Chapter six. Pre-Sell Your Flick in a Game of Five-Card Stud or Go for a Straight Flush*
“We could make Gone with the Wind1 and HBO wouldn’t buy it.”
1Gone with the Wind is also the phenomenon that happens to me when I eat fish tacos.**EDITOR’S NOTE: I love Gone with the Wind!
—Lloyd Kaufman
Associate Producer: The producer’s lackey or “bitch.” The producer usually delegates a certain financial, creative or administrative responsibility to these individuals. In your case, this may be your mom, drunk rich uncle or the guy that collects the shopping carts outside of the Stop and Shop. This title (or the title of Line Producer) can be given to DGA production managers or the crack addict bum messing up my garbage at this very minute.
Example: “I need someone to figure out what time and which actors are called to set tomorrow to shoot the shit we need to shoot.”
“Uh, I think maybe the Associate Producer can do that?”
It’s January 20th, 20092 and I woke up awfully early today in nipply, brisk Park City, Utah, the adopted American hometown for the Tromadance Film Festival—http://www.tromadance.com—no entry fees, no snootiness and you can see all the movies for free! Plus, free metal pole lickings in winter!—Tromadance is where Troma fans and aspiring filmmakers have communed every third week of January for the past 10 years. Park City also hosts an obscure gathering of the rich and famous and their vassals, called Dance of the Sun, 3 at the same time. My beautiful wife Pat is here in her capacity as the New York State Film Commissioner. I rolled out of bed to discover Pat blaring the broadcast of Barack O’s presidential inauguration.
2INDEX GYNO: Lloydie, honey, it’s becoming pretty darn apparent you didn’t write these chapters in chronological order.**FOOTNOTE GUY: That’s okay, Lloyd. Nobody’s perfect! Not even you, Index Gyno.
3INDEX GYNO: That’s the Sundance Film Festival, Lloyd. Both the Tromadance and Sundance Film Festivals are held at the same time as Slamdance (also a film festival), or, as I refer to it, Salacious Luscious Ass Mo-Fo’s Dance.
Once I realized I wasn’t watching Dr. Strangelove4 and thanked my lucky stars that my darling Pat was giving me a break from Meredith Viagra and Matt Louchebag5 lamenting the troubles of sustaining a makeover while teaching children to wrap themselves in saran wrap at night while eating a twinkie and playing Guitar Hero backward to lose weight, I became transfixed. Even I knew that I was witnessing a moment that will be remembered and talked about forever—the inauguration of President Barack Hussein Obama, the first part-black president since Warren G. Harding.
4Vice Prexy William Cheney in the wheelchair in a black trench coat and fedora was a great touch of the sinister Lionel Barrymore in It’s a Wonderful Life.
5Also known as Meredith Vieira and Matt Lauer, co-hosts of that morning monstrosity, The Today Show. Meredith is formerly of The Shrew, another vacuous morning talk show where women of various ages, races and political views sit around and talk about their differences with that woman from the crypt, also known as The View and Barbara Walters,* respectively.*EDITOR’S NOTE: Readers, there is no such show and Barbara, if you’re reading this, I’m a huge fan.
 |
| Figure 6.1. |
| When Lloyd attended President Barack O’s inauguration, he was mortified to see U.S. Representative Barney Frank wearing the same ball gown. |
I didn’t have to worry about anything concerning Tromadance just yet, as the festival wouldn’t be having its opening night (mal)functions until later that evening. I had actually fallen asleep the night before dreaming about my upcoming board meeting with the Independent Film & Television Alliance (IFTA) 6 in Los Angeles the following week. Somehow, in my dream, a naked, aberrantly hard-bodied Anne Hathaway7 has suddenly, magically replaced Pierre David8 at the table during an IFTA board meeting. That’s producing your own damn happy dream.
6PATTIE’S NOTE: Lloyd, sorry to interrupt—am I doing this footnote thing the right way? I think people should know that you are the chairperson of IFTA. It’s a really invaluable organization and you should talk about it some more.**LLOYD’S NOTE TO PATTIE: Y-y-y-yes, dear, just don’t hit me!
8Pierre David is a hard-bodied, extremely successful, independent (largely TV) producer of such masterpieces as She’s No Angel, ‘Til Lies Do Us Part and A Nanny’s Secret.
What is the IFTA and Why You, Mr./Ms. Producer, Ought to Give a Shit!
IFTA is a non-profit trade association of independent producers and distributors of motion picture and television programming worldwide. It was originally formed in 1980 by a group of independents whose main goal was to expand the independent film business by creating a world-class trade show, the American Film Market (AFM). 9
9According to my Wicca Woman Wikipedia, founded in 1981, The American Film Market (AFM) is an annual event which attracts over 8,000 industry attendees to Santa Monica, California for eight days in early November. Participants from over 70 countries converge to buy and sell distribution rights for completed films or to gain financing for projects in various stages of production. Troma has taken a booth there from the beginning.
IFTA defines “independent” as a film that is financed outside the major media conglomerates, even though it may be distributed by one of those devil-worshipping international media conglomerates like General Electric-Universal-NBC. Under this definition, all three Lord of the Rings movies—$250 million dollar masterpieces (that’s $250 million each)—as well as the Turner Movie Classic favorite Tales from the Crapper ($450 million budget10)—are both considered “independent.”
