When Social Capital launched three years ago, headed by musician and real-estate entrepreneur Martin Shore and production and finance specialist Christopher Tuffin, its goal was to make two to three films a year in the $15m-$35m range.
The company quickly sealed a partnership with The Steel Company, the veteran buyers' representation and deal-making boutique led by longtime agent, sales representative and financier Gordon Steel and production and finance expert John Baca.
Together, the partners created a joint venture capable of sourcing and putting together a modest slate of films. Social Capital brings private equity to the table while The Steel Company can leverage its relationships with senior and mezzanine lenders as well as its global network of A-list buyers whom it has advised for years. Pre-sales are handled through Hyde Park International.
But in light of the recent collapse of the independent marketplace and the overall economic uncertainty facing studio-level suppliers, Shore and Tuffin see greater opportunity in higher budget ranges and have begun exploring co-financing deals with studios.
"Content is king," Tuffin says. "That's what brings value and that's where we start. We want to have a model that is buy-side driven and in this regard our friends at The Steel Company are great partners because they bring great knowledge of buyers' needs.
"There's been a vacancy left behind by New Line International and we're about identifying where independents fit into the under-$55m landscape. However, we're now in a position where we can go much higher - we can do a $100m studio co-financing but at the same time we're not averse to a specialty film."
The first two key projects in the pipeline are Tell-Tale, Michael Cuesta's $15m update on Edgar Allan Poe's horror tale The Tell-Tale Heart which is produced by Ridley and Tony Scott and stars Josh Lucas, Lena Headey and Brian Cox; and Julie Delpy's $8.5m period thriller The Countess starring Delpy, William Hurt and Daniel Bruhl.
Tell-Tale has pre-sold to 16 territories including South Korea (KD Media), Brazil (Playarte), CIS (21 Entertainment) Mexico and Latin America (Quality) and Germany through a first-look output deal with Square One. Generally the plan is for the German pre-sales to cover 10% of budget and remaining pre-sales to account for a further 20%.
The Steel Company has helped engineer Social Capital's network of lenders and financial partners, which includes Comerica Bank, Oceana Media Finance and Tax Credit Finances, the last of which helped to arrange and cash-flow Rhode Island tax credits on Tell-Tale. Andrew Hurwitz and Graham Taylor of Endeavor Independent (which also reps Social Capital) represent domestic rights on Tell-Tale.
When the dollar tumbled against the euro, Social Capital stayed on as producer of The Countess and flipped the balance of the financing over to X-Filme in Germany, its original co-finance partners on the project, which used French and German subsidies to offset the weak dollar. Celluloid Dreams is handling worldwide rights.
Scott Free is among several film-making outfits with which Social Capital and The Steel Company have developed non-exclusive co-production and finance relationships subordinate to their studio deals.
"About five years ago after representing people like Rank and Samsung, John and I decided that we should try to get some capital together and get involved in doing deals ourselves as producers and deal-makers," Steel says. "Social Capital has a great deal of sophistication in the financing world and we look forward to building a strong slate."
"It's a tough marketplace now," John Baca says. "There are not a lot of A-list projects and what we need to do is become more instrumental in helping to deliver that. Unless we feel it's something our buyers will respond to, we don't get involved."
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