Union Patriot Capital

AFM buyers float pool

Idea centers on eliminating sales agents, cutting film prices

By ADAM DAWTREY, BENEDICT CARVER

Five AFM buyers from major foreign territories are in discussions to form a distribution consortium in an attempt to cut sales agents out of the picture and bring down film prices.

The informally structured entity, which sources said was at an "exploratory" stage, comprises companies from France (Metropolitan Filmexport), Japan (Gaga Communications), Germany (Helkon Media), U.K. (Entertainment Film Distributors) and Spain (TriPictures).

Although the participants are still in discussions, sources said the concept is simple: to reduce the cost of buying higher-budget independent films by pooling resources and going straight to producers.

The named companies are all well-known handlers of such product. Entertainment, for example, distributes New Line in the U.K., and both it and Spain's TriPictures have output deals with Peter Guber's Mandalay Entertainment.

The consortium is the brainchild of Metropolitan's Samuel Hadida, who did not return phone calls Wednesday. None of the other companies could be reached.

According to some sources familiar with the proposal, members of the consortium would be able to pass on selected films. However, for every one they miss, they would be obliged to accept the next two they were offered.

Distribution to non-member territories could be handled by a sales company or a studio.

No other details were available.

It was not clear how many suppliers had been approached. But many studio-based producing entities hold international rights to their films, including Beacon Communications, Icon Prods. and Lakeshore Entertainment.

Similar pacts in place

Several of the members, such as Germany's Helkon Media, have already struck similar pacts. Helkon has multipicture deals directly with Edward Pressman Film Corp. and Joel Silver and Richard Donner's Decade.

The new consortium, if it takes off, will join a fairly crowded market of buying groups.

Mutual Film Co., for example, has tied up partners in the U.K. (BBC), France (UGC), Germany (TeleMuenchen) and Japan (Toho Towa/Marubeni).

The Canal Plus/Pathe European distribution partnership operates in the U.K. (Pathe Distribution), France (AMLF), Germany (Tobis), Spain (Sogepaq) and Italy (Medusa). However, activity has been minimal since its formation nine months ago.

Last October, Christian Halsey Solomon's Quadra Entertainment took the consortium approach when it joined with producer Ed Pressman and four overseas distribs to handle five films per annum in the $25 million-to-$40 million range.

Rights splits

The foreign buyers will split around 50% of each film's budget. In return they gain all rights in their territories and retain a small equity position in each pic (Helkon's deal with Pressman runs alongside this arrangement).

In addition, Michael Mendelsohn's Patriot Intl., which anticipates financing several big-budget films a year, has formed an "equity consortium" with several foreign distribs.

Despite the growth of consortia buying, sales agents -- who admittedly have the most to lose from its success -- remained skeptical.

"Even output deals are a nightmare," said one senior exec at an indie company. "Many buyers already want script and cast approval. Can you imagine what it would be like if they were partners?"

Good in theory

Others said such deals always looked good on paper, but once the foreign distribs had endured several costly box office flops, they would change their minds.

"The idea is valid, even good, but in the past, most film consortia, such as Euro Trustees, have failed," said one exec.

Another problem noted was whether distribs in five such different territories would be able to agree on film titles they all wished to handle.

It was not clear whether Hadida, who has produced films such as "True Romance" and "The Adventures of Pinocchio," had ambitions to back films via his consortium.

"Sales companies that produce will be fine dealing with these guys," said another seller. "It's the ones that don't that'll have a problem."

(John Hopewell contributed to this report.)