The film finance department at CAA is thriving as the agents work as strategic consultants to high-net-worth individuals, gaining investment for mid-range projects. Screen talks to Roeg Sutherland and Micah Green.

Several years ago, when a succession of flops encouraged the US studios to withdraw from so-called mid-budget productions, many asked what that meant for Hollywood. Uncertainty and concern hung in the air, but CAA’s film-finance department saw an opportunity.

The US majors purged their development pipelines of $25m-$40m projects, leaving plenty of workable screenplays in their wake. Roeg Sutherland and Micah Green head a robust department of agents (including Dan Steinman, Ben Kramer, Dina Kuperstock, Laura Lewis and Laura Walker) at the film finance department and knew that if they could slash the budgets by around 25% there could be a mechanism for getting these projects financed.

Up until that point, the unit had set up a couple of films per year in excess of $15m and in the past two years it is believed to have put together more than 35 in that range and put more than $1bn to work. Projects include Source Code, Larry Crowne, The Ides Of March, Cogan’s Trade, The Wettest County, The Grey, Looper and Gambit, the EFM hit which closed a US deal recently with CBS Films.

Smaller, profitable titles include Insidious, Paranormal Activity and An Education. Black Swan started life as a sub-$15m film and has become a global smash with grosses close to $300m. The project owes much to financier Brian Oliver, the Cross Creek Pictures founder who was brought in by CAA, and this approach to financier relationships — a key driver in the way the department operates — has reaped rewards for the unit and the broader agency.

Green, Sutherland and their colleagues work as strategic consultants to high-net-worth individuals — people who have been viewed, on occasion, in Hollywood as disposable assets themselves; a resource to be used, marginalised and discarded. However, the unit is far more interested in nurturing financiers and helping them build sustainable businesses.

Green explains CAA’s film finance department “was so named because the agency wanted it to serve the interest of financiers in the same way we serve the interests of talent in the talent department and directors and writers in the lit departments”.

In some cases it takes months for the unit to get to know financiers and re-assure them their money will be put to work in a way that is transparent. Projects are hand-picked, appropriate talent brought in and investors kept appraised of risk profiles and project status.

“Services range from building a business plan to raising debt, raising equity, creating deals with foreign companies to output deals with foreign distributors. We build a group of agents around them so they can source the kind of material they want and introduce them to the directors and actors they want to work with,” says Sutherland.

While nobody will deny selling films at festivals has its place in the year-round business of independent packaging and financing, the model at CAA is broader.

“When we present projects, we present them from the perspective of the financier and we talk to them about how we think they make sense as investments,” says Green. “We work as their advocates throughout the life of the project, from negotiating talent deals to evaluating appropriate budget levels, to securing strategic partners and distribution.”

Understanding the investment

The partners try to create scenarios where little equity is at risk. For example, the budget on the Andrew Dominik-Brad Pitt project Cogan’s Trade was covered mostly by international pre-sales through Inferno, and from soft money, creating an attractive proposal with little risk against US. The belief at the department is that it is more fruitful to nurture long-term relationships that generate profits and encourage further investment than barge into a scenario where the partners cannot see past the deal.

Just as financiers are made familiar with the often complex puzzle that is independent film financing, so agents have been engaged in conversations with talent to modify the mechanism of remuneration in cautious, post-crash times.

“When people understand the nature of the investment, it’s a lot easier to get to what current pricing is,” Green says. “When talent understand the risk profile of a film, and there is a human face to the investor, it can be easier to achieve a reasonable deal. People often look at financiers as this sort of money tree, and that has historically been due to a lack of transparency in the financing process.” Sutherland adds: “Talent are willing to bet on themselves, particularly when they are participating in world-class projects with strong breakout potential.”

‘CAA wanted the department to serve the interest of financiers the same way we serve the interests of talent’

Micah Green, CAA

When films come together well, studio-level independent projects offer a refreshing change from making similar films in the studio system. Joe Carnahan, for example, came off The A-Team and reunited with Liam Neeson on survival thriller The Grey. “You might be doing something for a price but you’re doing it with complete freedom, and the film-makers love that,” Sutherland continues. “It’s about working outside the system and using the studios for something they remain the best at — marketing and distribution.”

An increasingly joined-up global business means that today the money can come from anywhere. “We’re very focused on co-productions,” says Sutherland, well aware that the right alliance can cover close to 40% of the budget. CAA is known to have nurtured strong relationships with European companies, particularly French entities such as Wild Bunch, Gaumont and StudioCanal, while it has a handle on China through the agency’s Beijing office.

Sutherland says: “Peter Loehr is a genius at being able to source money out of Asia.” Green adds: “Our China office is at the forefront of film financing within the Asian markets. We have a lot of China Film financing and we’re working on more than one Chinese co-production at a really high level with US talent. There’s a lot of money coming out of China which will be mingled with US investment, too.”

Green and Sutherland are also intrigued by a recent development. “The trend of equity financiers moving into distribution investment is something we encouraged and facilitated on Biutiful, I Love You Phillip Morris, Silent House and The Grandmasters,” Green says. Steven Rales’ Indian Paintbrush also arrived on the scene at Sundance when it joined with Paramount to swoop on Like Crazy.

“This trend is happening because financiers are becoming more sophisticated and want to diversify their businesses,” Green continues. “Many of them have learned the favourable economics of distribution after selling the original production at a film festival. These opportunities have to be packaged and brought to them and it’s not happening overnight — relationships are being cultivated over a long period of time.”

The past few years have seen festival buyers stump up low-seven figures or six-figure sums for highly regarded titles. Wise investors see the economics of distribution at a certain level can be profitable when the price point for domestic rights is low up front. It is understood Mickey Liddell is setting up distribution for Sundance hit Silent House through a rent-a-system and will put up the p&a.

It takes money to mount an effective campaign. For a nimble financier who can move in on a quality project, a service deal — which Green says would have been regarded five or six years ago as a “last resort” — presents an opportunity. CAA wants to be in the thick of it. “The specialised space is such a good space right now,” he says.

Micah Green

Micah Green specialises in film financing and distribution. He joined CAA in 2005 having previously managed film sales consultancy Cinetic Media.

Roeg Sutherland

Roeg Sutherland specialises in the packaging and representation of independently financed films and international co-productions. He also works with writer, director, actor and producer talent in the motion picture arena. He joined CAA in 2001.