Bullishness is back in the indie world.
Riding a wave of strong sales that began earlier this year, the folks headed to the Toronto film festival are in a decidedly upbeat frame of mind, a sharp turnaround from 2008 and 2009. And while the current optimism is tempered by recent memories of downturns, there are also concerns that Toronto may even see some overspending and over-production.
“People are realizing that Toronto is a great place to start selling new films,” says FilmNation Entertainment topper Glen Basner. “Equity is coming back after being on sidelines, and that’s a double-edged sword, as while it allows more movies to get made it doesn’t necessarily mean more good movies. For now, the financial crisis made buyers much more conservative, but the cycle will change.”
Alex Walton, president of international sales for Exclusive Media, agrees. “There’s a real appetite for product. Buyers are hoping there will be a wealth of new material. The buoyant mood from Cannes should continue.”
As majors dramatically cut back on their production slates, distribution pipelines have been freed up and slots are open for indies to exploit — especially with better-than-expected markets at Sundance, Berlin and Cannes. After the stunning successes of “Black Swan” and “The King’s Speech,” Woody Allen’s “Midnight in Paris” has bolstered the consensus that this is a good time to be an indie .
The key reasons:
- As studios focus more of their resources on tentpoles, more viable buyers have emerged for independent midlevel-budget projects. Besides the traditional names (TWC, Fox Searchlight, Focus, Sony Classics, Summit and Lionsgate), several others are expected to be in the mix, including FilmDistrict, CBS Films, Open Road, Relativity and Millenium.
“There’s going to be a lot of competition for finished films, with five, six or even eight buyers,” notes UTA’s Richard Klubeck. “The market’s robust. I don’t think either side has the upper hand, though.”
- Equity’s coming back. “The market and public are embracing these films, and banks are getting more comfortable providing gap(financing) again,” says Rena Ronson, co-head of UTA Independent Film Group. “We’re seeing more high net worth individuals coming onto the scene investing wisely as well.”
- Overseas entities such as StudioCanal are stepping up with commercial projects such as “Tinker Tailer Soldier Spy.” “It has real potential in the U.S.,” notes StudioCanal topper Olivier Courson, “and it’s clearly a European film.”
- Digital coin is on the upswing. “Though they haven’t offset the decline in DVD sales, digital revenues are rising,” says Hal Sadoff, ICM’s head of international and independent film. “Over the past two years, VOD and streaming services such as Netflix are generating revenue and subscribers at a much faster pace than anyone expected.”
CAA’s Micah Green points out that digital’s a better field for independent distributors to compete with the major studios — as opposed to fighting for retail shelf space. “VOD and digital are the great equalizers in indies,” Green adds.
- Indies are able to access Hollywood’s talent pool much more readily. “Agencies have become very good at creating smart deals and getting their clients to share in the backend revenues, which enable independent films to get made,” notes Basner.
- Investors have a plan. “We want to really be involved in production,” Courson asserts, adding that there’s a real audience for character pieces. He cites “True Grit” and “Black Swan” as examples of international hits that found auds who, he posits, “are really bored with bigger, CGI blockbusters.”
TWC production president David Glasser is blunter. “I think there’s a lot of smart money in the indie market now — people like Megan Ellison, Brian Oliver and Ron Burkle,” he notes. (Supermarket mogul Burkle is the key investor in TWC.)
It’s a bracing turnaround from two years ago, when the Weinstein Co. was mired in uncertainty and had hired Miller Buckfire to advise on a restructuring. TWC rolled the dice and announced it had acquired distribution rights to the yet-to-be shot project “The King’s Speech” in North America, Germany, France, Benelux, Scandinavia, China, Hong Kong and Latin America.
“The King’s Speech’ is a powerful story about a remarkable time in history,” said Glasser at the time. Two years later, Glasser is expansive to the point of praising a rival’s title.
“I love Toronto — it’s so easy to get to screenings,” Glasser adds. “I think it’s going to be as active as Cannes. The independents have recognized that the marketplace wants smart movies like ‘Midnight in Paris.’ ”
Sony Classics topper Tom Bernard admits he’s still startled by that latest Woody Allen pic topping $50 million in domestic grosses.
“I thought it had a shot at $15 million, but every now and then, a film captures the zeitgeist,” Bernard says. “We also thought ‘Crouching Tiger’ would do $20 million domestically.” (“Tiger” topped $125 million at the domestic B.O.).
