The Cannes Film Festival will be dispensing awards to filmmakers this week, but they don’t give awards to dealmakers.
Yet as international co-financing pacts grow ever more complex and ubiquitous, the negotiators, not just the cineastes, occupy centerstage. And filmmakers these days worry less about their scripts than about their bridge, gap and mezzanine financing — not to mention their foreign pre-sales, rebates and tax credits.
Talk to members of the dealmaking fraternity and you learn that the market landscape has been changing in subtle ways. Buyers around the world are no longer intoxicated by star casting; they like high concepts in Russia and Brazil, too. Raunchy comedies seem to travel worldwide, as do horror pictures. And digital rights have become an obsession, especially in Asia.
International pre-sales are so important that a company like Stuart Ford’s IM Global (partially owned by giant Reliance of India) self-finances six or seven projects a year in addition to selling territories for scores of other films.
It was John Heyman, then a top agent in London, who pioneered foreign pre-sales in 1962 because, while Elizabeth Taylor vehicles were easy to set up, he needed funding for working actors like Trevor Howard and Jack Hawkins. Still, the studios solely financed most of their major projects into the 1980s, and paid little attention to foreign markets.
With the majors drastically curtailing production, however, and overseas audiences growing, the pre-sales business has become pivotal. At the same time, a new generation of equity players has arrived on the scene — many are in Cannes this week — looking for deals.
The newcomers are an intriguing mix: With Wall Street’s 25 wealthiest investors raking in some $21 billion in 2013 alone, there’s lots of “play money” around for young heirs like Megan Ellison, Molly Smith and Teddy Schwarzman, all of whom like movies. Bolstering the American indie business, however, is the kind of entrepreneurial funding that’s been fueling tech startups. David S. Rose, in his new book on the subject, titled “Angel Investing,” calls such financing “a legitimate part of an alternative-class investment portfolio.” An aggressive angel investor like Jacob Pechenik has funded some 34 indie films in the past two-and-a-half years, and claims to be doing quite well. One of his investments, “The Skeleton Twins,” starring Kristen Wiig and Bill Hader, cost less than $2 million, scored well at Sundance and already has made him a profit, with Lionsgate and Roadside Attractions buying domestic rights, and Sony Pictures Worldwide Acquisitions taking international. The film has a Sept. 19 release date in the U.S. A former software creator, Pechenik fully funds some films, but often is interested in gap or bridge financing.
The Austin-based Pechenik, 42, acknowledges that angel investing can be a riskier proposition in film than in tech startups, since the mix of personalities can be volatile — but he happens to love film. “It’s an exciting means to reach people and get ideas out into the world,” he says.
That’s a view shared by the crusty dealmakers at Cannes, who often sneak off at the end of the day to catch a movie. Or an award presentation, even though they know they’ll never be the guest of honor.