February 12, 2003

When I Hear Someone Say “Art,” I Go for My Gun

In a matter of days, another sector of the independent film industry will ring in. On February 19, the annual American Film Market conclave will unspool at the Loews Santa Monica and the adjacent cinemas of the 3rd Street Promenade.

Along with Cannes and MIFED, the AFM is one of the required annual social engagements for the buyers and sellers not aligned with the behemoths (actually a few members including Miramax, New Line and Focus fall under the umbrella of majors). It embraces everyone from Pathe and Intermedia to Troma, Concorde and a smattering of schlockmeisters. The latter group, particularly Troma, receive an inordinate amount of media attention as if their flamboyance were the hallmark of the organization. The AFM gets a bad rap from the mainstream press who appear to enjoy dismissive and demeaning caricatures when they pop in for a quick, superficial look.

Putting aside the obvious bottom feeders, most members of the American Film Market Association work hard for modest returns. Few have rich parents dolling out lucrative stock options and bonus packages. Apart from Elie Samaha, the days of free-wheeling spending on yachts and private planes by the likes of Carolco are a very distant memory. There’s money to be made but the prospect of a pot of gold at the end of the rainbow is as elusive and unlikely as tripping over a unicorn.

The most recent AFMA membership sales survey (calendar year 2000) suggests annual revenue in the neighborhood of $2.6 billion. It’s broken down into three areas with television accounting for the lion’s share of gross receipts at 46.5%, theatrical representing 32.4% and the remaining 21.1% derived from video and DVD earnings.

If you’re not Columbia TriStar International, UIP, Buena Vista International, Warner Bros. or Fox there are several hurdles to jump. Chief among them are an inconsistent flow of new, appealing pictures, limited or worse access to theaters and other forms of distribution and collecting more than the initial guarantee from one’s far flung network of distributors. The significant AFMA players that include Summit, Myriad, Mutual, Initial Entertainment, Lakeshore and Lions Gate are fortunate if they can produce, secure or wrangle a couple of “A” titles annually. More often than not that’s only been possible because studios have increasingly sought foreign partners to limit up front risk. Hence, Summit comes aboard Insomnia, Mutual wrestles away Italy and Japan away from Paramount on Lara Croft and Lakeshore winds up with the majority of international sales for The Mothman Prophecies.

The fragility of foreign sales cannot be overstated. The classic case is Carolco, the company that had successive successes with Rambo, Terminator 2 and Basic Instinct. It’s hard to imagine an independent having the top overseas grosser two years running squandering all its financial resources on personal aggrandizements with no investor to pull in the reins. That scenario occurs once in a lifetime and the present AFMA crowd can only aspire to lightning striking twice. Myriad, for instance, racked up a nice piece of change internationally and $12 million in box office receipts for National Lampoon’s Van Wilder but had setbacks when two other films - People I Know with Al Pacino and Chen Kaige’s English-language Killing Me Softly - had their domestic releases postponed (the latter ultimately premiered on Showtime) and could not capitalize on North American media. With respective current overseas box office of $10 million and $4 million, both films performed considerably below expectations.

Summit’s portion of Insomnia’s foreign box office is close to $50 million but it had a string on non-performers last year that included Serving Sara, Femme Fatale and Novocain. Initial is currently riding high with The Gangs of New York but took a drubbing a year ago with Ali. With most of these companies releasing little more than a handful of titles annually, each picture takes on major significance. However, even a hugely popular title can’t necessarily provide a comfortable cushion as the erratic flow of product means that one is rarely able to leverage the carrot of an upcoming release against accurate accounting of overages in theatrical, video and TV sales.

Vortex, a newcomer to the fold, has had enormous good fortune with My Big Fat Greek Wedding that’s already grossed $100 million internationally thanks to recent openings in Germany and France. It also handled The Man from Elysian Fields and Nicolas Cage’s directorial debut Sonny and will introduce the comedy Lalawood with Martin Short as Jiminy Glick at the 2002 AFM. It took the company a full year to sell Greek Wedding, with about a third of its sales only occurring following its North American success. Vortex’s Dean Shapiro says overage checks are just beginning to come into his office but, despite AFMA box office tracking, his ability to extend a long arm to distributors in Singapore or Peru for payment is severely limited. One often has to wheedle what’s owed through guile and cunning because force is not an option.

Now there’s little question that the majors wield considerable power in every corner of the world even in countries that have screen and import quotas. What they lose annually in piracy would fuel the operations of all the indies for the next decade. The five sisters alone generated in excess of $6 billion theatrically in 2002 with the number rising north of $7 billion with the addition of New Line and Miramax. Non-AFMA members, including Toho of Japan, Korea’s Cinema Service and a host of Europeans, generated another billion and that leaves roughly $1 billion or 11% of $9.1 billion to carve up among the remaining AFMA companies. Collections aside, it’s roughly twice as much as their slice of the domestic marketplace. The trick, and these companies’ very livelihood, rest on honest accounting and payments.

As to the actually product being hawked this year it’s really too much to expect anything of lasting merit. Films with movie stars draw buyers like bees to the honey and have titles that have included K-19: The Widowmaker, Simone and The Shipping News. There are exceptions that included Gosford Park, Monster’s Ball and The Pianist in 2002 but it’s more likely buyers will be searching out Lara Croft and Resident Evil sequels. In a fair market environment a true alternative to the slick, packaged movies produced by the studios might be healthy for all involved. But with limited access and resources is it any wonder that AFMA companies promote films that emulate the Hollywood mainstream. After all, it worked for Carolco.

Email Leonard Klady