Random Thoughts on Financing and Distribution

I just got back from a lecture on independent filmmaking this evening.  The speakers were a husband and wife.  She runs a local film festival and he runs a local film production studio and is the son of a very famous football coach.  It was really interesting to hear about their jobs, how they got into the film industry, how they met, and the projects they have worked on.

One interesting story he told was of a film that he had invested in.  It had been a real attention getter at Sundance and had been nominated for two Academy Awards.  You would think that with credentials like that they would make a real nice profit on this film, but the highest price a distributor was willing to pay was only a third of the film’s budget.  Needless to say, he and all the other investors lost money on that film.

This is the kind of story I’ve heard over and over again.  Most people think that producers who get their films picked up by major distributors make a lot of money, right?  Wrong.  In most cases it’s the distributors who make the money.  And who ends up getting screwed?  The investors.  So why would anyone want to sell their film to a major distributor?  Well, because the opportunity to get the kind of exposure that comes with a wide release is very tempting to a producer.  It means that they will become known and that could give them more clout in future negotiations which lead to greater profits for subsequent films.

There’s only one problem with that:  you’ve screwed your investors.  Why in the world would anyone want to invest in a film where they knew they would lose money?  Now some investors love film or believe in a specific project and just want to be a part of it so they’re willing to take the risk.  But most are in it to make money.  It’s an investment and they want to see a return on their money.  I can’t blame them for that. 

Some producers justify accepting these distributor deals by saying that their investors are rich and can afford to lose the money.  Yes, they do have to have a certain amount of wealth to qualify as an accredited investor.  But does that justify taking their money knowing full well they will never see a return on it?  My view on this is no.  I find it unconscionable that producers would screw the very people that helped to make their film possible.  I may get labeled idealistic or naive for this viewpoint.  Fine.  But I won’t compromise my integrity for anything or anyone. 

I strongly believe that producers have a fiduciary responsibility to their investors.  It’s not only the job of the producer to make a quality film that is appealing to the audience, but it is also the producer’s job to try to the best of their ability to make a profit on the film and, at the very least, pay back the investors’ money.

Getting a distribution deal with a major distributor is every producer’s dream and I’m by no means against it if they are willing to offer a fair deal.  But the more I hear about how tough it is to get a fair deal, the more I have begun to explore other options.  I’ve heard that sometimes a smaller distributor will offer a more equitable deal and it’s something I want to look into further.

A question I asked the producer tonight was whether he thought that self distribution was the way to go.  He said yes, but he said to be sure to team up with someone who has done it.  Self distribution is something I definitely want to explore.  From everything I’ve heard it’s a huge amount of work.  But if you are going to spend huge amounts of time and effort to get your film made, why woudn’t you spend the effort to make sure your film gets distributed and makes money?  It’s what any business in any other industry would do. 

In every other industry out there businesses make sure that they have a plan and work that plan for getting their products distributed.  But in the film industry I’ve seen filmmakers shrug in defeat when they say they couldn’t get their film picked up by a distributor.  Seriously?  My jaw drops whenever I hear this.  This is a business!  Treat it like a business! 

The film industry is the only business I’ve seen where many people give all their attention to making the product and no thought to distributing and marketing it.  Granted, if you’ve got a bad product, you’re just not going to find many customers who will want to buy it.  But that’s no excuse for not trying. 

I do want to qualify what I just said and emphasize that not all filmmakers drop the ball when it comes to distribution.  There are many savvy producers out there who do know how to maximize profits on their films.  Unfortunately, there also seem to be a lot who don’t.


Writing and Financing Updates

Sorry for being so quiet lately.  When I got back from Comic-Con I was really looking forward to getting caught up with blogging, among other stuff.  Instead, a nasty virus caught up with me and had me down for the better part of a week.  This put me so far behind with everything else that I’ve been scrambling to catch up ever since.

So let’s talk about the film project, shall we?  I’m way overdue on giving you all an update.

Back in January I mentioned that two treatments were being worked on.  One by the writer I’m working with and one by me.  So how are they coming along?  Well, slowly.  The writer has the first revision of her treatment finished and ready to send to me.  I just haven’t seen it yet because we are busy negotiating a producer/writer agreement right now.  It’s a bit of a time consuming process and, ideally, it’s something that should have been done right at the outset of our working relationship.  But once we get the agreement hammered out and fully executed, she’ll be sending me the next revision.  I’m looking forward to seeing what she has done with it.

My version of the treatment is coming along much more slowly.  Instead of writing, I got sidetracked with financial matters, namely, my own.  Now I’m not one to talk about my personal finances on a public blog, but in this case my own finances are very much a factor in this project because all of the money that is keeping this project moving forward right now is coming out of my own pocket.  I need to get this project to the point where it is packaged so that I can pitch it to investors and get presales.  If I get lucky, maybe I can find an angel investor who is willing to come aboard the project early and help out with seed money.  But, in the meantime, I’ve had to get creative and find ways to stretch my own money.  While I make an okay living, I’m not by any means a wealthy person, so this has been a challenge. 

