New global recipe for film production

Foreign companies are making English movies

It’s a sign of the times when quintessentially American producer Joel Silver is making his next film, “Unknown White Male,” an entirely European co-production, in partnership with Germany’s Studio Babelsberg and French major StudioCanal.

On the other end of the budget spectrum is the edgy indie film “Buried,” starring Ryan Reynolds, which recently sold at Sundance to Lionsgate and, for all intents and purposes, is a Spanish film.

What the two films have in common is that they typify the next phase of the ever-evolving film biz.

Step 1 was Hollywood’s realization that its films could earn more money overseas than domestically.

Step 2 was Hollywood’s jump into local-language production, forming co-productions with overseas companies or cementing rights deals with various territories (as New Line did with “Lord of the Rings”).

Now it’s the international companies, not Hollywood, that are opening the door to Step 3: making audience-friendly, English-language films with stars (a la “Taken”) and American-based producers like Silver, Neal Moritz and Gary Barber.

The model for this 21st-century global studio is StudioCanal, which is doing multi-territory distribution, has a massive library rich with remake potential, an international sales arm, inhouse pay TV deals through Canal Plus, and production relationships with Hollywood producers.

StudioCanal’s individual efforts are not new, but the innovation is that it’s all under one roof.

In the last few years, StudioCanal has laid the groundwork for deals like “Unknown White Male,” bringing Euro co-production coin and attractive properties suitable for remaking to the table with U.S. majors. For indie films, StudioCanal can fully finance against France, Germany and the U.K. and presales elsewhere even before trying to sell to a struggling U.S. indie market.

The U.S. majors will continue to lead the way in the global film biz, but international alternatives are being built and developing their own multi-territory distribution operations. They’re also building libraries and physical production space, such as backlots and soundstages, that rival Hollywood’s. And they have another lure: financial incentives.

While Hollywood studios have learned to rely on non-U.S. box office (films like Fox’s “Ice Age 3” and Sony’s “2012” earned three times overseas what they did in the U.S.), these new international studios are finding they can profit without even opening their films in America. Companies such as India media giant Reliance Big Entertainment, Abu Dhabi’s Imagenation and Korea’s CJ Entertainment are becoming more active outside of their own territories.

“We have the biggest film library in Europe,” says Olivier Courson, StudioCanal chairman-CEO. “We’re the only European company able to release a film directly in Europe’s three biggest markets. And we belong to one of Europe’s biggest media groups.”

Those three statements are key, and they’re all are connected.

In May 2006, StudioCanal acquired leading indie Brit distrib Optimum Releasing; in January 2008, it acquired German producer-distributor Kinowelt.

The moves meant the company could release pics directly to France, the U.K. and Germany, which comprise nearly 60% of the Western European market.

And StudioCanal was sitting on a 5,000-title library which, including tentpoles like “Terminator 2” and “Cliffhanger,” generates half of StudioCanal revenues, Courson says.

Under Courson, Studio-Canal also set out to sell remake rights.

“Remake discus-sions open a lot of doors. They give you a of what material people are drawn to,” says StudioCanal exec VP Ron Halpern.

StudioCanal has forged production-distribution pacts with Spyglass, Moritz’s Original Film and Silver’s Dark Castle.

Those three entities will supply high-profile Hollywood movies for StudioCanal’s distribution in France, U.K. and Germany. And all three boast distribution in the U.S. via major studios, which means their high-budget American hoopla can fuel the Euro launches. In exchange, the Americans get funding at a time when many studios are cutting back production deals. It also gives Hollywood the possibility of English-language remakes of films from the Canal library. And it eases the sale of these films to Euro TV.

Silver’s “Unknown White Male” is a case study in the new model. Currently lensing in Germany, the pic has a Spanish director (Jaume Collet-Serra), Irish leading man (Liam Neeson), German leading lady (Diane Kruger) and a Europe-based storyline.

The pic is structured as a U.K.-German-French co-production and emanates from the European pacts Silver has forged through his Dark Castle production venture.

Dark Castle has inked a five-year deal with Germany’s Studio Babelsberg to co-produce 15 features, which gives Silver easy access to German subsidy coin as well as to the Babelsberg backlot. While the film still will be fed through Dark Castle’s output deal with Warner Bros. in the U.S., structuring the pic as a European co-production gives Silver the ability to sell it to the lucrative European TV sales market.

