Union Patriot Capital

Investors run with bulls in indie financing

Feb. 10, 1997

By Robert Marich

More money is chasing indie projects than ever before, making this the best of times in the perennially tough independent movie sector, according to an entertainment industry panel.

Major studios such as Fox, Disney and Sony have set up units specializing in distributing independent films, and there's a greater willingness on the part of foreign film distributors and U.S. investors to lay out cash, according to an independent production panel held Saturday during the two-day UCLA Entertainment Symposium.

John Sloss, a Los Angeles film attorney, said that a John Sayles film shooting in Mexico was the object of "two billionaires battling to invest -- and others were waiting in the wings." He said that eagerness came despite the film being shot in the Spanish and Mayan languages. He declined to otherwise identify the investors or the film.

With the U.S. stock market at an all-time high and pumping wealth into the economy, "rich people with money are willing to invest in movies," Sloss said.

When someone comes up with compelling script, "I think you'll always find the money and talent" to make the film, said Michael Mendelsohn, a Hollywood banker who also produces films through Century City-based Patriot Pictures.

Michael Helfant, executive vp of producer Interscope Communications, thought that the major studios setting up speciality film divisions "is a good thing" because it pumps more money into the independent sector.

Sloss said he expects cable network Bravo to introduce an independent film funding program soon, joining HBO and Showtime in the ranks of TV outfits pumping up indies.

A necessity in assembling independent films is persuading star talent to work for a reduced upfront salary, since indie films are not aimed as the mass market. Robert Newman, an agent at International Creative Management, said a continual sticking point to such salary-reduction deals is talent's fear of being shortchanged in downstream profit participations payouts.

Agreeing, Sloss pointed out major studio specialty divisions typically exclude 80% of lucrative video revenue from profit participation calculations, so there's little incentive for talent to work for reduced pay rates.

With indie film "Pulp Fiction" putting the careers of John Travolta and Bruce Willis on the comeback trail, Avenue Entertainment Group president Cary Brokaw said independent producers should consider established Hollywood stars who are out-of-favor as prime candidates for projects. Such stars will consider taking "risks" with low-paying, high-prestige indie films, Brokaw said.

In a separate panel, Warner Bros. International Theatres president Millard Ochs said his circuit's planned 30-screen megaplex movie houses will allocate a handful of screens for upmarket indie fare, another piece of good news for the sector. The indie screens will have separate entrances, since the older-skewing indie filmgoer tends not to want to mix with the core youth audience that heavily patronizes mass market films.