I attended the 5th Annual Film Finance Forum East today, presented by Winston Baker with Variety magazine and chock full of key players in film production, distribution, sales and financing. There was so much information, and I highly recommend catching an upcoming conference like this if you can. It was encouraging to hear the different ways movies are getting produced and funded. It was also daunting to hear how much there is to learn! There was 10 hours of substantive information and networking so too much to summarize, but here are some Tweetable quotes and highlights:
Brian de Cenzo, VP at Goldman, Sachs & Co and James Moore, CEO of Vine Alternative Investments shared an overview of the film business as an asset class:
- Brian – how do you get people to show up for stationery content in a non-stationery world? (on the challenge of theatrical releases in a world of downloadable content)
- Brian – there is a permanent structural shift from buying to renting content
- Brian – money is moving to licensing content which means more options for consumers J but lots of it is going to original programming, not moviesL
- Brian – industry dynamics should cause introspection, especially in light of increasing production costs
- Brian – getting the word out has never been less expensive
- Brian – audiences continue to show that if you give them a reason, they will come
- James – the benefits of film as an asset class: cash flow, low correlation, large opportunity
- James – lower volatility can generate higher compound returns over time
Eileen Burke, Founder of West End Capital and Advisory, James Janowitz, Partner at Pryor Cashman, Andy Kim, CFO of The Weinstein Company, and Stephen Stites, VP of Goldman, Sachs & Co talked about hybrid companies (companies who started with one service and now are offering multiple, such as producing AND distributing):
- Eileen – everyone looks at the same data, but there are so many different business models
- Andy – The Weinstein Company has moved into TV development and is looking to grow this area
- Jim – slate deals do much better with active management
- Jim – you really need to monetize with a bigger company/ studio release (though he did acknowledge some self-releases go viral)
Margaret Chu, founder of Tangram Advisors, Terrence Dugan, partner at Morgan, Lewis & Bockius, Michael Katzenstein, senior managing director of FTI Consulting, and Peter Ma, Associate at Colbeck Capital Management talked about distressed investing (referring to either financial or operational distress):
- Margaret – tentpole films have larger share and are driving box office
- Margaret – opening weekend is an increasing % of total box office. The theatrical windo is shrinking
- Mike – there is an adverse impact in physical dollars being replaced by digital dimes
- Mike – the film business is not an investment space for interlopers; it is incredibly personal, relationship-driven
- Peter – we are not investing in individuals, not one product, not just one guy; there’s a management team, a series of contracts
- Mike – growth is almost all digital, all mobile; folks will sacrifice quality of experience to watch content that their device happens to give them
- Terry – passion cuases people to hold on till it’s too late
- Peter – for the investor, take the time to understand film accounting
Vicki Cherkas of Cherkas Strategic Consulting, Jonathan Deckter, President – International Sales and Distribution of IM Global, William French, President of Film Production Capital, Dominic Ianno, CEO of Indomitable Entertainment, Celine Rattray, Partner of Maven Pictures, Dan Steinman, Agent – Film Finance Group at CAA, and Christopher Woodrow, Chairman and CEO of Worldview Entertainment talked about single-picture financing:
- Celine – developing a film is tough; the bar is higher
- Celine – anything you take on for development needs to be easy to be made
- Dominic – if you invest in 10 films, you’ll get 1 hit, 2 break-even, and 7 will lose
- William – some films sell of international rights to pay for production and keep domestic as the upside
- Dan – if a film is using an unknown foreign sales company, it means better known companies probably passed
- Celine – on casting the lead actors: it’s so easy to make the wrong call
- Dominic – the movie starts to get made the moment you get a star
- Jonathan – under $10MM, studios won’t get involved early; for $20MM+, you want US distribution on board before production
- Dominic – production costs are higher, distribution costs are higher, there are 10 new releases each weekend
- Celine – steps to making a film: set script, director and casting; get foreign estimates (multiple bids); decide where to shoot, looking at tax rebates; look at domestic value as 10-20% of total film budget; given the budget, figure out how to produce at this amount; get a financing plan (sales advances, loans, equity), then raise the rest of the dollars needed
- Celine – foreign sales forecasts are typically accurate; domestic is much harder to estimate
John Hadity, EVP at Entertainment Partners, Aaron Gilbert, MD at Media House Capital, Keith Kjarval, Founder of United Pictures, John Logigian of consulting firm The Logigian Company, Lucy Mulloy, writer, director and producer of Mulloy Productions, and Donna Smith, President of Persnickety Productions talked about how to capitalize on the independent film business:
- Aaron – festival costs of promoting the film are covered by domestic agents
- John L. – surround yourself with people who know the business, work with quality people
- John L. – how to succeed in indie films? Be practical, nimble and tough at times
- Keith – wrangling always falls on the producer; you have the relationships with investors and the filmmakers
- John L. – the producer must sell – tell the story, share the vision
- Keith – as a producer, your job is to network – make it your business to know who people are
- Aaron – as producers, our job is to find the commercially viable project
- Aaron – the producer’s job is to educate the investor
- John H. – fundraising is so hard, sometimes people are afraid to say No to a potential investor
- Keith – post-production budget has to fit with pre-production raise
- Donna – we’re all very fortunate to work in the movie business
We are all fortunate to work in the film business. Amen to Donna’s closing words.