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2006[contents]THE BUSINESS OF FILMCANNESMay

F E AT U R E S

MAKING GAME MOVESBACK TO BASICSONE ON ONE WITH RICK SANDS.MGM is back in the business and that is good news for theoverall film industry and the independents in both film andtelevision domestically and worldwide. Harry Sloan Chairmanand CEO took over the reins in the autumn of 2005 andsignaled that MGM would be heading in a new direction, andRick Sands came on board in January 2006 as ChiefOperating Officer:

THE VISIBLE & INVISIBLE COSTSINVOLVED IN WORKING WITHTHE AMERICAN TALENT GUILDS Over the years many independent producers have fought withthe American Guilds while shooting in America. Over the lastfew years the American Guilds’ reach has stretched tointernational shores, and the problems have intensified as theneed to use well-known actors to add ‘value’ accelerates forindependent product. Greg S. Bernstein argues that it is waypast time for the question of residuals to be re- looked at asthey no longer bear any semblance to the product revenuestream and burden independent product unjustly.

BUSINESS CHART UPDATESince 1982 it has tracked the fluctuation of the US dollar againstmajor currencies. Continued in 2006 we have introduced nine newcurrencies and continue to track the US Dollar against the Eurosince December 2002. Graph shows fluctuation of the US dollaragainst the Euro from April 2005 to April 2006

CANNES 2006 PRODUCT GUIDEThe Business Of Films Indispensable Guide To Films Unabridged version available Daily at Cannes 2006.

THE BUSINESS OF FILM’S • CANNES 2006 PRODUCT GUIDE • London Box Office Unavailable This IssueClear concise guide to products available at CANNES 2006. See unabridged version at www.thebusinessoffilm.com. Over 1500 titles listed.

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THE ART OF INDEPENDENCE& THE IMPACT OF INTEGRITYFor our industry review at Cannes 2006, our features focus onthe variety of skills that one needs to survive in any business andparticularly we believe the film business. Those ingredientsencompass knowledge of the product that by and large can onlybe acquired by a certain amount of experience, a business likeapproach, and the degree of professionalism required to reachthe top of one’s chosen field within the industry whether it befinance, production, distribution, talent, representation, or law.

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STILL THE INDEPENDENT INDEPENDENTAt the recent Berlin Film Festival, Chairman of the BerlinaleTalent Campus Dieter Kosslick and Program Manager CathyRohnke took on the challenge to interconnect the elements ofFilm, Hunger, Food and Taste. The creative vision was capturedin the words of Campus Talent Manager Thomas Struck: “Yourbody is a Cinema. Films are food for your soul. Cinemas arerestaurants for feelings.” Jeremy Thomas sat on the panel of afascinating seminar that was focused on the interconnectivity ofFilm and Food. Together with Tom Luddy, co-director of theTelluride Film Festival, Carlo Petrini, Alice Waters, and JimClark, Thomas discussed his latest film Fast Food Nation,which he produced and which is selected in Competition at thisyear’s Cannes Film Festival. The Business of Film caught upwith Jeremy Thomas after the seminar in Berlin, and hecandidly shared his thoughts on aspects of the industry and howhe has continued to make his own distinctive brand of movies.

Publisher & Editor-in-Chief Elspeth TavaresThe Business of Film Media Foundation Training Programme Josephine McDiarmid. Contributors Miles Fielder (BoF Alumni),

Allison McKenzie, Elizabeth Joseph. Product Guides Betsy Pearson. Assistant to Elspeth Tavares Norma Dalke. Accounting (London) Barbara Bogatko.

Layout/Web Design Elspeth Tavares. MagazineProduction Joao L. Santos.

