Economic crisis squeezes mid-budget projects

As the first snowflakes fell toward the end of what had been an unusually mild Berlinale, departing film execs were taking some reassurance in the knowledge that at a time of global financial turmoil, the right projects were still generating healthy interest from buyers.

More worrisome, however, is the road ahead for producers and sales agents trying to raise financing and do business on mid-budget projects with no major stars attached.

The market for U.S. projects with a budget of $20 million-$45 million and international projects budgeted at $4 million-$8 million is shrinking.

Minimum guarantees are coming down, collecting monies owed is harder than ever in some territories, and the business model of financing through pre-sales is becoming increasingly outdated.

For those with starry projects, however, the dividends are still high. But Berlin’s European Film Market was most notable for its lack of significant sales for the U.S.

GK Films scored strong sales for its Johnny Depp starrer “The Rum Diary” and its Keira Knightley-Colin Farrell pairing “London Boulevard.” Shingle was also expecting to secure a domestic deal for “The Young Victoria” after a well-received Berlin market screening.

Similarly, French mini-major StudioCanal rolled out a number of deals on Liam Neeson starrer “Chloe”; Pathe Intl. clinched major territory deals on Brit helmer Neil Marshall’s “Centurion,” which is also the next project from “Slumdog Millionaire” producer Christian Colson; and Icon Entertainment inked some significant territory deals on animated pic “Mary and Max.”

Magnolia acquired U.S. rights to Thai martial arts star Tony Jaa’s “Ong Bak 2,” bringing to an end a protracted episode that first began in 2006 with the Weinstein Co. pre-buying world rights, excluding Asia and the U.K., in a deal worth north of $10 million. (TWC ultimately spent the next few months giving those rights back to Thai film company Sahamongkolfilm.)

It was precisely that kind of headline-grabbing deal that was absent from this year’s EFM.

That Harvey Weinstein arrived in Berlin with no new projects to announce, sell or acquire was indicative of a market that had a little steak but not much sizzle.

“There weren’t enough projects that were really moving the market, but we did some good business, and I’m actually more positive post-Berlin,” said Paramount Vantage Intl. sales prexy Alex Walton, who was reportedly close to securing a number of major territories for titles such as “The Crazies,” “Ondine” and “13.”

A common theme among both buyers and sellers was the polarization of the market. High-profile fare will always find a home — increasingly so as the product pipeline dries up in the coming months — and niche, low-budget fare will also still sell at the right price.

“The middle ground is not where you want to be right now,” said Will Machin, head of sales for U.K.’s Ealing Studios Intl. “If you don’t have a commercial film with an A-list star or a specific arthouse title, it’s going to be very difficult to raise finance or sell your project.”

In the artpic sector, business is still getting done, and star auteurs and breakouts still sell well, said one Gallic sales agent.

“But, in general, prices paid for Europe — Germany, Italy, the U.K. — are 20%-25% down on five years ago, and fewer films are selling, and you make fewer deals per film,” the sales agent said.

For art films, “It’s a slower and more selective market, though deals will still be done. People are taking more time to make decisions,” said Raphael Berdugo, general director of Roissy and president of France’s ADEF Film Export Assn.

Spanish pubcaster RTVE rolled out “Dieta Mediterraneo,” Joaquin Oristell’s food and sex comedy, to nine territories at Berlin, led by a deal for France with Zootrope Films.

As the market wound down, France’s Pyramide Intl. was closing in on Kristin Scott Thomas starrer “Leaving”

Teutonic business was slow, with just a handful of minor sales touted. Faced with oft-heard cries of financial woes, local sellers are possibly facing long drawn-out negotiations for choice product.

Commenting on this year’s market and general state of the biz, Dirk Schuerhoff, managing director of Munich-based Beta Cinema, said: “People are less inclined to take risks. They’re being much more careful and taking more time in considering what they buy.”

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