NEW YORK — Hardly an easy process at the best of times, raising finance for a film in today’s “irrationally pessimistic” market requires unique persistence, resourcefulness and business savvy.
That was the inescapable bottom line Tuesday, the first day of the 2003 Intl. Film & TV Finance Summit in Gotham, as the assembled lawyers and bankers offered advice but few guarantees on how to secure funding in a climate where foreign pre-sales are scarce, European TV prices depressed and studio overhead deals increasingly the preserve of only a privileged few A-list producers.
“There are more independents than ever before and less financing than ever,” said financier Dwight Smith, a partner at Gotham-based bank M.R. Beal & Co.
Smith urged filmmakers to build their pitch as a real business plan, complete with mission statement, budget highlights and a marketing plan with details on the target audience and box office benchmarks of similarly positioned films. Business plans may be anathema to artists, but they’re essential to the financing campaign.
While the plight of the independent producer is a familiar one, it’s more symbolic than ever of the industry in general.
“A good producer never loses that warrior attitude when it comes to raising money,” said attorney Karen Robson, who reps many financiers among her clients of writers, directors and producers.
Robson notes that producers being weaned off the cushy studio system need to learn how to be independents and how to bring capital to the table if they want to keep their overhead deals.
“Hollywood producers haven’t really taken themselves out of the studio system yet emotionally,” said attorney Vinca Jarrett, whose Boston-based firm specializes in film production packaging.
Canadians and Europeans who understand how to use soft money are doing better. “It can be done, but you have to look out of the box and re-create the structures,” Jarrett says, urging producers to be careful in selecting the right distributor and sales agent. “There’s a lot of shysters out there — you’ve got to be careful.”
If a small distrib can offer only a handful of screens, she continues, one may be better off self-distributing.
The current trend, Robson said, is focused on soft money such as P&A financing and tax benefits, and the rise of a generation of wealthy dot-comers and real estate moguls looking to invest in movies.
These aren’t the same Wall Street investors who dabbled in the film biz in the last decade in the hopes of making a killing with their first sale at Sundance, but a larger pool of private investors who made big money in personal computers/Internet and real estate booms. There’s also the ever-popular children of the wealthy looking for an avocation, and international tycoons like Philip Anschutz, who may or may not have any further strategic motivations for investing.
Seat of finance
“Every producer in Hollywood is looking for (a wealthy individual),” Robson noted. One industrious client of his flies first-class between New York and L.A. simply to increase his chances of bumping into a rich individual just waiting to finance a feature.
And while private investment is more readily available for P&A funding, since at that stage there’s a real product to lend against, it’s not necessarily cheap. Such lenders want a sizable return, and they’re typically the last in and the first out, Smith said.
None of this news may sound particularly promising, especially as relying on rich individuals is an inherently unpredictable source of funding and likely would work for only a limited number of pictures.
Still, the assembled experts had a few tips to offer independent producers (which these days means just about all producers):
- Have a business plan.
- Beware of small distribs and secure a detailed marketing plan for your film before handing over the rights.
- Limit finder’s fees to no more than 10% of the financing (4%-8% is best), less if it’s for a slate of films.
- Only work with respectable sales agents with good exhib contacts.
- Use a collection agent (banks will insist on it).