Contact Email addresses: press releases: [email protected], Product Guide listings: [email protected] orgo to www.thebusinessoffilm.com, click on Media Kit, then click on Product Guide Submission Forms

The Business of Film has freelance contributors in:LOS ANGELES, CANADA, AUSTRALIA, NEW ZEALAND, SOUTH AFRICA, IRELAND FRANCE & ITALY

Eastern Europe: Leposava Bukavac, Senjacka 10, 11000 Beograd, Yugoslavia. Tel: 381-11-2-650-188 Fax: 381 11 369 1648

CANNES MAY 2006 No 210Head Office: London 64 Baker St. London WIU 7GB Tel: 44-207-372-9992 Fax: 44-207-372-9993

Los Angeles Office: 5150 Wilshire Boulevard, Suite 509, Los Angeles CA 90036 Tel: 323-935-8228 Fax: 323-935-8229

The Business of Film is available by subscription only. The Business of Film is published 15 times per annum including daily during the Cannes Film Festival under license from Elspeth Tavares. Website: www.thebusinessoffilm.com. No portion of this publication, either on-line or printed,

including text and graphics, shall be reproduced without written permission from the publisher. Entire contents copyright © 2006 Elspeth Tavares. All Rights Reserved.

2 T h e B u s i n e s s o f F i l m C A N N E S M AY 2 0 0 6

2006[CANNES]Elspeth TavaresPublisher & Editor in Chief

COMMENT

As the acknowledged Grande Dame of the worldwideFestival circuit, The Cannes Film Festival continuesto assert its presence as the premiere event by calmly

exerting the power of ‘the moment’ and ‘the place’.Following the announcements of this year’s selections, itappears that The Festival – the global ‘we’ – is putting torest much of the disruptions of the past few years. GillesJacob having left center stage, the new committee is tryingto get a grip on formulating its own stamp, as if suchauthority can exist in this prestigious institutionalencampment of worldwide political film power thatorganizes the premiere event in the industry’s globalcalendar.

Part of exerting the position of the Grande Dame, is thechoice of The Da Vinci Code for the opening film. (Inone of our featured articles we pose the question What

Do Astrology, The Middle East & The Da Vinci Code HaveIn Common?) The film has generated so much controversyamong religious leaders worldwide, particularly in America,that one wonders! In the past, the Festival has shied awayfrom associating itself with films that have caused a furor,but perhaps the Grand Dame is asserting that finally she canstep back from being influenced in any way by factors otherthan her own artistic commercial dictate of keeping theFestival at the forefront as the world’s premiere event.

Everyone is at Cannes because everyone wants to be atCannes. We love to gather on the beach and in therestaurants, luxuriating in the feeling that we have all

arrived at the pinnacle of our individual success. One feels,too, that the organizers sense that the Cannes Film Festivaldoes not have to fight for its position nor justify what it doesor how it chooses to do something. This year’s boldproclamation is that the film market is complementary andinseparable to the Festival, at once embracing it and thenunderplaying its role to the real event: The Festival.

Making money or being reliant on money is not adirty word. It’s all part of our industry, and it’s awelcome embrace that we feel the Festival is at last

openly acknowledging the complementary aspect the filmmarket brings. The Grand Dame’s proclamation continued onher parade along the Crosiette, pointing out the manyinitiatives the Festival has instigated and the role the eventplays in bringing together the many nations of the world tojoin in rejoicing film as the mirror of our society.

This year’s selection is very Eurocentric, interestingly in itsdesire to be both a salute to the established filmmakers, anda peep for the new filmmakers into the venerable Institute

so loved by us all. The jury in all the sections (In Competition, UnCertain Regard etc) is beginning to reflect a younger upcominggroup of talented filmmakers and stars, and this is refreshing tothe event’s complexity. The Cinema on the Pelage offers morescreening and musical events. The beautiful Gena Rowlands willpreside over The Actor's Master Class. The Music Master Classwill be conducted by Alexandre Desplat, in dialogue with JacquesAudiard. The Cinema Master Class will be directed by SydneyPollack. The many other events, such as All The Cinemas of TheWorld, reinforces that the Cannes Film Festival should be seen tobe all-inclusive. As it once again becomes more comfortable as agreat institution, which in recent years has strayed a from its grassroots, the adoring public will continue to bestow the recognitionThe Festival deserves. As it changes with the tide of evolution onall fronts, we will continue to regard it for the breadth and depthof fulfilling its venerable obligation to the world of cinema.

