The country's economic blight has hit its film biz; could the same happen elsewhere?
Greek companies at this year’s American Film Market were on the hunt for one thing: mercy.
The country’s crippling economic problems have forced many Greek distribs to try to renegotiate sales contracts made prior to 2012. And with all of Europe facing a massive debt crisis, Greece’s struggles could be a harbinger of tougher times ahead for the film biz in much of the rest of Southern Europe. In August, the Film Distributors Federation of Greece sent a letter to major sales agents asking for a 40% discount on all films purchased but not yet released.
“Although the recession has been affecting our business for quite some time, it is only now that we collectively request your backing and support in order to help us overcome these challenging times and be back on track again,” the letter stated. “We hope that you will review our request positively, aiming at a long-term mutually beneficial business relationship.”
Greece’s two largest distributors, Village Roadshow and Odeon, walked away from this year’s AFM empty-handed. Together, the two companies make up about 70% of the Greek exhibition business.
“Every three months, we have new austerity measures,” said Village’s CEO, Yannis Kalfakakos. In a sign of solidarity, Kalfakakos sat side-by-side with Odeon CEO Manos Krezias — Village’s largest rival in Greece — to talk to Variety about Greece’s troubled exhib biz. “We cannot plan anything.”
According to both execs, Greece took in just north of $100 million at the box office last year (That number uses the euro’s value as of Dec. 31, 2011). This year, it’s on track to bring in less than $80 million.
Admissions are down 20%, but so is the cost of getting into the theater. Last year, the average ticket cost $11.65. Now it hovers below $9.
That explains why “The Dark Knight Rises” could do 5% better at the Greek B.O. than the last installment but still generate 20% less revenue. And just a few years ago, Kalfakakos and Krezias could expect a good independent title to earn about $200,000. Woody Allen’s “To Rome With Love” is the top indie so far this year, earning $106,000.
Declines in ancillary markets have also hurt Greece’s ability to make its payments. Home entertainment, according to the distrib federation, has plunged 50% since 2008, while television sales are minimal.
“Sales agents have to realize that Greece is not what it was,” Krezias said. “We are on hold. We don’t know what’s going to happen in the near future.”
Before the country’s economic collapse, Greek distribs could often afford to pay a minimum guarantee of 0.2 % or 0.3% of a film’s budget — a pic costing around $25 million might have had an MG of $50,000. In some cases, reaching just 0.1% is now hard.
“We have all adjusted our pricing accordingly,” said Lisa Wilson, partner and co-founder of the Solution Entertainment Group and former Parlay distribution prexy. “I’m looking for less than half of what I was before.”
What minimum guarantee a distrib can offer, however, is also worth much less to American banks, which would lend up to 70% against a Greek MG just a few years ago. Now, say insiders, some banks won’t lend anything.
“All I can do is submit the request to the banks, and it’s really up to them,” Wilson said. “The clients have signed a notice of assignment, and their responsibility to pay is absolute.”
Greece has always been a small part of the global film business, and observers say it’s unlikely that the country’s struggles would cripple producers who rely on their output deals. But as Europe grapples with a growing debt crisis, some bizzers worry that other countries could soon face similar issues. Italy and Spain have been especially hard hit. The Italian box office, for example, has plunged by more than 40% since last year. And Spain has long suffered from the effects of piracy and slump in the homevideo business.
The good news for sellers, if not for Greek bizzers, is that emerging markets in Brazil, China and other territories have made up for declines in the Greek market.
“As always, you have one territory that goes down and another becomes stronger,” Wilson said.