Thursday, May 24, 2012

Raising Money for Independent Film Production, Opening a Vein and Productive Insanity


Dear Reader,

Remember this: “Everything is people.”

So I get an email from an successful executive at a respected production company with whom I am attached to direct a family oriented fantasy film.  I ask, “So how’s it going with our project?”  His answer: “Film financing sucks right now!”
Yep. It sure does.  Why?  And why, furthermore, if the well is as dry as it seems to be, do so many godawful pictures continue to get made?  Even at a studio level; hey for every The Avengers there’s a Battleship -- 1,400 S/FX shots signifying nothing.  That’s just my opinion (Lord knows I wish I had a budget and resources like that to make a film; yes I have production resource envy) -- but really how in the hell did no one notice the script, yes the words in the script that were supposed to amount to a coherent story, involved Aliens who can’t stand sunlight riding around in ships with a bunch of windows in them that’s the good guys can blast to shards?  Good lord.



And thinking it through, if the well is that dry how does any movie get made?  At all?  Ever?  In today’s “sucky financing market.”  Good question.

Leaving aside the obvious studio route: studio buys comic book, studio hires five consecutive writer teams to subsequently “fix” the last team’s “terrific effort”, studio hires  one of the ten usual directing subjects, studio pays said usual directing subject a boat-load of money, studio hires big name actors and pays them an even bigger boat-load of money, studio finances whole production, studio turns marketing department loose on finished film, studio (hopefully) makes a cargo ship-load of money and monetizes every single thing they possibly can regarding merchandise.  They better because at $200 million heads will roll if it flops.  John Carter anyone?  The head of Disney production got the guillotine for that one -- which if you think about it on a cost-over-colossal screw-up analysis is hardly as bad as JP Morgan flushing $2 billion down the drain.  But hey, this is Hollywood and like Mike Medavoy once said (I think it was him) “You are only as good as you next picture.”  Make a stupendous blunder like John Carter and there won’t be a next picture.  But hey, I heard a tasty gig just opened up at JP Morgan.

But really, heads are gonna roll even if a film at that budget level does “Okay.”  I call this “The Home Run Syndrome.”  Studios used to operate on “The Get A Lot of Base Hits Syndrome” (the 80’s and 90’s), but those days are long gone.  And yes, I know what you’re thinking, “Well, Dave, studios make a lot more sorts of films at substantially lower budget levels than that.”  No.  They don’t.  Studios acquire those films.  They buy them.  They don’t make them.  Not anymore.  Don’t believe me?  

Here’s a quick story:
So I’m sitting in the office of the head of Worldwide Film and Television Acquisition at a major studio about 6 months ago.  I’m talking to this person, who also happens to be a friend and someone with whom I have worked (very successfully) in the not so distant past.  He’s read a screenplay of mine to which I have attached a major star -- wrote it as a vehicle for him to star in as a matter of fact.  My executive friend is also a big fan of this actor.  Actually had done a movie with him and really likes him both personally and professionally.  So, great, I’m “in” right?  I mean, clearly he’s gonna recommend to production that the studio fund my film and away we go, right?  And considering my answer to his next question, “What do you see as the budget, Dave?” this should be a slam dunk.  Because I answer, “In the $10 million range. All in.”  Seems workable, right?  I mean at $10 million how can the studio really lose?  Here’s what he said, “It will never happen here.  We won’t make that movie.”  Wait.  What?  Here’s why, “Because the first people I’ll have to run it by are not the production guys, Dave, it’s marketing.  And they will never be able to justify spending upwards of $30 million to market a movie that only cost $10 million.”

“Wait. What?” I say.

“I know, seems bass akwards doesn’t it?”  I agree with him that it does.  Then he goes on and says, “But if you make this film and it comes out as good as I know you can make it, then chances are we’d probably buy it.  If you get it into a few festivals and people like it, we’d definitely buy it and distribute it.”  Wanna know why?  Because they could acquire the film at a price that would then come close to justifying the expenditure of the sort of marketing money they need to part with to get it out there in front of a large audience.