For the last four years, the Cannes Market has organized aProducers Network, giving the 5000 producers (that is theofficial number) who attend Cannes under this classification

the opportunity to network and share experiences with their peersfrom around the globe. The Cannes market, and other events suchas The Berlin Film Festival, all have a variety of differentprograms to help the independent producer and first time producer.Throughout our daily editions at Cannes, The Business of Film hasfocused on a discussion that attempts to cover the concept of‘What defines the Producer.’ Its scope covers both the novice andthe experienced producer, and what is recognized is that the art ofproducing films is so varied and complex, no one organization norindividual has the answer, and neither should they. To be aproducer of films is to have many indefinable attributes, andsuccessful producers (the very few in the international arena) area testament to the nebulous qualities that are required to succeed.

That the industry at large can show at Cannes 1400 screeningsof ‘produced’ films, plus the tens of thousands that areavailable from the 400 exhibitors who attend the Market, is

a staggering statistic. With the need for content from the manydifferent platforms and for the new delivery systems, anyone andeveryone who wants to be a Producer has a chance to succeed.

The Grande Dame Reasserts Her Grand Position

Law Offices of

Greg S. BernsteinA Professional Corporation

9601 Wilshire Boulevard, Suite 240

Beverly Hills, California 90210

Phone: (310) 247-2790

Fax: (310) 247-2791

www.thefilmlaw.com

email: [email protected]

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4 T h e B u s i n e s s o f F i l m C A N N E S M AY 2 0 0 6

THE BUSINESS CHART FINANCIAL UPDATE

Monitor

21 April 2005

21 April 2006

% Update

1,008,500

945,550

-2.65%

39,575

38,805

-2.98%

45,720

45,020

1.67%

S. KoreaWon

ThaiBaht

IndianRupee

5,6830

6,0493

-1.33%

7,0101

7,5375

-1.78%

DanishKrone

SwissFranc

SwedishKrona

579,250

513,950

-2.45%

11.0406

10.9848

2.91%

2,5495

2,1158

-0.46%

ChileanPeso

MexicanPeso

BrazilianReal

Tracking the Euro - $US to Euro April (2005) - April (2006)

Since 1982, The Business Of Film has tracked the PoundSterling, French Franc, German Marc, Italian Lire, SpanishPeseta, Japanese Yen and Australian Dollar. The chart to theleft shows the value of the dollar against the 3 key currencieswhich are not part of the EEC (The Euro). The chart belowshows 9 new currencies we have introduced based on requestsfrom our subscribers. On-line at www.thebusinessoffilm.com wewill continue to track the European currencies until they expire.

198219902001200220032004

15 Mar 2005

21 April 2005

21April 2006

% Update

5,7325,7116,9196,4626,3485,578

5.272

5,242

5,703

-2.00%

2,489,0001,494,0001,113,2001,241,6001,198,7001,084,900

1,107,350

1,071,650

1.178.050

1.44%

09,92012,09018,31018,07516,73616,736

13.586

12,734

13,744

-2.40%

PoundSterling

JapaneseYen

AustralianDollar

TRACKING THE FLUCTUATION OF THE US DOLLAR AGAINSTT KEY CURRENCIESTaking a base of $10,000, the figures below show the average rate for each of the currencies against the US dollarduring each of the years listed, the value of the currency on 21 April 2006 and the percentage change in rate sinceThe Business of Film update on 21 April 2005. The graphic chart shows US$ to Euro April 2005 - April 2006.Source: Thomson Financial Datastream

1,1777

1,2712

-1.65%

Source: Thomson Financial Datastream

C A N N E S M A Y 2 0 0 6 T h e B u s i n e s s o f F i l m 5

For our industry review at Cannes 2006, our features focus on the variety of skills that one needs tosurvive in any business and particularly we believe the film business. Those ingredients encompassknowledge of the product that by and large can only be acquired by a certain amount of experience, a

business like approach, and the degree of professionalism required to reach the top of one’s chosen field withinthe industry whether it be finance, production, distribution, talent, representation, or law.

