WORLD CINEMA REPORT: Where Did All the Money Go? Trouble and Tricks in Overseas Financing
by Anthony Kaufman
(indieWIRE: 06.24.02) — Remember the famous stories of indie film past? When once-burgeoning American directors financed their movies through foreign pre-sales and TV broadcasters able to fund esoteric works and still make a buck? Today, those idealized times have nearly disappeared, but that doesn’t mean that savvy financiers and producers have given up completely; they’re just more resigned and more resourceful.
“Presales are much more difficult nowadays,” admits Overseas Filmgroup‘s Brian O’Shea. “Why is it so tough? A lot of the international territories are producing their own films, in their own languages, for their own markets, and they also have access to the international market themselves, which is all cutting into the amount available to American independents.”
“The buyers are now less willing to take risks on theatrically arthouse films,” he explains. Foreign money is more readily available to larger “theatrically-positioned films” (read: those with big names), O’Shea says. Overseas Filmgroup recently financed Bruce Beresford‘s “Evelyn,” which stars Pierce Brosnan and Julianna Margulies, by preselling to Asia, Latin America, Spain, and Eastern Europe, as well as “Knight’s Castle,” John Boorman‘s $30 million time-travel fantasy.
Cinetic Media‘s Micah Green agrees that the situation, for the moment, is relatively dire for unproven talent. “We only finance pictures from well-known directors, well-known producers or well-known cast, so for us, the financing landscaping is good,” he says. “But if you’re trying to finance a film without major cast elements attached, it’s really hard overseas. There aren’t lots of well-capitalized international companies looking to finance American independent films.”
Cinetic’s recent overseas funded pictures include two Killer Films projects, Todd Haynes‘ “Far From Heaven,” which received overseas financing from French foreign sales company TF1 and French distrib ARP, and Robert Altman‘s “The Company,” which Green says will be put together through several “international pieces.” (Altman’s last film “Gosford Park” was financed though U.K. sales outfit Capitol Films and a hodgepodge of international presales and foreign sources.)
“Because the TV market is soft, the money that the middleman [producer] counted on is gone,” explains Green of the current challenges. For example, a U.S. producer used to go to a company like Lions Gate to finance their film. Lions Gate expected to turn around and sell those rights to European TV for a fixed amount, but European TV is paying less, so Lions Gate doesn’t have that money to invest. So no matter where you turn, the money that used to be there is gone.”
Many financiers had previously looked to the German market for funding opportunities, but the recent bankruptcy of media giant Kirch and a general downturn in that Germany’s economy has produced a more financially strapped market. While Hollywood has perhaps been harder hit by the German collapse, Green says this affects the independent producer, as well. “It all trickles down,” he says. “Your New York producer making one or two movies a year may not have had any direct ties with those German companies, but money was flowing from those companies into the U.S. mini-majors, who those New York producers were dealing with. So everybody feels the effects.”
But there are still occasions where U.S.-based first- or second-time directors have managed to leverage foreign funds. Peter Sollett‘s “Long Way Home,” for example, a feature adaptation of his award-winning short “Five Feet High and Rising,” was financed completely through French giant StudioCanal. But Sollett’s case is unique. The international community specifically singled out the writer-director as a hot new talent: “Five Feet” won the best short in Cannes and Sollett was selected in Cannes’ Cinefoundation program where he was mentored by Olivier Assayas in Paris.
“What independent directors and producers need to do is build long-term relationships with foreign producers, distributors and sales agents,” explains Scott Macaulay, a producer on “Long With Home” with Alain de la Mata, head of StudioCanal’s sales company Wild Bunch. “You can, as a producer, attend the Rotterdam CineMart, meet someone, have a drink with them at Cannes and discuss your latest project, and maybe update them on your progress in Berlin. At some point you’ll be perceived as an American doing business in Europe or Asia as opposed to just an American.”
“An American independent’s ability to be championed by international festival programmers and press can translate into solid financing for not just one but several features,” adds Macaulay. “Many European territories still place great value on an independent director’s ‘vision’ — a distinctive point-of-view, visual style, method of directing actors, and original understanding of a specific subject matter remains a marketable commodity in these territories.” Macaulay cites not just the continued support given to the likes of David Lynch and Jim Jarmusch, but also newcomers like Jonathan Nossiter (“Sunday“) and Todd Louiso (“Love Liza“).
Overseas’ O’Shea was able to tap money from Canada’s Aboriginal TV Network to finance Chris Eyre‘s 2002 Sundance entry, “Skins.” He’s also working on a package of $2-3 million-budgeted U.S. produced monster movies that will be bankrolled in part by a French company. “It’s a concept-driven strategy of selling groups of films,” he explains. “What you focus on are previous genre-type films that have worked in the past with foreign distributors. They’ve made money with them, and you establish relationships with them.”
But the latest craze in international financing is so-called “soft money” opportunities — tax incentives set up by foreign countries to fuel their local film industries. “For the right project,” says Cinetic’s Green, “there are ways to build a package that will enable you to structure co-financing deals.” Programs like the German Tax Fund or the U.K.’s Sale and Lease Back, which essentially act as tax shelters for the wealthy, can contribute significant portions of a film’s budget.
If producers spend a certain percentage of their budget in a particular country (Luxembourg is apparently hot at the moment), or cast a number of foreign actors, or have a foreign-born director at the helm, tax incentives, and co-production possibilities are to be found. “It’s never free money,” warns Cinetic’s Matt Littin. “But a smart producer thinking early enough may be able to incorporate this type of financing. People need to use whatever weapons are in their arsenal and one of them may be to qualify for these various soft money opportunities in Europe.”
But soft money isn’t the panacea to your financing woes. “As an American producer, your projects can immediately become ineligible unless you put your project together in a very deliberate and specific manner,” says Littin.
Cinetic’s Green notes that soft money opportunities may again facilitate larger more established films and filmmakers than those just starting out. “This type of financial structuring is really complicated, and I think it’s beyond the means of local independent producers who don’t have much experience making a movie, let alone structuring this kind of international financing.”
Green continues: “On the first or second-time features we’re working on, most of the money is coming from friends, family, doctors, lawyers and dentists and perhaps more of that money is there than there was two years ago, because people have pulled their money out of the market. If they want to blow their money, they’d rather blow it on a film, then putting it in a stock where it will all just disappear.”
“At the end of the day, those people are still there,” Green says. “And if you’re just starting out, your time is probably better spent nurturing those relationships than in seeking out unusual international financing, because they’re probably not there for you.”