Confab points out the importance of securing distribution

Even though the major studios have cut back their slates, independent filmmakers are not able to help fill the void, due to the Catch-22 of the indie biz: Without domestic distribution, they can’t get the film financing.

This sobering recession math was repeatedly revisited by studio execs, film financiers and indie production chiefs Wednesday at the second annual Film Finance Forum in Century City. Panelists at the Hyatt Regency confab said the finance climate, though not rosy, does seem to be improving. It helps that the falling DVD market seems to have hit a plateau.

In the meantime, they cautioned, everyone must be smarter about securing coin and keeping costs down.

As studios began cutting back the number of movies they were producing in recent years, they also shuttered or dramatically downscaled their specialty arms, reducing the opportunities for distribution.

“Clearly, there are a lot less packages being made out there, but I think in the long run, it’s healthy,” said Doug Hansen, president and chief operating officer of Endgame Entertainment. “We see it as a big opportunity.”

Hansen said he targets companies with their own distribution apparatus — such as MGM, Lionsgate and Summit — that may have an open theatrical slot. Depending on their needs, it could be more advantageous for them to take a distribution fee rather than incur P&A costs that quarter.

“Rather than create our own distribution, I’d just as soon pay them a fee and have them apply it directly to their bottom line,” Hansen said. To ensure that they can secure these spots in this competitive climate, his company has shifted to focus on more commercial projects.

The good news, panelists said, is that talent and their reps have adjusted their salary demands, helping to keep costs down on studio and indie productions.

“Most of the agencies are working with us, as opposed to against us, so from that standpoint, it’s better,” said keynoter Ashok Amritraj, chairman-CEO of Hyde Park Entertainment.

“What has happened is you have to be a lot smarter,” said David Friedman, exec VP-general counsel for Summit Entertainment. “You have to share some backside to be able to get the talent that you really need.”

With foreign territories a lot more selective about pre-sales, “You have to attract the next level of talent that you maybe wouldn’t have gotten before,” Friedman added.

Certain once-vibrant territories such as Japan, South Korea and Russia can’t be counted on anymore, one panelist after another said, in part because of competition from local-language releases. And those territories still stepping up on pre-sales are insisting on a domestic theatrical release before they’ll take it.

Lacking a domestic release, Hal Sadoff — ICM head of international and independent film — recommends a $12 million to $15 million budget, max; any higher and he considers the film too risky.

Roy Salter, principal of the Salter Group, maintains that the film biz has weathered the recession pretty well compared to industries that have been pummeled, like real estate and auto. But he acknowledges that there’s a lot of bottled-up money and films “so there’s a lot of frustration.”

Diane Stidham, managing director of Newbridge Film Capital, predicted that “there will be some new distributor that rises up out from the ashes” if P&A money returns, but the panel acknowledged that entering the market wouldn’t be cheap.

Lacking any new distribution entities, Amritraj predicted, “We’ll start to see holes on those domestic calendars” by 2012.

In the meantime, the less cluttered marketplace had made it easier for distribs. “You used to have weekends where five films would open,” Friedman said. “You don’t have that all the time any more.”

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