More important, Bernard asserts, the circuits themselves have come onboard in giving space to specialty titles — leading to robust biz in locations such as Atlanta, Indianapolis, Nashville and Portland — and setting the stage for deals at Toronto. “We’re getting lots of knocks on our door,” he adds.
While the major buzz generated from last year’s Toronto screenings of “King’s Speech” and “Black Swan” began to fuel hopes that the indie film business outside the six majors was finally back on track, sales of smaller pics such as “Insidious” (which played in the Midnight Section) have boosted that optimism, according to Paradigm’s Ben Weiss, who teamed with CAA for the sale to FilmDistrict.
“I feel like last year’s Toronto was a kickstarter to the turnaround,” he says.
This year’s fest features launches of potential awards season contenders like “Moneyball,” “The Ides of March,” “W.E.” “The Descendants” and “Friends With Kids.”
“Ides” is particularly intriguing, as it’s financed by Cross Creek, the emerging indie powerhouse that financed “Black Swan.” The company has also brought two pics to sell — racing drama “Rush” and an untitled thriller starring Emily Blunt and Colin Firth as a man who fakes his own death.
“The prevailing idea when we came into the business was that you couldn’t make tweeners,” Oliver notes. “But that’s the movie people want to see — ‘King’s Speech,’ ‘Black Swan.’ You make that film and then let studios do what they do best — market it.”
Walton notes that Sony’s bringing plenty of marketing muscle to “Ides.” “They’re going to do this along the lines of ‘The Social Network,’?” he says, starting its release after a “glut of summer juggernauts.”
Joey McFarland, the president of financier Red Granite, shares the optimism. The shingle, which is selling foreign rights to “Friends With Kids,” is aiming for a domestic deal at Toronto for the Jennifer Westfeldt comedy.
“What we’ve got has a nice warm indie feel, but captures the look of a studio film,” McFarland says. “We think it’s perfect timing.”
Execs believe that indies have come upon a unique opportunity as the six majors focus on tentpoles.
“The real benefit in falling volumes of studio production is not that studio distribution slots become available, but that studios turn more projects down,” notes Pathe’s Cameron McCracken. “That means that a greater number of commercially interesting projects are becoming available for independents to finance and distribute outside the studio system.”
Sadoff notes that the studios’ focus on tentpoles doesn’t translate to an increased focus on stars. “You’re seeing a significant drop in studio films — and those films are more of an event rather than being focused on actors,” he adds.
So why the downward production trend? David Linde, former Universal chairman and now head of the Reliance-backed Lava Bear Films, see the majors continuing to react to the fast-changing economic environment amid plunging DVD sales.
“The studios are justifiably adapting to a changing revenue model. One result is a reduction in the amount of productions, including in the midlevel release (1,500-2,500 print) range, creating openings for indies who lacked access to those kinds of films and the revenue that both existing and emerging distribution platforms now offer them,” he says. “New players are adopting new models oriented around the size of their releases and their company.”
The evaporation of the DVD market means that there’s far more focus on making commercial films, according to Voltage Pictures topper Nicolas Chartier. “Buyers are more aggressive now, so I hope that this isn’t a bubble,” he says.
FilmDistrict’s Peter Schlessel believes his newbie company can react more quickly than the studios, which have more at risk since their costs are so large.
“The studios are like an aircraft carrier — they take a long time to make a turn,” Schlessel says. “If you buy midbudget indie films, you lower your risk, so you’re playing with a narrower bandwidth where the hits aren’t as big, but the floor is higher. Studios are in the business of big hits and big misses with dozens of people in the marketing department.”
Another positive sign for the indie sector: CBS Films hired veteran Sony exec Scott Shooman as exec VP of acquisitions in late July. Shooman worked for a decade at Sony and oversaw a number of acquisitions including “Insidious,” “Hanna,” “Machete” and “The Imaginarium of Doctor Parnassus.”
“We are looking for fresh, filmmaker-driven product, not limited to any single type,” Shooman says. “We’re not characterizing ourselves by looking for a specific genre, and the success of good original indie movies like ‘Black Swan’ and ‘The King’s Speech,’ which supersede genre categorization, supports that strategy.”
Sales-financing vet Lisa Wilson of Parlay Pictures believes that the addition of new players in domestic distribution is a big plus, particularly with the early success of FilmDistrict. But she warns that it’s a tougher market than ever.
“The wrong film won’t work,” Wilson notes. “With Facebook and Twitter, everyone knows immediately. Everyone’s connected and there’s no room for mistakes.”