Sunny forecast in Europe

Presales showing signs of recovery

“Presales deals” and “Germany” haven’t been used positively in the same sentence much over the past two years, but the good news is things are beginning to change.

Take Walden Media’s expensive “Around the World in 80 Days,” starring Jackie Chan, Steve Coogan, Jim Broadbent and Johnny Knoxville. Even without a domestic partner, pic presold to Germany’s Telepool and Universum for a significant sum.

Summit Entertainment’s Patrick Wachsberger made a key German presale on its Alcon/Warners kid pic “Racing Stripes.” He also managed to presell German rights — largely thanks to star Bruce Willis — on Intermedia’s “Me Again,” but the deal fell through recently when Willis dropped out of the pic.

Presale deals to the world’s major territories — even on pics without a U.S. distributor — seem to be slowly coming back after a painful two-year freeze that saw the indie film financing trigger all but disappear.

Arclight’s Charlize Theron-Penelope Cruz pic “Head in the Clouds” presold to Tobis in Germany and closed a number of other key European territories prior to its shoot.

“Europe is starting to sort itself out,” says Cinetic Media topper John Sloss. “There’s a fair amount of optimism in the presales world. ‘Far From Heaven’ did really well in Italy and it will probably gross more overseas than it did domestically.”

Not all roses

But some sellers aren’t as optimistic about the prospects of selling off pic rights globally.

“I would not use the word rebounding in terms of the presales market,” says Mark Damon, chair of MDP Worldwide. “Not until four of the top eight territories are supported by a healthier TV market. I’m not sure how long it’s going to take but I would say it’s at least 18 months away.”

The market remains so weak, Damon adds, that he has simply abandoned applying territorial percentages to sales any more.

Instead sellers are focusing on using estimates of what each territory is worth by factoring in elements such as the demand in a particular territory, talent and the director. Sellers say that generally the Spanish theatrical market is slightly up, though pay TV remains impossible, and the Japanese market is buoyant right now due to a strong video market and less reliance on TV sales.

“Theatrical and video are driving the market right now,” says Miramax chief operations officer Rick Sands. “Companies with the wherewithal to cash flow acquisitions and P&A and wait for the TV situation to straighten out are in a very strong position.”

Some sellers are seeing a 10%-20% boost in sales activity thanks to video/DVD deals.

“Overall, I think DVD is somewhat filling the gap left by TV. People are buying things they weren’t buying a year ago. There are video- or DVD-only deals being done and even TV series sold in DVD are making real money,” says Myriad Pictures prexy Kirk D’Amico.

The pay TV market is also beginning to come back slowly in some territories, though it remains dire in Spain and France due to the implosion of Canal Plus.

TV upturn?

On the free TV front, broadcasters are carefully buying again even though they’re snapping up fewer films at lower prices.

“TV is definitely loosening up and Germany is buying again,” says Sands. “TV reality shows are starting to taper off and local programming is not delivering the numbers to the local networks so they need to buy movies again.”

As always, the right product can garner significant presales.

Currently generating buzz in the presales market is indie pic “The World of Tomorrow,” a Natural Nylon/Brooklyn Films production starring Gwyneth Paltrow and Jude Law, that’s shooting in the U.K. and expected to be snapped up shortly.

“If it’s the right film distributors will still pay astronomical prices,” observes industry vet Gordon Steel.

Studio level fare in particular remains highly sought after. Over the last six months some studios, looking to lay off risk have sold off a slew of films to minor territories, including Malaysia, Singapore, Turkey, Hong Kong and the Philippines.

But for the smaller independents, the market still demands an entrepreneurial spirit when it comes to financing projects.

“Since the foreign marketplace today is delivering, in terms of presales, less than 50% of any picture’s budget, it is incumbent on indies to be as entrepreneurial as possible,” says MDP’s Damon. “That means seeking out every form of subsidy, tax benefit, labor rebate or state funding support in the U.S. Only this way an indie can survive.”

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