The Walt Disney Company is among a growing number of global children’s companies using Ireland’s production expertise and enviable tax credit system to produce animation. But there’s more to the story, writes Jesse Whittock.
Ireland’s long relationship with the US is based on trade these days, with US companies taking advantage of favourable Irish corporation taxes to open bases there.
According to official data, US investment in Ireland hit US$17.7bn in the first six months of 2011, a 49% increase year-on-year. Animation production is among the growth areas, as shown by The Walt Disney Company’s recent activities.
In the past few years, the Mouse House has looked to Ireland to create its animation productions, thanks largely to the successful tax break system set out in Section 481 of the Taxes Consolidation Act 1997. This covers up to 28% of budgets for qualifying television, film and animation projects.
The tax break has become an enviable status symbol, one that Cathal Gaffney, CEO of Dublin animation house Brown Bag Films, describes as “among the best tax incentives in the world. Once an application is approved and financing is closed, the investor funds are lodged into a bank account on day one of production. Unlike other territories, you don’t have to wait for a year after the audited accounts are finalised.”
Peter Lewis, co-founder of another Dublin toonsmith, Boulder Media, agrees, saying that while Section 481 funding is not entirely simple to access, “the rules are clear, you know where you stand and the process runs smoothly. It works very well in practice.”
In the summer of 2010, Disney and Dublin-based Brown Bag went into production on 52-part cartoon Doc McStuffins. The series, about a young girl who communicates with and heals stuffed toys, played a key role in Disney Junior’s launch as a 24-hour linear US cable channel in March and broke audience records among girls aged 2-5.
Disney EMEA and double Oscar-nominee Brown Bag are now in production on CGI preschool series The Happy Hugglemonsters (52x11’), which debuts on Disney Jr programming blocks in 150 territories in the fall, following the family lives of a group of young monsters.
However, Gaffney says that talent, not financing, is the key ingredient to great content. He has hired an additional 40 employees for Hugglemonsters. “The incentive is there to stimulate production but it does not lead to production for the sake of it. There are lots of territories with tax incentives but in creative industries, creativity should be the driving force, not a tax credit.”
But there’s no denying the tax credit’s power to attract overseas investors.
Disney EMEA’s senior VP of original programming Marc Buhaj says Section 481 is part of the reason Ireland is considered an important animation market. “The tax incentives have helped to build a thriving creative community in Ireland and Disney’s philosophy is to work with the best creative talent for projects, wherever they are.”
Boulder accessed tax credit financing for Cartoon Network’s popular children’s comedy The Amazing World of Gumball and new cartoon Randy Cunningham: 9th Grade Ninja (52x11’), which will launch on Disney XD in 129 countries this fall.
Announcing Randy to journalists in London earlier this year, execs called it Disney’s most global coproduction to date.
However, Disney still often employs US scriptwriters and prodcos for pre-production rather than Irish firms. This is true for Randy, with LA-based Titmouse Inc working the creative.
Boulder’s Lewis notes that tax break systems support “production funding rather than development” and doesn’t necessarily lead to the creation of bigger and better Irish intellectual property. However, Irish production companies “might not develop at all if 481 did not exist,” he adds.
Meanwhile, problems closer to home remain. Although US companies and other overseas investors have the Irish bug, local toon companies, such as Monster Animation & Design (Punky), have complained that a lack of local financial support from pubcaster RTÉ and its commercial rivals is hindering local development. (It is worth noting Monster and RTÉ were named best producer and best broadcaster respectively at last year’s Cartoon Forum.)
“We have a population of just four million so it’s always going to be a difficult landscape for a broadcaster. RTÉ has a budget of approximately €50m [US$63.2m] to spend on independent programmes each year, but sadly only a very small percentage of that goes on animation,” says Brown Bag’s Gaffney.
“While there is a dynamic children’s department doing a great job on a tiny budget, RTÉ is a public service broadcaster and as a whole it needs to invest more in home-produced animated programmes relevant to an Irish audience.”
Ireland’s global coproduction business is doing very nicely, but it appears the domestic front faces some battles of its own.