Christ, I’m exhausted from just writing that.

Here’s another little story if I haven’t beat this horse dead yet:

So I’m in a meeting with a major Production Company on the lot at a different major studio.  I’m talking with the Head of Production who is a big fan of my writing.  He just read an epic western based on a true story (written with writing partner Paul Jaconi-Biery) and said, I kid you not, “It’s literally one of the best scripts I’ve ever read.”  I know, I know, we’ve all heard that before.  But see, here’s the deal, he really means it.  And yes, the script really is that good (G’boy Dave, pat-pat). 

He continues, “But the studio will never let us make this.”  Wait.  What?  This company has made not millions, not hundreds of millions, but their movies have made the studio literally billions of dollars.  So they should get to make any damn movie they want, right?  Wrong.  The HOP tells me, “The studio looks to us for tentpole movies.”  Tentpole movies.  Uh huh.  Then he asks, “Do you have anything like that?”  

Now we all know what a tentpole movie is, right?  It’s a big budget, popcorn movie - usually an action movie -- almost always based upon (these days anyway) a comic book, a piece of existing material in the studio’s library or on a ride at once of the studio’s theme parks.  I tell the HOP that I unfortunately do not have the rights to any comic books (all the major comic book publishers have deals with studios), nor do I have the rights to any of the studios catalog of material in their library and I sadly do not have any vested majority stock ownership in the studios theme park.  Still he persists, because he’s actually a very nice guy, and says, “Well, still, do you have anything ya know, BIG?”

“Sure,” I tell him, “But when was the last time, or what was the last tentpole movie that the studio made that WAS NOT based on any of those three things I mentioned?”

Ringing silence.  But I did get a re-write out of the mix.  So there’s that.

One last little story, here’s a redacted note a high ranking acquisitions exec (a good friend) at a different studio sent me about the same script:

“David, I read this and really liked it.  Nice story and strong writing.  But as you note, you need the theatrical component and I can't provide that.  This would need to go into either (Big Studio’s smaller label) as an acquisition or into the studio via one of our creative execs.  Frankly, (Big Studio) isn't making films like this so (Big Studio’s smaller label) is your best bet.  I will say that they tend not to get involved in a lot of stuff at the production level, rather they come in when the film is either finished and screenable or in production with attractive elements.  So I think it's a long shot they'll get involved at this stage.  Sorry, wish I had better news but I know the thinking around here now.  I think you'll need to try and figure out the financing without distribution just knowing the market today.  Very difficult to get studios to finance or commit to distribution on projects like this.”


So there ya go.  That’s the studio route.  Good luck.  It’s great work if you can get it.

So what about independent film production?  Where’s that money come from?  If you think the studio route is daunting, now your head is gonna spin.  There are, in my current experience, 6 ways to get money to make an independent film.  Here’s what I call them:
  1. The Rich Guy Method.
  2. The Scavenger Hunt Method.
  3. The Foreign Pre Sales Cobbling Method.
  4. The Completely Useless Big Slick Business Plan Method.
  5. The (Insert Big Retailer Here) Will Acquire the DVD Rights and Guarantee Your Investors 50% - 70% of Their Money Back Up Front Provided The Film Has The Right Cast (preferably Country Music Stars Who Want To Cross Over and They Appeal To The Faith Based Market) and No Foul Language Method.
And then there’s the one thing that is common to all of these methods, and I call it:

