A New Dawn for Indies

October 28, 2009 World Screen

This article originally appeared in the AFM ’09 issue.

The financial crisis of 2008 did more than spark a series of controversial bank bailouts, shut off credit spigots, cripple the advertising market, and set off the biggest economic downturn since the Great Depression. 

It had a strong impact on the independent-film community. With less money available to finance production and with buyers having much smaller acquisitions budgets, indie producers and distributors have to focus on the fundamentals of the business: making affordable movies that buyers want to acquire and viewers want to see.
 
Getting back to basics will be an underlying theme at the American Film Market (AFM), where everyone agrees that this year will be a buyers’ market. International buyers have always been selective—now they are pickier than ever. Lack of funding in the market has led to consolidation, as several companies have had to close shop—not necessarily a bad thing for the indie industry as a whole. Jonathan Wolf, an executive VP of the Independent Film & Television Alliance (IFTA) and managing director of the AFM, saw this coming for quite some time.
 
“Last year I said there were too many films and too many companies,” states Wolf. “If the liquidity crisis [had not taken] place, the marketplace would have pushed out a number of companies, because you can’t double the amount of films that are being made and expect the consumer to watch them and spend money on them. We expected this bubble—and that is the best word to use—in production to burst. We didn’t know what would cause it, none of us knew that it would be the credit crunch, but the bubble had to burst because supply and demand were out of balance and needed to be realigned.”
 
As a result, Wolf expects a slightly smaller AFM this year. “We will see about 20 percent fewer films screening this year compared to last year, and that will bring us back to the level of 2004, which is probably where the industry needs to be,” he says. “And we will see about 15 to 20 percent fewer companies, again, back to the levels of 2004.”
 
For Wolf, this readjustment is long overdue. “During the last ten years we had more money coming into the industry than at any period in time. We had the dollar reaching all-time lows, so exports should have been high. We had soft money from tax subsidies from all over the world. Cultural subsidies were at an all-time peak. There was money available through hedge funds and through wealthy investors, the presales market through the early part of the decade was still healthy. This should have been a renaissance period for the indie film sector. Yet we’ve heard for the last three or four years the woes of the industry. And this is really because what makes the industry successful and profitable is not the access to production financing, but it’s a balance of supply and demand tied to great filmmaking. You can never leave out the fact that the product has to be good.”
 
Wolf’s hope, which is shared by many, is that consolidation will weed out the less good and make room for quality. “Maybe producers will be more careful and produce better product,” says one distributor, who prefers to remain anonymous. “Instead of throwing films out there and hoping they will fly, they might actually seek some advice from distributors before they produce. We had so much before. I would like to see less product and of higher quality, just as the buyers would. Maybe before it was just too easy and now only dedicated filmmakers with credentials will be able to raise money.”
 
Given the positive moods at the Toronto International Film Festival and at MIPCOM, distributors are starting to see signs that the worst of the economic downturn has passed.
 
“As the world economy slowly improves, we are seeing some uptick,” notes Robert Halmi, Jr., the president and CEO of RHI Entertainment. “Prices have been a little down but activity is picking up.”
 
“In general, you can see that the loss of advertising revenue has really impacted how aggressive the buyers are and what they look for,” says Gavin Reardon, the head of international sales and co-productions at Incendo. “They are basically acquiring what they really need and paying just what they have to pay to get it.”
 
SILVER LININGS
One relatively peaceful island in the turbulent sea of independent filmmaking is the TV-movie business, where demand is on the rise and the presale financing model takes a lot of risk out of production.
 
A case in point is RHI Entertainment. The company, as Halmi, Jr. explains, is seeing “demand picking up, especially in Spain, the U.K., Italy, and France. We sell our product before anything is produced, so it’s financed through presales.”
 
Gene George, the executive VP of worldwide distribution at Starz Media, is also upbeat about the TV-movie business. “We are definitely seeing some positive signs for next year, and the reality of it is, it really all depends on your content. If you’ve got content that works for the marketplace and that buyers want, it’s still a really healthy environment.”
 
“In Europe there are a lot of TV-movie slots,” says Jens Richter, the managing director of SevenOne International. “In Spain, Telecinco has a weekend movie slot, in France every afternoon you have TV movies, and sometimes even in prime time. Large broadcast groups run them a couple of times on their premium networks, like M6 or TF1, and then on their secondary digital channels, like W9 and TM6. There are also TV-movie slots in Germany, Italy, and Central and Eastern Europe. It’s a very healthy model.”
 
“There still definitely is a demand for TV movies,” concurs Prentiss Fraser, the VP and head of sales at E1 Entertainment. “Broadcasters are getting a lot more specific about the genres that are working for them. With the competitive environment we have right now, they are really honing in on what their audience is looking for.”
 
The key to success in the TV-movie business is offering genres that broadcasters want. “We target movies that can play in the right slots, which right now are late afternoon and post–prime time,” says Starz Media’s George. “Typically those are action films or disaster films or the female thriller films, which can play post–prime time.”
 
Movies featuring empowered women are a big sell on both sides of the Atlantic. “Female-skewing movies, especially those being made for cable channels in the U.S., primarily Lifetime and Hallmark Channel, have found a place in the international market because of the quality of these movies,” says Fernando Szew, the CEO of MarVista Entertainment.
 
“Plus, these cable channels have a very clear target audience that matches the target of certain international broadcasters,” continues Szew. “In addition, it’s now been a few years that the female-targeted movies—either females in a position of power or the more traditional romantic comedies—have found an audience and an easier time to clear more territories than they used to.”
At AFM, MarVista will have a slate of movies, including the thrillers House Under Siege and Crimes of the Past, as well as romantic comedies such as Tricks of a Woman.
 
