Where’s The Money

By Alan von Kalckreuth

Stick a few finance savvy attorneys on a panel and ask Joey Tamer, President of S.O.S. Inc. to moderate a discussion about “real” money and what attracts, or repels, it in the digital entertainment world and you are going to come away wiser and more confident that some one is going to get the money, even if it’s not you.  The panel was part of the Digital Hollywood summit held in Los Angeles last week.

It appears that the venture capital and strategic investment community, or VCs as these guys call these sub-species, are happy to put their money where their mouth is… BUT, Tamer warns, they have a game plan and if you take their money you’re now dancing to their tune.  They have an out strategy that they will stick to and that’s the timeline you are going to have to meet. 

The panel was well chosen to represent a range of VC engagers and not surprisingly they spoke with one voice.

The “next” check, a term tossed around like kindergarteners recite B is for ball, seems to be where your focus should be even before raising incubation funds.   David Albert Pierce of Pierce Law Group LLP revealed in his dry, knowledgeable way that when you get money to develop your great idea and you do a great job showing how your great idea is going to make a load of duckets for everyone involved, you then have to romance the next level VCers.  And this level is inhabited by VCites far shrewder and less forgiving that a ninth grade principle during a full moon.

The venture capitalist “don’t want to see a patchwork quilt,” as Ms. Tamer put it.  “They want to see neat and tidy capital share.”  What Ms. T is driving at is you don’t want to have given percentages to your gardener because he let you use his pick-up and the guy who printed your business cards because he took a post-dated check.

Mike McGlade former Chief Revenue Office for FastPay, a wheat-grass drinking sort of dude who has raised mega millions for digital enterprises, announced that he is firing up his own start-up and tells the room of eager learners that they should forget “the smoke and mirrors and the vapor-ware,” and get out and make sales.

“Know what the market is,” explained Pierce.  McGraw agreed and being the touchy-feely sort wants to imprint on everyone’s mind that the proof of concept should be evident from the reality that someone is prepared to pay for what you are setting out to deliver.

“Go to someone already in your business area,” advised Tamer.  You get to save yourself an awful lot of time explaining how your product or idea works, or why your version is the “must have” version.

Steve Masur, Managing Director of MasurLaw, and who looks like he drives an expensive Audi, said that there is a load of incubator resources in Silicon Valley to move projects to a level that the VC will expect it to be at before they run their numbers.  He advises that you keep something under your hat as you shuffle through this necessary savanna region.  Everyone agreed that it is easier now to set up a viable project because of the lower cost of technology and resources.

If you get through the incubation period and have a chance at this second level, which is pretty much the start of the game to these guys, you must now be as shrewd as a Trump, as focused as a cobra, and as positive as toll-booth attendant. 

“VCs have time-table and it’s easier to divorce your wife than your VC partners,” warns Tamer.  “A lot of entrepreneurs lose control of their company through sloppy capital deals.”  Her warning resonates from the chambers of experience.

McGlade put it this way; you’re in trouble if “the horse is bleeding.”  His concern is that the snappy decisions often made during the incubation stage may create “more liability for you in the future.”  “Leverage your receivables so you can keep you business running,” he advises.  Another strategy he suggests is obtaining a revolving line of credit, BUT “don’t give a personal guarantee, instead raise equity.  And if you can’t then go do something else –this might be a good indicator,” he warns wryly.

Pierce explains that if you have momentum and you are struggling because you are cash strapped it is not a bad idea to offer a “last-in, first-out” deal to you incubation investors for the money you need.  If they pass on the offer then open it up to whom every you can.

“Debt is not a bad thing”, Pierces proposes.  “Take Apple this week!”  Tamer strongly agrees.  “Take out a small loan… and pay it back,” she proposes, “that shows you have a history.”  I learned that when I was a child,” she adds.  I wondered about her upbringing!

“Work with smart people,” is key according to McGlade.  On this point Masur advises the audience, “you get what you pay for, so pay for value.”

Pierce summed up the struggle for money to make your dream a reality with the axiom; “If the money is coming to you it’s coming to you.  You can get fast and funny with it, but if the money is coming to you it’s coming to you.”


Future of Film Summit: An Overview

by Alan von Kalckreuth

Ben Forkner of Film 360 has it all, a studio first look deal and a stable of actors and writers that would give TMZ a good week of back-to-back material. So how good is it for him? That’s one of the questions raised at the Future of Film Summit held at the trendy Sofitel Hotel in Los Angeles this week.

First thing Ben should remind himself of every morning before brushing his teeth is that he’s in a small and elite club. Most producers do not have the luxury of a studio picking up a share of their overhead and get behind their project – assuming they don’t pass on it! Since 2000 the number of these deals has diminished alarmingly and the terms are not as sweet as they once were.

So what do studios want in return? Story driven, tent-pole movies that have strong international and domestic appeal… and if possible are the stuff of franchise. And that’s good news for writers. “The value of top writers has skyrocketed,” Ben declares. “Writers are now able to create a brand for themselves,” agreed J C Spink, “they were so passed over for a hundred years out here!”

