×

Why Festivals Should be Giving Awards to Investors

The Cannes Film Festival will be dispensing awards to filmmakers this week, but they don’t give awards to dealmakers.

Yet as international co-financing pacts grow ever more complex and ubiquitous, the negotiators, not just the cineastes, occupy centerstage. And filmmakers these days worry less about their scripts than about their bridge, gap and mezzanine financing — not to mention their foreign pre-sales, rebates and tax credits.

Talk to members of the dealmaking fraternity and you learn that the market landscape has been changing in subtle ways. Buyers around the world are no longer intoxicated by star casting; they like high concepts in Russia and Brazil, too. Raunchy comedies seem to travel worldwide, as do horror pictures. And digital rights have become an obsession, especially in Asia.

International pre-sales are so important that a company like Stuart Ford’s IM Global (partially owned by giant Reliance of India) self-finances six or seven projects a year in addition to selling territories for scores of other films.

It was John Heyman, then a top agent in London, who pioneered foreign pre-sales in 1962 because, while Elizabeth Taylor vehicles were easy to set up, he needed funding for working actors like Trevor Howard and Jack Hawkins. Still, the studios solely financed most of their major projects into the 1980s, and paid little attention to foreign markets.

With the majors drastically curtailing production, however, and overseas audiences growing, the pre-sales business has become pivotal. At the same time, a new generation of equity players has arrived on the scene — many are in Cannes this week — looking for deals.

The newcomers are an intriguing mix: With Wall Street’s 25 wealthiest investors raking in some $21 billion in 2013 alone, there’s lots of “play money” around for young heirs like Megan Ellison, Molly Smith and Teddy Schwarzman, all of whom like movies. Bolstering the American indie business, however, is the kind of entrepreneurial funding that’s been fueling tech startups. David S. Rose, in his new book on the subject, titled “Angel Investing,” calls such financing “a legitimate part of an alternative-class investment portfolio.” An aggressive angel investor like Jacob Pechenik has funded some 34 indie films in the past two-and-a-half years, and claims to be doing quite well. One of his investments, “The Skeleton Twins,” starring Kristen Wiig and Bill Hader, cost less than $2 million, scored well at Sundance and already has made him a profit, with Lionsgate and Roadside Attractions buying domestic rights, and Sony Pictures Worldwide Acquisitions taking international. The film has a Sept. 19 release date in the U.S. A former software creator, Pechenik fully funds some films, but often is interested in gap or bridge financing.

The Austin-based Pechenik, 42, acknowledges that angel investing can be a riskier proposition in film than in tech startups, since the mix of personalities can be volatile — but he happens to love film. “It’s an exciting means to reach people and get ideas out into the world,” he says.

That’s a view shared by the crusty dealmakers at Cannes, who often sneak off at the end of the day to catch a movie. Or an award presentation, even though they know they’ll never be the guest of honor.

Popular on Variety

More Voices

  • Tegna CEO Dave Lougee

    Coronavirus Pandemic Puts a Bright Spotlight on Value of Local TV

    The TV station group Tegna has been the subject of acquisition rumors for nearly a year. Finally, bids started to surface earlier this month that pegged the company’s market value at about $8.5 billion.  But in the space of a week, the assets up for grabs at Tegna have taken on a very different kind [...]

  • SXSW

    How Canceling SXSW Because of Coronavirus Affected These Filmmakers

    The 2020 South by Southwest Film Festival was set to be a career-making moment for many creators, and a particularly bright spotlight for women, as 70% of the films in competition were directed or co-directed by female filmmakers.  But when the 27th edition of the Austin-based festival was canceled on March 6 due to the [...]

  • Sugical mask isolated on yellow surface.

    How I Raised $6,000 During the Coronavirus Pandemic by Asking for Couples' Drama (Column)

    When you have a generalized anxiety disorder and a daily existential crisis, you end up self-isolating long before the city of Los Angeles mandates it. My coronavirus co-quarantine result is an apartment-turned-shared-home-office between a graduate student (my boyfriend) and a social media editor (me) who attempt romance from six feet apart without leaving their loungewear. [...]

  • Sam Mendes Bong Joon Ho 1917

    Final Oscar Predictions: Who Will Win in the Major Categories?

    The 92nd Academy Awards are almost here… For films like “Joker” and “Marriage Story,” the journey to the Oscars began five months ago with their premieres in Venice. “1917” had the least amount of time on the campaign trail: The Sam Mendes war movie didn’t start screening until late November. In the end, however, it [...]

  • Harriet Movie BTS

    Academy Needs to Start Taking Chances With Noms; Rewards Will Follow (Column)

    Throughout its history, the Academy Awards has been subject to intense criticism for the issues it embraces — and ignores. This year’s uproar over the lack of diversity among nominations in the highest-profile awards categories is the latest example. This failure reflects a chronic dearth of opportunity at Hollywood’s top artistic and financial levels. The milestone nominations [...]

  • Baby Yoda The Mandolorian

    Media Giants Make Smaller Moves With an Eye Toward Future Gains in Streaming Era

    Maybe the empire can strike back. Or at least strike anew. Over the past few months, a number of developments have emerged for traditional media companies that indicate a spirit of reinvention and experimentation is spreading across the industry. There’s a new willingness to take a hard look at long-standing operations and make big and [...]

More From Our Brands

Access exclusive content