Equity players fill in gaps that studios have vacated
As the traditional funding model for independent film crumbles, a new breed of mogul is emerging to fill the void.
Production companies backed by wealthy patrons are increasingly calling the shots in a business where the studios are reducing their slates, and pre-sale and bank finance is harder to come by.
These high rollers were behind several of this year’s most notable indie films, including “The Kids Are All Right,” “Black Swan,” “Howl,” “Rabbit Hole” and “The Conspirator.”
Michel Litvak at Bold Films and Gigi Pritzker at Odd Lot Entertainment typify the trend. Litvak is a Belgian industrialist based in Paris, while Pritzker is a scion of Chicago’s Hyatt dynasty. Both have been making movies for several years, but are playing an increasingly prominent role in the indie biz as alternative sources of finance dry up.
Odd Lot produced helmer John Cameron Mitchell’s Toronto hit “Rabbit Hole,” while Bold’s recent pics include Scott Charles Stewart’s “Legion” and Joe Dante’s “The Hole 3D.” The two companies teamed up a year ago to launch a foreign sales joint venture Affinity Intl., and are now co-producing the Nicolas Winding Refn thriller “Drive,” starring Ryan Gosling and Carey Mulligan.
Execs at both companies insist they aren’t just a billionaire’s plaything, but a proper business with their owners actively involved in day-to-day decisions, and the vital capacity to greenlight their own projects.
“We’re in the vanguard of those companies with the ability to get pictures made,” says David Lancaster, who runs Bold for Litvak. “We’re a serious company, making a play to produce smart commercial movies in a measured, thoughtful and financially sensible way.”
Odd Lot’s Bill Lischak says, “Gigi Pritzker is our funder, but she’s also our lead principal, our CEO, though she doesn’t like to use the title.”
Pritzker went to film school, set up a production services company and eventually became a producer in her own right with “The Wedding Planner.” She created Odd Lot on the heels of that success, and hired an experienced team to help her run it.
“She’s grown up in this business,” Lischak explains. “She’s very hands-on and very involved in reading scripts, doing deals and taking meetings. She provides the capital, but we try to use that in smart and leveraged ways.”
Affinity is a key element in their bid to stretch their equity and cover their risk with presales, banks, tax breaks and soft money. Both companies want to make about three films a year, investing 25% of the budget as equity, though it can go as high as 50%. Odd Lot’s budget range is $5 million-$60 million, while Bold aims for $10 million-$30 million.
They develop their own projects, but also seek out packages from other producers, or simply provide sales advances via Affinity on a last in, first out basis.
“We’ve found our position in the marketplace has grown over the years,” Lischak says. “A lot of interesting product is available that didn’t use to be available for the independents three years ago.”
“Rabbit Hole” is a classic example. It’s a Pulitzer Prize-winning play developed by Nicole Kidman at Fox, retooled as an indie production at a lower budget. Odd Lot financed the project in partnership with another equity producer, Dean Vanech’s Olympus Pictures. The talent took reduced fees in return for backend.
“We like partnership, and we like deal structures to be aligned in everyone’s interests,” Lischak explains. The fact that Pritzker puts her own money at risk makes it easier to ask the talent to do the same, he argues.
The big challenge for these equity-backed producers is to secure domestic distribution. Odd Lot puts up P&A if needed to secure slots on favorable terms.
That’s a step Bold has yet to take, though Lancaster doesn’t rule it out. “We’re looking for a distributor to have some skin in the game,” he says.
Litvak financed Emilio Estevez’s 2006 drama “Bobby,” but has since shifted towards more commercial fare. For him, it’s not about prestige, but popularity.
“Michel is driven primarily by an intellectual creative curiosity, he finds all types of film fascinating, he just likes the idea of telling great stories that a lot of people want to see,” Lancaster says. “He has graduated towards smart, elevated genre material, not adult dramas that are more character based, but story-driven films in that campfire tradition where people gather round to hear what happens.
“There are lots of scripts sitting on shelves in studios they aren’t going to make,” says Lancaster. “They are turning towards larger or more tentpole-type movies, and looking more to companies like ourselves to produce the programmers that fall between those tentpoles.”
The history of indie film is littered with billionaires who got burned. But perhaps the game is no longer so rigged against them. Lancaster believes the current influx of cash from rich individuals is more considered than some previous fads in indie finance.
“I rode them all — the insurance-backed finance, the German funds, the hedge funds. Now it’s the rich guys. But what I’m seeing is a more measured and commercial approach to the business from people who care about their money.”
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