More filmmakers turn to theatrical service deals

With traditional U.S. theatrical acquisition deals nearly non-existent of late, industryites are turning to do-it-yourself alternatives. Why wait for a paltry minimum guarantee and little chance of overages when there are DIY examples such as “The Passion of the Christ” and “Bella” to point to? That’s the thinking behind the flurry of filmmakers who are taking control of their own theatrical rollout and the increasing array of companies that have stepped up to enable them.

With most studios as well as mini-majors Lionsgate and MGM releasing films for distribution fees, and the innumerable partnerships involving smaller distribs or bookers, the straight pickup deal is a rare breed these days. At the same time, the “service deal” is no longer a dirty secret but a basic reality of the release biz.

For indies, the model appears to be working, particularly with niche titles — such as those targeting faith-based audiences. Successes this year include Rocky Mountain Pictures’ handling of docu “Expelled: No Intelligence Allowed” ($7.7 million), Roadside Attractions’ 2007-08 release “Bella” ($8.1 million) and Vivendi Entertainment’s collaboration with Mpower Pictures on “An American Carol” ($6.8 million).

If there’s any doubt that new filmmaker-driven distribution is heating up, Freestyle Releasing’s fourth-quarter films should offer solid proof. Headed by Mark Borde, who says he prides himself on “inventing the service deal,” Freestyle is set to take out “The Haunting of Molly Hartley” on Halloween on 2,000-plus screens, and will follow-up with another wide rollout in December of “Delgo,” an animated pic written, directed and produced by Marc Adler.

“We’ve quadrupled our business in the last four years,” Borde says. The company handles about 20 films annually, from “Bottle Shock,” an indie comedy that recently grossed a healthy $4 million, to last year’s Korean sci-fi epic “Dragon Wars” ($11 million).

If outsiders believe certain service providers will take on anything for a buck, Borde says he turns down films “90% of the time,” adding that he gets some 20 unsolicited offers every week. “Because I’m competing with the studios, I have to present a film with theatrical quality that my exhibiting partners believe will gross in theaters.”

While fees range dramatically, based on size of release, number of cities, P&A costs, etc., Borde says Freestyle is more affordable than the studios, which charge some $1 million to $1.5 million, plus a significant percentage of net proceeds, for a serviced rollout.

Borde also touts that producers will pay far less on P&A (in the $10 million-$15 million range) than what a studio would require on a similar wide release. Plus, he claims, participating producers will receive “theatrical revenue infinitely faster than going through a studio.”

Vivendi Entertainment, which offers a range of distribution options including rights acquisitions with minimum guarantees as well as more straightforward service deals, is catering to filmmakers who want to have greater control of their films in release.

“We give producers a level of financial transparency that the studios don’t really give,” says Vivendi prexy Tom O’Malley, pointing to the company’s monthly — as opposed to quarterly — earnings reports. “We have a very collaborative process. Whether producers are putting up the P&A or not, they’re very involved. And since we don’t own the films in perpetuity, the rights revert back to the producers earlier. Many of them come to us and say, ‘I’d really like to own my films.’”

Former First Look exec MJ Peckos, who started Mitropoulos Films in 2006, agrees that producers are now “realizing to sell their film and lock it up with someone for 15-20 years and have no control is not necessarily the way to go.”

For example, Peckos is arranging the second-stage rollout on Sundance darling “Ballast” for filmmaker Lance Hammer, who decided to orchestrate his own release after realizing his IFC Films deal would give him less control and options.

In addition to American indies, Peckos is expanding her business to include films from foreign-based companies, such as Mexico’s Gussi Films, for which she’s handling Argentine pic “Elsa & Fred” and “La Zona.”

Like former ThinkFilm exec Dylan Marchetti — who recently launched Variance Films to fill the gap left by shuttered distribs and to help filmmakers launch targeted, grassroots campaigns — Peckos is generally working on smaller releases than she did in the past. She now has six-figure P&A budgets or less, but Peckos says the model allows her to be “more creative” than when she was working for a larger operation. “And I think we’re getting the same results,” she says.

“The service deal can really embolden distributors to try new things,” agrees Roadside Attractions’ co-topper Eric D’Arbeloff.

For example, Roadside — half its slate now consists of service deals — transformed the release of federal-deficit docu “I.O.U.S.A.” into a one-day economic conference, complete with a live-feed post-screening Q&A with Warren Buffet and the film’s well-funded backer Peter Peterson of the Blackstone Group. “Releasing docs has been pretty grim, and we knew we had to reinvent it,” D’Arbeloff says. “I don’t know that’s a route we would have gone with our own money. But I think it really paid off.”

Distributors and consultants acknowledge that adapting to new technologies and moviegoing habits is absolutely necessary going forward. But, as D’Arbeloff notes, “We’re still at the stage where a movie isn’t real if it hasn’t been released in theaters.”

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