As the acquisitions crowd of buyers and sellers rolls into Park City tonight, there is heightened expectation that even more films will sell this time than at last year’s festival, when more than 40 films were bought. It is hardly a surprise to expect a brisk pace of dealmaking, but numerous buyers would be surprised if the numbers reach last year’s level.
Major distributors like Focus Features, The Weinstein Company, Sony Pictures Classics, Fox Searchlight, Open Road and CBS Films are looking to round out their already full 2012 schedules with a couple of films, and a lot of smaller distributors and newcomers like Mickey Liddell will use the festival to build their slates. Distributors like Magnolia and IFC need product to churn through their VOD-centric releasing platforms, and same with Village Roadshow, Roadside Attractions, Anchor Bay and smaller distributors.
There is a Sundance catalog full of titles that didn’t come in with distribution, and the festival did a better job than ever keeping bootleg copies of the films from being slipped to buyers like in past years (password-protected online viewing gets the credit). That means acquisition teams will be seeing the films at the same time, which should ramp up the competition. And Margin Call‘s impressive showing as a day-and-date VOD title has some feeling that VOD-centric deals will become a major part of the dealmaking, particularly with former Magnolia execs Tom Quinn and Jason Janego attending their first Sundance since starting a VOD division for Harvey Weinstein. The majority of deals made at Toronto last fall were VOD-centric, and there is no reason we won’t see smaller films get gobbled up here.
So films will sell. But will buyers spend drunkenly?
Here are the factors buyers and sellers mentioned to me that could help determine how good this festival marketplace will be:
The Harvey Factor: Last year’s Sundance kicked off a strong acquisition year for Harvey Weinstein, and many believe it fueled strong buying not only here but at Cannes and Toronto. The fact that Weinstein had more face time on the Golden Globes than host Ricky Gervais, and three of his four films feted there were acquisitions, gives buyers hope that he will keep buying. “If Harvey Weinstein comes to buy, this will be a great festival,” said one seller. “Last year’s pace was directly attributable to Harvey making a few big deals.” TWC COO David Glasser, like several other buyers, promised to be disciplined: “Harvey does set the tone, but we’re not coming here to overbid or to find five films,” he said. “We’re looking for the two or so gems, and if we find the right picture at the right price, we’ll make a deal. We’ve learned a lot over the last three years, seeing what worked and what didn’t. The margins in this business are very tight and that extra million you overpay could have gone to marketing. We’ll bid numbers that will allow us to be here five years from now.” Let’s see what happens if Harvey decides he has to have one of those Sundance films, like he did pre-Cannes when he acquired The Artist.
The Big Buyer Contraction Factor: Some sellers were concerned about the uncertainty over big buyers. Lionsgate’s acquisition of Summit Entertainment eliminated one buyer, though sellers note that Summit usually sniffed but didn’t buy that many Sundance films. Relativity Media is in an uncertain situation with its financing; and when Bob Berney exited, FilmDistrict head Peter Schlessel set most of his big-ticket films with Tom Ortenberg’s Open Road. Does that mean FilmDistrict won’t buy and that Open Road won’t have to fill many slots? Schlessel tells me he will be at Sundance and will buy if the right film comes along. It isn’t a priority, though, because the company has a strong slate this year. The priority is to hire marketing and distribution executives and have them in place by Cannes.
THE VOD FACTOR: The success of Margin Call has sparked vigorous debate about the merits of VOD and the prospect of every pay-per-view deal being able to replicate the model. For one thing, the distributors spent $1 million to four-wall screens in the Landmark chain, and with AMC. The latter is one of the Big Three chains that have taken an adamant stance in not playing films that play on VOD when they open theatrically, shutting down the test Universal wanted to conduct last year with Tower Heist, which would have been offered VOD three weeks after the film’s release in a couple of markets, with an admission price of $60. I’ve heard NATO has been grumbling that Margin Call got AMC screens, and many think chains will take a harder look at attempts to replicate it. If a distributor is paying big money to buy screen time upfront, will other theaters demand a higher split to play the film?
The other question distributors are weighing is this: would Margin Call, an excellent drama with a timely hot button issue, have fared better with a traditional theatrical release? Several distributors said the film would have justified a P&A spend of several million dollars. “We were very interested in the film, but the guys selling make a quick deal,” said SPC partner Tom Bernard. “I think that movie left a lot of money on the table, maybe $15 million to $20 million in box office, and a huge DVD ship. It would also have generated more awards conversation by playing through all those windows. The way the movie was received and the climate of the country made it possible for Margin Call to be in the right time and the right place. There is certainly a place for VOD, and some movies are right for day and date platforms. Low budget horror films are great. Filmmakers need to carefully evaluate what they have. VOD gives life to a lot of Sundance movies with no theatrical chance, but it’s not the first call if you have a movie that has the strength to be seen in theaters. We all have VOD operations, but for good films that follow a traditional theatrical rollout, VOD should fall should come after DVD and before your Starz/Encore pay window.”
