Independent distributors around the world are facing an ever tougher fight to defend their turf from major studios keen to capitalize on the rising tide of international box office dollars.
Not content with dominating the global market with their own blockbusters, the Hollywood majors are becoming increasingly aggressive about cherry-picking the best indie pix for release in the most lucrative foreign territories.
That’s bad news for local distribs. Such films, produced outside the studio system and sold worldwide by foreign sales agents, are their lifeblood, and they can’t afford to let them ebb away to the majors.
Caught in the midst of this battle are the international sales companies, which increasingly find themselves having to weigh the merits of rival bids for foreign rights from indies vs. majors.
It’s a complex calculation, and cash upfront is just part of it. Indies are often bolder than majors in their bidding, but the majors can offer to take whole chunks of the world in one swoop.
The majors have powerful distribution machines in the big foreign territories, but the best local indies – companies like Entertainment in the U.K., AMLF and Bac in France, Lauren in Spain – offer street fighter qualities and a detailed knowledge of the local terrain that many producers believe the majors can rarely match.
These are vital advantages in their guerrilla war against Hollywood’s heavy artillery.
Variety interviewed many of the leading sales companies attending this week’s Cannes Film Market, and most confessed to mixed feelings about the majors’ growing interest in buying their films.
On the one hand, new buyers are always welcome – particularly such powerful ones, and especially after a period when the number of viable independent distribs has shrunk significantly in some key countries.
On the other hand, the sales companies are “indies” themselves, and as such they are uneasy about helping the Hollywood studios increase their power and market share at the expense of indie distribs.
The need is there
Many argue that it is in their long-term interest to ensure the survival of a healthy independent distribution sector worldwide. “We desperately need the indies,” says Michael Ryan, co-chairman of J&M Entertainment.
In an ideal world, most sellers say that they would still prefer to take their films down the independent route.
The Sales Co.’s Carole Myer says she deflected Disney’s inquiries about European rights to “Priest” when Miramax picked up North America. “If I don’t keep the indies in business when I have something people want, how are they going to be around in the future?” she argues.
“We want in the first instance to do deals with the independents if we can,” says Film Four Intl.’s Bill Stephens. “We give the indies the first right. There’s nothing in the business for them if you take away the cream.”
But above all, sellers are after the best deal for their film in each territory, and sometimes that means going with a major. Miramax, for example, sold “Pulp Fiction” to Buena Vista in three territories and to local indies in 10 others. ‘There is an ideal distributor for each film,” says Ian Jessel, former head of foreign sales at Miramax.
Buena Vista and Columbia TriStar are the most aggressive international buyers among the majors, although Warner also picks up its share. Fox is coming up hard on the rails under Bill Mechanic, who has brought his globalist sensibility with him from Disney. Sellers report that these days Fox virtually will not discuss buying U.S. rights unless the U.K. and Australia are offered as part of the deal.
Even sales companies with films too arty to get a studio release in the U.S. report growing interest by the majors over the past 18 months in picking up selected international rights to their pics.
Fox, for example, took most of Europe for “An Awfully Big Adventure,” which will be released stateside by Fine Line. Disney stepped up for Ciby’s “Muriel’s Wedding” in the U.K. when the indies were dragging their feet, and did boffo business.
The major advantages
The advantages of distribution by a major are obvious. “If you have a film that could be big, they have the muscle, the access to screens and incredibly good ancillary deals,” says Jane Barclay of Capitol Films.
There’s also a certain appeal to selling several territories in one hit, cutting out the hassle of haggling with a dozen separate companies of variable quality. J&M sold Sony worldwide rights to the low-budget Brit thriller “Mute Witness” for exactly the sum it had estimated getting by selling every territory separately. The fact that the film was by a first-time director, and the Sony deal guaranteed a U.S. release, were important factors in J&M’s decision.
“If the numbers are good, then I can understand taking the easy way out. Getting out of the red and into the black in dollars, right away,” Jessel says.
Nonetheless, the majors remain very choosy about what they buy, and even when they do make an offer, sellers argue that there can often be good commercial reasons for sticking with the indies.
“With the majors, you’re swimming with the sharks,” says London-based marketing consultant Paul Brett. “Your film will be well marketed, but it will never, ever get preference over their own stuff. If you have a company like Entertainment in the U.K., which is well-financed and knows the business, you’re definitely better off with an indie. You get the minimum guarantee, honest returns and the commitment to marketing.”
Sellers say that despite their financial might, the majors are often rather conservative in their bidding for the biggest pics. Indies regularly offer more, and they offer it earlier. Pre-selling is the lifeblood of independent production, but majors rarely pre-buy.
It is also hard for sellers to build long-term relationships with majors: “You can’t package with a studio, whereas with an indie, if they want your big film it often comes with baby brothers and sisters,” says Polygram’s Graham Mason.
Negotiating with a major can be a laborious process, dragging on for months – no scribbling deals on the back of a napkin here. “They’re the same negotiating for one small territory as they are for North America,” says Barclay. That sometimes involves demanding terms and conditions that are simply inappropriate for a foreign territory.
Sellers particularly dislike the majors’ penchant for cross-collaterizing their multiterritory acquisitions. This means that profits in one country are offset by losses in another, thus reducing the producer’s chance of overages.
Majors normally do their international buying through acquisitions execs in Los Angeles. This means that the person who loved the film enough to pay cash is not the same as the person who will actually release it.
The indie edge
Under these circumstances, indie films can get lost in a major’s crowded release slate, whereas indie distribs with fewer pics tend to give them the personalized care they need. The best indies have an intimate understanding of their own local audiences and media, and they have more at stake.
“Bullets Over Broadway” was a case in point, according to Jessel. This was the first time indies got a crack at a Woody Allen movie, and they pulled out all the stops. Many managed to penetrate the provinces with the film, whereas the majors had previously stuck conservatively to the large urban centers.
“Four Weddings and a Funeral’ undoubtedly did better on the independent circuit than if it had gone with the majors,” argues Graham Mason. “All the distributors worked so hard because they saw it was their big chance. For someone like Disney, a $1 million profit is nice, but for an indie it means survival for two years.”
With honorable exceptions, international marketing by the studios tends to be a blunt instrument – a question of volume and muscle, rather than subtlety. On their own studio releases, the Hollywood head office dictates marketing strategies, release dates, posters, trailers and even the title of a film in the local language, so that doesn’t give local execs much chance to develop their own skills.
“The best reason to go the independent route, particularly with more specialized titles, is that indies are more experienced at dealing with a variety and diversity of films than majors are,” says Peter Rogers of Chrysalis Films Intl.
That said, some of the majors’ local subsidiaries have an outstanding reputation among sellers. Buena Vista in the U.K. is a shining star, blending the muscle of a major with the indie sensibility imported by managing director Daniel Battsek from his days at Palace.
Of course, the big question mark against the indies is always financial. A major distributor will not go belly up overnight, or refuse to pay its bills, and that’s an endemic problem among indies in territories like Spain and Italy.
That’s where the seller simply has to know the market – most countries have a fair selection of well-funded, honest indies, and these tend to be more open about their accounting even than the majors, which tend not to like outsiders nosing into their books.