In our selected features we have chosen to make the articles a series of conversations, allowing thesetalented individuals to share their particular brands of professionalism and approach to the industry andthe way in which they have made it work and sustained longevity for their companies, both major and

independent. As MGM gets back into the business (which is a welcome signal for the whole industry), RickSands, COO, asserts that in spite of MGM being backed by a number of financial institutions, his approach isback-to-basics, maximizing the marketing push for product, including educating the young and upcomingtalent to recognize they must get on the road and give a film a promotional push, and that even though Slasherfilms can make many millions it is not the product MGM will distribute because they have a standard touphold. Producer Jeremy Thomas has made a consistent distinct brand of films, and his trademark in theindustry is integrity for the product. Chris Hyams had made 300 8mm movies with his brother by the time hegot to university. A computer wiz, he has devised a simple and brilliant way for independent films that getinvited to Festivals but find it hard to acquire distribution to actually achieve distribution and keep control oftheir negatives. His philosophy is that he won’t take a penny from the film until it’s made a profit.

In The Business of Film Daily editions throughout six days of the Cannes Film Festival festival, we focuson Everyone Wants to be a Producer: Making it or Making it Happen – What Defines A Producer? Thisseries of discussions looks at the rarely voiced hard questions and the harsh reality of the film industry that

to make it as a producer is a very difficult job requiring many faceted skills. It is not just about finding thefinance, but an alchemical blend of many elements, and it’s no wonder that few (for the size of the industry)make it by the collective body of work produced over time.. The common denominator throughout all thearticles and conversations with the individuals (both filmmakers and executives) is passion for the product,expressed via the indefinable Art of Independence and the Impact of Integrity in thought, word, and deed.

Flyboys on MGM’s slate of releases in 2006

THE ART OF INDEPENDENCE& THE IMPACT OF INTEGRITY

CANNES FEATURE

6 T h e B u s i n e s s o f F i l m C A N N E S M A Y 2 0 0 6

Rick Sands

MAKING GAME MOVES

RICK SANDS

MGM is back in the business and that is good news for the overall film industry and the independents in both film and television

domestically and worldwide. Harry Sloan Chairman and CEO took over the reins in the autumn of 2005 and signaled that MGM

would be heading in a new direction, and Rick Sands came on board in January 2006 as Chief Operating Officer. The company has

announced content partner deals with companies such as The Weinstein Company, Lakeshore Entertainment, and Sidney Kimmel

Entertainment, and expects to announce deals with two European companies shortly. In this interview with The Business of Film,

Sands outlines the company’s strategy of a new financial model, a back to basic approach to marketing films, and the desire to

see talent go on the road and promote their films. That would be a directional push that has frustrated many distributors and will

be welcomed. Charlie Cohen Executive Vice President joined the round table.

THE BUSINESS OF FILM: What is the basisof the new financial models that you touchedon at the recent MIPTV, where the companylaunched its first international pressconference and presented its game plan?

RICK SANDS: We are making deals withcontent providers/producers who aregenerally independent producers who getfinanced in one of several ways. We'relooking to acquire movies that are fullyfinanced outside of the studio system ingeneral. Essentially we either make deals withproducers who fully finance the movies andwill lay off portions of international in orderto finance, or they'll just write the checksthemselves and bring the movies to MGM and

we will market and distribute eitherdomestically or worldwide in a sort of hybridfashion. As for P&A, either we'll put up theP&A or sometimes producers will put upP&A. It depends on the nature of the deal.Obviously, if we put up P&A the fees arehigher. It's all a matter of balance. Anotherway that we are creating content is bypartnering with producers and then going toequity financiers and creating financingstructures that will develop and producecontent, which MGM will distributeworldwide through all media. MGM will doall the marketing, distribution, and creative,and the producers within the structure willdo the creation of the content. They'llproduce the movies.

THE BUSINESS OF FILM: Why would aProducer particularly want come to MGM?What makes doing a deal with MGM differentfrom any of the other deals out there at thismoment in time?

