Doing Deals

Deals are deals, but now it doesn’t mean that they are necessarily that binding. My first two film productions were small. We made them in some ancient age, nearly 40 years ago. We shook hands on the deals and received some finance, and made the films and delivered them, all before the contracts were drawn up and signed. How things have changed.

Now you can have a signed contract and it means nothing. Several times in the recent past the contracts have been longer than the screenplays. Who does this benefit other than the attorneys?

For the last many years there were two main film industries. One, the major studio system, is the one most of you are aware of. These are fundamentally the big money distribution machines that own a big pipeline that demands film product being fed down its voracious maw or it is just a very expensive waste of space.

The alternative method is known as the independent film sector. This makes smaller budget films. Despite convention this sector has always demanded some star names to make their films marketable. Not to the cinema or other audiences, but to the independent film distributors in each country. Historically the way this worked was that these films were pre-sold on a country by country basis and their value and desirability was computed against the cast, director and producer track records and the projected budget of the movie to be produced. This, in turn, relied on the banking sector accepting and underwriting these ascribed values per territory. They would advance discounted cash for the film then to be produced. They made their charges and profits based on the accuracy of these projections. This worked comparatively well for many years. But when credit got tougher, and the banks became more risk averse the whole system seized up.

The result has been other, newer alternatives in which capital funds from other sources were created. These were largely tax incentive schemes originally motivated by governments wishing to create film industries to lead the vital creative sectors in their burgeoning economies. With the recession beginning and spreading its tentacles, banks are getting tighter with their fiscal policy, governments start to panic and cut incentive schemes, just when they should be doing the opposite. The results for the independent film sector are disastrous.

Big time corporate deals will become more difficult to finance, and you’ll see further examples of this like Microsoft’s pulling away from Yahoo’s purchase. A deal that would have gone through a year back. Deals in the entertainment business for the bottom feeders, which is most of us, will become tiny or non-existent. Perhaps we’ve gone full circle. Now we can make tiny, inexpensive productions again, and the means of distribution has been democratized so we can get things done and out there, in front of the world. The trouble is this, so can millions of others. Therefore the big question now is how do you get proper exposure for your product so that it has the oxygen to grow? I think I know the answer, but that’s for another day.