So how’s the new digital landscape changing things? “As emerging platforms take shape you’ll see some changes”, Paul Green suggests. “But for the moment it’s steady as she goes,” he adds, but, “If digital distribution takes off, and Hulu and NetFlix start having first-look deals then things are going to change.”

J C Spink sees studios as being more savvy in the projects they go after. “Studios have a much better game plan, more sure of themselves,” he explained. As an example he pointed out that the dwindling return on DVD sales has hit the comedy market badly. Smaller budgets are now the norm for a genre that once demanded near action movie like coin.

Paul Green believes that the material and architecture of all movies, inside and outside the studio system is fundamentally the same, bankable players, soft money, foreign sales… oh! And a good story!

Where do you get that good story? J C Spink explained that that’s the hardest of all. “I read one hundred Nicholl’s scripts over a six week period and I found fifteen that might be worth a second look.” When asked what those fifteen looked like he said, “ten were good writers and five were good concepts.” But I guess zero were good writers with good concepts!


American Film Market Opens in Santa Monica

Los Angeles, CA – October 31, 2012

The 2012 American Film Market (AFM), kicked off this morning in Santa Monica. The AFM will screen more than 420 motion pictures, including 77 world premieres and 306 market premieres, for thousands of film buyers and industry professionals from more than 70 countries.

Films making their World Premieres include: A Glimpse Inside the Mind of Charles Swan III, from writer/director Roman Coppola and starring Bill Murray, Jason Schwartzman and Charlie Sheen (Independent); The Colony, starring Laurence Fishburne and Bill Paxton (Sierra/Affinity); Cottage Country, starring Malin Akerman and Lucy Punch (VMI Worldwide); The Frozen Ground, starring Nicolas Cage, John Cusack and Vanessa Hudgens (Voltage Pictures); Nous York, starring Leila Bekhti and Géraldine Nakache (Pathé International); The Numbers Station, starring John Cusack and Malin Akerman (Content); and Pawn, starring Nikki Reed and Ray Liotta (Red Sea Media) and Summer In February, starring Dominic Cooper and Emily Browning (Speranza13 Media).

This year’s film market has shown a preference for more “name” driven, higher budget projects signaling a slight shift in power toward the independent producers of the film world.

While the zombie and horror movies that have long been the hallmark of the AFM haven’t gone away, more would-be producers of star-filled films will be working the halls of the Loew’s Hotel looking for independent financing or to secure distribution for their projects.

“There has also been an influx of buyers this year” stated Jonathan Wolf, AFM’s managing director and executive vice president of Independent Film & Television.  “We are seeing more new international buyers come to the market than in a decade,” he declared.

The country with the most new buying companies this year is South Korea (25), followed by China (13), the U.S. (11), Japan (6), Turkey (6), and Russia (5), France (4) and Italy (4). New companies attending include Snap TV from Argentina, Lume Filmes from Brazil, JY Entertainment from China and Mountain Pictures from South Korea.

The American Film Market runs from October 31 to November 7, 2012.


Social Network Makes More Friends

Los Angeles

October 10, 2010

The Facebook movie, “The Social Network” had enough friends to lead the box office again over the weekend of October 8 – 10, while new releases “Life as We Know It” and “Secretariat” had decent starts and “My Soul to Take” didn’t manage to take any.

Boasting the smallest percentage the_social_network15second weekend decline of any No. 1 movie this year, “The Social Network” pulled in an estimated $15.5 million, increasing its sum to $46.1 million in ten days. Its 31 percent dip was also the lowest of the weekend among nationwide holdovers, and it held better than 21 among past similar titles, though that picture still had better attendance.

Here is the top 10 for the week of October 8 – 10th, 2010.

1 Social Network, The Sony $22.4M
2 Legend Of The Guardi Warner $10.9M
3 Wall Street: Money N Fox $10.0M
4 Town, The Warner $9.7M
5 Easy A ScreenGems $6.7M
6 You Again Disney $5.7M
7 Case 39 PARVAN $5.3M
8 Let Me In Overture $5.1M
9 Devil Universal $3.6M
10 Alpha and Omega Lionsgate $2.9M

Enough about “Nine”

The film “Nine” has bombed at the box office. With a budget of $80 million, plus about $30 million in marketing, the musical has brought in just under $6 million dollars since its release on December 18th.

Despite the fact that penelope_cruz-1Americans are staying away from this dud, the morning chat shows continue to plug the film. Only this morning, NBC’s Today Show had Penelope Cruz talking about her role in “Nine.”

What kind of pact do these talk shows make with film distributors? Why do they keep promoting films that clearly hold little interest for the film-going public? How much do talk shows get paid to plug films? Are the raves and gushy interviews supposed to instill confidence in the network’s journalistic integrity?

“Nine” has confirmed that the star system as we know it is all but over. All that talent in “Nine” couldn’t bring audiences into theaters, while films like “The Hangover” with no stars earn a total of $459,422,869 to date worldwide.

It’s time stop trying to get blood from a stone. “Nine” is no more that a three and a half.  Lets move on and clear the airwaves. There are plenty of worthy films and actors to talk about.