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Cash Crunch: Seeking Film Financing in Lean Times

By Anthony Kaufman | Indiewire October 30, 2008 at 4:47AM

"Call me when the economy is better." That's what one New York-based indie producer heard from a potential investor recently. With Wall Street crashing, hedge funds shaking out, and a possible global depression on the horizon, it's not exactly the best time to be looking for film financing these days. While some producers say it's too soon to see fallout from the economic turmoil, many are seeing immediate and substantial effects.
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"Call me when the economy is better." That's what one New York-based indie producer heard from a potential investor recently. With Wall Street crashing, hedge funds shaking out, and a possible global depression on the horizon, it's not exactly the best time to be looking for film financing these days. While some producers say it's too soon to see fallout from the economic turmoil, many are seeing immediate and substantial effects.

"The chaos of the economy makes everyone more cautious," says veteran indie producer Ted Hope. "I've definitely seen less movies getting made, and I hear agencies are more cautious about attaching their clients to projects that are not fully financed."

With the economic instability worldwide, Hope also worries that the unsteadiness of foreign markets is affecting bank loans. "Will they loan against foreign estimates? And will people who choose to raise P&A be able to borrow again?"

Plum Pictures' Celine Rattray has been fundraising on two movies over the course of the crisis, "The Winning Season," starring Sam Rockwell, and "After.Life," starring Christina Ricci. "I went to all the usual suspects, and some of my usual Wall Street investors laughed at me when I called," she says. "In terms of the high net worth individuals, it's definitely a much tougher time. Probably half the people are out of the game right now." Rattray notes that those investors who used to get into the film business for the "fun of it" are fewer and far between these days.

Producer Joshua Zemen ("Against the Current") says he's also receiving the cold shoulder from financiers. "In the immediate future, people are holding off on funding just to make sure that we're not going to go into a deep depression," he says. "And everyone who makes independent film their business is looking for bargains," continues Zeman. "So you're seeing a trend towards moving down budgets: What used to be $2 million is now $1 million. What used to be $1 million is now $500,000. It's the nail in the coffin," he adds.

Despite the massive equity contraction, however, producers are still getting movies made, and new financiers appear to be stepping out of the woodwork.

On two different projects, Ted Hope says he's had first-time film financiers come on board. And both of Rattray's projects did, indeed, find enough coin to go forward. Four different investors, including one new to the business, backed "The Winning Season." "After.Life" was fully financed by a sole private investor, fresh to the movie business, Bill Perkins, a Houston energy trader who runs a venture-capital firm. (Perkins recently made headlines for funding a New York Times full-page ad that criticized the government's economic bailout plan.)

Producer Mike Ryan, currently in Puerto Rico shooting Todd Solondz's untitled "Happiness" companion piece (a.k.a. "Life During Wartime"), also found an investor new to the film business "outside of the typical private equity models," he says. Financed completely by Elizabeth Redleaf's new production outfit Werc Werk Works, the Solondz film benefited from Redleaf's long-standing support of arts and culture. (Redleaf serves on several boards, including the Walker Arts Center and The Minnesota Opera, and recently divorced Andrew Redleaf, the founder of Whitebox Advisors, a prominent $4 billion hedge fund.)

"Her perspective about art/indie films is different than most indie private equity that are chasing the 'Little Miss Sunshine'/'Juno' money," says Ryan. "She is a unique finance source that is dedicated to unique one-of-a-kind films."

But as Redleaf explains, her interests go beyond simply patronage. "This is definitely not philanthropy," says Redleaf, who is also backing new films from Caveh Zahedi and Bela Tarr. "We are definitely in this to make money, for artists and investors." Redleaf says Werc Werk Works plan to support films with budgets ranging from $1 million to $5 million, as well as put together cash for P&A to push theatrical releases.

Director Joe Forte, who continues to fundraise for his debut feature "A Lifetime in Heat," says there are plenty of investors out there who have not been affected by the credit crunch. "The thing all these people have in common is that their financial house was and is in order," he says of the few backers he has found for his film. "So while it is very, very tough in this market, I think there are still investors out there. Getting to them is the trick."

Working on a higher budget level, producer Anthony Bregman ("Synecdoche, New York") believes he won't feel the effects of the downturn just yet. "The money that's there to spend on movies has already been allotted," he says, referring to bigger film production entities such as Michael London's Groundswell Productions and Mark Gill's The Film Department, which capitalized well before the crash. "So that money is there and it's not gone away," he says.

For Bregman, and others, the bigger problem isn't so much shrinking equity as diminished distributors. "The domestic distribution landscape is very different than it was a years ago. If you bring a film to Sundance, who won't be there? Picturehouse, Warner Independent, Paramount Vantage, ThinkFilm. The buyers are way more limited," says Bregman. "And those who are still going to be there, who is actually buying?"

Indie producer Jay Van Hoy agrees. While he believes funding may still emerge for their low budget projects, he's equally, if not more concerned about "the bottoming out of the film-acquisitions market," he says. "The recent Wall Street meltdown freezes up a lot of equity, but 99% of those folks weren't going to invest in our films anyway. Where it hits us more is in how it hurts distribution companies."







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