RICK SANDS: We bring studio leveldistribution, marketing for all media –theatrical, video, television, new media – whichgives you power in the marketplace as aproducer to get your movie maximized in termsof value throughout all revenue streams. One ofthe other things that's a unique advantage for anoutside producer bringing product to us asopposed to going to any other studio is we'renot going to have competitive, fully MGMfinanced in-house films. Producers don't have

BACKTo BASICSONEOn ONE


CANNES FEATURE

to worry about their movie being a stepchild toour own movies, because everyone is treatedequally. And that's a big advantage.

THE BUSINESS OF FILM: Content is the keyin today’s distribution environment, and with alibrary of 4000 films, obviously the newcontent will drive the library in differentancillaries.

RICK SANDS: Yes, the beauty of having newcontent is that it does drive the value of yourlibrary. In home video, new release drives thevalue of catalog, and television as well. So it'sreally a win-win for everybody involved.

THE BUSINESS OF FILM: If we look on thebroader picture, in relation to content, TheBusiness of Film recently featured an in-depth article with Comcast, which has a 20%stake in MGM. What I found fascinating wasthe way in which so much content is neededand repurposed. Comcast indicated that theywere seeking to acquire content themselves.Isn’t there a conflict if Comcast is also goingafter content?

RICK SANDS: They're not content providers.They are distributors and they are deliverysystems to consumers. Comcast is creatingchannels, but they're partnering with peoplewho create content and that's how they becomecontent providers. Right now, the telcos andcable systems, more the telcos, are spendingtens of billions of dollars worldwide to build thepipeline to peoples' homes. The way that peopleconsume once content is in their home ischanging. The way they consume outside theirhomes is changing as well. But there's a lot ofcapital expenditure around the world beingspent. There's the middleman who's thedistributor, whether it's studio level orindependent, which media you're distributingfor, and then there are the content creators.We've chosen to be in the distribution to thosepipelines as well as creating content, because atthe end of the day, as much as people don't liketo hear it, the method of delivery is going to beinvisible to the consumer; whether contentcomes to their house over the air, by wire, byphone, satellite, it's not going to matter. Ofcourse, that's not implying anything negative tothe people spending these billions of dollars. Ifthey happen to be the delivery system of

choice, they will make a lot of money. Buteverybody needs content, regardless of the waythat content's being consumed. So we havechosen to be on that side of the ledger and alsothe distribution mechanism for content creators.We're aggregating content and we are distributingon all platforms. And marketing is going to be a keyto actually getting people to choose. You know, youask yourself – What if you could see any movie evermade at any time? How would you choose? That’sgoing to be the genius of marketing in the future.

THE BUSINESS OF FILM:Where do you think thatcomplex intermixture of delivery systems is going?

RICK SANDS: I think it will eventually go toubiquity and I do believe that people will beable to see any content any time. It's going tobe the genius of people who are marketing, andpeople with libraries are going to have to figureout how to get people to consume. And we'vebeen pretty good at that as an industry. We arecompeting for leisure time. Young men areplaying video games. When high definitiongames come out, and they are just around thecorner, it's going to be even more competitive.We're just going to have to be smarter andquicker than our competition.

THE BUSINESS OF FILM: In our 25thanniversary issue Tom Gray talked about day,date and time across all the medias worldwide.What is your opinion on that controversialissue?

RICK SANDS: I'm a believer in windows, inan orderly distribution pattern, whichincludes exclusivity within windows. We arenot leaders in changing windows. Rightnow, we're respecting the theatrical andhome video and pay television and then freetelevision windows. As those windowschange on an industry-wide basis, we willreact. We are not being proactive incollapsing those windows. My backgroundcomes from building movies. If you havetent poles it's easy to go day and dateworldwide all media. It's great, but that's notthe business I grew up in at Miramax andDreamWorks to a certain extent. We builtthe movies, like what we did with Chicago.We started out with a platform. We only hadthe top 10 cities, top 50, top 100. We reallybuilt a groundswell. Then you lay thepublicity on top of that and the electronicmarketing, and you build movies into thesuccesses that they become. Day and date,all media doesn't allow you to do thatbecause you're not going to be on peoples'minds and on shelves. As long as DVD isactually physically delivered, you can havea couple of weeks on the shelves, in terms ofprime shelf space, and if people don't buy,you're gone. So that takes the discovery outof movies, worldwide day and day all media.It does protect you against piracy but it alsochanges the ultimate game.

