Beachy Keen

Sales brigade for the most part upbeat about film market prospects

HOLLYWOOD – It could be spring fever, changing market conditions, or the fact that anxiety over the recession is waning. Whatever the cause, optimism is clearly the dominant mood among this year’s marketgoers as they head to the Cannes Film Festival, kicking off May 12.

“Supply-and-demand equations are returning,” says indie pic lender Jared Underwood, senior veep, Comerica Entertainment Group. “There are fewer sellers and buyers are a bit stronger. The pre-sale market is firming up and the euro has more buying strength — buyers can pay more without paying more.”

What: Cannes Film Festival & Cannes Market
When: May 12-23
Where: Palais des Festivals, Cannes, France
Who: About 27,000 film professionals from 106 countries
Web links:
City of Cannes
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Sellers who attended Mip TV in late March report that new outlets in territories such as Eastern Europe and the Baltics are creating competition and a demand for product. “There are so many new cable stations launching and they are buying across the board,” says Liz Mackiewicz, senior VP, sales and distribution at First Look Intl. “Even the Asian market, which is buying primarily for video/DVD, is active and buying for pay cable and basic cable now.”

Though film sales to broadcasters in the major European territories remain at a much lower level than three years ago, most sellers say the situation has as much to do with competing programming as economic constraints — largely due to the ongoing popularity of reality series in primetime slots.

“Over the last two years we focused on films that could go theatrical or directly to DVD. We are now seeing TV returning in some territories and so we’re trying to pick up product for the market that can generate sales from both video and TV,” notes Dream Entertainment chief Ehud Bleiberg.

While it is obvious that film sellers can no longer set up projects with pre-sales alone, many high-end vendors — including Initial Entertainment Group, Summit Entertainment and Intermedia — have successfully changed their business plans to become producers. Their goal is to fill the void left by the major studios, which are producing a smaller number of pics a year.

Two producer-sales companies are delivering two of the studio’s biggest late-year tentpoles. Martin Scorsese’s “The Aviator,” to be released domestically by Miramax and Warner Bros., was produced and majority financed by Graham King’s Initial. Intermedia’s “Alexander,” helmed by Oliver Stone, bows via Warners in fall.

The trend looks set to continue with pics such as Initial and Universal’s “The Good Shepherd” already in the pipeline. Though big-budget fare is still some of the toughest product to sell to foreign indie distribs — even in what looks be a rebounding market.

It’s the sellers of the mid-level-budget fare that are seeing business pick up.

“As long as you have a certain kind of product the market is fairly robust,” says Senator Intl. prexy Joe Drake. “We aren’t doing $100 million films. We are playing more in the genre space: horror and comedies that can be made between $10 million and $40 million.”

But Drake stresses that all his films have studio distribution Stateside, and that it would be suicide to enter the game without it.

UTA agent Jeremy Barber, on the other hand, says he’s actually seeing more financiers willing to risk doing films without a U.S. distrib on board in the lower end of this budget spectrum.

“There’s a plethora of financing out there,” he says. “It tends not to be element dependent. It’s more about the material and a filmmaker’s vision. For smaller indie movies, under $3 million, there’s a large number of buyers in place as well as international buyers.”

Fewer pics and an emphasis on commercial franchises at the studios have created opportunities for these smaller and mid-level budget players.

“We set up our company to do $20 million to $45 million movies — those are not numbers the studios spend a lot of time on,” says former CAA agent Adam Krentzman, who formed financing-production shingle Outlook Films last year. “They are spending their time on tentpoles. It’s now possible to finance and package movies in that range that the studios are happy to (distribute).”

Krentzman adds that financing for those pics it not coming from foreign sales but subsidies, tax-driven equity and private equity.

“We set up our business not based on any foreign sales because the studios prefer to keep worldwide rights now. Studios used to get 60%-65% of their budgets from foreign sales five years ago but now they are getting closer to 30%-35%, so they prefer to keep the world.”

In terms of product, sales and financing companies are seeing an increased demand for horror from smaller territorial distribs. It’s a trend that can be traced to the ongoing success of the genre with such studio and indie pics as “Texas Chainsaw Massacre,” “Dawn of the Dead” and “House of 1000 Corpses,” which work well in foreign markets on DVD and pay channels. Comicbook-based titles also are in demand, following on the heels of “Hellboy,” “Blade” and “The Punisher.”

“Spider-Man” helmer Sam Raimi’s horror label with Senator Intl., Ghost House Pictures, is nearly 2 years old, and now U.K.-based sales and financing shingle Capitol Films is looking to establish label, Kensington Gore, with helmer Bernard Rose.

Yet despite the seeming frenzy surrounding the horror genre, some contend it’s not really a trend. “Movies that know what they are are always going to work. Horror has always been there,” says Nick Meyer, co-prexy, Lions Gate Films Intl., who has been doing well with pickups such as gore pic “Cabin Fever” and Sundance shark chiller “Open Water.”

Meyer, who also is staying well away from the $100 million pictures, says these days it’s not about trends but about creating value propositions. “Our customers aren’t looking for those types of movies, they’re looking for films they can afford to buy and make money on — real, viable theatrical pictures. If you are going to make a $50 million movie that’s too violent to play on TV nobody is going to buy it.”

Despite an overall rebound, industryites point to some ongoing problem spots. The closing of a lucrative U.K. tax loophole has had a ripple effect across the European production community — as has the harsh dollar-euro exchange rate, which helps sales but is making the production and marketing of pics abroad a more expensive undertaking.

And consolidation among buyers and sellers continues. The latest examples include the Millimages takeover of French distrib Bac and the consolidation in Japan of Nippon Herald and Kadokawa.

“It is the yin and yang of our business,” says First Look’s Mackiewicz. “Things in one way decrease while new players simultaneously emerge. Our job as sales companies is to keep on top of that and be aware of who’s hot and who’s not to meet the needs of the international market.”