Market Correction

An article published in The Wall Street Journal on April 20 is making waves in Hollywood. Headlined, ‘Indie films suffer drop-off in rights sales’, it suggests that international sales, a crucial source of funding for independent films, are “drying up”; that a number of factors from the credit crunch to piracy to the rise of local-language films has left some independent buyers out of business and others simply not buying.

The article flew round town within hours and rumours abound that it was responsible for panicking several investors who have subsequently pulled out of single-project financing deals.

To say the story was naive is an understatement. Like every other part of the film business, the sales world is going through a sea change. That said, for films that are cost-effectively made and marketable, nothing has changed: presales are still eminently achievable.

Take Voltage Pictures, which was selling the thriller The Company You Keep at Berlin, with Robert Redford directing. Sales agent Nicolas Chartier this week confirmed presales had been very healthy — to TMG/Concorde in Germany, Rai in Italy and SND in France among others.

Buyers now want to buy movies that might actually make them some money

He explained Redford’s name in the directing chair, combined with the fact the project was a thriller and would have a strong theatrical launch in the US, all helped buyers to commit. The budget, in the $30m region, is not enormous and Redford’s name is attracting strong talent to the cast. The film is scheduled to start shooting in August.

“It’s simple,” Chartier said. “People don’t want to pre-buy bad movies. They want safe, reliable, commercial movies.”

Likewise Stuart Ford at IM Global had a good EFM, extensively pre-selling Walter Hill’s action thriller, St Vincent, starring Mickey Rourke, and the psychological thriller After.Life with Liam Neeson and Christina Ricci.

“If you have a package that has name talent, is fully financed, in a reliable commercial genre and sensibly priced, it’s business as usual,” Ford said. “That side of the business is still thriving.”

There is, of course, no doubt the independents are hurting. Many can only pull the trigger on a deal if they have a broadcast commitment in place. The DVD market is down, in part because consumers have cut back on buying movies for $20 when they can download them for $3. Piracy is a problem, and buyers are also pruning their annual slates. They want fewer movies with safer elements and stronger upside potential. Too many of the equity-funded films didn’t work.

But what The Wall Street Journal failed to make clear is that most independent distributors around the world, or certainly those worth their salt, are not dummies who can be sold any old Hollywood cast-off. They know what works and what doesn’t in their market and they won’t help finance over-priced art films or projects
which don’t offer much chance of recoupment. When the business was flush with video money, they were perhaps less discerning, but in Cannes this year they want commercial films with realistic budgets and realistic pricing.

Domestic distributors have been practising a wait-and-see policy for years when it comes to movies, so why should international buyers be the ones on the hook for half the budget? “When films are being made for $35m that should be made for $20m, of course people are cautious,” one seller said this week.

The onus is not on the foreign buyers now. It’s on the producers and talent representatives to re-establish what an independent film is, and what it should cost. The equity money that poured into the business only confused the matter, driving production costs up and blurring the lines between independently financed films and studio films. “If you are selling to independent distributors, the price points should be lower,” says Ford.

Nothing happening here is actually as terminal as The Wall Street Journal would suggest. The business is merely correcting itself after a period of glut and over-production. As one sales agent joked: “Buyers now want to buy movies that might actually make them some money.”