'A huge opportunity for local films'

The world of film finance is in good health despite the economic downturn. That was the message at the Third Film Finance Forum @ Zurich Film Festival on September 22.

Veteran French producer Pierre-Ange Le Pogam [pictured] of Stone Angels said in his keynote: “There is a big economic crisis; this is bad for many people but it’s good for the movie business.

“In France 15 years ago, 150 million people were going to the movies every year. Last year it was 215 million. The global market for movies is growing. If people are considering investing in movies, now is the right time to do it. Do it only with professional people,” he noted, before joking, “Don’t do it with the American studios.”

The changing model of the studios was a hot topic at the Forum, with speakers seeing opportunities for more realistically budgeted films (up to $50m) as studios work with ballooning budgets on larger tentpole titles.

Le Pogam said: “The more the world grows, it helps people to realise they absolutely have to emphasise their local experiences,” he said, pointing to the success of French hit Intouchables and adding: “More and more sophisticated European producers know how to make movies for $10m, $20m, $30m that can reach the whole world.”

‘If people are considering investing in movies, now is the right time to do it’

Pierre-Ange Les Pogam, Stone Angels

Ben Browning, CEO of Wayfare, agreed: “There is a huge opportunity for local films emerging, studios are retreating to creating brands and fewer movies.”

Roeg Sutherland, co-head of CAA’s finance and sales group, argued the industry was seeing a resurgence in finance thanks in part to the strength of foreign sales. He said: “The pre-sale market is back, even if it’s not at the same level it was six years ago. Also, Japan is buying again.”

Sutherland added: “For most investors, it’s about covering a lot of your budget with foreign sales and soft money.” He said he aims to get 70%-80% of a film’s budget out of pre-sales and soft money - a North American deal would represent only 20%-30% of that budget.

For the investors he works with, Sutherland said a return on investment of 13%-16% would be satisfactory.

Christopher Woodrow, CEO of Worldview Entertainment, said: “Between 2004 and 2007, a lot of investors got burnt because they were exposed to too much theatrical risk… or too much cherry-picking by the studios, or too much mezzanine debt on top of equity. The model has changed a lot. There’s never been a better time to invest in film.”

Libby Savill, partner at O’Melveny & Myers, said that with the industry correcting after the boom time, “We are now seeing some investors coming back into the market.” She pointed to positive examples such as Anton Capital backing StudioCanal’s international slate.

Le Pogam added: “This is a period of time in which the American studios have a lot of doubt about their business models. It’s time to balance the capacity of producing movies across the world. Studios have their local subsidiaries and they need these new movies [from independent producers].”

US producers are also increasingly looking at international co-productions. Brian Oliver, president of equity fund Cross Creek Pictures which has backed six films in three years including Ron Howard’s Rush, a UK-Germany co-production, and UK-Canada-Sweden’s The Woman In Black, stressed the importance of local expertise in the process of multi-territory co-production.

Despite the effort involved in finding the right local partners, Oliver said the process pays off: “If it works creatively, then there’s a lot of money accessible in the UK and Germany. It’s definitely becoming more part of the finance plan of films we talk about doing in Europe.” For instance, Cross Creek intends to shoot The Woman In Black: Angels Of Death next year. Oliver said the film’s partners are considering whether to structure it as a co-production, a UK film or whether to relocate it from the UK to another European country.

Alexander Jooss, SVP and head of business affairs, Universal Pictures International Productions, agreed: “We are open to getting involved with anything that makes commercial sense.  The beauty of this business is that you can find gold dust in the smallest Brazilian arthouse film if you distribute it the right way and your investment is measured appropriately to what you think your return will be.”

Additional reporting by Andreas Wiseman