IFTA members have produced and distributed more than half of the films that have won the “Best Picture” Academy Award, including: Gandhi, Amadeus, Platoon, The Last Emperor, Driving Miss Daisy, The Toxic Avenger, Dances with Wolves, The Silence of the Lambs, Braveheart, The English Patient, Shakespeare in Love, Chicago, The Lord of the Rings: Return of the King, Million Dollar Baby, Crash, The Departed, No Country for Old MenandTroma’s Tales from the Crapper.11
During 2009, IFTA members have continued to produce, distribute, and finance some of the world’s most innovative and prominent films, including Appaloosa, Atonement, The Band’s Visit, Burn After Reading, The Great Debaters, Juno, Mad Money, Never Back Down, Nick and Nora’s Infinite Playlist, Rambo, Righteous Kill, Smart People, There Will be Blood, Tyler Perry’s The Family That PreysandPoultrygeist, Night of the Chicken Dead.12
12FOOTNOTE GUY: Lloyd, this is my favorite part of the whole book so far! It is so beautifully written!**EDITOR’S NOTE: Are these excerpts from IFTA’s website, Lloyd? Even though it’s more entertaining than your writing, you know that you can’t fulfill a 323-page book contract simply by blatantly continuing to cut and paste “literature” from the Internet.
Why the Heck I Ran For IFTA Chairperson
In 2007, I was elected to the role of chairperson of IFTA for a two-year term. I ran my campaign on the following platform:
1. To fight media industry consolidation, 13 primarily by using part of the treasury of our trade association to lobby Congress, the Federal Communications Commission, opinion makers and others in Washington, D.C.
The rules protecting the public against monopoly in the media have been done away with. The worst fallout from this is that it is now almost impossible for independent content to get on U.S. TV.
2. To fight for “net neutrality” on the Internet, the only democratic medium14 we have left in this world. This means preserving the open, democratic, diverse and level playing field on the Web.
If you post or upload something interesting on the Internet, it will be discovered by the public, as opposed to humungous ad campaigns in the traditional media, which drive the public directly to an intended target, be it a movie or a piece of cheese. The MPAA has come out against net neutrality.
Yes, now the Internet is still free and open to everyone, everywhere. Whether it’s Disney uploading the High School Musical multibillion dollar trailer or the beautiful subtle montage of 2 Girls, 1 Cup, both have an equal chance of attracting a large public. 15 It’s a true “free” market. Troma’s website can get 500,000 hits a month; The Huffington Post site gets only 22 views per month. 16
And why the heck did we have to form this Independent Film and Television Alliance in the first place? Well, to explain that, we have to go all the way back to the Glamour Age of Hollywood, to the United States v. Paramount Pictures, Inc. case, which the Supreme Court heard in the winter of 1948.
What’s So Friggin’ Important About United States V. Paramount Pictures, Inc. (1948)?
(and I really am going somewhere with all of this)
You fledgling producers should know that, again confirmed by my little friend Wikipedia, 17United States v. Paramount Pictures, Inc. was a landmark case that decided the fate of humungous movie studios owning theatres and holding exclusivity rights under which theatres would show their films. It changed the way Hollywood films were produced, distributed and exhibited. The studios were prohibited from owning or controlling the movie theatres and had to disgorge them or sell them off.
17Not to be confused with my other little friend, whom I keep separate from the pack or Wicca* itself, which I briefly practiced post-Yale, pre-Pattie, while mistakenly falling under the spell of the 1970s Goth babe who worked in editorial at McCall’s magazine, from whom we subleased our first janitor closet (office).*Years later, Troma and I took a major ration of shit from Wicca-ites when we printed a catalogue of our new releases with a Wicca theme. They thought we were goofing on them! HA! IMAGINE THAT! Me goofing on someone—impossible! Producing Lesson #647: Be careful whom you insult.
The Supreme Court held in this case that the existing distribution scheme was in violation of antitrust laws of the United States, which prohibit exclusive dealing arrangements. It was perceived as the beginning of the death of the old Hollywood studio system and set a precedent for vertical integration18 cases. This opened the door for independent producers to get their movies into cinemas without having to go through the big oligopolistic19 studios.
Well, that landmark case was pretty lucky for Little Lloydie. When I came onto the filmmaking scene in the late 1960s, there was hope for a fledgling producer. If a filmmaker made a movie the public wanted to see, he could actually get it into a cinema. No cinema wanted to book Squeeze Play (1976). We convinced an AMC theatre in Norfolk, Virginia, to give Squeeze Play a sneak preview. It ran with a Peter Falk/Charles Grodin feature, The In-Laws, and caused such a stir (in loins and laughter), that all of a sudden movie theatres across the country clamored for Squeeze Play and we eventually had to make 400 35mm prints. Back then, it was the ol'“If you build it (and it’s good), they will come” attitude. 20
20The same philosophy I had when erecting the leaning tower of plastic straws for the gentleman who works the weekend graveyard shift at the 7-Eleven on 42nd Street between 8th and 9th Avenues. Also a direct quote from Field of Dreams, the 1980s (yawn) classic starring Kevin Costner, the star of Sizzle Beach, USA. Sizzle Beach, USA, Kevin’s very first movie, was produced and distributed by Troma and later remade as Costner’s epic Waterworld. http://www.troma.com: BUY TROMA!!!
