You will be redirected back to your article in seconds

Bank lending steadies, after downsizing

Frugal is new normal for find funding

Indie film lending cratered with the 2008 global credit freeze, but has regained balance at a downsized volume that seems sustainable and steady, say film finance executives.

“There’s a ‘new normal’ and that is to be very conservative,” said Christine Ball, who is senior VP/group head and senior relationship manager handling entertainment at Wells Fargo Commercial Banking. “Certainly, the banks all get this.”

Wells Fargo has a $500 million film loan portfolio.

Movie finance executives say that for single picture financing the new environment means pre-selling more territories. As a result, so-called “gap” financing for remaining unsold territories is smaller than was acceptable during the easy-money period from 2004 to 2008.

For sizing corporate credit lines, this means tilting more to bad-case scenarios for calculating the earning power of films and other assets used as collateral, rather than more-generous medium performance assumptions used a few years ago.

Popular on Variety

The trend to tighter qualifications means fewer films are financed by banks, though a silver lining is that a less congested film landscape means the movies that make the credit grade have a clearer shot at selling and generating revenue in distribution.

“There seems to be a better caliber of movie product today that very often is easier to finance,” said Lisa Wolofsky, the Montreal-based manager of gap and international financing in the entertainment unit of National Bank of Canada. “I’m seeing more projects that are viable.”

One independent segment where bank financing is plentiful is high-end movies.

“The pre-sale market is as robust as I’ve seen in maybe 15 years for films with budgets of $20 million or more,” said Jared Underwood, senior VP and group manager of entertainment lending at Comerica. “Films with major stars and directors are selling well. But the lower- to mid-level budget films with smaller stars, tend to be more difficult to pre-sell and riskier in general.”

Comerica has been a banker to the film, TV and videogame industries for over 20 years, financing over 800 movies.

Finance executives say that another effect of fewer pics being funded is lower production costs, particularly because top creative talents have lower salary demands in comparison to the boom years.

Another characteristic of the new normal is that a slew of European banks that were significant lenders to the international and Hollywood movie sector have mostly disappeared.

“European banks will be slow to return, and not any time soon, I think, given the magnitude of sovereign debt issues gripping Western Europe,” said David Molner, managing director of media finance specialist Screen Capital Intl.

Finance executives say remaining banks seem to have sufficient lending capacity for the downsized indie film sector, and if a void appears, then non-banking financing such as equity investments, soft money subsidies or insurance-backed financing can fill it.

“Given the major studios are distributing few pictures…this is good for the domestic financiers that survived,” added Dominic Ianno, CEO of film financing company Indomitable Entertainment.

More Film

  • The Cold Blue

    Erik Nelson Wants to Preserve the Past With 'The Cold Blue' World War II Documentary

    Erik Nelson describes his documentary “The Cold Blue” as “the garage band of movies” — he didn’t have the large team or crew other documentary contenders have. “The Cold Blue” is a World War II documentary that looks at raids and B-17 bombing missions that took place during the war. Nelson’s team looked at 34 [...]

  • Ray Manzarek

    Film News Roundup: Concert-Documentary 'The Doors: Break on Thru' Set for February

    In today’s film news roundup, one-night showings of a Ray Manzarek tribute and the season premiere of “Doctor Who” have been set for 2020, and the MPAA hires a copyright expert. ONE-NIGHT SHOWINGS The Doors and Trafalgar Releasing are teaming on the worldwide Feb. 12 release of “The Doors: Break on Thru – A Celebration [...]

  • Richard Jewell

    Warner Bros. Hits Back at Atlanta Paper Over 'Richard Jewell' Legal Threat

    Warner Bros. is standing behind “Richard Jewell,” the Clint Eastwood drama that is the source of controversy over its portrayal of a female journalist trading sex for scoops. The Atlanta Journal-Constitution sent a legal threat to the filmmakers on Monday asking them to include a disclaimer noting that the film took dramatic license. In a [...]

  • The Irishman

    'Captain Marvel,' 'The Irishman,' Other Original Scores to Miss Out on Oscar Nominations

    The Regina Spektor song from “Bombshell” and at least six major scores including “The Two Popes” and “The Irishman” won’t be on Oscar’s music shortlists when they are announced next week. That’s because none of them are on the official Academy eligibility lists from which music-branch members are now voting. Preliminary voting ends tomorrow afternoon, [...]

  • Golden Globes Zodiac signs

    Golden Globes Nominees as Zodiac Signs

    The Golden Globes nominees aren’t the only stars of awards season. Variety turned to astrology to assign Zodiac signs to this year’s nominees. Some selections required a little more nuance — Olivia Wilde’s “Booksmart” is a Virgo with a prominent Sagittarius rising and Greta Gerwig’s “Little Women” is a Sagittarius that wishes it were a [...]

  • Two-time Oscar®-winner Tom Hanks portrays one

    How Production Designer Jade Healy Recreated the Beautiful Neighborhood of Mister Rogers

    Production designer Jade Healy is doing double duty this awards season. For one, her work can be seen in Noah Baumbach’s “Marriage Story.” There, she created a world of angst and individuality, making use of negative space as a couple reaches the end of their relationship. In Marielle Heller’s “A Beautiful Day in the Neighborhood,” [...]

More From Our Brands

Access exclusive content