Dealmakers talk state of biz

Variety breakfast keys on financing climate

When it comes to new media, Hollywood should be open to change but wary of getting boxed in by relying too much on a single distribution partner. So said Peter Chernin during his keynote convo Tuesday ayem at Variety’s Dealmakers Breakfast gathering, held at Soho House West Hollywood.

In a wide-ranging Q&A with Variety editor-in-chief Tim Gray, Chernin spoke of his areas of focus and investment (high-end film and TV, digital platforms and emerging Asian markets) since leaving News Corp. in mid-2009 to launch Chernin Entertainment and the Chernin Group. Following Chernin, a quartet of top players in the film-finance sector weighed in on the climate for pic coin deals and outlook for 2012 in a sesh moderated by Variety executive editor Steven Gaydos.

Chernin was candid in offering his perspective to the crowd of about 130 industryites on the myriad challenges that showbiz execs face at a time when the business landscape is undergoing dramatic change.

Popular on Variety

“That’s why these jobs are hard, and that’s why the people in this room get paid a lot of money,” he quipped. Both in the TV and film sector, “there’s real tension between protecting your existing business models, particularly as it relates to the cable business model,” and the need to be open to new revenue-generating opportunities, he said.

Chernin observed that Hollywood has learned from the mistakes made a decade ago by the music business, which was first ravaged by piracy as digital file-swapping services became popular and then allowed Apple’s iTunes to dictate the pricing and distribution terms for the legitimate online market.

In Chernin’s view, the rise of Netflix during the past year has been “remarkably positive for the business.” He also remains bullish on the long-term prospects for Hulu, the Internet vid giant that he spearheaded for News Corp. in partnership with NBCUniversal in 2007.

Although News Corp., NBCU and Disney (which bought into Hulu in 2009) tested the waters for selling Hulu earlier this year, Chernin called it “a phenomenal thing for these guys to own” and pegged its market value at around $3 billion.

During the film-finance sesh, panelists zeroed in on two central issues: the overall drought of equity funding in the marketplace and the red ink that some investors saw from slate deals inked during the go-go years just before the global economic meltdown in 2008-09.

Although the actual returns were more nuanced, the perception is that investors lost a fortune through those deals, and that hangover has definitely affected the flow of capital into Hollywood.

“The myth is that everyone lost money,” Christopher Brearton, O’Melveny & Myers managing partner, told the crowd. “And that’s just not true.”

However, Andrew Walter, senior veep and head of the entertainment practice at Houlihan Lokey, countered: “There’s a lot of money that feels like it’s gotten burned.”

Panelists agreed that as financing options shift, Hollywood has to become more flexible in adopting new models.

“The traditional independent financing model no longer serves 70% of the product that needs financing,” IM Global CEO Stuart Ford said. “The presence of high net-worth individual money, which is less rigidly ROI focused, is what’s keeping the cameras rolling for much of the industry.”

Gary Barber, MGM co-chairman and CEO, was blunt in discussing the pressure distribs face to deliver a big opening weekend B.O. number in order to set a pic on the path to profitability. “We’re like parachutists,” he said. “If we don’t open, we’re dead.”

More Film

  • The Evening Hour

    'The Evening Hour': Film Review

    A small town already down on its luck receives a few fresh kicks in “The Evening Hour.” Based on Carter Sickels’ 2012 novel, this second narrative feature from director Braden King is more plot-driven than his first, 2011’s “Here,” a leisurely and slight, if pleasant, road-trip romance. Indeed, there may be a little more content [...]

  • Ntare Guma Mbaho Mwine, Zainab Jah,

    'Farewell Amor': Film Review

    There are small, telling differences in the way each of the three long-separated main characters in “Farewell Amor” remembers the day of their reunion. Standing at JFK, awkwardly clutching a bunch of flowers to give to the wife and child he has not seen in 17 years, Walter (Ntare Guma Mbaho Mwine from “The Chi”), [...]

  • 'The Father': Anthony Hopkins Gives a

    'The Father': Film Review

    There have been some good dramas about people sliding into dementia, like “Away From Her” and “Still Alice,” but I confess I almost always have a problem with them. As the person at the center of the movie begins to recede from her adult children, from the larger world, and from herself, he or she [...]

  • The Last Thing He Wanted Sundance

    Anne Hathaway, Rosie Perez on Bringing Joan Didion to the Big Screen

    After “Pariah” and “Mudbound,” director Dee Rees returns to the Sundance Film Festival with her next feature, “The Last Thing He Wanted,” a political thriller based on a 1996 Joan Didion novel. The adapted screenplay follows a reporter named Elena McMahon (Anne Hathaway) and her photojournalist friend (Rosie Perez) as they chase a complicated story [...]

  • Ana Gasteyer to Host WGA Awards

    Film News Roundup: Ana Gasteyer to Host WGA Awards

    In today’s film news roundup, the PGA selects a site for its Produced By Conference, Ana Gasteyer is hosting the WGA Awards, and Docu-Day is set for Feb. 8. PGA CONFERENCE The Producers Guild of America will hold its 12th annual Produced By Conference on June 6-7 at Fox Studio Lot in Los Angeles. The [...]

  • 'Welcome to Chechnya' Review: LGBT Survivors

    'Welcome to Chechnya': Film Review

    You can do anything with a face on screen these days, whether it’s shaving decades off with a digital scalpel or deepfaking it into unrecognizable oblivion. Usually this wizardry has the air of a stunt, a transformation pulled off merely because it’s possible. Never, however, have such effects proven as chillingly essential as they are [...]

  • Ethan Hawke Directing Film of Tennessee

    Ethan Hawke Directing Film of Tennessee Williams' 'Camino Real' (EXCLUSIVE)

    Ethan Hawke will direct and adapt “Camino Real,” Tennessee Williams’ wildly experimental play, into a feature film. Uri Singer, who worked with Hawke on the upcoming Sundance Film Festival entry “Tesla,” will produce and finance the picture through his company, Passage Pictures. It’s a passion project of the actor, writer, and filmmakers — one that [...]

More From Our Brands

Access exclusive content