New distribs fueled by lower upfront minimum guarantees
Despite the economy crashing, ancillary revenue cratering and several acquisition deals falling apart, there seem to be more new indie distributors heading to Sundance than ever, which means sellers will have to be diligent in picking the right fit.“A lot of people are coming back this year — the Harvey Weinstein situation, Bob Berney, Relativity,” Sundance director John Cooper says. “They’re not new people necessarily, but they have new or sort-of-new companies. That’s kind of exciting, because there might be a little more (sales activity) on the bigger side. There are definitely some films in the festival that are possible big buys, like ‘Salvation Boulevard,’ ‘The Details’ and ‘My Idiot Brother.’ “ And while the big boys fight over the few titles with wide-release potential, they’ll face competition from a raft of aspiring minimajors, including FilmDistrict and vet producer Relativity (retrofitted with the late Overture Films’ marketing and distribution arms), willing to make bigger bets on wide releases, despite a much smaller ancillary bounty than was available and expected in years past. The flood of new distribs is being fueled by lower upfront MGs (minimum guarantees) paid to filmmakers — or, in some cases, no upfront cash at all — allowing a wider range of small players to compete on a more equal playing field. “The MGs have gone down because, besides Fox Searchlight, Sony Classics and Focus, all those studio divisions shuttered,” says Roadside Attractions VP of acquisitions and business affairs Dustin Smith, who negotiated for last year’s grand jury prize winner “Winter’s Bone,” then helped strategize the quick Midwestern-area rollout that turned a $500,000 advance into a $6.25 million hit. “Four years ago, everyone was paying $3 million for every movie, buying up anything with the least bit of commercial appeal,” Smith says. “Now there’s a tier of experienced companies — IFC, Magnolia, Roadside and Samuel Goldwyn — that can get decent movies again at prices we can afford and do justice to them. And our infrastructure, overhead and P&A costs aren’t as ridiculous, so you actually get money on the backend.” Each of the above-mentioned companies saw a multi-million dollar summer box office return on a pickup with a low- to mid-six figure pricetag. And with mainly lower MGs, the surviving specialty divisions and other distributors saw profits on their acquisitions as well. Their success has served as a Pied Piper for a slew of new labels (see story on page A12) of all sizes. New kids on the block For every shuttered specialty division like Miramax, there’s a new outfit cropping up in its place — in that case, Miramax, rebooted by Filmyard Holdings as a standalone indie. New CEO Mike Lang and his team will visit Park City with future acquisition plans in mind, but no mandate to buy. Some filmmakers essentially choose to bet on themselves through service deals, shouldering the cost of distribution with their own cash or third-party P&A investments from companies like Liddell Entertainment. Paladin, Freestyle, Emerging Pictures and numerous small startups are in this business, and conventional distributors like Lionsgate, Goldwyn, Roadside and the new Wrekin Hill make some of their release slots available for these arrangements. “If you have P&A available, you can certainly structure a deal where you keep your rights and all the upside, but you double your risk,” notes Roadside co-prexy Howard Cohen. Sundance holds the biggest question mark for the mini-majors (Lionsgate, Summit, the Weinstein Co.), aspiring ones (Relativity, FilmDistrict) and the majors’ worldwide acquisitions speculators (Paramount, Sony). The biggest grosser by far from last year’s crop was “The Kids Are All Right,” which Focus turned into last year’s biggest buy (under $5 million), biggest hit ($20 million) and arguably the biggest awards contender. But “Kids’ ” widest release was in fewer than 1,000 theaters, a far cry from the 1,500-2,000 screens Relativity and others hope to corral for their open release slots. The next most successful 2010 pickup released so far, Roadside’s “Winter’s Bone,” earned $6.25 million but reached only 141 theaters in its widest release. Returning players “Theatrical releases of independent films are as robust as they’ve ever been,” insists Sony Pictures Classics co-head Michael Barker, who has mostly avoided the higher-end bidding wars. “But the whole issue is: How do you make up for the revenues we’re losing because the DVD sell-through business has disappeared? You make up that money with revenues with other technologies, and it’s just a bit slow in coming and meeting that goal.” And with the new distributor gold rush, cautionary tales abound. “There are a couple movies that sold out of Sundance last year to distribution companies that I’m not even sure are in business anymore,” notes Sundance Selects and IFC Entertainment president Jonathan Sehring. First Independent Pictures founder and president Gary Rubin, who picked up last year’s Jesse Eisenberg starrer “Holy Rollers,” will be scouting for films at Sundance again — as senior VP for new arthouse distrib Cohen Media Group. His former outfit will remain as a film library. All of Sundance 2010’s other buyers still appear to be in business, but with several deals falling apart, and distributors like Apparition now mere ghosts, one could be forgiven for thinking otherwise. For example, although Hannover House announced a deal for the 2010 Sundance audience award winner “Happythankyoumoreplease” last March, by August the film had landed at Anchor Bay. Along the same lines, neophyte distributor Metropolitan claimed it would launch its 20-release-a-year distribution outfit with the biopic pickup “Casino Jack,” but by midsummer, the $10 million deal fizzled, and by December, “Jack” became the sophomore release of neophyte distrib ATO Pictures. Demand up for VOD There may be no stronger indication of indie distribution’s state of flux and quandary of choices than the latest moves and musings of two very different studios: IFC, which releases virtually all its theatrical films day-and-date via VOD, and Sony Pictures Classics, which has strictly adhered to a theatrical platform release model with months-long windows until DVD and VOD. IFC had its biggest theatrical hit of the year with the $2.9 million-grossing docu pickup “Joan Rivers: A Piece of Work,” a deal sealed just after last year’s Sundance on the condition it get a traditional theatrical release several months before hitting ancillary outlets. Meanwhile, on VOD, IFC’s “The Killer Inside Me” (nabbed for around $1.5 million and launched on its new Sundance Selects label) earned just $217,000 in theaters, but went on to become the company’s top-performing download. On the flip side, SPC has always held firm to an old-school theatrical release strategy, but Barker says he’s considering the possibility (however remote) of a day-and-date VOD release in the company’s future. “Right now, the model that we have is the one that works best for the films we’re releasing and acquire, but you’ll really have to see how things unfold,” he says. “We’ll see.”
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