DARWINISIT DILEMMAS
Evolving distribs bank on creative financing, risky fare

by Charles Lyons

It's no secret that independent film has become vulnerable and dependent -- in need of the security of deep-pocketed parents.

That was the message when, after 11 years of trying to cobble together its own financing, one of the more successful stand-alone companies, Good Machine, evolved into a larger label within Universal. That, too, was also the case when FilmFour suddenly disintegrated, a victim of what appeared to be a muddled artistic vision as reflected by such underperformers as "Charlotte Gray" and "Crush."

But whereas financing for independent film is unquestionably in dire straits, specialty distribution and audience interest in indie films remains healthy. How is it that coin can be so scarce and distributors so hungry?

The answer has much to do with the decline of the foreign pre-sales and television markets coupled with media consolidation in the U.S. Worldwide producers depend on TV and pre-sales as the cornerstone of assembling a pic's financing. With European markets depressed, indie films were the first to fall by the wayside. Without pre-sales dollars, producers have struggled to attract banks to invest in their projects.

"Today, all the planets have to line up in order to do a high-budget film for an independent," says Kirk D'Amico, whose Myriad Entertainment backed out of a package to finance the $50 million-plus "Borgia," a Neil Jordan film to star Ewan McGregor.

"The small companies are getting squeezed," adds D'Amico. "You need enough cash flow to finance pre-production, before your main production financing closes."

Gotham producer Andrew Fierberg says that unless you're making a digital pic for under $600,000, you're better off trying to raise $15 million-$20 million with actors who can actually open a film than pursuing pics at budgets of $4 million-$7 million, which are even tougher to finance.

Morgan Rector of Comerica Bank adds, "When you do all the math, what you find is that if you want to make a film for $10 million, for example, you only end up getting $8 [mil] or $9 [mil] through sales, and you just can't operate that way."

Jokes Rector, "Even the overseas guys who never pay are not buying now, much less the legitimate players."

Cassian Elwes of William Morris Independent confesses that the packages for indie pics are tougher to put together, even with stars attached, and producers such as Forensic Films' Scott Macaulay say they need to be harder on the scripts they pitch to investors.

But John Sloss of Cinetic Media is more optimistic: "I don't think it's a bad situation at all, other than territorial financing. Video and DVD are booming overseas. It's hard if you are going to rely on the path of least resistance -- the time-honored way of financing movies. But the key is to find a creative way to hook into the financing. You need soft money and equity."

Sloss was a co-founder of InDigEnt, the low-budget digital collective that broke out this year with pics "Tadpole" and "Personal Velocity," which were snapped up by distribs at the Sundance Film Festival.

Part of that hunger comes from an underlying sense that there is an audience wanting to see independent films, movies that break the rules and sometimes, the $100 million barrier.

The multinational corporate behemoths have quietly come to inhabit an environment where they depend increasingly on franchises, sequels and corporate synergy to stay in business. Adult dramas and riskier fare have become, for the most part, the domain of the majors' specialty labels.

But even this strata of independent film has its drawbacks, with rising marketing costs, high overhead and corporate responsibility leading some companies to think first and foremost of a pic's marketing hook rather than its inherent artistic value. And, with larger slates including inhouse productions, some of the companies are neglecting the kind of grassroots marketing from which smaller pics have traditionally benefited.

In such an environment, it's no wonder that some of the year's more compelling and successful films did not come from the major's specialty labels. This year's indie standout thus far is an IFC Films release, "My Big Fat Greek Wedding," a comedy with charm and originality to spare.

Nearly every distrib, particularly Lions Gate, passed on the pic. The film's financier, Gold Circle Films, enlisted nascent IFC Films in a service deal in which Gold Circle paid for the P&A. By mid-July, the film had caught fire, allowing IFC to expand its rollout to nearly 500 screens. The film is inching toward a $30 million domestic cume and will likely prove to be one of the top-grossing specialty pics of the year.

That B.O. puts "Greek Wedding" on par with last year's standout, Christopher Nolan's "Memento," another film that distribs had overlooked, and one that benefited from the marketing acumen of IFC's Bob Berney.

"We are looking for films of any genre that try to serve audiences that are underserved," says Berney. "Whether it's the Latin audience or the over-45 audience."

The story of how IFC and Berney parlayed Mexican pic "Y Tu Mama Tambien" into a sleeper has been well told by this and other papers, with the exception of the little-known fact that some of the studio-based classics labels had passed on the pic because they feared it would get an NC-17 rating and anger their corporate parents.

But, with the abrupt exit of Berney to head up Newmarket's still-unnamed U.S. distribution arm, it puts into question IFC's future as a distrib. The IFC staff maintain that Berney was no solo act; but even if he were, the company, like the Newmarket banner, will need to survive the vicissitudes of the business, which can be mighty sobering. Still, IFC's recent successes highlight the fact that there is plenty of room for creative distribs in an already crowded landscape. (Just last week, Showtime Networks announced the launch of a new theatrical indie arm to make pics budgeted under $1 million.)

"A lot of the companies don't want to be who they are," says Sony Pictures Classics co-topper Tom Bernard, "but they are using the specialty label to get into the bigger game."

Despite prohibitive marketing costs, the best news is that smart and unusual films are breaking out: the Focus release "Monsoon Wedding" has grossed over $13 million, while Fox Searchlight's "Kissing Jessica Stein," Sony Pictures Classics' "Thirteen Conversations About One Thing," Lot 47's "The Fast Runner" and Kino's "Piano Teacher," for example, are finding their audiences.

"The truth is that audiences are passionately searching for films that touch and inspire them," says producer's rep Jeff Dowd. "Sometimes, the economics of a costly theatrical release don't initially work but nonetheless audiences can discover these films in a big way on television, video and DVD. With more focused efforts, they might have even worked theatrically."

The video and DVD market cannot be underestimated. Yes, you still need the theatrical release to launch a homevid success, but when a movie such as the all-but abandoned "How to Kill Your Neighbor's Dog" grosses $60,000 in theatres but nearly $12 million on video, you know there's still hope for independent film.