As studios put more and more of their resources into tentpoles, independent producers are pondering a key question: How much money is the right amount for a project?
For starters, with the Cannes Film Festival looming, producers are dealing with “smarter” money.
“The equity is now much more sophisticated — they look at it on a risk basis rather than making an emotional decision and I actually prefer those investors over emotional ones,” says Myles Nestel, head honcho of 3-year-old financing entity the Solution Entertainment Group. “Prior to the crash in 2008, people were throwing money at projects.”
That means a microscopic attention to detail on such pictures as Pierce Brosnan’s spy thriller “November Man.” “We were originally set to shoot in Germany. And we had to compromise by shooting in Eastern Europe, and in Serbia, and it saved a significant amount,” Nestel recalls.
Lotus Entertainment co-chair Bill Johnson, who has an exec producer credit on opening night film “Grace of Monaco,” (pictured) believes the usual guidelines for the current marketplace require about 60% to 65% of budgets to be covered by foreign presales — though that’s not a hard-and-fast rule. “You have to be crafty,” he adds.
Jamie Carmichael, president of the film division of Content Media, says the limits are clear: “It’s a dead zone between $6 million and $25 million, so there has to be a really good reason because DVD revenues continue to decline. It needs to have a genuine theatrical capacity. If you’re above $25 million, you can get the writers and directors that lead to a theatrical release.”
Carmichael says the change in thinking is being driven by change in the value of home entertainment along with TV stations not buying as many movies.
But projects are still getting made in that so-called “dead zone.” For example, Participant Media financed the $20 million thriller “A Most Violent Year,” written and directed by J.C. Chandor (“All Is Lost”) and starring Oscar Isaac and Jessica Chastain, then sold U.S. rights to A24 earlier this year. FilmNation is selling foreign territories at Cannes.
Participant is also in post-production on its sequel to “The Best Exotic Marigold Hotel” with a budget in the high teens — marking the first time that a Fox Searchlight title has ever gotten a sequel and giving hope to independent producers everywhere. The 2011 original had a $10 million budget and grossed $136 million worldwide.
Production chief Jonathan King admits that Participant’s overriding goal of promoting social action sets it apart from other producers in making the greenlight decision. “Our mission is unique but we do aim for our films to be commercially viable,” he says.
Harrison Kordestani, head of financier Main Street Films, says the math is extremely simple.
“Studios can’t make an A-list movie for less than $40 million so we’re trying to fill that void,” he notes, pointing to the comedy “Barely Lethal,” starring Hailee Steinfeld as a teen raised at a boarding school that trains children to be assassins. Jessica Alba and Samuel L. Jackson also star.
“We made it for $15 million and it would have cost a studio twice as much,” Kordestani says. “You have to have a modicum of key talent such as what we had on ‘Your Right Mind’ with Katherine Heigl and Ben Barnes. You need enough talent with directors and writers to convince the actors.”
“We’re not trying to outdo the studios,” Kordestani adds. “We’re trying to be responsive to the marketplace. I admit that some films should not be made because you can wind up with producers holding a $6 million bag.”
For Primeridian, the year-old banner formed by Arcadiy Golubovich and Tim O’Hair, the rules are relatively simple — make two-quadrant director-driven adult dramas. They’re in Morocco on the set of “A Hologram for the King,” starring Tom Hanks with Tom Tykwer directing on a $35 million budget.
“With every month that’s gone by, we are more comfortable with this project,” O’Hair says.
Jere Hausfater, chief operating officer of Aldamisa Entertainment, says the indie-financing world has been through a profound change that leaves little margin for error.
“You used to be able to count on home entertainment or television as a significant financial backstop on films that tank at the box office,” he says. “Today, If you lose, you usually lose big.”