Market changes push sellers to fill financing gaps
In a tough climate for banking and presales, sales agents are increasingly being asked to put their money where their mouths are. That means backing up their territorial sales estimates with hard cash.
The days when bullish gap lenders would bankroll aggressive sales estimates have gone. With foreign distribs reluctant to prebuy, producers desperately need advances from sales companies to make sure their films get made.
Problem is, few if any sellers today have the pockets or the inclination to give the kind of multimillion-dollar guarantees against all foreign territories that the likes of J&M and Majestic used to deliver over a decade ago. But for those with access to capital and an appetite for risk, even putting up a couple of hundred thousand dollars can give them a bigger say and a bigger stake in the films they handle.
“The opportunities to do so on sensible terms have become more prevalent since the credit market conditions have knocked some of the crazy gap and super gap money of recent years out of the game,” says Stuart Ford of IM Global, who says he has paid advances for some recent projects but won’t disclose which titles.
“We will never put up risk capital just for the privilege of selling the film. If it’s our money on the line, then we need a proper backend on the movie, greater creative input and a longer-term level of rights ownership.”
Nicolas Chartier at Voltage has used the capital he has built up from trading genre telepics to put minimum guarantees into five recent features — “The Whistleblower,” “Game of Death,” “Mr. Nobody,” “The Hurt Locker” and “Keeper.”
Over in the U.K., the Works Media Group is linked with financiers James Atherton and Jan Pace of Quickfire. They’ve invested in projects such as “Glorious 39,” “The Cove,” “I Am Love” and “Prima Linea.” The deal for the Italian-lingo Tilda Swinton starrer “I Am Love” looks fruitful, after a strong bow in Venice and Toronto triggered boffo sales, including some for over the asking price.
“Our close relationship with Quickfire puts us in a fantastic position where we can be really competitive and aggressive when we really want a movie,” says Works chief Carl Clifton. “James Atherton and Jan Pace are decisive, and once they commit they keep everything simple, and the whole process is very swift.”
Sharon Harel’s WestEnd Films put up minimum guarantees to help close the financing for the Stephen Frears pic “Tamara Drewe” and Hideo Takata’s “Chatroom.” “We’re very, very careful, but they needed the money and we liked the projects,” says Harel. “In both cases we made the films happen.”
Protagonist Pictures, the sales outfit backed by Film4, Vertigo and Ingenious, mostly reps projects backed by one or more of its shareholders, but will make direct investments itself on occasion. The first instance is Richard Ayoade’s directing debut, “Submarine.” ContentFilm and Salt also sometimes put up small sales advances.
Exclusive Media, the company formed by the merger of Guy East and Nigel Sinclair’s Spitfire Pictures with Hammer Films, has equity funding from John de Mol’s Cyrte to bankroll its own production slate, and also has the capacity to offer advances to third-party producers. “We are in the market for picking up stuff, but we just haven’t found anything yet,” says head of sales Peter Naish.
After shuttering his old sales company Odyssey Entertainment this year, Ralph Kamp has re-emerged in partnership with equity financier Prescience, which recently started its own gap fund, Aegis. That finally gives Kamp the means to invest in projects.
“At Odyssey, I did 34 films in seven years, but we never put up our own money because we didn’t have that money to put up,” Kamp explains. “As the environment of the whole world changed, it became harder and harder to secure titles with just good will and the promise that we’d make the best effort possible to sell them. Prescience has various funds, they are no longer limited to financing just British films, and they can put up money in different ways.”
Goldcrest is another U.K. financier, which has launched itself back into theatrical sales, hiring Penny Wolf to run its international arm. “We will look at each project on an individual basis, but in some cases we can cover the tax credits, provide the post-production, invest equity, and if they are British films we can see if our EIS funds want to get involved,” Wolf says.
Then there are the big French players, sheltered from the worst of the financial storms that have battered the Anglo-Saxon economies. TF1, Gaumont, UGC, Pathe, EuropaCorp, Wild Bunch and StudioCanal can be significant production financiers or multiterritory investors, but rarely confine themselves to putting up simple sales advances.