Dear Reader, I have to admit I was a little scared shitless when I signed on to do this book. I mean, I’ve been around a long time and somehow managed to make this crazy movie-producing world really work and I’m doing my danged best to share with you all I know, but the industry has since changed a whole heck of a lot. Flash forward from Squeeze Play to 30-plus years later, and we have maybe only twelve21 35mm prints of Poultrygeist, my best-reviewed movie to date. Only about 200 U.S. cinemas have played my fowl flick. And why is it nearly impossible for the little indie guy these days?
Well, that all has to do with a little blacklisting former president named Ronald Reagan. 22 The Consent Decree of 1948 was abolished on Reagan’s watch and the media conglomerates were free to own and control the cinemas once again. But there’s more bad news! Prior to Reagan and President Ford, there was President Nixon. And prior to Nixon, there was President Johnson. 23 And in the 1970s under Nixon, the Federal Communications Commission (FCC) created what became known as the Financial Interest and Syndication Rules (Fin-Syn).
22Reagan “named names” during the House Committee on Un-American Activitities hearing during the “Red Scare” period of U.S. history. He was an actor and SAG member before he became our 40th president. Just as we know in the casting department at Troma, a union actor is definitely not always the best person for the job. So it is true with regard to being President.
23President Johnson has nothing to do with this subject. I just like saying Johnson. Lyndon Johnson, My Johnson, Hairless Young Asian Boy Johnson.
What are the Financial Interest and Syndication Rules?
The FCC imposed this set of rules, which required the networks to license at least 35% of their content from independent sources. They also limited the content that broadcasters can own. 24
Unfortunately, Reagan relaxed these rules25 and so many companies ended up sleeping with the fishes. Soon President Clinton slept with a whale26 and these rules were completely abolished (in 1993). Anyhow, back to the present day in Park City, Utah, and Obama’s inauguration celebration.
25He started there and kept right on relaxing through that whole giving weapons to the very friendly, open, welcoming, non-threatening, non-hostile country of Iran (Iran-Contra Affair) episode and continuing on to forgetting the whole dang thing when he died (of Alzheimer’s).
Pattie was already chirping away in excitement over the new consciousness and confidence sweeping across America as she padded to the shower, and I scratched my balls. All of a sudden, it occurred to me! This was the historical dawn of a new era. In his wonderful inauguration speech, President Obama was encouraging all of us to be a part of our governmental process. I decided right then and there that I should sit down and write a letter to the president!
So by now you’re reading my letter to President Obama, thinking it’s nearly impossible to get a movie produced and how dare I include a mention of butt fucking in a letter to the president of the United States. And you are thinking that once your movie is produced, it may also be impossible to get anyone to actually even see it. 27 And you’re right. So we’re back to unbridled passion as our fuel. Is there even no way to guarantee you will make your money back as an independent producer in this Obamanable age?
27Focal Press is offering full refunds to anyone who feels they are depressed, uninspired or angry about the contents of this book thus far, wanting to shout only “Fuck Your Own Damn Movie!” to the world.**EDITOR’S NOTE: Focal Press cannot and will not do any such thing, Lloyd. But there must be something to keep our young producers going, no?
Even after Trey Parker and Matt Stone’s South Park became the hit it is, Comedy Central refused to play Cannibal the Musical on television. As their distributors, we at Troma received this rejection letter:
Dear Mr. Kaufman:
Thank you for submitting and re-submitting Cannibal the Musical, but it is simply not up to our standards for broadcasting.
Regards,
Comedy Central
No explanation whatsoever—just economically blacklisted, like all of the Troma films nowadays. I forwarded the above-mentioned letter to Trey’s attention.
That rejection letter hangs on the wall of his office. Trey Parker’s office is at Comedy Central.
It’s eating shit like that Comedy Central letter makes me think about blowing my fucking brains out.
Well, Trey and Matt became famous through South Park and their fame increased the subsequent DVD demand for Troma’s Cannibal the Musical. But without fame and fortune, what is the formula for immediately recouping your money that you had to lay out to produce your movie in the first place?
The money making wild west of the 1980s was driven by video. Mom-and-pop stores needed videos to fill up their shelves to meet the demand of their renters. These films were often independent, so it meant that anyone who made a video could sell it for rental and there was no competition from the major studio films. The majors were not using their own labels but were using Vestron28 to release their videos. Because all of the international buyers were hungry for home video product, they would pay for the movies before they were made. Producers would pre-sell29 five movies at a time and get advances against all five. Thus, movies were financed by pre-sale.
29FOOTNOTE GUY: I just read ahead, and Lloyd—Kathy Morgan actually—explains this pretty soon. I mean, Paul sort of went into it earlier, but Kathy really explains it.
When you order something on a shopping channel and they say “six weeks for delivery,” it’s usually because they are waiting to see how many buyers they will have. Then they make the product and send it to you. That was how the movies were made. You’d pre-sell your film to a buyer from Japan. He, in turn, would pre-sell your movie to enough cinemas, video stores and TV channels in his territory, guaranteeing that he could make a profit within the territory. Home video drove everything, as there was a huge worldwide home video demand. However, in the United States, Blockbuster eventually took over the home video market from the mom-and-pop stores and it became like a monopoly. When the majors started putting out the videos themselves, independent video stores started to fold.
