Distributors grab arthouse titles on fest circuit

Back in April 2007, as a prelude to the proposed merger of her Paris-based sales company Celluloid Dreams with Blighty’s HanWay Films, Hengameh Panahi pronounced the business of festival films dead.

It was quite an admission from the reigning queen of arthouse sales, and it sent shockwaves through the sheltered world of foreign-language auteurs, whom Panahi had loyally championed for decades.

“We can’t anymore carry these small movies,” Panahi said at the time. “I feel I’m hurting my distributors by tempting them to go with these festival films, for which there’s no economy today.”

Yet as it turned out, the Celluloid/HanWay marriage was never consummated, and Panahi has continued to handle the same festival fare as before, unable to say no to the filmmakers who have come to depend on her. A year later, judging by the level of dealmaking at what was generally regarded as a dreary Cannes, arthouse sales are still kicking — though whether that’s a sign of life or a death spasm isn’t clear.

“The festival community is changing and separating from the market,” says Celluloid’s marketing maven, Gordon Spragg. “There’s a whole world of people going to festivals with films that do the rounds, pick up awards and take their screening fees but never get sold.”

A prime example might be Lance Hammer’s Mississippi suicide drama “Ballast,” which won three prizes at Sundance and screened in competition at Berlin, but which Celluloid has only managed to sell in a handful of territories. Hammer ultimately pulled out of a domestic distribution deal with IFC.

“Buyers are more and more cautious,” Spragg says. “There’s a recession and the uncertainty over video-on-demand. At Cannes, people complained that there wasn’t much new product, but that’s because the old stuff hasn’t shifted.”

“There are films that are never bought by anybody but trickle around from festival to festival,” agrees arthouse distrib Robert Beeson. “If a sales agent has six films in a festival, three will never get sold.”

But the other three will — and that explains why sales agents and distribs alike still soldier on in the optimistic belief they can make a living from such commercially uncompromising material, if only they can exercise enough care and judgment about which films they select.

Beeson and his partner Pam Engel are living proof that hope springs eternal in the arthouse biz. They spent three decades building Artificial Eye into the U.K.’s premier foreign-language distrib but left the company last fall after selling it to Curzon Cinemas in a consolidation that reflected the increasingly tough times in the pure arthouse trade.

Yet Beeson and Engel barely took a breath before they plunged straight back in, launching New Wave Films in February and prebuying the latest movies by the Dardennes brothers (“The Silence of Lorna”) and Nuri Bilge Ceylan (“3 Monkeys”). “We probably paid a bit over the odds,” Beeson admits. “It was a deliberate thing to say we’re back.”

At Cannes, Beeson and Engel bought “Tulpan,” “24 City,” “Adoration” and “A Christmas Tale,” while Artificial Eye took “Waltz With Bashir,” Palme d’Or winner “The Class,” “Il Divo,” “O’Horten” and “Ashes of Time Redux.” There was also competition for fest titles from a slew of established and new distribs, including Optimum, Eureka, Halcyon and Revolver.

Clearly there’s more of a business here than meets the eye.

“It’s not a huge business, it’s a small business, provided you keep your costs down,” Beeson explains. “When we started New Wave, we thought we’d do two films a year, but then we couldn’t stop, and now we’ve got 10. Everyone gets a bit carried away with festival fever. Buying is easy, releasing them is the tough part.”

Louisa Dent, who followed Beeson as m.d. of Artificial Eye, says: “The business is driven by passion, but there is a model that works. On the whole, you try and recoup and make a small sum, and feed your library of DVDs, and you always have the belief, the hope, that you will find something that crosses over and takes off, like ‘Hidden’ or ‘The Lives of Others.’”

For Dent, festivals remain the key launchpad for the arthouse sector. “Our films are press-driven, and the press starts at film festivals.”

The prospect for such breakout hits seems to have improved dramatically in the past couple of years, with more specialized pics than ever breaking the $2 million B.O. barrier, attracting a slew of feisty new microdistribs into the arthouse end of the business.

Even the post-Cannes collapse of Tartan Films hasn’t cast a chill. That’s seen as a specific case of a company succumbing to its own long-standing administrative failings (“Prudence wasn’t exactly their watchword,” Beeson offers) rather than indicating any endemic weakness in the sector. That analysis is borne out by the number of companies now competing to pick up U.K. rights to Tartan’s library.

The story in other major territories is less upbeat. One leading arthouse seller describes the scene thusly: “In Spain, there is competition, but the market has come down a lot in value. Italy is really difficult at the moment, France is OK, Germany is so-so, Japan is still tough, and the USA is a nightmare.”

Stefano Massenzi of Italy’s Lucky Red points out: “In Italy, unlike in the U.K., a lot of distributors have been working hard to build this market for 20 years, so you cannot say there’s more interest now. It’s the same as always — just a few films make it to a large audience, a few to a nice audience, and most don’t make it at all.

“Television is no longer there in Italy — the TV buyers are more picky, so we are more picky,” he continues. “With space on TV limited, the increasing cost of promotions and the fact that just a few make it at the box office, you have to be extremely selective about what you choose.”

“What is doing really well is arthouse, but lighter — films like ‘Irina Palm,’ ‘Caramel,’ ‘Couscous,’ ‘The Lives of Others.’ People want to be entertained, uplifted, but in an intelligent way.”

That’s not always the agenda for festival directors, who often seem uneasy with the more crowdpleasing end of the arthouse spectrum. “The Lives of Others,” notoriously, never played at a major European festival. If many “festival” films go unsold, perhaps it’s because the fests themselves have lost touch with what intelligent, upscale audiences will pay to watch in the theater.

Meanwhile, in an attempt to answer the conundrum of what to do with the mountain of unsold films, Celluloid Dreams has joined forces with the Auteurs, a U.S.-based Web venture billed as an “online cinematheque.” The hope is to build a global community of passionate cinephiles around movies that otherwise would never get seen outside the fest circuit. It would be some irony if the future of art cinema turns out not to be in the cinema at all, but in the home and on the Web.

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