Soumache, Rassam Launch ON Entertainment

New holding company ramps up on ambitious international slate

Soumache, Rassam Launch ON Entertainment

PARIS – Occupying five floors in a five-floor steel-and-glass office block, the first offices of ON Entertainment stand on the Boulevard Ney, a busy main road crossing northern Paris.

They also stand metaphor for the state of film and TV production in modern France. Last December, long-term associates Aton Soumache and Dimitri Rassam, two high-profile producers in France, merged their companies to create ON Entertainment, a new and – for France – powerful holding company.

Soumache brings TV toon series producer Method Animation, maker of the highly successful “Le Petit Prince,” plus “Peter Pan,” “Iron Man,” and “Little Nick,” plus Onyx Films, producer of the upcoming Euros57 million ($77.5 million) “Le Petit Prince,” helmed by “Kung Fu Panda” director Mark Osborne and one of France’s biggest recent toon movies. Rassam’s Chapter 2, a film production house, who credits include French B.O. smash “What’s In a Name?,” and Andrea Di Stefano’s upcoming “Paradise Lost,” with Benicio del Toro as Pablo Escobar, is the third part of the mix.

Via their joint venture, ON Corp, Rassam and Soumache will retain a majority stake in ON Entertainment. ON has raised new coin via a €10 million ($13.6 million) capital increase backed by, among others, three-well known players: Ohana Capital, a corporate investment fund, Gallic entrepreneur Laurent Dassault’s holding company LDRP, and AB Group, one of France’s biggest rights-brokers and the owner of 14 pay-TV channels.

India’s DQ Entertainment will continue to hold 20% in Method Animation. “We look forward to partnering with ON Entertainment on new productions, combining the unique strengths and resources that the two groups represent,” commented DQ Ent. CEO Tapaas Charkravarti.

Parallel to taking equity in ON, AB has inked with ON for French and international distribution rights to Method Animation TV series. putting up minimum guarantees on future TV series. AB has an option to co-produce these shows as well.

For Gaul’s film and TV industries, ON Entertainment in a sign of the times.

Method Animation has seen success with its TV toon skeins. Now in its third season, “Le Petit Prince” has sold to 150-plus countries. There are two seasons of “Peter Pan.” Movie results have been far less regular. Onyx’s futuristic “Renaissance” won critical praise, but little box office. Budgeted at a reported $31.6 million, and produced with Fidelite Films and Studio 37, the English-language Central Park-set motion-capture “The Prodigies” bombed. Released by Warner Bros., sci-fi romancer “Upside Down” underperformed in France, but grossed $9 million in Russia, per Rassam. “It was not an overall failure, not an overall success,” he commented. Comedy “What’s In a Name?” by contrast grossed $28.8 million in France alone in 2012, making it one of the most successful films of the year.

Integrating in one entity its film, animation and TV interests, ON Entertainment can see from TV the recurrent income that desperately frustrates the film business.

“In France these days, there are no two ways, you’re either small or pretty strong,” said Soumache, conducting a whistle-stop guide round the new H.Q.

ON’s current slate, worth €73 million ($99.3 million) in combined production budget in 2012 and punching €34 million ($46.2 million) in consolidated sales, was sizeable enough.

But as other companies downsize in the number of French films it is handling – Warner Bros, Wild Bunch, reportedly Pathe – ON’s slate is now one of the most ambitious in France.

Backed by Orange Studio, Sold to Warner Bros, for Germany and Japan, CDC for Latin America and EEAP for Russia, and now handled internationally by Wild Bunch, the animated feature “Le Petit Prince” will bow via Paramount in France Oct. 7 2015, then roll out worldwide

“Le Petit Prince” is currently one of the biggest-budgeted animation productions in Europe, apart from Universal’s Illumination-Mac Guff’s follow-ups to “Despicable Me 2,” also made out of Paris. An unannounced U.S. distribution deal is closed. U.S. P & A will be in the range of $30 million.

Also recent on the slate is the about-$50 million “Saint-Exupery,” an English-language live-action bio – to which a high-profile U.S. director is expected to be attached – of the dashing author-aviator who wrote “Le Petit Prince.” His children’s books, led by “Prince,” sold 140 million copies worldwide, making him by far the most-read French author of the 20th century, Rassam said.

Co-starring Josh Hutcherson (“The Hunger Games”), Escobar-starrer “Paradise Lost” is due for release year-end 2014.

It is already developing new projects, such as “Iznogoud,” an adaptation of Rene Goscinny and Jean Tabary’s comic books by “What’s In a Name?” writer-directors Mathieu Delaporte and Alexandre de la Patelliere: and at Onyx, animated feature “Funny Little Bugs,” a big-screen €13 million-€14 million ($18 million – $19 million ) makeover of Antoon Krings comics, that have sold 17 million copies worldwide and goes into production at the end of the year. Kroons and Arnold co-direct.

Also in development, but at Method Animation, is toon series “Popples,” co-produced with Haim Saban’s Saban Brands and Zagtoon, a remake of ‘80s hit from “Inspector Gadget” creator Jean Chalopin, Soumache said, plus English-language live-action/animation hybrid, “The Seven Dwarfs and Me,” a reworking of the Brothers Grimm fairy tale. Anglo-Saxon talent and French, German and Italian broadcasters will be involved in the half-hour show, Soumache said.