Put bluntly, Blockbuster became a division of Viacom-Paramount and economically blacklisted independent movies like Troma’s.
So, you can see that with the aforementioned movie distribution state of affairs described by Mr. Yuzna, it is imperative that we penetrate the Blockbuster hymen by demanding that they and the rest of the world offer a true variety of independent films from which consumers can choose.
I happened upon the whole pre-selling thing when I was at the Cannes Film Festival years ago. Floundering in my guilt over eating too much of the heavy sauce with my fluke30 the night before, I became a participant in one of the luckiest fish stories of my life (minus any actual sort of strategy) when I sort of miraculously pre-sold the rights to The Toxic Avenger II31 to mein German distributor. He had “caught wind” of a toxic rumor that Troma had promised a rival German company Toxic II. Refusing to be left in the schnitzel, mein German offered us a hefty sum up front to make the sequel for his company. I later turned that money for one movie into two movies accidentally by shooting excessive, marathonic hours of footage. Michael Herz called me an idiot, but when Toxic III brought in big moolah, he called me a genius32… and he actually smiled.
31See Direct Your Own Damn Movie for more details. Also, pause for a moment to reflect on my sheer genius for then using that money from the pre-sale to make not one, but twoToxic Avenger movies. A total twofer! Also an accident. But a very happy one indeed!
Lloyd Asks Paul Hertzberg
LK: What is the budget for your upcoming project, Icarus?
PH: That’s actually closer to the 5 million range.
LK: And the screenplay is something you liked?
PH: Yeah, it took a while. We tweaked it and got it to the point where I liked it, and then we took it to the Cannes Film Festival in May. At Cannes, we announced it and made pre-sales.
LK: So how do you do that? In other words, you have the script and…?
PH: We offer the script to people who might want it—including synopsis, artwork and pre-sale flyers with Dolph’s picture on it.
LK: This is Dolph Lundgren, right?
PH: Yeah, Dolph Lundgren33. We probably sold 70 percent of the budget to major territories before we started shooting at the end of February in Vancouver.
LK: Can you explain what pre-selling is?
PH: It’s a combination of finding the right buyers from the territories of the world who would want a Dolph Lundgren action film. You show them the script or the synopsis and let them know that the film will be successful as either a theatrical release, DVD and/or on television. An action film with Dolph Lundgren in the lead is a known commodity that will be good in theatrical as well as ancillary markets. 34
34ANCILLARY MARKETS: Circle K, 7-Eleven, Quik Chek, WaWa.**INDEX GYNO: He means to say that ancillary markets are secondary sales targets for a program that has already completed its first run on its initial delivery medium; that is, after theatrical distribution comes home video, TV, pay-per-view, Internet rights and so on.
LK: So how does selling to a specific territory go? Are there any independent distributors?
PH: It varies. In this particular case, we wanted to expand the type of buyer we attract, so we took some ads out in the trades35 during Cannes, announcing the film. We had contacted a number of companies in different countries with whom we had never done business. So, we actually made some additional sales.
35TRADES: Winds that blow hot and hard.**INDEX GYNO: Those aren’t trades, baby.****FOOTNOTE GUY: I know this one, I know this one! Examples of trade magazines are Variety or The Hollywood Reporter.******LLOYD’S NOTE TO FOOTNOTE GUY: In other words, FG, the self-promoting horn-tooting high school newspapers of Tinseltown.
LK: Why can’t everybody do what you do—that is, get money before the film is even shot?
PH: The reason we are able to do it is because we’ve been doing it for so long. We have credibility. Buyers know when we announce a movie that we are actually going to make it. There’s a comfort level with the distributors—it’s not about flyers or pieces of paper. We are real.
LK: Are there strong enough independent distributors?
PH: That can pre-sell?
LK: No, that you can sell to. Like say in Spain or France.
PH: Yeah, sure in Spain we just did an output deal36 with TV6.
36An output deal is a series of films you agree to license to one particular distributor. Also what I have with my friend at the 7-Eleven.
LK: Are they independent?
PH: No, they’re a new TV channel. Actually, it’s called Cuatro. They pre-bought a number of our movies. Orem, in Spain, bought a lot of our movies, Eagle, in Italy, has also pre-bought a number of our movies. We sell a lot of movies to TF1 in France.
LK: Are these independent distributors?
PH: Yes, they’re independent and some are networks. We just sold Icarus to DNC in the UK and they’re an independent distributor who pre-buy. Eagle is independent. We are with New Select in Japan and they’re independent.
LK: So, in spite of the industry consolidation and the problems Troma faces, you’re able to get around the conglomerates?
PH: We’ve been fortunate overseas, but in the United States it’s been more difficult. Overseas, we have a steady list of buyers to whom we’ve been able to pre-sell so we can produce our films.
PH: Yes, in terms of genres, over the years we’ve tried dramas and we’ve tried comedies and all we could prove is that you can lose money with those on a regular basis, so we decided to focus on genre action films and genre disaster films. If there is a way to destroy the world, we will try to come up with it.
LK: There seems to be an explosion of horror. Everyone at Cannes seems to be pitching me a horror film. Should a young producer produce horror?