Material Girls on MGM’s slate of upcoming releases

Continued on page 8

CANNES FEATURE


THE BUSINESS OF FILM: The industry isfaced with a situation where people have somany other alternative entertainmentopportunities such as gaming online which isphenomenal. Parents have an extensive choiceof niche programming channels where they canprotect what type of programming theirchildren see. So the choices are becoming morefinite, as it were. Isn't there some validity to theargument: MGM does not want to be the firststudio to say ‘the industry should break downthe windows’ but ultimately the windows willdisappear because of the impending ease withwhich the consumer can access product througha computer or TV screen?

RICK SANDS: Eventually that'll beinvisible. It'll be ‘download to view’ or‘download to own’ wherever you wantprogramming in your house. If you want iton the big screen, your plasma, it will bedirected there. It's going to be asubscription or on-demand type revenuestream, as opposed to exclusive windowsfor pay and free tv, but we're not in a superrush to get there.

THE BUSINESS OF FILM: Charles, you covertheatrical distribution for the company. Thereappears to be a trend for film companies to turnback to the old style of marketing. For example,one of the movies that was produced inBozeman, Montana went back to have itspremiere and the German Director flew in forthe occasion. It was done to thank the localcommunity for being such a part of the projectand to share some of the glamour as well asacknowledge the production value of shootingin Montana, with a local company barteringpublicity and advertising. Do you think that's abig trend? Is it because the P&A costs areescalating or is it just that the industry needs tofind another way to reach the audience?

CHARLIE COHEN: I think Rick can talk aboutthis better than me, but I think the costs are anelement. I also think that the kind of movieyou're trying to market and the audience you'retrying to get to will affect how and by whatmeans you go after and try to get them. Ifyou’re targeting the young kids, you won’t beable to go through the traditional marketing

means we used to employ, because they're notpaying attention to that. We're putting togetherour own marketing group here that will be moreguerilla-like.

RICK SANDS: Absolutely. The big tent polesbuy households as everyone sees the TV spots.But if you have targeted movies, having tie-ins,having sponsors really helps you get where youneed to go. And if you have a movie that makessense to advertise on My Space, you can do apromotional tie-in with them.

THE BUSINESS OF FILM: If MGM is going tomaximize the tie-in potential of the varyingdemographic groups covered by the content youare acquiring from the announced deals, then itappears you will need a fairly large marketingdepartment, because it will take a lot of work andresearch. So there is currently a trend towardsthat kind of marketing. But, Rick, do you supportthis trend? Is it because that’s what you grew upwith? And are we circling back to the way weused to promote films?

RICK SANDS: You mean taking the show on theroad? Taking the show on the road but realizingit's a different road than it used to be is the onlyway to be successful in this business today. Youreally need to analyze every property you haveand try to figure out how to maximize it, but theroad now is the internet. If you have an actionmovie, the road is buying TV, trailering properly,sending the talent traveling. I'm a huge believerin talent travel, and it's where we have thegreatest challenges with people because there's ageneration of talent coming up right now thatdoesn't understand that you need to travel. Youneed to hit the road internationally anddomestically, and the international audiences aremuch more loyal. When you're burnt out inAmerica because your movie doesn't work, theinternational audiences will be more loyal toyou. They give you a few more mistakes.International audiences are much more directordriven than American audiences. They're film-festival oriented, they will respect you more.When you go into a territory, they will love you.But that's a learning process.

THE BUSINESS OF FILM: I agree, but how areyou going to get the stars to work with you andrealize that is really necessary for them to go onthe road and travel to promote the picture.

Flyboys on MGM’s slate of upcoming releases


RICK SANDS: It's a challenge, and the problemis that some of the talents’ agents don't get it.Some of their publicists don't get it. That's a bigpart of the problem, and that's when you go andpush.

THE BUSINESS OF FILM: There are incrediblestories of actors who after two or three movies,make unreasonable demands concerning privatejet travel, demanding that the whole floor of ahotel be theirs and only use three of or fourrooms, surely those days have to be over.

