The Studio Impresario

Decades of competition between Britain's historic film studios, Pinewood and Shepperton, ended last year in a merger scripted by co-owner and chairman Michael Grade. "In an international market the rivalry made no sense," says Grade, 59, who has also been one of the U.K.'s most controversial television executives. The merger's rationale was to create scheduling flexibility, the better to accommodate the big-buck Hollywood films that already account for 60% of the studios' business. But a series of unforeseen events has so far left the theory untested. Last June, a threatened U.S. actors' strike prompted American studios to stockpile films and cut back on production. As that situation eased, the terrorist attacks forced American filmmakers to stay home. "Demand side is only now getting back to normal," Grade says.

Still, Pinewood has been kept busy with the next James Bond flick, and Shepperton's schedule is filling up with films like the second Harry Potter movie. Grade is so confident, he and his partners may float the company on the London Stock Exchange. The firm is also set to manage (and perhaps invest in) a $150-million film studio planned for Toronto. Pinewood's chief overseas rivals — studios in Canada, Australia and Central Europe — allow filmmakers to trim costs, thanks to favorable exchange rates, tax breaks and cheap labor. But Grade argues the savings are often minimal, and claims Britain's much-heralded talent — in front of and behind the camera — offers more value. Meanwhile, TV productions help keep the two lots profitable. Two state-of-the-art digital TV studios were recently built at Pinewood at a cost of $3.56 million.

Grade — who is married and has a three-year-old son with his wife, Francesca, and two grown children from a previous marriage — comes from a well-known family of film impresarios. But he made his own name in TV. As chief executive of Channel 4, where he was accused of pandering to poor taste, his programming choices prompted one tabloid to label him "pornographer-in-chief." But under his stewardship the station helped finance such hits as Four Weddings and a Funeral and Trainspotting. Grade doesn't rule out getting the studios involved in financing small-budget films aimed at the domestic market. But he's no producer. "You find somebody whose taste you trust and let them get on with it," he says. A wise move by a man who confesses that Teletubbies is one of his favorite shows.

Q&A
TIME: London isn't a cheap place to film. How does it compete?
GRADE: The skill base here is phenomenal. The place is geared to filmmaking, and there's almost no limit to the number of big pictures that can be crewed up. You get what you pay for, which isn't true of every country.

TIME: Many hit films are made in Britain, but few are fully financed here. Why?
GRADE: There aren't enough high-caliber producers. Secondly, the industry is too fragmented. Everybody's got a film company. There's no major. There's no equivalent of Warner Brothers or Fox.

TIME: Will cinemas die out because of home-entertainment technology?
GRADE: No. The shared experience of sitting in a dark room with a huge screen and surround sound is unrepeatable at home. Box office admissions go up all the time. Young kids don't want to stay at home and watch TV, they want to go out, get away from their parents.

TIME: You're a sailing buff.
GRADE: I love it. I'm not a person who can do nothing, and when you're sailing it's all-occupying. It takes over while you're out at the mercy of the wind, the sea, other boats and the tides. You're occupied the whole time, but it's a complete respite from work.

TIME: Do you mind being called controversial?
GRADE: I've been caught up in a lot of controversy, usually somewhat manufactured, sometimes by me, if it sells the product. The only rule is, never lie.