The third of five AFM seminars Tuesday found producers preaching the values of budget consciousness, market awareness and reverence to material at the Miramar Sheraton Hotel in Santa Monica. Moderator Nigel Sinclair, partner in the Los Angeles based law firm of Sinclair, Tenenbaum, Olesiuk & Emanuel prompted diverse responses to his request that panelists reveal their secrets for securing money for films, something Sinclair dubbed "X-factors." The producers' responses led the panelists on a two-hour discussion of the thoughts and deeds required of independent film producers in today's marketplace.

The panelists appeared to agree on an unwritten commandment that thou shalt avoid the no man's land of budget levels that are too low to guarantee A-list talent but too high to assure a return on investment when no big prints and advertising budget can get behind a picture and push it before audiences. Despite agreement that there was a budget range to be avoided, the panelists couldn't agree on the numbers. Sigurjon "Joni" Sighvatsson, President of Lakeshore Entertainment believes that today's budget "no man's land" is between five and ten million dollars. Lakeshore provides 100% of the financing for a number of films under five million dollars without any U.S. domestic theatrical guarantees. If the films fail, the loss is easy to digest. On the other hand, films budgeted at more than ten million dollars -- driven by A-list talent -- often find U.S. domestic distributors willing to mobilize a total of $25 million in budget plus prints and advertising funds in order to obtain a healthy return of more than a few million dollars. With a 5-10 million dollar film, studios seem less willing to mobilize the $20 million total in hopes of merely securing one to two million dollars in revenues. At the same time, Sighvatsson claimed it is hard to pre-sell films with budgets under three million dollars unless your "X-factor" is an investor bringing a large portion of the budget to the table. He gave the example of a $3.3 million dollar picture about a black painter and starring Gary Oldman, Dennis Hopper, Willem DaFoe and Benicio Del Torro that he couldn't give away at last year's AFM. An independent art collector finally agreed to finance the picture and, after showing rushes in New York, a large distributor picked up the film for good money. Sighvatsson feels that "both inflation and the success of Pulp Fiction have caused movie costs to skyrocket with the theatrical marketplace getting smaller and smaller," which is the basis for his five to ten million dollar "no man's land" parameters.

Lawrence Mortorff, President of Kushner-Locke Features, Inc. feels the "no man's land" where the negative cost is too difficult to recoup is right around four million dollars. Urging the producer audience to look at statistics and think about film from a business angle, Mortorff stated that filmmakers must look past the short term sale of only one film. Producers should "look closely at the international marketplace in order to mix and match package elements to ensure the best return on the dollar" according to Mortorff. He advised against making the film and then selling it because the foreign marketplace simply won't often allow you to recoup your negative cost on a film costing more than four but less than ten million dollars. Mortorff stated that producers are better off securing as many pre-sales as possible for any project, knowing that completed films may often be duds in the market because buyers will have already had the chance to take a test drive of the product. When buyers see the finished film and "kick the tires," statistics say that it's tougher to get a good distribution deal. That's why Kushner-Locke "assumes the U.S. [theatrical] market is zero" when budgeting a film. That way, all business decisions can be made on projections of TV and video sales assuming that overseas markets will provide 60% - 70% of the costs.

Lawrence Bender, producer of projects such as Fresh, Pulp Fiction and White Man's Burden, identified the budgets to avoid by stating that producers should "get the budget to a place where [the financiers, distributor or studio] have to make the movie" and avoid increasing the size of the budget just because you may find access to the funds. Bender pointed out that good producers must have some business savvy in order to avoid having a career that spans only one film. Bender also lamented the fact that many in the business have apparently "failed their way to the top." He urged producers to push for their vision but to know the business side and accept that you cannot simply pick the best actor for any one role without considering the actor's artistic and economic value to the film.

Anant Singh, executive for Distant Horizon who has brought the world the anti-apartheid films Sarafina! and Cry, the Beloved Country, stated that the best success comes when filmmakers do not encumber any rights until after the film is made. While he acknowledged that if the film is a dud, his formula doesn't work, he pointed out that no one ever sets out to make a bad movie. He drew subtle (and not so subtle) responses from fellow panelists and the audience when he admitted that he always makes a personal financial investment in each of his films in contravention of the producer's first commandment: Thou shalt finance your film with other people's money.

