Financiers make mark in creative developement
Before Ryan Kavanaugh set up shop in Hollywood a decade ago, film financing was a mostly anonymous affair. There was nothing notable about funds named Gun Hill, Beverly or Melrose, other than the Hollywood streets the latter two are named after; and lenders like JPMorgan Chase, Merrill Lynch and Bank of America were faceless financial institutions. With Kavanaugh, there was now a colorful personality attached to the pursestrings of many pics playing at the megaplex.
These days, Kavanaugh is hardly the only deep-pocketed moneyman on the scene.
A new crop of investors boasting their own rich bank accounts has recently gone from Hollywood outsiders to the top of executives’ call sheets.
Their increased involvement in the film biz comes as the media congloms demand more profits from their studio divisions, scaring off execs from greenlighting films unless they can spawn sequels or an eventual reboot, generate piles of merchandise and sell millions of theme-park tickets.
“At the end of the day, Hollywood is all about making money,” says one major studio boss. “That sounds cynical, but it’s true. My hands are tied having to come up with big franchises. I can’t make certain movies anymore, no matter how profitable they might become. I make movies that turn into toys.”
While the majors devote their attention to tentpoles, they still need additional movies to fill their distribution pipelines. And that’s where Hollywood’s new bankrollers come in.
A year ago, David and Megan Ellison, the offspring of Oracle’s billionaire chief Larry Ellison, were unknowns before pairing up with Paramount to make tentpoles like “Mission: Impossible — Ghost Protocol” and high-profile indies like “True Grit.” So were the five Thompson brothers, a Louisiana oil-and-gas family whose Cross Creek banner struck it rich with “Black Swan.”
Tim Headington (“Hugo,” “Rango”) is a Texas oil and real estate baron who co-founded FilmDistrict with Graham King (with whom he funded GK Films). “Warrior” producers Jordan Schur and David Mimran made their millions running record labels and a Monaco-based food processing firm. And Richard Branson was a high flyer, not a filmmaker, until launching the Virgin Produced banner.
Before them, Reliance Group’s Amit Khanna was a player in Bollywood prior to backing DreamWorks with $325 million. Jeff Skoll (Participant), Fred Smith (Alcon), Sidney Kimmel (SKE), Bill Pohlad (River Road) and Philip Anschutz (Walden) earned their wealth from eBay, Federal Express, apparel brands like Nine West and Anne Klein, the Minnesota Twins baseball team and L.A. real estate, respectively.
And Thomas Tull, part owner of the Pittsburgh Steelers, was a rich fanboy with a soft spot for comicbooks, toys and videogames before forming Legendary Entertainment and co-financing Warner Bros.’ bigger tentpoles.
In the past, outside financiers were lumped under one disparaging label: “dumb money.” When one well was tapped dry by studios, another would come along.
The cycle is under way once again. Only this time, Hollywood’s new moneymen are savvier and getting more involved in the creative process. Financiers aren’t just writing checks in exchange for premiere tickets, they’re actively helping develop and produce the films in which they invest.
Pohlad has said he’s “attracted to the (film) business because of filmmaking” and not how much coin he can collect from a pic’s success. He also “wants creative involvement.” And David Ellison says he never wants Skydance to be viewed as “just a checkbook.”
These newcomers also are signing on to support films they actually want to see.
Given Tull’s fanboy interests, it’s no surprise that Legendary has established itself as a key banner behind the Batman and Superman actioners; the giant robots-vs.-monster epic “Pacific Rim”; fantasy tales “Seventh Son,” “Paradise Lost” and “Jack the Giant Killer”; a reboot of “Godzilla” and adaptations of videogames “World of Warcraft” and “Mass Effect.”
Anschutz’s Walden (“The Chronicles of Narnia”) has focused on family fare with messages that align with the mogul’s religious and conservative values, while Skoll’s Participant makes movies with sociopolitical themes like education and healthcare that jive with his philanthropic causes.