“The Lifetime thriller is any salesperson’s favorite movie,” says E1’s Fraser. “I wouldn’t say it’s a slam dunk, but it’s well received internationally.” E1 is bringing a variety of films to AFM, including thrillers and dramas such as The Courageous Heart of Irena Sendler, Absolution and Cradle of Lies.
 
“We have a real sweet spot in that the type of product we are producing—the female thrillers—appeal to a broad audience,” says Incendo’s Reardon. Incendo is bringing several to the market, including Equity, Second Chances, Web of Lies, Ring of Deceit and Hidden Crimes. “Over the next 16 months we will be delivering a total of 11 films, and that’s something that the buyers are really excited about—having a consistent supply of product that really works for them.”
 
FEMALE PERSUASION
Projects featuring strong, empowered women are driving TV-movie production in Europe as well as in the U.S. SevenOne International has recently had good results with The Night a Village Vanished, based on an actual event in 1961 when all the residents of a village in East Germany decided to flee to the West rather than give their land to Communist authorities. “This movie is a female thriller because it’s a woman who has the idea to escape, it’s a woman who does the dangerous stuff, and the antagonist on the Stasi side is, of course, a woman,” notes Richter. “The movie got a 20-percent market share on Sat.1 in Germany, when Sat.1 normally averages an 11-percent share.”
 
SevenOne is working on another female film, The Whore, based on a bestselling German novel. “That started production in Hungary. It is a German, Austrian, Hungarian co-production, with a French co-financing partner, and we added some gap financing,” says Richter.
 
Vision Films is also distributing a co-produced film. “Bathory, starring Anna Friel as the infamous countess, history’s most beautiful and prolific vampiric serial killer, is a Hungarian-Czech co-production shot in English,” says Lise Romanoff, the company’s managing director of worldwide sales.
 
Co-productions are not the only way of financing TV movies—the most common is through presales. “We combine presales with soft money and tax incentives and try to shoot in locations that give us the most bang for our buck,” says Christian Mercuri, the president of international sales and distribution at Nu Image. Among the company’s new titles are the drama Trust, starring Clive Owen, and the action-adventure-fantasy Conan.
 
Companies based in Canada, such as E1, can take advantage of various government subsidies. “The Canadian model is probably different from other international models,” says Fraser. “We are quite fortunate that we have the government to help support the financing of our projects. But a lot of times these come to us with existing television licenses or existing funding and we will just deficit-finance the rest of the production in order to complete the financing on the project.”
 
Starz Media produces between 10 and 12 TV movies a year and makes use of output deals. “I like to set up output deals because I want to give the company the confidence going in that a certain percentage of the budget is already covered,” explains George. But in today’s climate, with broadcasters being ever more selective and competitive, the key to a good output deal lies in including the right kind of product.
 
“I have a pretty good sense about coming up with content that is going to work for broadcasters and that is going to fit into those deals, because even though they are output deals, they are only for certain types of content,” says George. “If we do a TV movie that is a western—which is very likely for Starz because we have the DVD distributor Anchor Bay Entertainment and for DVD in the U.S. the western is a great property—we could sell it to Hallmark or any other of the cable platforms, but international broadcasters are not looking for westerns. So I have to structure output deals that make sense for international broadcasters.”
 
Among Starz’s offerings at AFM are the family feature The Dog Who Saved Christmas, the disaster feature Megafault and the thriller Blue Seduction.
 
RHI Entertainment is also bullish on output deals. “Packages and volume deals are doing well overall,” says Halmi, Jr. At AFM, RHI is focusing on Alice, a re-imagining of the Lewis Carroll stories, and The Phantom, both for Syfy, as well as the female-skewing Lifetime mini-series Everything She Ever Wanted and the two-hour movie Too Late to Say Goodbye, both based on Ann Rule novels.
 
TRYING SOMETHING NEW
There’s no doubt, money is harder to find and buyers are more selective than ever, so distributors have to find different ways of serving broadcasters’ needs and reaching new audiences.
 
Vision Films has successfully branched into documentaries and bio films. It has two Michael Jackson specials, Michael Jackson: Unmasked and Michael Jackson: History The King of Pop. These were in the works before Jackson’s death this summer and have since sold around the world. A third one is currently in production called Who Killed the King of Pop?
 
Other companies are branching out into the production of series. MarVista has already had considerable success with Beyond the Break and is developing more series. So is RHI Entertainment. “We are actively developing new original series,” says Halmi, Jr. “We recently opened an L.A. program-development office to increase our presence in this regard. In addition, some of our movies and mini-series are also serving as backdoor pilots.”
 
Incendo, too, is on the lookout for co-production projects. “We are looking for partners to work with on television series, specifically pay-TV series,” says Reardon. “We are very actively looking at projects with different producers attached, and it is our goal within the next six to eight months to have two TV series.”
 
SevenOne International is looking for ways to broaden the appeal of its product. Together with the German commercial station ProSieben, it has created a new genre of TV movies for the European market—the mystery movie. The first, Gonger, scored an 18-percent share for ProSieben, when the station’s average share is 11 percent; it also performed well on Antena 3 in Spain.
 
“We are coming out with three more mystery movies, including Gonger II,” says Richter. “And we started shooting a mystery with ProSieben, this one in English. There are some German actors, but the female lead is English, as is the majority of the cast, because we want to see how we can extend the reach of our movies by shooting in English. We have to think of new ways. Channels love these kinds of movies, but you still have to finance them in a period of time where money is a little bit harder to get.”
 
Getting back to the basics of financing product that fits the specific needs of broadcasters is the way forward for independent producers and distributors.