursday. "The need for further, effective infrastructure to meet demand for the U.K. is a priority."
The Pinewood CEO later told THR: "We are certainly meeting customers' expectations. Pinewood has one of the premiere brands in studio facilities around the world. We'll always make sure we provide the quality and service that our clients want."
But competition for productions isn't just coming from within the U.K., such as Warner Bros. Studios Leavesden and other providers in a globalized business, he emphasized. "Film and TV producers can produce where they wish. So, we must provide a quality service and be competitive in our pricing," he said. "On the U.K. front, we are pleased to see any production come to the U.K. -- it doesn't necessarily have to come to Pinewood. And we will compete as best as we can to win the work when it is available."
The studio's first expansion push was dubbed Project Pinewood and cost a total of $10.8 million (£7.1 million) in 2011. In reporting an $8.3 million operating profit for its latest fiscal year on Thursday, Pinewood said that its current expansion push has cost it close to $3.1 million (£2 million) to date.
If Pinewood doesn't manage to get approval for an expansion, could it look for acquisitions of studio operators elsewhere in the U.K.? "It's pretty clear that the most effective way to add capacity is to increase around the hub that already exists at Pinewood. We have the land, we have the capital, we have the ambition and the plan. That must mean that it is efficient and economic to add that capacity there rather than going off to some far-flung part of the U.K. where you don't have the infrastructure and skill base."
Asked about the early effect of new tax incentives for high-end TV dramas that launched earlier this year, Dunleavy said leading TV executives from the U.S. have toured Pinewood and other studios already. "There is a lot of interest," he said without disclosing possible first projects that may shoot at Pinewood with the help of incentives.
He also said that Pinewood has been "very pleased" with a deal with the Isle of Man. Pinewood became an adviser for the Isle of Man's film and TV investment fund in return for a 9.9 percent stake. The company is now co-investing in U.K. films and TV productions. Safe-cracker drama Dom Hemingway, starring Jude Law, and period drama Belle, with the likes of Emily Watson, Tom Felton, Miranda Richardson, Tom Wilkinson and Matthew Goode, will be among the first projects made under the partnership, Dunleavy said.
Dunleavy on Thursday also expressed confidence in new business opportunities in the U.S. and China.
In the U.S., the company recently struck a joint venture deal to develop 288 acres of land south of Atlanta into a studio complex to be called Pinewood Atlanta. It will look to attract film, TV, music and video game projects. Pinewood is a 40 percent shareholder in the project, which is set to open in mid-2014.
"We will hopefully get a positive response from the market and can maybe build more for the future," Dunleavy said. "Atlanta is an exciting place," and productions can take advantage of the fiscal incentive in Georgia, he added.
In China, Pinewood has entered a 50/50 joint venture with Bruno Wu's Seven Stars Media. It will "assess a number of business proposals in the growing entertainment market in China," with Pinewood providing its expertise and limited capital investment, the company has said.
"We have picked a local partner to work with us who understands the sensibilities of the local market and is compatible with the Pinewood brand," Dunleavy told THR. "China is a hugely exciting prospective market for the future. It's already a big market, it is going to become an enormous market. We are only into this partnership for a few weeks, but we hope to create a flow of co-production opportunities between the U.K. and China."
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