The choices of the Ellison siblings also reflect their tastes: David’s Skydance gravitates toward actioners like the fourth “Mission: Impossible,” the “G.I. Joe” sequel, a reboot of the Jack Ryan series, zombie pic “World War Z,” the Tom Cruise vehicle “One Shot,” and a disaster epic from scribes Zack Stentz and Ashley Miller (“X-Men: First Class” and “Thor”), who are also tackling a reboot of “Top Gun,” which Skydance is producing with Jerry Bruckheimer. Megan Ellison’s Annapurna Pictures has become the darling of indie filmmakers like the Coen brothers (“True Grit”), Doug Wick (“Wettest County,” bought by the Weinstein Co. at Cannes), and Spike Jonze, Kathryn Bigelow, Andrew Dominik (“Cogan’s Trade”), Gore Verbinski (“Bitterroot”) and Paul Thomas Anderson, although her buy-up of the “Terminator” rights signals more of a move to tentpole territory.
It’s a busy group.
•Tull’s Legendary launched with a $500 million fund in 2004, and raised a credit line of about $700 million last year, making it a major pic producer through 2016, even after its seven-year pact to co-finance and produce films with Warner Bros. ends in 2013.
It established itself by laying claim to genre fare, with co-productions including WB’s Superman and Batman films, the “Hangover” comedies, “300,” “Watchmen,” “Clash of the Titans” and “Inception.” Tull also has launched Legendary East, a Chinese studio set up to self-finance pics in that country through a $220.5 million fund (and another $225 million credit facility), with Ed Zwick’s “The Great Wall” as its first project.
• David Ellison’s Skydance oversees a $350 million fund to co-finance films with Paramount, with the shingle getting first look at the studio’s projects through a four-year deal, an unusual pact for any first-time financier.
• Megan Ellison has yet to disclose just how much money she’s working with, but her company ponied up $20 million to land rights to the “Terminator” franchise.
• Timmy, Tommy, Todd, Tyler and Bobby Thompson bought their way into Hollywood with $40 million through their Cross Creek Pictures banner, run by Brian Oliver (former topper at Arthaus Pictures and a Propaganda Films exec), and found a gusher at the B.O. with “Black Swan,” a $13 million pic that danced its way to $329 million worldwide. The company has since enticed backers to raise another $260 million.
• Randall Emmett and George Furla’s Emmett/Furla Films teamed with Stepan Martirosyan and Remington William Chase’s Envision Entertainment in September to establish a $250 million equity and debt fund, with initial dollars coming in part from the Russian oil biz and real estate ventures.
• Media Rights Capital’s Modi Wiczyk and Asif Satchu closed a five-year, $350 million revolving credit facility with five banks, also in September, to replace a similar three-year fund secured in 2008.
• India’s Reliance Big Entertainment backed half of DreamWorks in 2009, for $325 million, essentially giving the company a second life. It’s also ponied up development coin for projects developed by shingles run by Tom Hanks, Brad Pitt, Nicolas Cage, George Clooney, Jim Carrey, Jay Roach, Chris Columbus and Brett Ratner.
• Last summer, former CBS and Sony exec Jeff Sagansky launched Hemisphere Tentpole Co-Financing Fund with Jean-Luc De Fanti and Eli Baker (also behind Winchester Capital Partners) to back 12 to 16 studio pics that it believes will play well in growing foreign moviegoing markets. The first $200 million went into Sony’s “The Smurfs” and “Men in Black III,” Paramount’s “The Adventures of Tintin: The Secret of the Unicorn” and “World War Z.”
• And flying high with funds from his Virgin-branded airlines, Branson launched Virgin Produced in July 2010, through a pair-up with Kavanaugh
‘s Relativity. Run by former J2TV/J2 Pictures producers Jason Felts and Justin Berfield, the shingle landed a hit with “Limitless,” a $27 million pic that starred Bradley Cooper and has scored $162 million worldwide. It also backed “Immortals,” a co-production with Relativity, that is now its biggest hit. Relativity quickly paired up with Virgin after the shingle offered to provide some valuable marketing muscle by tubthumping films across Branson’s airlines, including Virgin America and Virgin Atlantic, and cell phones, through Virgin Mobile.
