Ever increasing exposure via multiplexes, an increasingly competitive independent sector, and a blighted tv industry have forever changed the face of Australian distribution.
Tv once underpinned theatrical distribution here, at least for the majors. Tv sales were the safety net distribs relied on to recoup their advances; theatrical release was the cream.
Now Aussie nets are under extraordinary financial pressures, and homevideo is static, too. For non-studio small screen distributors times are hard indeed.
Webs have drastically cut volume and prices. Industry sources report that a major film is now capped at around $A200,000; drama series are approximately $A20,000 an hour, minis $A50,000 (compared to $A75,000 a while ago).
And that’s Aussie dollars, not U.S. greenbacks, the standard currency for program-buying. Australia’s commercial webs quietly changed to local currency last year for ease of budgeting and to hedge against currency fluctuation.
For the smaller distribs that has put greater reliance on ancillary areas, such as production, Southeast Asian distribution, even exhibition, to tide them over.
The tv villain
Aussie majors Village Roadshow (which has a distribution joint venture with Greater Union) and Hoyts have both pointed to tv as a major contributor to each company’s poor results over the last year. For the first half of this fiscal year Hoyts Entertainment posted a $A7.4 million loss. Village Roadshow’s profits fell 67% to $A1.15 million.
Both companies note there has been some headway. Hoyts’ chief exec John Rochester reports some “sensibly structured” sales to the Ten and Seven webs, and Village Roadshow’s m.d. Graham Burke says the company has stitched together a “fiscally sound relationship” with the Ten web that sees sales conducted under a “very complicated” structure.
And some smaller film players have also reported headway, although one said an offer from Nine was so low “it just wasn’t acceptable to our producers.”
Indies have yet to experience any relief. “Prices are rock bottom, and there’s no easing at all,” says one tv distrib. “The networks are under heavy pressure and that pressure is being taken out on us.”
Because the webs are relying heavily on their U.S. output deals, many of which have been renegotiated, time slots for indie product are tight.
In line with the soft tv market, film distribs are also aiming to reduce the guarantees they were paying, although the indies report no great change in the prices being asked by overseas suppliers. “The market is adjusting,” says Burke. “All of us were living in an unreal world.”
Distribution nevertheless is the primary source of revenue for Hoyts and Roadshow, indicative of the health of the current theatrical market.
Total boxoffice revenues rose almost 12% last year to $A270 million. First-quarter results for 1991 of $A96.77 million indicate another strong year. A significant proportion of the increase is also a result of more sophisticated reporting techniques.
Last year members of the Motion Picture Distributors’ Assn. of Australia (all the U.S. majors, repped either by Hoyts or VR) released 95 pics in Oz compared to 159 non-MPDAA member releases.
Not surprisingly, the U.S. companies take the lion’s share of business. At the end of last September they accounted for almost 75%.
Multiplexes are driving Oz film distribution, but that’s changing the industry’s dynamics. Releases are now much wider – up to 100 prints and more compared to 50-60 four years ago – and yield a healthy upfront in the first four weeks compared to the first few months.
But that means higher p& a costs. A major release now costs upwards of $A700,000, more for a triple A title. Tv is expensive but now the main tool of all the majors. “During release we now have to support so many screens over a long period it really cuts into film rental,” notes UIP m.d. Mark Gailey (who is also MPDAA chairman).
Gailey and Hoyts/Fox/Columbia/Tri-Star g.m. Scott Neeson also say that Oz has one of the lowest film rental levels as a percentage of b.o. in the world, which they attribute to the high overheads (from such factors as staffing policies and high interest charges) associated with Austrailian multiplexes.
Roadshow’s national marketing and distribution manager Alan Finney disagrees, noting Oz releases often equal if not exceed the comparative U.S. performance.
Majors agree however that as multiplexes become more established film hire terms will become more dynamic.
“Our policy is moving towards not treating all multiplexes the same,” says Gailey. “By world standards our film hire levels have to be considered too low.”
Upshot of this is an increasingly competitive marketplace for product recognition and placement. “Marketing is more aggressive, and the market is a lot tougher so we need to get the most out of our ad dollar,” says Scott Neeson.
Adds Gailey: “It’s very competitive, so we have to start to think of new ways of doing things. If you’re not adjusting all the time you’re falling behind.”
Distribs also believe a growing casualty will be the marginal film, an increasingly riskier item to release alongside the major titles. “The gap between big films and those that aren’t is getting wider,” avers Finney.
But the indies are playing a growing role filling that niche. Just as the majors aren’t adverse these days to handling a quality arthouse title, so too are the more established indies taking on a higher volume of product via wider releases.
Past six months have seen the major indie players win their biggest share of the b.o. yet, in many cases outstripping the majors’ midline releases. Some notable successes: “Jesus Of Montreal” (New Vision), grossed almost $A2 million; “Cyrano De Bergerac” (New Vision) over $1.6 million; “An Angel At My Table” (Ronin/Longford) upwards of $A2 million; and “Metropolitan” (Premium) more than $A1 million. When New Vision releases “Hardware” it’ll go out on 25 prints, distrib’s biggest spread to date.
Boost to indies
Indies attribute that to increasing consumer awareness of arthouse product and more mainstream venues being made available as a result. “Now the major exhibitors are looking at a constant supply of quality product because of the hits we’ve had in the last two years,” says New Vision m.d. Frank Cox.
Although infrastructure expansion and growing p& a costs also trouble the indies their business is centered on film distribution and so most have been buffered from the tv downturn.
With the exception of Tony Zeccola’s Palace Entertainment Corp., Oz indie’s tv sales are generally limited to the thrifty pubcasters SBS and ABC, although video is offering increasing opportunities via various joint ventures, most recent of which is Dendy Films’ just-inked linkup with RCA/Colpix/Hoyts to release its catalog.
Most also have the comfort of related exhib interests, usually key arthouse venues in the major cities. Says John Cerrone, g.m. at Premium Films, which is linked to eight screens: “It’s extremely important. In every territory the distributors that are more successful are the ones with their own screens.”