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Winston-Baker / Variety Film Finance Forum

by Jeff Steele

I attended the film finance forum today, in Century City.  In general, I find these forums to be informative, but not necessarily educational, whether I’m sitting on a panel or not.

However, unlike any other finance forum, they did offer a 3 hour crash course on film financing fundements, so that any lay-producers could better contextualize the large amount of technical/financial information. Kudos to the Winston-Baker team for that!  Jeanette Buerling represented Magnet and indie equity.

For those who didn’t attend, the overall consensus, was that P&A and independent US distributors are the holy grail of indie filmmaking.  As I’ve stated in previous posts, buyers want to know: (1) where is the equity coming from, and (2) who is the distributing it (and more specifically, how many screens at widest release).

Without US distribution, you generally won’t get the bigger numbers out of foreign (unless you have star power), which means budgets need to come down to a reasonable amount (like $10-12m), where a $2m domestic video sale makes financial sense.  Many were recommending zeroing-out the value of domestic (in your finance plans), and making your movie under the assumption that you’ll make nothing from the US.  While not entirely realistic, it does instill a good discipline.  Nonetheless, senior and gap lenders are still doing single picture deals without domestic distribution in place.

In other news, “performance-based” slate financing is still dead but cross-collateralized, multi-picture, senior bank facilities are alive and well.  Get’m while they’re hot.

The highlight for me was when one panelist (a guilty contributor to the film bubble) commented at the beginning that too many movies had been made over the past few years that shouldn’t have been made; but then at the end, told an audience member that he’d get their movie made if they had 50% equity.  This is called: a finance plan looking for a film, instead of a film looking for a finance plan.

Once a junkie, always a junkie.

I tweeted last week that Japan and Greece were becoming virtual-zeros on my sales estimates, but now there’s a sense that South Korea and Russia are too, and that Latin America is paying 30 cents on the dollar.  This would imply that budgets need to come down that much further.  The good news is that this downward pressure is also applying to cast salaries.  These days, there’s little reason to offer an actor equity/profit participation in your indie film, unless you’re getting them for way under their rate and they’re (1) playing a character type/genre they’re known for, and (2) demonstrably getting the move made.

All in all, no big surprises.

Copyright © 2010. Film Closings Inc. All rights reserved.
8 Responses leave one →
  1. March 4, 2010

    Hi,

    I’m just getting started with my new blog. Would you want to exchange links on our blog-rolls?

    BTW – I’m up to about 100 visitors per day.

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  2. Matt Mariano permalink
    March 4, 2010

    As always, a great post! I am learning a lot from you Mr. Steele!

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  3. March 5, 2010

    Indeed. Still confused on some points though but that’s why I’m following…to learn.

    -M

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  4. March 9, 2010

    Great article. Love the, “…a finance plan looking for a film, instead of a film looking for a finance plan. Once a junkie, always a junkie,” take on the forum.

    I agree with you budgets need to come down. I would argue $8-10m as opposed to your $10-12m.

    I always see the ‘chicken or the egg’ routine when discussing film production. If you always have to have star power to get financing, I would see less and less films being made. Bigelow used non-A-listers with “The Hurt Locker” and, in my opinion, hit a hanging curve ball out of the park. I would love to dream big, but I couldn’t see getting that type of lightening hitting twice.

    So, the issue becomes ‘can I use non-A-listers’ and still get a project financing which gets me in the black before principal photography begins?

    Or, do I see the problem incorrectly?

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  5. March 14, 2010

    Just found your blog, and I love reading about the topics you’re covering. But, I feel that though I grasp what you’re saying, it’s not as useful to me as I’d like it to be, b/c I’m producing a $600K (nearly $200K of that figure is for “launch money” on the sales/marketing/distribution end) American comedy-drama by a first-time feature writer-director (and I’m a second-time feature producer). So, many of the tools you’re talking about just don’t apply to something small like our project – gap financing, foreign pre-sales, being rejected by CAA. :) Do you have any pointers for maturing indie filmmakers and their financing options? I’ve been focusing on equity and a small state tax refund (small, b/c our budget is relatively small), and my motto’s been, “keep hitting the ball, keep asking.” BUT, I’m all ears and eyeballs if you have anything to add! Thanks.

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    • March 14, 2010

      @Lorie M,
      You’re very smart to set aside some launch money; this will give you a leg-up against the competition within your price range. You are correct in that at $600k, you’re pretty much resigned to tax credits and equity. But you won’t be excluded from any agency once you’re financed. Their clients aren’t working either — so they need the job, if you’re paying. Since this is a comedy-drama, you probably won’t have much VFX, so i would budget a relatively “big name” lead at Schedule F ($65k/week) and shoot them out in one week. This doensn’t have to be your lead actor, just your biggest star for your one-sheet/video box. Insofar as where to raise alternative capital, you might be able to get a post house to put in some equity against services rendered (pardon the pun.) Hope this helps.

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  6. March 17, 2010

    Jeff,

    I have been thoroughly enjoying your posts. Thanks for contributing to the community. With regards to your pre-sales comments above, I’d just like to add that a big reason for the drop in acquisitions is the growing popularity of local production in each of the territories mentioned.

    Being based in Japan, we are often tasked with market assessments and co-production counsel. Financing in Japan is alive and well, contrary to what many may think. And with Japan still reigning as the world’s 2nd largest marketplace for filmed entertainment (though China will soon overtake it), it would behoove many producers to consider content that appeals to this market; whether that be via sub-plots, casting or other key attachments.

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    • March 17, 2010

      @Daren,
      You are absolutely correct. The increase in indigenous/local production (a topic I will cover shortly) has had a significant impact on Hollywood. I’ve made several references to Japan having zero value on foreign sales estimates, and this is one of the principal reasons. This is good for Japan, not so good for US indie producers. Incorporating Japanese elements into indie productions is definitely one way for a producer to try to create Japanese value. Infamous indie producer Brad Krevoy’s model has always been to cast three foreign costars and then to create a one sheet for each of their respective territories that has that co-star front and center, with the others in the background. Try to be respectful of your audience — casting a “local” for the wrong reasons could backfire on you.

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