6. The Ice Cream Man & The Matching Funds Investor Conundrum.
  1. THE RICH GUY METHOD, this is pretty much exactly what it says, you find a wealthy person and they simply give you the money to make you film.  I’ve had a few of these types of benefactors over the years, and most recently on a film I shot in Iowa in 2010.  The entire film was bank rolled, literally in the form of a check, by a single person.  How did I find this person?  I didn’t, someone else did.  Why did this person write the check to fund the movie?  A couple reasons; I wrote the script, I was signed to direct, it was a family film, and that gave this investor a satisfactory level of confidence that the whole endeavor was not akin to flushing cash down the toilet -- or making John Carter.  How do you find these investors?  Remember what I told you to remember at the start of this column?  “Everything is People.”  So never stop meeting people because, one way or another, one thing always leads to another - or in this case one person always leads to another, and one of them, one day, is going to have money they wish to invest in a film.  Oh, and one more thing, the first question you are likely to get is, “So, who’s in your film?”
  1. THE SCAVENGER HUNT METHOD, is just what it says, you scavenge around anywhere you can to find pieces (however small or large) of the budget until you have enough pieces and they add up to what you need to make the film.  The pieces can come from anywhere, there are no hard and fast rules to this method; a rich investor, monetizing tax incentives, MG’s (Minimum Guarantees) direct bank loans, your credit cards, gap financing, bridge loans, mortgage your house, a production company that might come in with some equity in order to run the production through their production/post production facility (essentially creating themselves a job), foreign pre sales, and the list goes on.  The problem with this method is the daunting nature of the possible conflicts between all the disparate parties involved.  For instance, whoever is “first in” is likely to demand to be “first out,” meaning they want a guarantee that they will get their money back before anyone else.  But what if after the film is finished, and it’s REALLY GOOD, a P&A Fund comes in and wants to give you $12 million to take it out into the domestic theatrical market?  Great right?  What if they demand to be “last in - first out”?  If you make that deal, your original “first in” investor will sue the shit out of you.  And he’ll win.  Film funds today (yes, there are some) usually have a “need sheet” that amounts to a Scavenger Hunt (the problem with these is that they ask you to come in with everything except the actual liquid equity - and in most cases you have to bring some of that to their table as well, which, of course, is impossible).  Here’s one I received recently:
“We are looking for projects with the following attributes:
- Theatrical distribution in place.
- Foreign sales agent hired 
  • In pre-production (cast, foreign sales, some capital behind them)
  • All tax incentives monetized 
  • At least 3 foreign territories pre-sold
  • Fund will bring 25-35% equity”
And for this they do you the beneficent favor of coming in at 25%-35% liquid equity of the actual budget, meaning that if all of those other criteria that they demanded you satisfy do not add up to (together with their paltry 25%-35%) the whole budget, then you STILL have to go out and Scavenge some more!  Oh, and these types of funds demand 5% of the all-in budget as a fee.  I hate the Scavenger Method.  Oh, and one more thing, the first question you are likely to get is, “So, who’s in your film?”

  1. THE FOREIGN PRE SALES COBBLING METHOD, is a close cousin to the Scavenger Method.  Essentially it’s this, you pre sell the foreign distribution rights to your film, and you better have all the necessary ducks in a row for your foreign buyer, the most important of which is “Who’s in it?”  Your actor had better fit into one of these categories, 1. stars that have been in big hits in the relevant territories; 2. stars that have been in popular television shows in those territories, or 3. stars that can be expected to generate a great deal of publicity everywhere.  Now just because you’ve pre sold your foreign territories doesn’t mean you’ve got all the money to make the film.  In fact, these days you’ve got a whole lot less than you used to be able to get.  I could spend 20 pages on this, but just click this link and it will take you to Edward Jay Epstein’s Blog -- his article is everything you need to know about the reality of this method in today’s film financing world:

Oh, and one more thing, the first question you are likely to get is, “So, who’s in your film?”

