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Stampede of indie players coaxes profit from margins

Independents drafted to the big leagues

NEW YORK — Though you wouldn’t know it at the recent, largely derailed, Toronto Intl. Film Festival, there’s a seismic shift occurring in the specialty film arena, particularly among acquisition- and distribution-driven companies.

Suddenly shingles like IFC Films, Lot 47, IDP, Cowboy Pictures, Winstar, First Look Pictures, Artistic License, Kino Intl. and Zeitgeist are becoming serious players. And newer companies such as ThinkFilm, Content Film and Magnolia Pictures have entered the fray.

With conditions ever difficult for such micro-shingles –screen count is down, marketing costs up and the landscape littered with the rubble of failed endeavors like Shooting Gallery — the question remains: Why is the number of companies vying to acquire and distribute specialty fare actually growing?

The answer lies in a shift in emphasis by the larger players such as Fox Searchlight, Paramount Classics, Fine Line Features, Lions Gate, Miramax Films and Sony Pictures Classics.

Though each of these companies has not stopped buying pics (in fact, several were acquisitive in Toronto), each has moved squarely into producing its own films — a business in which most of the smaller shingles have less interest.

These micro companies delight in filling the gaps, acquiring pics passed over by their larger competitors. They specialize in finessing those pics into arthouse theaters with carefully targeted, grass-roots marketing campaigns.

The micros use a theatrical release as just a small piece of their profit pie.

In fact, a company such as Cowboy may acquire a film for as little as five figures, release it in several national markets, but turn a profit only by selling the film to vid and television.

In such cases, a theatrical release might not be profitable but helps legitimize the product and guarantee ancillary sales.

Clearly, the smaller shingles are in a different business, where the profit margin may not include a back end.

Sande Zeig of Artistic License says her company offers service deals in which her company will distrib a pic, take profits from a theatrical release, but allow the filmmaker to retain various ancillary rights.

“Ours is a profitable business, based on lower expectations,” says Cowboy co-founder John Vanco. “We don’t need movies with big crossover potential. We’re happy to be in the world where we can have movies gross half a million dollars and come out OK.”

The micros also are more likely to collaborate than are their cash-rich counterparts.

Independent Distribution Partners (IDP) was formed as a releasing arm for three shingles — Goldwyn Films, Stratosphere and Fireworks Pictures Releasing. This way, a pic acquired by any of the banners has distribution.

Cowboy’s Vanco says the shingle sometimes shares the price of an advertisement in the New York Times with Zeitgeist and Kino, since none of the companies can afford to advertise alone.

Micro-shingle toppers from Lot 47’s Jeff Lipsky and Manhattan Pictures’ Paul Cohen to First Look’s M.J. Pekos and Winstar’s Christine Katsoolis say all focus on a film’s particular qualities over the money needed to acquire it.

And Fireworks Pictures’ veep of acquisitions and co-productions Bob Aaronson offers a not-so-silent note of thanks — pleased that, as he puts it, “the big guns” are not chasing all the pictures anymore.

Still, all is not cooperation in the micro world. Zeitgeist co-founder Emily Russo, noting the competitiveness of the marketplace — particularly in Gotham, where most of the micros are based — stresses how important it is to find the right playdate for a pic.

And companies like IFC Films, and the newly formed ThinkFilm and Content Film, have their eyes on the larger prize. No less interested in the art of the cinema, they know that the way to grow is to produce, as well as acquire and distribute.

Founded by former Lions Gate execs Jeff Sackman and Mark Urman, ThinkFilm jump-started its operation by acquiring Toronto Film Fest opening-night pic, Bruce Sweeney’s “The Last Wedding.” But production is still on execs’ minds.

There’s a lot of room in the indie arena for a company that is expandable and contractible, to “take movies as wide or as narrow as they need to go,” Urman says. “We traffic in films that don’t get box office past midsix figures. But we’d like to be more muscular than that.”

For the right pic, ThinkFilm will cough up top coin, and Urman knows well from his Lions Gate days that a relationship with a breakout filmmaker can quickly raise ThinkFilm’s profile.

IFC has moved in a nontraditional direction, leaping from production to acquisitions and distribution (normally, production is a later step for emerging shingles).

A diverse company whose parent, Cablevision, has deep pockets, the Independent Film Channel was spun off from Bravo in 1994. Three years later, the cabler launched IFC Prods. and Next Wave Films, both of which finance and produce pics.

But it wasn’t until a little more than a year ago that IFC created an acquisitions and distribution arm, with IFC prexy Jonathan Sehring tapping Bob Berney to run it.

“We’re more aggressive in how we market and release our films,” says Berney, who emphasizes the synergistic possibilities within Cablevision.

While still nascent, John Schmidt and Ed Pressman’s Content Film carries with it a similar agenda.

Though they will start small, with roughly $15 million in equity and a commitment to digital production, there’s larger ambition in the plan: to find talented young digital directors whose work has breakout potential — potential that also may transform the shingle into a mobile player in a larger arena.

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