PH: We have not done a lot with horror, but only because there is so much of it out there and people produce horror really inexpensively. You even have some micro-budget horror films being done for $10K to $20K and they are selling for $100K and those producers are very happy. Let’s say you are spending from $500K to $2 million dollars on a film and you only make $100K—you will not be very happy with sales. With producing horror, the competition is tougher and the field is already saturated. We avoid horror for the most part unless it’s something special and we can stand above the masses and not get lumped in with the ultra low-budget horror movies. Troma has a kind of brand and cult following. That’s different.
LK: That’s easy for you to say. Our international sales today are ass. Is there an actor that you wanted and then finally got?
PH: In the past, that has happened on occasion, but our films are usually genre-driven, rather than cast-driven. We do a lot of work with the SciFi Channel. We have been able to pre-sell in the U.S. to the SciFi Channel on a disaster film, for example. The key elements are the CGI37 and story. As long as we have good television or DVD-driven names, we’re fine, because we are making the movie for a price, plus the profit.
LK: What would be a typical SciFi channel project and how does it get organized?
PH: Well, we’ve been working with the SciFi channel for five years now. We go to New York, or talk over the phone—we’ll pitch concepts and they listen; they like them or dislike them. They’re very hands-on. The pitch evolves from two paragraphs, to two pages, to a seven-act outline and eventually a script.
LK: What would be a typical movie that you’ve done with the SciFi Channel?
PH: We just finished wrapping up Ice Tornadoes. Try to picture tornadoes on steroids. We gave it a SciFi element, but with something people can still recognize. The new one we’re starting to shoot in a month is called Stonehenge Apocalypse. I think people get the idea that something bad is going to happen around Stonehenge.
LK: How do you produce these? Does SciFi put up all the money or do you have to put up the money yourself?
PH: They’ll license it for the United States. Then, we put up a foreign guarantee and combine that with Canadian government and bank money. That’s how we cobble together a financing structure.
LK: What are the approximate budgets for SciFi movies?
PH: They’re primarily in the $2–$3 million dollar range and sometimes we go a little bit higher if it’s more of an “event picture.”
LK: Do they pay you up front, or do you have to deliver it first?
PH: They pay us when we deliver it.
LK: So you have to come up with the $2 million?
PH: Or more. We are able to take on higher budgets, because we get a piece of the budget from the Canadian government. If, for example, the budget is $3.5 million and I can get a million of that from the Canadian government, my net budget responsibility is only $2.5 million. If you get a bunch of that from the SciFi Channel and from foreign pre-sales, then you can have a good-looking movie with a decent budget. Sometimes, you can find yourself in profit right away—before the camera is even turned on!
LK: Can you talk a bit about movies with multiple producers? Do all of these producers get paid?
PH: Well I can’t speak for them, because we don’t do that. If there are a dozen producers, I hope they all get paid. Canadian regulations limit the number of producers. There can be three, four, or five tops.
LK: Do they get fees?
PH: I hope so.
LK: Is it like a percentage of the budget?
PH: Yes.
LK: Is there a limit?
PH: I think it’s about 10 percent of the budget.
LK: So the producers can whack off 10 percent of the budget?
PH: Typically.
LK: For a young person today, how would you advise him or her to break into producing?
PH: Right now, there’s no right way or wrong way. You can go to film school or you can attend a specialized program, like the American Film Institute (AFI) offers. If you find something that you’re really passionate about, just get out there, put it together, and don’t take “no” for an answer. The thing that’s great now, is that with the new high-def (HD) cameras, it’s less expensive to actually make a movie then it used to be. You can do it on video and you don’t need film. The post-production work is cheaper and you can come up with the money from credit cards, family, and friends. If the story is good enough and if the acting is good enough, it can give you a springboard for your career.
LK: So, you’re saying come up with a celluloid calling card and produce your own damn movie?
PH: Yes, or find some good material and control that material and the rights to it, because a good place to start your movie is with a great screenplay.
Meeting with Paul and hearing about all these foreign countries has me thinking about traveling abroad to Panama to seek financing for an Amazonian38 San Blas Island adventure as my next Troma film. I can see it now—hard-bodied Cuna Indian lesbians in the jungle—there’d be monsters, gore galore, and 10 imported naked Brazilian Panamanian models. Maybe we can throw in Eric Estrada or Jan Michael Vincent. I would pre-sell the entire package of a Panamanian hot jungle love story on the strength of my own heaving, hefty, Caucasian-American package. 39 What a turn on. Oh, baby, I’m so juiced up I could work for Tropicana. Sorry, I get a little carried away, but I’ll tear myself away from this waterfall of creativity to share with you some valuable insight from Kathy Morgan.
39EDITOR’S NOTE: Lloyd, can you get back on point, please?**LLOYD’S RESPONSE TO EDITOR: Oh, I can get back on point, all right.
An Interview with Kathy Morgan About Her Game of Five-Card Stud*
*For once, I am not referring to myself.
(Actor, Director, Producer, Script, Domestic Distribution)
Who is Kathy Morgan?
Kathy Morgan is a very successful, smart and savvy sales agent. She will tell you just what that means.40Her company, Kathy Morgan International (KMI),specializes in the worldwide sales, distribution, marketing and financing of top-quality theatrical motion pictures. Kathy has repped such films as The Last Emperor, The Terminator, and Platoon. She has also served as chairperson of the IFTA. As current IFTA chairperson, when I must make a decision, I think, “What would Kathy do?”
