Following a flurry of deals, including multi-picture financing pacts with Mandalay, Pathe and Lions Gate, KC Medien CEO Roland Pellegrino has risen to become a leading light on the international film financing scene. Martin Blaney surveys the rise of the former bank clerk from Ludwigsburg.
The road to Mandalay, and indeed the rest of Hollywood, from Ludwigsburg in south-west Germany is a long one, but Roland Pellegrino has sped along it in the past few years. Since he joined the Kapital Consult Group in 1994, after working on the management of investment funds for subsidiaries of the Deutsche Bank and Dresdner Bank, he has emerged as a major player on the field of film financing.
In 1996, he masterminded KC Medien's first film fund, raising $4.5m (DM10m) from private German individuals to invest in a slate that included Austin Powers - International Man Of Mystery. In its first two years, the projects co-produced by the fund were sourced from its affiliated US production and sales company Capella Films, but its ambitions soon outgrew this arrangement. "With the increased volume of capital in 1999, other strategic partnerships were needed," explains Pellegrino. "We needed an intelligent investment opportunity where we would have access to a flow of product on a lasting basis."
The first of these co-operations was sealed earlier this year with Mandalay Pictures, now a wholly-owned subsidiary of Munich-based film financier and packager Cineartists Entertainment. The relationship began when KC Medien boarded Jean-Jacques Annaud's Enemy At The Gates and then developed into a more ambitious arrangement. "We always try to structure partnerships out of individual projects," says Pellegrino.
KC Medien may have once only been known to the initiated few, but the scale of the Annaud film changed this for good. Starring Ed Harris, Joseph Fiennes and Jude Law, and shot on location in a former open-cast coal mine in Brandenburg and at the Babelsberg studios in the first half of this year, the $90m Stalingrad epic was billed as the most expensive film ever made in Europe and was a welcome boost to the Berlin-Brandenburg region's aspirations to become an international production centre.
For KC Medien, it marked a shift in strategy from financing the films set up for it by subsidiary Capella to focusing on big-budget, internationally-marketable films made in Europe. KC Medien's move to finance projects shot in Europe, and where possible in Germany, came at a time when the local production community was protesting loud and furious about the millions of Deutschmarks leaving Germany for Hollywood and leading political figures, led by culture minister Michael Naumann, were calling for legislation that would force media funds to invest in German or European productions.
In the event, no such requirements have been introduced and changes to German tax legislation this year have failed to deflect Pellegrino from his chosen path. "I was always of the opinion that one can and must earn money with film," he says. "We always tell our investors that this isn't a tax shelter model, but an entrepreneurial participation, and that they must be investors prepared to take a risk."
The collaboration on Enemy At The Gates led KC Medien to agree a $260m investment deal for 20 features produced by Mandalay until 2003. According to veteran producer Wieland Schulz-Keil, who served as a consultant on the KC Medien/Mandalay deal, the partnership envisages an annual output of seven to eight major pictures. Budget will be in the $70m-$90m range, with 80%-85% of the production costs being met by the minimum guarantees Mandalay can draw from its output deals with such distributor partners as Paramount, Constantin, Nippon Herald and Pathe. The remaining 15%-20% would be put up by KC Medien, although it has a 50% participation in the films' revenues. Since investing in Annaud's film, KC Medien has also committed to Frank Oz's The Score, Oliver Stone's Beyond Borders and Chuck Russell's Sean Connery-starrer End Game.
Formal multi-picture deals have also been hammered out with France's Pathe and the US' Lions Gate (SI, Dec 1). The Pathe deal will see $237m (Euros270m) channelled over the next three years into such features as Eric Rohmer's The Lady And The Duke, Constantin Costa-Gavras' The Vicar and Alain Chabat's Asterix & Cleopatra. KC's deal with Lions Gate involves co-financing a slate of 10 pictures in the $4m-$6.4m budget range, starting with Peter Bogdanovich's The Cat's Meow, starring Eddie Izzard as Charlie Chaplin.
The mega-budgets haven't gone to Pellegrino's head. He has remained true to his roots in south-west Germany and is moving the company headquarters next spring to Ludwigsburg, the town where he did his apprenticeship as a bank clerk. "Being [in Ludwigsburg] allows for all kinds of opportunities to collaborate with the Film Academy and I have already had discussions with the new director Arthur Hofer about offering the students the chance to work on our productions," he declares.
As well as his contacts in Los Angeles, Pellegrino has been strengthening ties in Europe. At the Berlin Film Festival he joined a brainstorming event attended by German and French film professionals to discuss the setting up of a German-French film academy. Apart from Annaud, KC Medien has also backed projects by such French masters as Rohmer and Tavernier.
Pellegrino hopes that projects of the calibre of Enemy At The Gates will boost Germany as a production location and raise the level of local behind-the-camera expertise. He has also supported German-language projects, including Hardy Martins' POW drama So Weit Die Fuesse Tragen and Dieter Zimmermann's music documentary Die Fantastischen Vier.