These new producers are keeping midrange-budgeted pics afloat — something New Regency (the “Alvin and the Chipmunks” franchise, “In Time,” “What’s Your Number?”) has long done at Fox. (The banner closed a $500 million credit line in September to fund more pics.)
Similarly, Emmett/Furla Films is expected to produce nine pics this year through its new fund that will benefit studios and mini-majors. The company recently financed Stephen Frears’ comedy “Lay the Favorite,” with Bruce Willis, Rebecca Hall and Catherine Zeta-Jones and Lionsgate-Summit’s upcoming “The Tomb,” with Sylvester Stallone and Arnold Schwarzenegger. .
And, after speciality labels Warner Independent, Fox Atomic and Par Vantage shuttered, companies like Norm Waitt’s Gold Circle Films (“Life as We Know It”), Bill Pohlad’s River Road (“Tree of Life,” “Brokeback Mountain”), James Stern’s Endgame Entertainment (“An Education”) and Steven Rales’ Indian Paintbrush (“Like Crazy”) are breathing new life into the indie biz with titles that are praised by critics but are never going to lead to action figures or videogames.
As Pitt recently told Variety, “There are a few very strong independent financiers that are more interested in content than profit. These guys like Bill Pohlad, who did “Tree of Life,” and Tim Headington and Megan Ellison are so important to what we do in the structure we are in right now. (Without them), harder-sell risk-taking films might not make it to the screen.”
Even Lionsgate is looking for partners, teaming up with “Warrior” producers Schur and Mimran, whose credits include the Edward Norton-Robert De Niro psychological thriller “Stone” and the Malcolm Venville-directed “Henry’s Crime,” with Keanu Reeves, to co-finance a yet-to-be disclosed slate of films.
Universal, especially, is relying on outside partners for pics. MRC (Seth MacFarlane’s “Ted,” “The Adjustment Bureau,” “Bruno”) has a five-year distribution deal with U. And the studio recently inked a three-year deal to release at least six films from Cross Creek, the first being Formula One racing biopic “Rush,” steered by Ron Howard. CBS Films released Cross Creek’s Daniel Radcliffe starrer “The Woman in Black.”
Cross Creek is focused on films with budgets that fall in the $15 million-$65 million range, with an average cost of $25 million to $35 million. Its Clooney pic “The Ides of March” had a $23 million budget. The film has since lobbied $41 million from the domestic B.O. In development at the shingle are Todd Field’s “The Creed of Violence”; “Black Mass,” a Boston Irish mob tale about James “Whitey” Bulger; and a biopic of actor Steve McQueen that Jeremy Renner is circling.
If there’s anything that ties these moneymen (and women) together, it’s that they’ve managed to largely stay out of the spotlight. In fact, most avoid the Hollywood party scene, attending premieres for their own pics only. They give few interviews. With the exception of Legendary, the shingles are small operations, requiring little overhead (Megan Ellison’s Annapurna is essentially the 25-year-old and her lawyer).
Some are looking to boost their presence, however.
Tull is making moves to turn Legendary into a full-fledged studio, self-financing more films in the U.S., rather than as co-productions with Warners, and abroad through his Hong Kong-based Legendary East, the entity that will produce English-language tentpoles designed for Chinese auds. WB will distribute those films.
Legendary already has successfully become a brand among the Comic-Con crowd, with the company’s panel at this year’s confab for pics that had yet to start production attracting more than 2,000.
And while there has been some internal friction between Legendary and WB over credit, and a falling out between Relativity and U (especially over their dueling Snow White films), most studio chiefs aren’t objecting to the inroads made by this crop of Hollywood newcomers. In fact, some are outright envious.
“These other guys, they’ve got the freedom to make whatever they want,” the major studio head told Variety. “They can take the risks we (studios) can’t anymore.”