  1. THE COMPLETELY USELESS BIG SLICK BUSINESS PLAN METHOD, this is usually employed by companies (they call themselves production companies but they’re not) that somehow acquire the rights to a slate of scripts they think have potential.  They usually group them into genres and then proceed to produce these big, slick, eye-catching “business plans” that attempt to convince an investor or a group of investors that there’s “no way they can lose” investing in this slate of films.  These companies could be trying to raise $5 million or $100 million.  Doesn’t matter, the “business plans” are all the same - filled with these utterly, ridiculously positive projections of revenue streams, startlingly great looking charts and graphs signifying nothing, and (this I hate most of all) completely valueless comparisons to films of the same genre that have been spectacular successes.  I’ve seen a bunch of these.  The best ones have nothing to do with whether any of the projects being hocked therein is ever going to make a freaking dime, the best ones are the ones that were assembled by the guy who’s got the best “desk top publishing” chops.  Ugh. Oh, and one more thing, the first question you are likely to get is, “So, who’s in your film?”  But this method has an advantage over the others in that you’ve already thought of this, and included in your CUBSBP a whole section of the most famous movie stars (pix and bios and attendant grosses their biggest movies have generated) -- none of whom you will ever have a chance in hell of getting in your film.

  1. The (Insert Big Retailer Here) Will Acquire the DVD Rights and Guarantee Your Investors 50% - 70% of Their Money Back, Up Front Provided The Film Has The Right Cast (preferably Country Music Stars Who Want To Cross Over and They Appeal To The Faith Based Market) and No Foul Language Method.  A mouthful isn’t it?  But this method actually works pretty good.  Provided you can satisfy their requirements up front they’ll make a deal, not with you of course, but with the production company you take your project to and with whom Big Retailer has an output deal, which is based on that production company having put a series of successful direct-to-DVD films on their shelves in the past.  The biggest of these is of course Wally World (did you know they have their own film division now? Yep.) and since they control 60% of the worldwide DVD sales market, they make the rules.  Oh, and one more thing, the first question you are likely to get is, “So, who’s in your film?”  But just look in the title for the answer to that question for this method.  




  1. THE ICE CREAM MAN & THE MATCHING FUNDS INVESTOR CONUNDRUM, is very much like, no wait, it’s EXACTLY LIKE, when you were a kid (for those of you old enough to remember this) and you and your friend (let’s call him Johnny) Johnny were playing in your front yards one summer day and you both at the same time heard the Ice Cream Man coming down the street.  You and Johnny both really want an ice cream (financing for your movie).  So you both go to your respective houses, and ask your respective mom’s, “Mom!  The ice cream man’s coming down the street, can I have a nickel for 50/50 bar?! (insert your favorite ice cream bar here).  And your mom tells you, “Sure, if Johnny’s mother gives him a nickel, I’ll give you a nickel.”  Problem is Johnny’s mom told him the same thing about your mother!  This goes on until the last possible moment when the ice cream man is already passed your houses and is about to turn onto another street (go finance a different movie).  But in the nick of time your mom gives you a nickel and Johnny’s mom gives him a nickel and you both run like hell to catch the ice cream man (financier).
Here’s a little story from an independent writer/director friend to illustrate the point:

“Dave, quick story, basically I've still been working on getting (insert name of lower budget indie script my friend wrote here) into production, I got a wealthy friend to commit 100K to it and when I took that to (insert manager/producer name here) he seemed to be re-energized to find money for the project. He signed this young director who seems talented and who I actually quite liked, and he adored the script, and (producer/manager) wanted him to direct the project. I was fine with that, as long as (producer/manager) could find the money.

So, I was in (certain state) at my brother's wedding, I got a text from (producer/manager)  saying it was "DONE".  He had a wealthy business partner who wanted to finance the project. They loved the script, loved me, the director, etc. They were going to do like 750K, which would be enough to do the film but it would be tight...whatever, I was ecstatic because I just wanted to get the thing into production!!!

Well, six months later, the money still had not come through. It was literally a nightmare for me, waiting and waiting and waiting and waiting...I felt bad for the director because he really wanted to get started but couldn't, and he was having a lot of financial problems, which I actually ended up helping him out with. I also felt a little bad for (manager/producer) because I could tell that his people wanted to finance, but they just had other projects in line before this one. It just sucked, because every time I talked to (manager/producer), he was saying, "Dude, we're there...the money is there...we don't need to worry about it". But then a week would go by with no word and I was like...dude...what the f**k!