LK: Why did you decide to get into producing, as opposed to writing or directing?
KM: Well, I use the term “producing” loosely, because I’m really a sales agent. A sales agent in my business pre-sells the rights to films, thereby enabling a film to be produced. Often we are given Executive Producer titles, because we are involved with the financing, but we are not in the trenches working on the film itself.
LK: Can you talk about Crocodile Dundee in L.A., or one of your executive producing gigs? Most young producers don’t know anything about pre-selling. Can you start from the beginning?
KM: The actual physical producer of the film comes to us with the script, talent and director and then asks us our advice regarding the “numbers,” which is the value of the picture in the international market place. There’s an old saying in the movie industry—I think William Goldman said it in a book41—”nobody knows anything.” I think it’s true now more than ever, because the marketplace is changing so fast. We’re supposed to be the experts, and after 30 years, we at KMI have a good enough idea that banks will loan against our projections and investors will invest based on the same projections. We give estimates of what the value of the picture would be in the international market and then we go out into the marketplace, meet with buyers from all over the world and pitch them the movie. We attend film markets and festivals all over the world and we meet with some buyers in between.
41EDITOR’S NOTE: Please tell our readers the name of this book.**LLOYD’S NOTE TO EDITOR: The name of this book is Direct Your Own Damn Movie.****EDITOR’S RESPONSE: Aaaaagggghhh!
LK: What are some the events you go to?
KM: We go to Cannes in May and Berlin in February and in between there are festivals, but we only go to those festivals when we have a film playing in that festival. We also attend Toronto, Venice, San Sebastián, Tokyo, and, of course, the American Film Market in Los Angeles is a great place to make sales. Each important festival supposedly has a market, but the main sales happen in Los Angeles, Berlin and Cannes.
KM: That doesn’t make a good case study because that was quite a few years ago. What we’re finding is that the film business is changing today, like all businesses. Some of the models we applied long ago don’t work anymore. We financed Crocodile Dundee in L.A. through international sales. Dundee was a strong franchise and we traveled around the world convincing distributors to license the film in their territories for a set amount of time. The normal term is between 7 and 15 years. They license the rights in the contract and our deals are “all-rights deals”42—meaning theatrical, video, and all forms of television, and so on. We then take these agreements to the banks. They discount the contracts and loan the money in a nonrecourse loan to the producers.
42An all-rights deal refers to when a buyer acquires every possible license for a particular title in a particular territory, as opposed to Troma, which pioneered the all-wrong deal.
LK: What does it mean to discount the contract and why is it called “discounting”? Is it like Wal-Mart, where I can get a polyester sweatsuit at a big discount?
KM: Discounting agreements is the term used in all forms of business, not just the film business. It’s the term used to describe loans against expected revenue, or, in our case, loans against distribution contracts.
Discounting a contract means a bank will loan the money based on just that contract. The banks know enough about the distributors and the reputation of KMI to have confidence that we will collect this money. This is a non-recourse loan, meaning that if something happens and the distributors don’t honor their agreements, the banks’ only recourse is to go after the distributors, not the producers or sales agents. Once we document these contracts and all the paperwork—
LK: Let’s say you get 100,000 euros from France, does that mean the bank will only give you 90,000 euros?
KM: No, if the contract is for a good paying territory, the bank will discount 100 percent. In other words, they will lend you all the money, less their fees. Now, for countries that are less stable or don’t have a good track record, their agreements may not be fully discounted. It depends on the bank or the territory.
LK: How about a recent film?
KM: It’s interesting, you were talking about case studies, and the film business is very unique in that every single product you make is a “one-off.” You can look at all of the money made in the film business, but each product has to stand on its own. The business is changing quickly, especially the value of any one project. Based on 30 years of experience and based on recent business trends, I can share a few of thoughts with you. Recently, we had a picture which was successful at the American Film Market, despite difficult business conditions.
KM: It’s called The Danish Girl. It’s something that is still in process and hasn’t started shooting, but we already licensed most of the territories in the world.
LK: How did that happen? In Tromaville, we would not say “girls.” We would say The Danish Gyno or Danish Pastry.
KM: The producer came to us with a script and an excellent cast including Nicole Kidman and Charlize Theron. Big stars are even more important for the international marketplace than the domestic. Sometimes the studios and the independents can have success pre-selling a movie that isn’t a star vehicle. Recently, there was a movie called Twilight. An independent company called Summit sold it and it was based on a best-selling book, but we did not need big stars. The Danish Girl was also based on a best-selling book, but very different because it needed big stars in order to be sold internationally.
I will give an analogy. When pre-selling the movie, we’re selling air. Pre-selling a movie is about risk management. We are securing distribution prior to producing the movie. So how do we get to do that? It’s like playing a hand of poker. We travel around the world and meet people, mainly men, in hotel rooms, but everyone keeps their clothes on and we deal a deck of cards, so to speak. It’s a game of five-card draw. We first put down the actor card and then the director card, the producer card, the script card and finally, the domestic distribution deal—but not necessarily in that order. The buyers bet on the cards and sometimes it’s well into the millions. One time, I actually had 100 million dollars in pre-sales from international buyers alone.
LK: Woo-hoo!