Jerry Offsay, President of Programming for Showtime Networks, Inc., revealed one of his company's "X-factors" is to lure producers with the right to pursue theatrical distribution for a Showtime financed film after production is complete but before the scheduled Showtime air date. Showtime thus fully finances star-driven projects with the possibility of sharing the upside of a theatrical distribution deal. Offsay claimed that Showtime likes to find partners for its three to five million dollar budgeted projects after the films are completed. For example, Jeffrey was originally intended to debut on Showtime but was picked up by Orion for theatrical release prior to cable.

Aside from budget-mindedness, the panelists also discussed the willingness of talent to appear in low budget films. Bender thinks that actors embrace quality independent projects that allow them to take risks unavailable in studio films. He described the 1990s as "risk years with lots of great, creative filmmakers" giving actors more interesting opportunities. Singh pronounced his belief that talent always responds to great material, citing his delivery to Whoopi Goldberg at Cannes the screenplay for his $3.5 million Sarafina! merely for comments and her next-morning telephone call asking whether she could be in the film! Sighvatsson stated that there is "no longer any stigma attached to acting in independent films" and that "actors no longer think it will hurt their careers." He continued that "the outlet doesn't matter as much as the quality of the film" and stressed that for lower budgeted films, "it's not just about the script" but can also be about an artist's passion and vision to bring the piece to life, as in John Dahl's Red Rock West. Mortorff agreed and cited the recent Sundance debut Whole Wide World as a film that Kushner-Locke got behind only after hearing the filmmaker's story pitch and plan of execution.

In response to an audience member's request for an explanation of the dearth of women panelists on the five AFM seminars (3 in 30 panelists total), the producers tap danced as best they could with some joining in the critique and others offering some semblance of an explanation. Mortorff immediately pointed out that it's tough to get women oriented films made but claimed that Kushner-Locke is seeing an increasing number of submissions involving women directors, producers and writers, regardless of the subject matter. Bender lamented that "the way it is is that the industry is white." He claimed that's why you never hear a pitch that starts out "it's a white man's film" and never will. Pragmatically, Bender stated that people can only make those films they get financed and Sighvatsson added his belief that markets for women themed films are expanding, citing the recent cultural, racial and gender cross-over appeal of Waiting to Exhale. Offsay disagreed, stating that international distributors will tell you that women's films simply do not pre-sell and claimed that any new film, even with the cast of Waiting to Exhale, would not pre-sell at this AFM. He stated that this "reality of the marketplace" means that such films end up costing companies such as Showtime more than genre pictures because they end up making much less money. Despite this economic reality, Offsay was happy with Showtime's policy to focus on the good scripts and make good, non-genre films. Mortorff agreed and stated that he often reads partially packaged scripts and asks himself why the actors ever committed to such bad screenplays. In response to a question regarding salability of stories with female leads or females in traditionally male roles, Singh and Bender chimed in that as long as a producer has sufficient passion to get a project completed by their design, take as many "no" answers as it takes to get to "yes."

No producers panel would be complete without a question about the number and types and logistics of script submissions and this seminar was no exception. Mortorff claims Kushner-Locke gets about 20 submissions per week and those sent by agents, lawyers or known producers often get priority but that everything does get read. Showtime has 15 readers surveying 100 scripts per week with interesting ones yielding debates lasting from five to 65 minutes, according to Offsay. He personally reads 8 - 10 per week. Singh's office is in South Africa and he usually only takes submissions from friends. Sighvatsson stated that Lakeshore gets about 50 submissions per week with priority reading given to those submitted by people with relationships with the company. For the first time in years, Bender is not in pre-production, production or post-production on any film at the moment and takes the time to read about one script per week. He won't take unsolicited works.

For the remainder of the Market, the Internet Entertainment Network will profile an assortment of international distributors/sellers as well as buyers and bring you short takes on each of the five seminars at this year's market, each focusing on Realizing the Independent Vision; Strategies to Survive and Prosper in the Age of Mega-Mergers.

If you have any special requests for information from the market or would like us to profile any particular buyer or seller, please email us at producing@hollywoodnetwork.com

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