A couple of years ago I had refinanced the second on my tiny condo.  Then, at the beginning of this year, as I watched real estate prices plummet and people lose their homes, it didn’t make sense to hang on to my riskier loans any longer so I decided to refinance both my first and second into one fixed-rate loan.  Fortunately for me, I was in a position to refinance.  There are a lot of unfortunate people in this country who got into risky loans and didn’t have a clue what they were getting into.  I really feel for them.  But having a little bit of a background in real estate, together with my propensity to do my homework and make sure I understand what I’m getting myself into, really gave me an advantage.  So I’m not in any danger of losing my condo even though it’s not worth much anymore and I have virtually no equity to speak of.  But I have a roof over my head and that’s the important thing!

Refinancing allowed me to get my monthly payments lowered a bit and pay off my car.  It’s not a huge amount, but it’s freed up enough money to allow me to keep the project moving forward.  For now.  Eventually, in the not too distant future, I’ll come to the point where I’ll need equity and/or debt money.  So even though the writing got put on the back burner for a while, I’ve been moving the project forward by taking care of some necessary financial matters.  And speaking of financing, I’ve met a few investors over the last few months who have shown some interest, so maybe something will come of that…we’ll see.

Getting back to the writing has been a challenge for me.  When developing a movie there always seems to be a ton of other things that need to get done and are demanding my time, so I found a way to basically force myself to focus on the writing:  I signed up for a screenwriting class.  The goal of this particular screenwriting class is to have an outline or beat sheet of one’s story finished by the end of the semester.  This is exactly what I needed because once the outline is done, writing a treatment from it should be a snap. 

Getting the feedback of my classmates and especially my teacher is a real help.  My teacher has worked in the industry for years as a writer, story analyst, studio executive, and executive producer; and has been involved in the making of such movies as Silence of the Lambs, Platoon, and Bull Durham.

Each week we are required to write a three-page scene.  Rather than try to come up with a random story idea each week, I decided to take the story I’m going to outline and use the characters and setting to fit the scene.  Most likely none of the scenes will actually be used in the story because I had to change some things to fit the homework requirements, but it does give me a chance to explore the characters and the story and really makes me think about where I want the story to go.

The first week’s scene assignment was to have one character follow another, so I had the protagonist follow the antogonist in an interesting setting.  My teacher liked it so much that he posted a note on the bulletin board and told the whole class to go read my “very instructive scene in the vein of I AM LEGEND.”  He also said I “include(d) so much action and suspense and communicate(d) the flow of action with some real clarity.”  I’ve never seen I Am Legend, but from the trailers I’ve seen of the movie, I can see where he would get that comparison even though that’s not really the tone I was shooting for.  Now, mind you, this scene was far from perfect.  The formatting was too “Old Hollywood,” but considering that we had just read an old Hitchcock script, that’s what I was using as a guide.  Also, the ending fell short.  Nevertheless, I’ll take the compliment, especially coming from someone with his experience in the industry, and considering that, so far, I’m the only one in class that has been singled out for praise.

Going on my trip and then getting sick afterward has really put me behind in this class, so if you’re wondering why I’ve been so quiet lately, it’s because I’m scrambling to get caught up on homework.  There are only about four weeks left before the semester ends and I’m determined to get the most out of this class, not just in terms of getting the outline finished but, also, in terms of learning as much as I can about screenwriting, which will make me a better producer.

In the producer/writer agreement that I’m currently negotiating, we’re setting deadlines and right now we have asked for a completion date for the treatment of October 31.  However, since the negotiations are currently eating into our writing time, I’m pushing to move the date back to November 30.  This means that all treatments, both hers and mine, need to be in final form by that date.  In addition, I’ve been accepting story submissions from another writer and if I feel that one of them is worth developing, I’ll have my attorney draw up an agreement with that writer also with the same timeline.  The goal is to get all the treatments done at the same time so they can be submitted to the cast at the same time.  After that it will be the decision of the cast as to whether they like any of them.  If they do, then we’re looking at a six-month timeline to get the script completed.  If they don’t, I start all over again looking for more stories.

So that’s where we are right now.  If things go well, we are looking at having a finished script by next fall, hopefully sooner.  I know that seems like quite a ways off, but getting the script right is absolutely vital.  According to Dov S-S Simens, you don’t just need a good script, you need a great script.  Yes, the standards need to be that high because the competition is intense.  Nothing less than great will do.  Hollywood may be able to get away with mediocre scripts, but independent filmmakers can’t.