KM: It was called The Alchemist. Again, it wasn’t made yet and this is the difficult thing about pre-sales: sometimes we are successful in raising the money and for various reasons it still doesn’t get made. The Alchemist is still in play. We are in as Executive Producers and Harvey Weinstein’s43 company is producing it. I think they are still working on the script. Anyway, back to my analogy. You have your five cards and the buyers will bet on how valuable your cards are. Will the movie that’s produced a year or two from now with those cards be worth their bet? Those cards are really about helping the buyers market the movie. If the actor card is an ace, like Kidman and Theron, buyers are prepared to bet more.
43Previously mentioned Harvey Weinstein really is one of the most loving creatures in the entertainment world. I am sure he will buy many copies of this book and give me a job. He is a giant teddy bear and must be a loving, devoted follower of Marianne Williamson.
When we make the pre-sale, that’s not all we get. When we deliver the movie (and delivery is a defined legal term with a list of deliverables44), the minimum guarantee is then due and payable. The buyers will then market and release the film. We negotiate a deal called the back-end, 45 so if the picture does well in a given territory, the distributor will pay overages, or split profits with the producers. A producer doesn’t have to sell for a flat fee and never see anything more. Some do, though. Also, at the end of some negotiated term, the rights will revert back to the producers, and the producer will still have an asset. It’s still not the end of the story. In fact, as a sales agent, once we do our deal and get the money from the banks, our job is just beginning. We then need to collect the license fees by delivering the picture. We also need to check with every distributor around the world, asking, “What’s your release date? What is your marketing plan? What are the holdbacks?” It is extremely important to coordinate foreign distribution with a big U.S. release.
44Deliverables refers to a list of what the producer is required to furnish, such as a letter granting the distributor lab access to your negative (to reproduce your film) and a video master for television broadcast, and so on and so forth.
LK: What’s a holdback?
KM: A holdback means that a certain distributor is not allowed to release the picture in his or her territory until we, the producers, authorize it. Most of the time, we don’t want the film to go out internationally before it is released in the United States. Statistically, 50 percent of revenues come from the United States. You do not want some distributor in Turkey releasing your film over there, having it flop and having that news leak, tarnishing the U.S. release. Another huge problem is piracy, especially in Asia. We wouldn’t want a title to be pirated there, especially before its U.S. release. The same with video. You have to coordinate your windows—your theatrical, video windows, TV, and pay TV windows. You don’t want one territory jumping the release gun and causing damage to a neighbor’s territory.
LK: Wow! That sounds hard. How did your other film, In the Land of Women, differ?
KM: Warner Independent, which unfortunately is no longer in existence, developed that movie and financed it. At the time, their business model was to split rights—meaning that they released it domestically and then they had sales agents like my company selling it internationally. The riskiest way to make a movie is to go out there and make it without any distribution lined up in advance. 46 It would have to be a very low-budget movie to do it that way. You need to know how you’re going to reach your audience before you make any investment. The major studios are different because they have a distribution pipeline they have to fill. With In the Land of Women, Warner Brothers made a decision that they would funnel it through their U.S. pipeline, but they didn’t want to take a risk on it internationally. They wanted to spread the risk with these specialty films, so they went out to the independent distributors through sales agents like me and licensed the film around the world.
46Case in point: visit http://www.poultrygeistmovie.com!
LK: Did In the Land of Women have stars?
KM: Yes, Meg Ryan, Kristen Stewart (who’s now a big star in Twilight), and Adam Brody. It was a nice film.
LK: Does your method apply to movies that aren’t “A” movies, or films without stars?
KM: It’s very difficult, unless one of your other cards is an ace. There are certain “auteur” directors in Europe who are able to raise money year after year just because of who they are—Woody Allen, for example. Almost every spring, he has new movie. There are people in Europe who will go see anything Woody Allen makes. European distributors will finance him. They will finance a movie without any stars or any script, just based on the director card alone.
Now, can a beginning filmmaker do that? No. A newcomer has to have more than one good card. There are certain underlying materials like a book that is a bestseller—that can be an ace. It’s built-in marketing. How do you get butts in the seats or eyes on the screen? Marketing has become a huge cost, because there are so many leisure activities that compete with movies. So sometimes, on the poster, you put a star’s image or sometimes it’s a book or sometimes it’s a brand. But the buyers need to be convinced that a large audience will come to see the movie they are being offered.
LK: What do you suggest young producers do to break in?
KM: Well, I would say to find another career. But if you are passionate about it, be persistent. It’s important to see older movies and understand film history. Get the best information and find a mentor. But still, you must persevere. A lot of people think it’s really glamorous, but it’s not. You must be prepared. It’s hard work, but I love it. I travel all over the world, meeting friends and doing business with people who have the same passion I do, which is the love of film. I thoroughly enjoy it.
Jean Prewitt
Who is Jean Prewitt?
Jean Prewitt is the CEO of the IFTA!
The dawn of the 21st century was supposed to bring a world without middlemen, where everyone (including film producers) could reach their loyal fans and customers directly, and where only the truly lazy had to pay someone to “handle their sales.” So you, the reader and hopeful producer, are likely to argue when we say, “You need a sales agent.” But trust us, you do! Here’s why.