Anyway, at the end of April, I called (manager/producer) and said buddy, I don't care if the f**king money is going to drop tomorrow and I'm making a huge mistake, but you need to give these financiers an ultimatum or I'm walking. He did so, they didn't respond, and I walked. I'd had another producer pursuing the project pretty hard, but I'd always sort of pushed him off because he wanted to go the route of trying to make offers and get some cast on board and then pursuing the budget through MG's, etc...a longer process, whereas (manager/producer’s) deal was straight equity.

Well, f**k that! I signed an exclusive agreement with this other producer a month ago, and didn't look back. The producer put 250K into escrow, which is usable to make offers, and we're going to send out our first two offers after Cannes. He's procured an MG for 500K from a Canadian company contingent on a list of talent, hopefully one of whom we can get. He also wants to do the project right, looking for more like 1.5M, and he wants to shoot local, which I think is the right thing to do.

And most of all, he actually communicates with me and tells me exactly what's going on, and he keeps me involved. And...funnily enough...he wants me to direct! Obviously a frightening proposition because I've not done that before, but the vision I have of this project is strong enough that I think I'll be able to do it.”


I reprint this here as an example of one of the two things all these raising-money-for-your-movie-methods have in common.  The conundrum of the “first in.”  Most of the time (no, scratch that, ALL of the time) you need that first investor to commit before the rest of the investors (pieces of the financing puzzle) will open their wallets.  How do you do that?  There’s really only a single way, a single piece of the financing puzzle that will almost always make it happen.  What’s that?  It’s that question I kept repeating at the end of every paragraph, Oh, and one more thing, the first question you are likely to get is, “So, who’s in your film?” 

You get Brad Pitt to commit to star in your movie, not only will you have every private investor on earth throwing money at you, you won’t need them, because the studios will all knock your door down to get at you.  But wait, how do you get Brad Pitt to commit (on paper no less!) to star in your movie if you cannot make a cash reading offer to his agent?  Ha!  Good luck.  You can’t.  Well, you can, and the answer to that is in the three little words I started this column off with.  They are the three most important words in the movie business (all business really) but nowhere more so important than in the entertainment business:

“Everything is people.”  I’ll leave it at that hoping you get the point.


So wrapping this all up are the other two parts of my title for this post, Opening a Vein, and Productive Insanity. 

Opening a view has to do with this, and I think it was Alfred Hitchcock that said this (could be wrong on that, and I’m paraphrasing here), “In the beginning is the word.  But what Hollywood seems never able to remember is that, also in the middle and the end is the word.”  “Writing is easy,” said another genius, “you just sit down and open a vein”  


That’s what I (we) do when we write.  When we create.  We bleed.  We bleed emotion, and soul, and self when we write.  It hurts.  A lot.  But if it hurts that much (it does for me anyway - and please, I am not complaining in the least here) and the odds are so enormously stacked against ever getting your story from the page to the screen, then why do we do it?  


The nearest I can come to answering that question is that I have something to say.  When, one day, I have nothing more to say, then I suppose I’ll stop.  I doubt it, but maybe.  And because, as another yet genius once said, “Writing is the only thing which while I am doing it, I don’t feel I should be doing something else.” 

And finally, the Productive Insanity part is this, ya know what they say about defining insanity, right?  It’s repeating a behavior which leads to negative consequences, but keeping right on with the behavior.  

Like banging your head against the wall fulling expecting one day to knock the wall down.  

But the satisfaction of finally seeing the movie up on a screen, and people watching it, enthralled and feeling what I intended the story to make them feel, is too great a pull, to wonderful a goal to stop.  


So I’ll keep banging my head against the wall, thank you very much.


And even though “It is the waiting the kills.  Always.”  I’ll be productive in my insanity if you don’t mind. 


Because good things happen to he who hustles while he waits.

Thanks for reading and check back soon.



And PLEASE sign up to follow.

Best as always,

DME








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