Opinion: the changing face of acquisitions

The cull has not gone unnoticed in Hollywood either. Familiar faces on the global stage such as Jason Resnick (Universal/Focus), Paul Federbush (Warner Independent), Ellen Pittleman (Paramount), Michelle Krumm (The Weinstein Company) and others are in the process of reinventing themselves, while Peter Block and Amy Israel have both gone into production.

So why was the acquisitions-driven business the first to be axed as studios struggled to deal with the economic pinch’ First, the majors are all reducing their slates and prefer to retreat into the comfort zone of in-house production, focusing on films they develop, produce and market from the start rather than buy into films with elements they cannot control. The recent proliferation of costly independent films financed by private-equity sources, flooding the market with mediocre product which mostly failed to find an audience, has strengthened the case for production over acquisition. Likewise, the failure of famously expensive pick-ups such as Hamlet 2 (Focus) and Son Of Rambow (Paramount Vantage) did not help.

It’s not that acquisitions departments no longer exist - Miramax is still active, Paramount has a large team buying for international and scouting for Vantage, Sony Classics is still going strong in its art niche and Sony has a busy worldwide acquisitions group. Then, of course, there’s Fox Searchlight Pictures, which is easily the first US port of call for any producer, having enjoyed extraordinary success with third-party pick-ups such as Thank You For Smoking, Waitress, Once, Napoleon Dynamite, Little Miss Sunshine, The Wrestler and of course Slumdog Millionaire.

But the business of acquisitions has become so competitive there is very little room for a cost-effective ‘find’ anymore. Studios’ local-language production arms have now extended these companies’ tentacles to the point where no overseas production goes unmonitored, no new film-maker remaining undiscovered for long.

‘We’re just not in the acquisitions business any more,’ one studio chief said recently. Indeed, with all the studios now ramping up local-language production, the argument for costly centralised acquisitions departments endlessly tracking projects becomes hard to justify.

This trend perhaps returns the acquisitions business to where it belongs - in the independent sphere where new companies such as Summit, Overture, Senator and Bob Berney’s rapidly gestating new venture are stepping up but paying less. ‘We’re returning to the numbers we got 10 years ago,’ William Morris Independent co-president Rena Ronson explained this week. ‘The deals at Sundance this year were solid, but there were no $10m sales. The climate has changed.’

This week also saw the announcement by the UK’s Pathe that it was downscaling its distribution arm, teaming up with Warner Bros to handle its films and essentially quitting the acquisitions game altogether.

The UK market is one of the world’s most competitive and, even though Pathe had enjoyed success with pick-ups such as Crash and House Of Flying Daggers, it has decided to opt out of the spiralling bidding wars which surrounded every available film to focus on the in-house productions it can control. In the UK - and indeed in many international territories - beleaguered TV stations are cutting their independent buys and DVD continues on a fast downward track. Many independents are finding it hard to justify spending the asking price for expensive English-language films. Their value in the marketplace is increasingly out of whack with their budgets.

The key word in the discussion about acquisitions is value. Until a new source of revenue emerges for distributors, the caution surrounding acquisitions will continue to deepen. The numbers just do not make sense. Maybe more, like Pathe, will retrench. Better to craft your own productions at a smart price, trusting your own instincts, than take a risk on someone else’s overpriced film that could lose you millions.

The message for producers and sales agents is clear. The days of big-bucks studio buys are over. Be prudent with budgets and realistic with the value of what you have.