You are probably trying to make a living by producing movies (or at least to pay off your debts), which means that you have to generate revenue. The right sales agent knows how to do that. As Kathy Morgan explained, their job is to know whether an individual film will appeal to buyers just on the basis of who wrote or directed or starred in it, or its budget, or its subject matter and what type of license fee they will offer. They may tell you that the license fees could be improved if you enter the film in a film festival and get attention first (or advise you that going to a festival and getting panned could kill this particular dream). The sales agent has to take himself to film markets and meet with the buyers there and negotiate deal after deal after deal to make sure your film can be seen in as many countries and on as many different screens (big, little, over the air, at home, online) as possible to make you (and the sales agent) the money you need to do this again.
Now you are probably saying to yourself, “But I can do that! I proved I could hustle when I got the money to make this film in the first place and talked all these talented people into working for scale to do it. So, tell me again, why am I giving this sales agent a percentage of my own distribution revenue? And helping finance his trip to Santa Monica47 and the south of France48?”
Because the sales agent knows the right buyers for your film and you don’t. A “buyer” isn’t the person who finally sits in a cinema and watches/laughs/cries over your film. A “buyer” is a hard-nosed businessperson who licenses your film exclusively for his home territory (or two) and down-sells it to the theater chains, television programmers and video dealers. And he has to be convinced by your sales agent that this film can make him money in his territory in front of consumers who may not speak the same language and may not get your jokes or pathos—more money than the film the guy next door is selling. More money than something he could find at home, made in his own language with stars that his countrymen know. You can’t even begin to know what choices he is making on a day-to-day basis to arrive at the price he is willing to pay. That’s the third thing the sales agent knows that you don’t (keep count here: which particular buyers want the type of film you’ve made; what will make that buyer like your film the most; what’s the best price you can demand from him and still get the deal). And all of those things matter.
Finally, the sales agent will get a better price than a direct-selling producer pretty much every time. This isn’t class discrimination. Getting the sale done on paper is only the first stage of fulfilling the producer’s side of the bargain. After the deal is done, the film has to be finished (if it wasn’t at the time of the deal) and then delivered. “Delivery” is a technical term that goes far beyond handing over the reels or a DVD. In the standard form contracts prepared and recommended by IFTA (more later), the delivery schedule runs to 50 or more items (including such things as music cue sheets and laboratory access letters) and will differ from territory to territory. Failure to meet the details of that schedule on time will negate the buyer’s obligation to pay but also destroy his ability to meet the requirements of the sublicenses into which he has entered.
Experienced buyers know that a professional sales agent understands the importance of the “details” of delivery. They have no reason to believe that the producer—now on to his next creative venture—is able to meet these obligations to multiple buyers around the world. The price they are willing to pay the individual producer for the film will be reduced to reflect the risk of incomplete delivery or sloppy response on other items where time is of the essence.
You are now convinced that you actually do need a sales agent. So, how do you find one that’s any good? That’s where IFTA comes in! IFTA’s 11 founding members created the American Film Market, held every November in Santa Monica, which now attracts 8,000 industry professionals from 70 countries.
IFTA now has 140 production/sales companies from 22 countries as members. These are not the only sales agents in the world, but they are the companies that routinely participate in the international marketplace. Every one of the IFTA members has a different business persona—some are adept at handling lower- to mid-budget range television movies; some have specialty divisions that produce or sell only high-concept horror (or low-concept, for that matter), or “women’s films,” or musical documentaries; others have a regular string of art-house films that grace the film festivals; and still others are known for their Academy Award–winning films over the years. And then there’s Troma.
As a producer, you need to do your research and find the companies that feature (on their website, company literature, and on their stands at the AFM) films like yours. Really like yours, not just those you’d like to be associated with—remember that you are looking for the company that knows how to sell your film, not something else. See if you can meet with them. See if you like them and believe they will care about selling your film. Talk to other producers. Look at IFTA’s Model Sales Agency agreement to see what you will be getting into. Pay attention to the details now and after the deal is done. Go ahead and find another project and do the creative thing you do best.
A final note about IFTA: IFTA members produce and distribute (sell) films and television programs that are financed, for the most part, independently of the six major Hollywood studios and they control the licensing rights for those films and programs in the major territories throughout the world. These companies take the financial risk to make programs that could not or would not be made in the major studios and would not be seen around the world without a strong infrastructure of independent buyers who choose to share the financial risk of releasing the films. We define “independent” to mean this very entrepreneurial sector of the entertainment industry.
IFTA delivers business services to support their business model, including creating the standard form contracts used throughout the independent distribution process; overseeing a professional arbitration panel that hears disputes arising from distribution agreements; providing research on business practices and realities in different territories around the world; monitoring and reporting on tax incentives that help producers reduce or recover production costs; lobbying governments to drop marketplace barriers that harm independent films and to protect the producers’ right of payment for his works; providing umbrella stands for members to use at television markets; and producing the American Film Market in a manner that continues to attract thousands of film buyers and sellers each year. Stability in the marketplace and enthusiasm for independent film are the insurance we try to provide that your film and the next one will have a chance.
MAN, THAT WAS GOOD SHIT! REALLY FUCKING GOOD! 49 I learned a whole lot from Kathy and Jean. Anyhow, I think it’s time we let all this pre-selling-movies knowledge simmer and move on to our next chapter all about how and why a producer needs to think about location. Don’t you?50