Brazil: let the buyer beware

Exchange rate a big factor in acquisitions

RIO DE JANEIRO — Local indie distributors plan to resume specialty purchases in Cannes if the Brazilian currency holds onto its recent gains against the U.S. dollar.

Local currency lost over 50% of its value in 2002, closing at 3.54 real to the dollar at year’s end but it bounced back to 3.08 on April 15.

Most local indie distribs scaled back acquisitions last year and early this year, fearing they would not be able to recover their dollar investments with sales in real.

“(Sales agents) live in a world of hard currency, but we reside in a world of weak currency,” says Marco Aurelio Marcondes, a partner at Europa Filmes MA Marcondes, a top indie distrib. “The exchange rate is a key element in this equation.”

“It is a buyers market now, unlike as it used to be in the mid ’90s, when one real was equal to one dollar,” adds Adhemar Oliveira, a partner at distrib Mais Filmes.

Purchase prices remain a contentious issue. All rights for Brazil come to about 0.5% of a pic’s budget, according to Imagem’s partner Marcio Fraccaroli. “(Sellers) insist on the following formula: Latin America should pay 1.5% of the budget, of which Brazil accounts for 35%,” he says, adding that buyers don’t usually go along with this calculation.

Local indie distribs are increasingly focusing their activities on the theatrical and DVD markets, which are growing. Home video is in a decline, while free TV remains virtually off limits to indies, as nets prefer to buy large film packages from U.S. studios. And pay TV remains tough.

“We have a list of over 50 films that we have unsuccessfully tried to sell to pay TV. The crisis in pay TV has worsened in the past two or three years,” reports Roberto d’Avila, content manager at TeleImage.

The theatrical growth has attracted at least one new player to the market. Imagem Filmes, which for the past three years limited its activities the vid/DVD market, has purchased all rights to 28 pics. Its first theatrical bow was on May 1 with “The Pledge.”

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