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Private investors bring home two big pics

'Home,' 'Elite' may set trends for Brazilian blockbusters

Nets cast movie coin | 3D phenom expands Brazil B.O. | Private investors bring home two big pics

Risk has not been a factor in Brazil’s highly subsidized, modern-pic production sector, as filmmakers usually fund their projects and pay themselves through the country’s generous incentives. But the two pics with the largest releases in the second half of 2010, Wagner de Assis’ “Our Home” and Jose Padilha’s “Elite Squad 2,” have challenged this logic and may set trends for the so-called Brazilian blockbusters.

Cinetica and Migdal, the production companies behind “Our Home,” raised about 85% of the pic’s production budget through private investors, such as local bank BRJ, while just 15% of the budget is funded through local incentives, says Migdal’s president Iafa Britz.

The pic, which Fox released Sept. 3 on 430 screens, cost $10 million, a big production by local standards. It’s based on the bestselling book of Chico Xavier, a deceased local national spiritual leader, and features Ueli Steiger (“The Day After Tomorrow”) as cinematographer and an original score by Philip Glass.

“We initially tried to raise the funding through incentives, but it was eventually clear we needed direct investors,” Iafa adds. “This is a healthier business model for the industry. But I’m not sure whether it is a trend or an isolated case.”

The producers of “Elite Squad 2” have also been innovative. Opening Oct. 8 on about 600 screens, the film will enjoy the largest release ever of a Brazilian pic. The majority of the film’s undisclosed budget came from incentives, but production company Zazen has invested its own coin, too. Padilha and other talent involved in the production, such as leading actor Wagner Moura, hold equity in the pic.

But what’s really groundbreaking about “Elite Squad 2” is Zazen’s decision to distribute the pic itself. The company hired distrib exec Marco Aurelio Marcondes to carry out the operation. Zazen has also inked a deal with local leading media group Globo Filmes, which invested about $1.4 million in the pic’s P&A, plus media on TV Globo and other channels.

This alternative business model challenges the traditional one, in which majors invest in Brazilian blockbusters through an incentive known as Article 3 and gain the pics’ distribution rights for the local market. An example of this established model is the first “Elite Squad,” which was co-produced (via Article 3) and distributed in October 2007 by Universal.

Under this model, distribs have the right for the first take on theatrical revenues (following exhibs and taxes), and the result is that producers rarely make any money. Zazen, however, frowned on dealing with the majors; rather, they wanted the filmmakers and other pic equity holders to maximize their gains. If they succeed, other producers of Brazilian blockbusters may follow the same pattern. “This business model does not exclude the others. It’s a valid alternative for certain projects,” Padilha says.

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