NEW YORK — Sometime in the early ’90s, I attended the Cannes film market for my then employer, the late and semi-lamented Carolco Pictures.That year, I participated in a Variety roundtable concerning the fate of the independent film business. The estimable Peter Bart, chairing the discussion, opened with a confession: He pointed out that Variety regularly ran stories detailing the imminent demise of the indie film biz — hardly an unreasonable point of view during that epoch. “Imagine my surprise,” I recall Bart saying, “when we arrive in Cannes each year and find 10,000 movies of which we were blissfully unaware being bought and sold.” Well, the 10,000 figure might have represented a bit of literary license on Bart’s part, but he probably wasn’t far off. The enduring mystery is where do these movies come from, who pays for them, and — most mystifying of all — why? Such stellar names of yesteryear as Vestron, Weintraub and, yes, Carolco have produced more work for bankruptcy lawyers than for film directors over the past decade. Yet they have been replaced by legions of others hoping to eke out a living making movies. I’m not talking about distributors. People who distribute films are, at least in theory, undertaking an economically rational activity. It is the people who finance the hundreds of movies made each year without assured distribution whose sanity must be questioned. About a month ago, Variety headlined the grim statistics coming out of the arthouse market this year. The article delineated a marketplace awash with product and nearly devoid of ticket buyers. So far this year, an extraordinary 250 films had generated an ordinary $185 million in total B.O., an average of less than $750,000 per pic. And that’s for those pictures that find a distributor! Understanding where the moolah came from to make those hundreds of movies which never find a distributor is my modest goal. Welcome assistance in this task arrived in the form of a recently published book, “The Biz,” by my old friend Schuyler Moore, entertainment lawyer at Stroock & Stroock & Lavan. “Most films lose money!” he begins, pointing to “a wild oversupply of film productions — 600 to 700 per year,” of which only about “200 or so obtain even a decent release, permitting any return at all, much less a profit.” Indeed, most of those 200 movies are owned or at least controlled by the studios. “The Biz” goes on to explain how the film industry continues to confound the normal rules of supply and demand by which other more mundane businesses must live. So, what drives the biz? In a word, “sex.” By this Sky generally means “sex appeal,” but he certainly doesn’t exclude sex itself as a motivating factor for hundreds of millions in risk capital flowing into a business with a track record that gives uranium mines a good name. And where does the money come from? The biggest single source is the distributors themselves, whose contractual agreement to distribute the completed picture causes otherwise rational bankers to lend real money against those contracts. “Tax shelters,” entirely foreign these days, come in or out of vogue, depending on which countries’ revenuers are asleep at the switch. “Friends and family” represent a surprisingly large source of capital. Last, and perhaps most telling, are simply rich guys (women have a greater respect for money) who have made a killing in some booming, but much more boring, industry. Twenty years ago it was real estate. More recently it was the leveraged buyout crowd. Still more recently, Internet geniuses have provided what is for them “fun money” but is the vital equity that permits such deathless epics as “He Died With a Falafel in His Hand,” “Traveling Bowls of Soup,” “Wind With the Gone,” or “Artie” (“a college boy with an uncontrollable gas problem chases the woman of his dreams”) to appear at this year’s Mifed film mart. I swear I have made none of this up — they are all completed features for which, I suspect, distribution rights are available. Will financing for indie features at some point dry up? When asked this question years ago at that Variety symposium, I answered that indie financing will have dried up when someone makes $100 million in the movie industry, then decides to move to St. Louis and start a wholesale plumbing supply business. That opinion still holds.
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