Post houses responded with differen types of financing

NEW YORK — Lower budgets are a key factor in the indie film market’s recovery, yet they often don’t allow for the kind of polished post-production that can help secure a theatrical sale.

Post houses have responded with financing — although not necessarily in the form of cash. They’re increasingly offering discounted or deferred rates and in-kind services in exchange for profit participation, taking payouts at the same time as other investors.

It’s a practical consideration for outfits looking to build relationships with emerging talent and fill unbooked rooms. It also benefits filmmakers — since post can often consume 10%-25% of an indie feature’s budget, these deals afford them a level of professional work that can be crucial to helping them stand out in an increasingly crowded low-budget marketplace.

Producer/director Lisa Immordino Vreeland says deals with Gigantic Post for sound, Edgeworx Studios for visual effects/animation and Gloss Studio on stills photography and color correction were key to financing her doc “Diana Vreeland: The Eye Has to Travel.”

“This is really the only way we could have done it,” she says. “We didn’t have the cash, and if I didn’t have this collaboration with everyone, there’s the probability I wouldn’t have been able to raise more funds.” The budget hit around $600,000 by the time the docu reached fests last fall, and its polished look helped it become the first sale (to Samuel Goldwyn) at the Toronto festival last year.

“The deals I’m structuring with a post facility here are the same as I would structure with anyone else,” says Jonathan Gray, a partner in Gray Krauss Stratford Des Rochers, and an exec producer on “Vreeland” who arranged the deals. He says such agreements typically defer part of the post payment up front in exchange for an equitable participation on the backend, off the first dollar alongside the cash.

Gray’s Gotham office shares the same floor as producer Gigantic Pictures and its audio/video facility, Gigantic Post, one of numerous houses on both sides of the Atlantic that make post investment deals.

Post facilities are also using tech work as a springboard into other areas. London-based music supervisor Cutting Edge Group recently signed a multifilm pact trading an investment in Endgame Entertainment features for music services and publishing rights.

Producer Iain Canning sees a key advantage to these alliances. “The great thing about having a film partner in post-production rather than a simple services deal is that you end up having a real partner concerned about how the film turns out and (is exploited) further down the line,” he says.

In Canning’s deals with post house Molinare on the $12 million “The King’s Speech,” and LipSync on the lower-budget “Shame,” each U.K.-based outfit made a cash investment in exchange for net profits and an agreement to be able to use their post facilities. “When you have a problem within your film — maybe you need more money in one area and slightly less in another — there’s a real collaboration and trust that you can work with them to provide that flexibility,” he says.

Some houses like Gotham-based Edgeworx are smaller operations using a hybrid model of hard cost and in-kind on the backend as a way to fill out their annual calendar with films that might not otherwise be able to afford their services.

“We have to be able to at least cover our costs,” says Edgeworx owner Cassandra Del Viscio, who arranged deferred payment deals on two of the 10-15 projects she’s handled over the past 2 1/2 years. “For certain films, we could go as far as 50-50, but maybe on the backend you’re actually ending up with 55%, so it’s like a bonus. If they’re coming to you with a pretty good rough cut, or it’s a project you have a lot of confidence in, it’s definitely worth it.”

Gigantic Post exec producer Steven Tollen took a comparable deal on “Vreeland,” deferring 40% of its payment in exchange for a cut of first-dollar gross, one of four similar pacts in the past two years out of Gigantic’s 40-50 annual projects. “You need to discern whether or not it’s a slow enough time period to accommodate the work without jeopardizing the possibility of having a full-paying job come in,” he says.

While more filmmakers are seeking to make post financing deals early in the budgeting process, one indie producer says it’s still common to defer deliverables against a potential sale.

“You don’t want to spend a lot of money, and (post) is one of the few places where you have room to negotiate,” Vreeland says.

As indie film budgets have declined, some backend deals are also more practical for post houses. Instead of negotiating rates down to fit smaller budgets, they offer a better chance to approximate the fees of a film with a bigger budget — provided the film achieves a degree of success, Del Viscio says.

Filmmakers and post houses sometimes have different perspectives on backend deals. “When they’re accepting the work, they’re saying, ‘Maybe this is going to make money, maybe it’s not going to make money,’ ” Vreeland says. “I think they ultimately believe that whatever they’re getting paid up front is all they’re going to see.”

Edgeworx received its backend on the 2010 Sundance doc “Life 2.0″ after the film sold to the OWN Documentary Film Club, and Del Viscio expects to get the remainder of the Vreeland doc payment soon. “I’m counting on some of that money,” Del Viscio say. “It can mean a decent sum to a small company.”

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