Shaky economy doesn't deter dickering at fest
Since Toronto’s opening day, President Obama’s jobs-bill speeches and the rollercoaster of financial news from the Euro zone has reminded film execs of economic uncertainties they face at home.
Though some claim the news is having no real affect on sales, buyers and sellers’ feelings about the economy are indeed having an impact on dealmaking, whether in pricing, deal structures or determining which territories and rights get purchased.
Several buyers have the mindset of Magnolia’s new senior VP of acquisitions, Dori Begley, who nabbed the TIFF sleeper hit “Goon” and Bobcat Goldthwait’s black comedy “God Bless America” for Magnolia’s Magnet label. “Uncertainty about the larger economy doesn’t appear to be rivaling indie buyers’ needs on the ground here,” she says. “Prudent competition for the right film is alive, and we’ve seen some notable — but not always outlandish — rise in the level of advances paid.”
CBS Films’ $5 million domestic buy of “Salmon Fishing in the Yemen” is the top sale so far. IFC/Sundance Selects paid an estimated $1.5 million for three titles — “Your Sister’s Sister,” “4:44 Last Day on Earth” and “The Incident” — which, with a few exceptions like last year’s $1 million “Super” buy, is the upper range of what they’ll spend on any given three pickups. (“Beloved,” “Into the Abyss” and “Trishna” were also in IFC/Sundance Selects’ TIFF shopping cart at press time, making them the fest’s busiest buyers.)
“While a rough economy will certainly impact independent production financing,” Begley adds, “I believe any distributor attempting to stock up on films right now is influenced far more by a pure need for product than fear of how an economic downturn might impact future box office returns.”
Music Box Films owner William Schopf, who saw his Lisbeth Salander trilogy hit big domestically, also hasn’t witnessed too much industry alarm. While he notes that the consumer pool of discretionary dollars is shrinking, he maintains that film is a good bargain compared with other entertainment options. “Like beer, I think film will sell well during this too-long economic malaise,” he says.
Dig deeper, however, and you can see how the larger economy is impacting Toronto — possibly even giving the acquisitions market a boost.
“What is changing a bit among the minimajors and specialty divisions with U.S. distribution (Relativity, Weinstein Co., CBS Films) is that before, some of these places would make a $30 million film, put 30% of that budget against the U.S. and use foreign sales to recoup the rest,” says WME international division co-head Elia Infascelli. “Now they’re thinking, ‘Why are we financing 100% of a film, with a massive infrastructure of sales and creative departments, when we just can go out of pocket with an acquisition for 30%? In a time where getting credit is more difficult, that’s a better option for a lot less money, and puts them in a position to distribute six to eight films a year, as opposed to three.”
One prime example is CBS Films’ “Salmon” catch. It’s the company’s second pickup after “The Mechanic” and several moderate performers from self-produced titles, arriving less than two months after Scott Shooman was hired as exec VP of acquisitions.
Phase 4 Films CEO Berry Meyerowitz says the economy is making distribs focus more on whether a film will work across all platforms (theatrical, DVD, VOD, Pay TV, etc.), or if it should just be purchased for one or a few of them.
“With Netflix streaming and Redbox, consumers are looking for more economic ways to get content, so what does that do to our model and projections when buying movies?” Meyerowitz says. “Everyone is sort of nervous about what the future will bear in this market — what’s going on with the banks, interest rates, jobs, etc. — but people who are in this game are trying to look past that. Buyers are genuinely taking into account the trepidation in the market and the economy, but overall, they’re aggressively negotiating for films, and we won’t see a meaningful decline in purchases.”
The instability in the Euro zone also has had an impact.
“(International sales) probably slowed down just a little bit in Toronto. You felt a little bit more caution than at Sundance and Cannes,” says Myriad Pictures head Kirk D’Amico, who reps overseas sales for Magnolia’s domestic pickup “Goon” and agrees with Meyerowitz on platform selectivity among buyers. “There’s a schism between blockbusters and everything else, and everything else is getting divided up into what works on VOD and what doesn’t.”
Overseas buyers and sellers from 67 countries (a TIFF record) face special concerns, as the EU dithers on how to handle troubled members like Greece, and other European countries struggle under austerity measures.
“They still want entertainment. There are issues of (some buyers) asking for longer payment schedules or some flexibility in delivery to help some companies with their cash flow,” D’Amico says. “But Greece and Turkey are still buying movies, and it’s still very competitive in those territories.”
Ultimately, the economy’s precise impact on this year’s sales market may be too hard to distinguish from other factors. Last year’s sales were enhanced by an extraordinary set of circumstances: hunger for titles among newly launched distribs, a robust crop of films emerging after a post-strike draught in product and open calendars at studios that had pared back buying after the economy took its 2008 dive. There also appear to be fewer films with wide-release potential, according to several buyers. All this makes a small decrease in 2011 sales almost inevitable.