Still, Margin Call managed to gross about $10 million worldwide, and post another $4 million in VOD receipts. Aside from the four-wall costs, the film cost much less in P&A than most prestige film releases. Both the filmmakers and the distributors made money and were happy. There are many proponents of VOD like Cinetic’s John Sloss, who has made successes of such films that include Senna, Exit Through The Gift Shop and Red State. The latter film had a notorious premiere last Sundance, when Kevin Smith pulled buyers away from watching the New York Jets in the AFC Championship Game or evaluating other movies. They came ostensibly to attend a film rights auction only to see Smith deliver a self-indulgent rant before pulling a sham and selling the film to himself for $20. Despite that, Sloss said Smith’s strategy of touring with the film and selling to his following proved to be a good fiscal alternative to the usual distribution deal.
“To me, Margin Call was the indie distribution story of the year, a signal of a sea change,” Sloss said. “Smartly released by a company that didn’t own movie theaters. The exhibitor determination to not allow this to happen seems to have softened. But will AMC be willing to repeat it? We had a film in this circumstance and they wouldn’t book it. When that theatrical/VOD release worked, it became huge fodder for all sorts of analysis and debate and it has emboldened other people. As for Kevin, Red State wasn’t his typical film and not a slamdunk commercial release. It was our responsibility to look at indicators and figure out what they are telling us. Kevin has 1.9 million devoted Twitter followers he could market to directly. The other great example is Louis C.K., who filmed his Beacon Theater concert released it online, charging $5. Without any password piracy protection, he’s up to $1.4 million. However you interpret all this, you have to learn how to play this game because it has the potential to finally compensate for the loss of DVD revenue.”
What does all this mean? Unless a film blows buyers away, dealmaking will be rougher than last year. While last year’s festival was very exciting, keeping journos like me up all night as buyers and sellers burned the midnight oil, the major buyers I spoke with are all too mindful that many of those films that sold in 7-figure deals didn’t really distinguish themselves at the box office. While nobody lost an eye, some acknowledge overpaying for films, particularly after titles like Our Idiot Brother got bought by TWC for $6 million for domestic and about seven other territories, TWC paid around $7 million for The Details (getting released this summer), and Paramount and Indian Paintbrush teamed to buy world rights to Like Crazy for $4 million, and Fox Searchlight spent around $3 million for The Art of Getting By (Homework). That seemed to raise the ante as other deals fell into place and most distributors went home with at least a couple of films. But if you look at the domestic box office chart below, you’ll see that there was not really a breakout in the big-bucks acquisitions and that the festival euphoria for films including Martha Marcy May Marlene and Another Earth didn’t translate in ticket sales. If some of those large-deal movies made money, it’s because the distributors smartly made deals for more than domestic territories. Rather, it was deals for films like the documentary Buck, The Guard or Margin Call that deserve bragging rights.
“The good news is lots of films are available, but the bad news is that over the last two years, the only Sundance films that grossed over $10 million were The Kids Are All Right and Our Idiot Brother,” said one seasoned buyer. “Big money was spent for a lot of films whose grosses didn’t justify the expense. That’s not to say there won’t be a breakout film here. We’re all optimistic, but we’re realistic as well.”
Agents bringing slates from CAA, WME, UTA, Paradigm, ICM, Cinetic, Submarine and Preferred Content were bullish. “There are a lot of titles available, we feel very good about our slate and I’m sure we’re not the only ones,” said UTA’s Rich Klubeck. “Buyers coming need movies, and whether last year’s films performed or not isn’t the point because a million factors go into how well the films perform. We are seeing the distributors in repeat business with those filmmakers, relationships were started and we think it was a wildly successful Sundance last year. There’s no reason to think it won’t be that way this year.” Kubeck, Rena Ronson and their team were bracing for a Friday when they debut the hot titles Celeste And Jesse Forever, Simon Killer (UTA and CAA co-repping), and Red Lights. They have seven films here, but that was half as many as last year and they sold all 14 of those.
CAA comes to the fest repping or co-repping 14 films, including the hot titles Bachelorette, Lay The Favorite, Smashed (UTA co-repping with CAA) and The Words. CAA’s Micah Green said that “we are more confident than we have been in years, and there is no doubt that the indie sector is exploding. The opening of the acquisition project The Devil Inside brings optimism as does the number of acquisitions that figure in the awards race,” he said. “It’s going to be a brutal festival for buyers, because there are so many pictures to cover.”
WME Global comes in repping or co-repping seven films, including the hot titles Arbitrage, Filly Brown and Hello I Must Be Going. WME Global head Graham Taylor said he was coming in with “cautious optimism,” but he couldn’t help being enthused about the broadening possibilities available to get films seen. “My takeaway from last year wasn’t just that so many movies sold, but also that they sold on a faster clock,” he said. “That clock will slow down this year. You’ll see the same level of buying, but a lot of these deals will take three months. Some bemoan the sale of Summit to Lionsgate, but there are plenty of buyers, both traditional and non-traditional. The VOD is also exciting, but it has to be curated properly. There is more competition on cable and satellite TV as on demand builds, and they need to create ways for viewers to find the good films. It’s great to have 1000 choices, but who wants to weed through the bad films to find the fresh titles?”