European nets have annual quotas they must meet when it comes to buying and screening European content. Being classified as a European production means “Unknown White Male” will be eligible for higher European TV sales.

“Being a European co-production really does make a big difference in a film’s exploitation value in Europe,” says Libby Savill, legal firm Olswang’s head of film, who worked on structuring “Unknown White Male” as a European co-production. “It’s particularly useful for independent producers who don’t have an output deal with the studios.”

With Leonard Glowinski onboard in the newly created position of head of co-productions and acquisitions for France and Europe, StudioCanal now aims to frame most of the international movies it makes as Euro co-productions when possible, Courson says.

Korea’s Kim Jee-woon (“The Good, the Bad, the Weird”) is writing a redux of Claude Sautet’s 1962 “Max and the Junkmen” as part of a three-film production deal between StudioCanal and Lion Rock Prods., John Woo and Terence Chang’s L.A.-based production shingle. Park Chan-wook (“Lady Vengeance”) is attached for a makeover of Costa-Gavras 2005 “The Ax,” another StudioCanal property.

“Stories with a European angle play better in theaters and on TV. And from a financial point of view, they qualify for television quotas and allow StudioCanal and its partners to offset risk by accessing tax and other financial incentives,” Courson says.

He adds, “A film which is well structured in this way can allow StudioCanal to minimize or eliminate the risk on the U.S. and so keep it as an upside.”

Courson also argues that framing big international movies as Euro co-productions merely recognizes the way markets are trending these days.

“Working Title has shown successfully for years how films with a European flavor, particularly their romantic comedies, outperform certain types of U.S. films in Europe and still play well internationally,” Courson says.

StudioCanal’s partnerships are two-way streets and a powerful illustration of what Europe, in a global film economy, can now bring to the table in the U.S.

The biggest attraction, at least for Hollywood’s top trawlers, is the remake potential of StudioCanal’s cavernous library.

“StudioCanal has great properties. Every time we think ‘What else can they have?’ they have more,” says Moritz, who’s producing the StudioCanal-financed “Cliffhanger 2,” now in development. Moritz is also developing the remake of “Escape From New York,” another StudioCanal property, for Warner Bros.-New Line.

StudioCanal is not the only French company trading retreads Stateside. In a recent deal, Luc Besson’s EuropaCorp last year sold Miramax remake rights to Guillaume Canet-directed thriller “Tell No One,” and is pursuing a redux of “District 13,” titled “Brick Mansion.”

Miley Cyrus and Demi Moore are circling a remake of “L.O.L.: Laughing Out Loud,” handled by Mandate Intl. and a smash hit for Pathe in France last year.

The only question regarding Stateside remakes of French pics and library titles, given Gaul’s status as Europe’s foreign-language production giant, is why more makeovers haven’t been done before.

Their numbers look set to increase, says Spyglass Entertainment’s Barber, who co-developed another remake of a StuidoCanal property, the 2005 French thriller “Anthony Zimmer.” Now called “The Tourist,” with Angelina Jolie and Johnny Depp, the film is being produced by GK Films and Spyglass in association with StudioCanal and financed by Graham King’s GK Films.

For Barber, France “has always made good films. Nowadays, it’s going to be a constant source of development properties.”

On StudioCanal’s big Hollywood films — “Tourist,” Spyglass’ “Leap Year,” Dark Castle’s “Unknown White Male” and “The Losers” — it has carved out rights to two or more of its direct distribution territories — and it’s usually all three. On “Escape,” it’s retained all of Europe.

Low-budget or prestige directors are finding it’s just as easy (or easier) to raise coin in Europe for their pics. At Sundance last month, two of the first four U.S. distribution deals sealed — Lionsgate on Rodrigo Cortes’ “Buried” and Hannover House on Joel Schumacher’s “Twelve” — were on pics partly financed out of Europe. Gaumont co-produced “Twelve”; and French sales shingle Kinology presold “Buried” heavily.

On the Eli Roth-produced “Cotton,” which StudioCanal fully financed, “we’re at cash break-even before the U.S., and the U.S. is upside, thanks to our distribution financing and international presales,” says Harold Van Lier, StudioCanal exec VP of international sales.

“StudioCanal offers a model I’ve always believed in: foreign presales to finance the picture, in exchange for a huge domestic upside,” Roth says. “When you’re fully financed, you’re not pressured to take a big upfront (minimum guarantee) to recoup your costs: You can really go with whoever has the smartest release strategy.”