Budgets on TV series average around €8 million-€10 million ($10.9 million-$13.6 million), Soumache added.

Going forward, on average, ON will produce one English-language movie and two French films a year, and an animated feature every 18 months, per Rassam.

Aiming to up not down the ante, ON is squarely pitching the international market on many if its projects.

“We wanted to build an entity allowing us to be more ambitious in the nature and volume of projects, developing properties that have more international appeal,” Rassam said.

Courting foreign markets, however, ON is also making a virtue out of a growing necessity, as Rassam recognized.

Under a torn-two-ways president Francois Hollande, France is wrestling with how to preserve its social state but create a more market-driven economy.

In film terms, that social state is a fulsome and sophisticated incentive system. It is driven above all by broadcasters’ legal obligation to pre-buy or co-produce French movies, which saw free-to-air and pay TV networks invest €359.0 million ($488.3 million) in French movies in 2012, per Gaul’s CNC film board.

Sophisticated, multifaceted, France’s incentive system has for decades been the envy of Europe.

But its consequences, though never its existence, is now being questioned.

In January 2013, Vincent Maraval pointed out “Le Monde” opinion piece which moved waves in France, such were the budgets of French films, inflated by massive TV investment in local star vehicles, that almost none of 2012’s big local hits turned a profit.

“French films are economically less and less profitable, they keep selling but their costs are too high,” Maraval insisted last week in Variety.

As a result, Maraval said, Wild Bunch is cutting down the number of French films it is handling.

On Friday, running through Monday, the UniFrance Rendez-vous with French Cinema in Paris resumes with a junket for around 130 international journalists and 100 French directors and thesps.

Among attendees, Audrey Tautou and Cedric Klapisch will talk up “Chinese Puzzle,” Francois Cluzet “En solitaire,” Francois Ozon “Young & Beautiful.”

The Rendez-vous takes place after, for France film industry, unprecedented negative news-flow. Warner Bros, like Wild Bunch, has scaled back on handling French movies. Pathe pink-slipped nine staff in November, among reports it will cut its French film distribution slate. Another On partner, Orange, has frozen new French film investment, though a board meeting may shortly clarify film financing strategy going forward.

Meanwhile, in 2013, failing to produce one true blockbuster, French films grossed about $150 million less at the French box office.

Nobody claims the Gaul’s film industry or its incentive system is in meltdown.

“More than crisis, there is real fear of crisis. If France has four-or-five big hits in 2014, that fear will diminish,” said producer Pierre-Ange le Pogam, at Stone Angels.

“The only crisis is in terms of financing and profitability paradigms. A film made in France would cost a third to two thirds less anywhere else in the world, or a fifth in Asia,” said Joel Thibout at Backup Media.

He added: “That is not necessarily a totally bad thing. It means France had a highly industrialized industry with specialist high-quality expertise in producers, sales agents, distributors. Also, France has a huge domestic market, cinema visits per capita is high, TVs are still buying, business is still going on.”

“Sometimes sectors want to negotiate how wealth is divided up in an industry, and that is happening in France right now. We’re still highly privileged,” concurred Backup’s Jean-Baptiste Babin.

But a new mindset is setting in.

“Many people in the moviemaking industry in France are now thinking more about what films’ target audiences are, not just thinking about how to make movies, though we must preserve our system which means that we are not solely dependent on the market” Rassam said.

Production companies aren’t necessarily changing slates overnight. It takes 18-months at least for changes to work through an industry, and they will not mark wholesale change in France anyway.

The $17.2 million “Nobody From Nowhere,” from “Name?” co-director Delaporte, with director-thesp Mathieu Kassovitz and Marie-Josee Croze, Cannes best actress winner for “The Barbarian Invasions,” is due for delivery ywar-end 2014.

ON is still producing the kind of comedies that clicked so well with French audiences.

Co-produced by Pathe and Orange, Martin Bourboulon’s high-concept – and remake material? – comedy “Mum or Dad,” where a separated couple fight a desperate battle to not (sic) have the custody of their children, is due for delivery in 2015. Laurent Lafitte (“Love Punch”) and Marina Fois (“Polisse”) star.

But, as one of France’s contracting clutch of high-rollers, it centers its future very much in international.

“The French system’s amazing, even if it will probably change and evolve. But as a business you can’t depend on one source of financing alone,” Rassam said.

In animation series, it has been in international a long time. Now in its third season, “Le Petit Prince” was co-produced with France Televisions, Germany’s WDR, Italy’s RAI Fiction, Switzerland’s TSR and JCC.

In movies, in international, it will compete it the most competitive market in the world. Even its chequered results with movies has been not only a learning curve but part of the partners’ international build. “We’d never have had the legitimacy to make a movie with Mark Osborne if we hadn’t made ‘Upside Down,’” Rassam argued.

Having talked the talk, ON must now go on walking the walk.

Patrick Frater contributed to this report