Neuer Markt financing doesn't flow as freely as it once did
At first they seemed like white knights, tooling around on these shores in BMWs, waving Deutsche marks at needy producers who had lost their studio gigs.
But for many of the upstart Germans — Helkon, Kinowelt, VCL, Intertainment, Advanced Medien — who planned to make it here in the film biz, the dream is gone.
So, too, are U.S. producers’ dreams of yet another easy, steady source of film finance.
Says one top indie producer: “The market was overheated, then it collapsed. It is all but impossible to put together German financing today.”
In all, the brash boys of the Neuer Markt infused Hollywood with more than $100 million in cash, and more than a billion in long-term production, distribution and rights commitments.
In the future, there will no doubt be some money available in Germany (particularly from congloms with strong content libraries), but it will come with strings attached: Deals will be tax-driven, dependent on subsidies — and there will have to be Teutonic content. Output deals are out and ad hoc film-by-film arrangements will be in.
Once the deals they struck with German partners fully unravel, U.S. producers like Gale Anne Hurd, Elie Samaha and Joe Singer will have to be that much more nimble on their feet.
In fact, in the wake of the German retreat, Hollywood as a whole may find itself greenlighting fewer projects per year, at lower budgets. And the major studios themselves may once again have to cough up more of the dough to make them.
Many of the quickie marriages between U.S. producers and German wannabes are already mired in litigious divorce proceedings.
Producer Singer is suing Helkon, Wolfgang Petersen is bickering with Advanced Medien and Franchise Pictures is caught up in a nasty legal tussle with Intertainment.
Others have simply decided to scale back their partnerships: Producer Mark Canton and Senator Films have just lowered the heat on their relationship so that it becomes “more sensitive and flexible” — a move that meant pink slips for all of Canton’s staff.
Still others have dissolved by mutual consent. Propaganda and Constantin Film ended their relationship early this year when Constantin’s Bernd Eichinger stepped down as chairman to become a producer, moving the company more toward generating home-grown product. Constantin also didn’t renew its deal with Paramount-based Mandalay Pictures.
Search for new banker
Producer Hurd is quietly seeking new sources of financing now that her erstwhile Teutonic partner, Kinowelt, is no longer paying her Valhalla Prods.’ overhead.
And Intermedia has put the German rights to its film slate back on the market after terminating an output deal with Helkon.
VCL is searching for new partners to share its costly pacts with Francis Ford Coppola and Woody Allen, while New Line has taken back German rights to “The Lord of the Rings,” fearing that the German company couldn’t make its payments, and passed them on to parent Warner Bros.
In short, the days of the Teutonic tie-in are over.
“The key now is that producer deals will not be indiscriminate anymore,” said Rob Moore, a partner in Revolution Studios.
“As opposed to being able to get a big paycheck upfront, now it’s going to be the reverse. People will only be able to get money after they come up with a great idea that someone is excited about financing.
“From a studio and financier standpoint, this is a healthy change for the business. You only pay people when they deliver,” Moore concluded.
Added Radeel Reda, U.S. prexy of production at Winchester Films: “I think the producers will have to take deals for a lot less capital. Studios will pick up a couple of deals, particularly those that are consistently performing. Indie companies will pick up the slack, but not at the level that the producers were used to.”
A few U.S. producers are blunter in their assessment of the situation.
“I was successful getting movies made at the studios,” said one angry U.S. producer. “I wonder whether I shouldn’t have stayed at the studio system rather than gone down this road. I feel I was screwed over and wasted a lot of time in the process. The Germans rescinded our deal at the time that it was almost done.”
And the Germans have their gripes as well.
Said Philip von Alvensleben, co-prexy of Myriad Pictures, which is owned by Germany’s In-Motion: “What’s for sure is that everything is coming back into perspective. I hope that the U.S. will return to carrying more of the negative costs. They have had it too easy for too long and it’s not good.”
Some of the Germans were, of course, naive in their approach to Hollywood. They expanded in Tinseltown too quickly, they overpaid for theatrical rights, they depended too much on too few producers and they gambled that they could sell off TV rights in the highly competitive German TV market, so tightly controlled by Kirch and Bertelsmann. For those that were publicly listed, the crash of the hot German Neuer Markt exchange did the rest.
Most of these cash-strapped companies are now likely to refocus on their home country and only pick up rights to U.S. films on a pic-by-pic basis.
Despite the mutual recriminations, a few of the relationships between Hollywood producers and German film outfits continue to thrive. But most of those that do are based on a distribution rather than a production model. Spyglass, for example, enjoys an output deal with Kirch, but does not depend on Deutsche marks for equity.
Among the production-based relationships that are working are Revolution and Senator, though two of the resulting releases — “America’s Sweethearts” and “The Animal” — have preformed subpar in Germany.
Ashok Amritraj and David Hoberman’s Hyde Park pact with Kirch also appears to be clicking, having resulted in three pics — including “Anti-Trust,” “Original Sin” and “Bandits.”
And perhaps one of the most recent pacts — that between vet producers Arnold and Anne Kopelson and Intertainment — may point the way for future partnerships with German companies.
Though no films have yet resulted in the 10 months the companies have been aligned, several are in active development at Paramount, where the Kopelson shingle has its deal. The two pics a year mandate stems from a consistent dialogue between producer and financier.
“I was saddened to see some of the other companies fall apart,” Arnold Kopelson said. “But the fact that Anne and I, and our staff, have such a long and good relationship with Intertainment’s Barry Baers and Steven Brown will ensure that this one works. You have to be very selective in the projects that you choose to make.”