Zurich's Finance Forum sees growing opportunities for international producers
The world of film finance is in good health despite the economic downturn. That was the message at the Third Film Finance Forum @ Zurich Film Festival.
Veteran French executive and producer Pierre Ange Le Pogam of Stone Angels said in his keynote: “There is a big economic crisis, this is bad for many people but it’s good for the movie business.”
He noted: “In France 15 years ago, 150m people were going to the movies every year. Last year it was 215m. The Global market for movies is growing.”
“If people are considering investing in movies, now is the right time to do it. Do it only with professional people,” he noted, before joking: “Don’t do it with the American studios.”
In all seriousness, the changing model of the studios was a hot topic of the Forum, as studios work with ballooning budgets on larger tentpoles, there are more opportunities for more realistically budgeted films (say, up to $50m) across the globe.
Le Pogam said: “The more the world grows, it helps people to realize that they absolutely have to emphasise their local experiences,” he said, pointing to the success of the very French hit Intouchables. “You should back the local movies that can travel and have impact…More and more sophisticated European producers and rest of world they know how to make movies for the $10m, $20m, $30m that can reach the whole world.”
Ben Browning, CEO of Wayfare, agreed: “There is a huge opportunity for local films emerging, studios are retreating to creating brands and fewer movies.”
Libby Savill said the industry was now correcting from the boom time in the previous decade when hedge funds and banks were plowing finance into studios and independents. After that bubble burst, she says, “We are now seeing some investors coming back into the market.” She pointed to some positive examples working now such as Anton Capital backing StudioCanal’s English-language slate.
Roeg Sutherland, co-head of CAA’s finance and sales department, agreed that the industry was seeing a resurgance in finance thanks in part to the strength of foreign sales. He said: “The presale market is back, even if it’s not at the same level it was six years ago. Also, Japan is buying again.”
Sutherland added: “For most investors it’s about covering a lot of your budget with foreign sales and soft money.” He noted that he would aim to usually get 70-80% of a film’s budget out of pre-sales and soft money, then a North American deal would represent only 20-30% of that budget.
His model at CAA is usually to get “70-80% of a budget out of foreign sales, especially pre-sales, and soft money. Then North America is 20-30% of the budget.” He added: The more difficult thing is to evaluate the US value of a movie,” especially with more VOD-centric players entering the US market.
For the investors he works with, Sutherland said a return on investment of 13-16% would be satisfactory.
Christopher Woodrow, CEO of Worldview Entertainment, added: “Between 2004-2007 a lot of investors got burnt because they were explosed to too much theatrical risk…or too much cherry picking by the sutiods, or too much mezzanine debt on top of equity. The model has changed a lot. There’s never been a better time to invest in film.”
Sutherland suggested that interests need to be aligned between filmmakers and investors and budgets need to be kept at smart levels to ensure that movies are getting made, not waiting around to finance unrealistic budgets. “If you want to make a movie that’s more difficult you just have to take less up front. That’s what’s changed [in the past decade],” he said.
Le Pogam added: “This is a period of time in which the American studios have a lot of doubt about their business models. It’s time to balance the capacity of producing movies across the world. Studios have their local subsidiaries and they need these new movies [from independent producers].”
The Forum was held Saturday at the Dolder Grand Hotel.