RICK SANDS: Those days are over. They reallyare. There are a few "stars" and star directorswho can command that, but if you're an up-and-comer right now the way you grow your careeris you hit the road, you work, you travel, youmake it happen. The movie, at the end of theday, is only as good as the movie is, but if youshow an effort, there's huge upside, as youknow. That's the way we built Miramax. We putpeople on the road. We used to launch people’scareers at Film festivals constantly. If you askQuentin Tarantino how his career waslaunched, he'll say the Cannes Film Festival. It'sa challenge today, because it's a mindset that alot of the young up-and-comers don’t have. Ipersonally have a list of some people I reallydon't want to work with because they don'tsupport their movies after they make them. I'mnot going to say who those people are now, butthey'll be in fewer of our movies than they'll bein other people’s movies. It’s called ‘taking theshow on the road.’ It's old fashioned, but I thinkthe industry has to get back to it, and they aregetting back to it. As I said, ‘the road is notSanta Monica Boulevard anymore.’ It's MySpace; it's Face Book; it's all these internetroads. But it's still taking the show on the road.

THE BUSINESS OF FILM: It’s good benefit forthe whole industry that MGM is going back tobasics and that even though the company isfunded to the tune of several millions, thatdoesn't negate the fact that you're still going tobe looking at all the pennies, because manysilently agree there is a tremendous amount ofwaste in the film business and accept it asinevitable.

RICK SANDS: We look at pennies, but we try totake a broader view of where the industry isgoing. And we're giving producers and directors

the ability to put their vision on the screen. It’slike the old United Artists, that's the strategy.It's the talent's vision and we're going to marketand distribute.

THE BUSINESS OF FILM: But are you goingto put financing into their films?

RICK SANDS: Well, we actually are causingthese films to be financed through outsidefinancing structures. There's a lot of moneyaround right now. The equity players and thedebt players are happy to listen to our visionand they're happy to support us.

THE BUSINESS OF FILM: If we put that intoits own perspective in terms of MGM helpingprojects get made, it seems that we are broadlysaying: “As Producer, I can bring a project toyou where, if I have certain elements attachedand if you like the script, you would beinterested.” Would you be interested in aProducer who brings you one movie?

RICK SANDS: If you have one movie, we areinterested, but these financing structures are forslates, more like 15 over four years, because WallStreet won't finance individual projects. Theproducers involved need to have track records andknow what they're doing, and you need to be ableto model development, when your production'sgoing to happen, how long that's going to take,when the movies are going to be delivered, whenyou will release them theatrically, video,television. It's essentially cash flow out and in andhow you manage the portfolio and how you limitthe downside and how you make sure that theupside happens. And you need to know yourbusiness when you talk to these guys.

THE BUSINESS OF FILM: I think you agreethat there are actually very few producers in ourbusiness given that factor. There's a handful,maybe 20. So your 15 pictures over four yearsfinancial model by necessity has to involveexperienced producers.

RICK SANDS: Exactly. We have announced thatwe're in business with Harvey Weinstein,Sydney Kimmel, and Tom Rosenberg, as partnercontent producers. They're the real deal. Wehave a few more as well. We just announced adeal with Dean Devlin who makes quality,commercial movies.

THE BUSINESS OF FILM: The role of theproducer has changed dramatically over thelast few years. Financiers are now calledproducers. They're really executive producers,but they take producer credits. So MGM istrying to get in bed and lock down theavailable, well-regarded, independentproducers who are around.

RICK SANDS: Correct. As you know‘producer’ is a broad term. Producers for usare people who are able to cause movies tobe made. Now, they might not be guilddefinition producers because they don't goto the set everyday and they don't hire thecrafts company and they don't hire thecostume designer. They hire the people whohire the director. They make the movieshappen, and the credit they take isproducer. Maybe they're executiveproducers, but they call themselvesproducers, because they are making thesemovies happen. It's a great business we arein, and it isn't all about the money. Wewon't do slasher movies even though theymake money. MGM will not make thosemovies or cause those to be created. Notthat there's anything wrong with thosemovies, it's just that we're trying to keep avision and the standard of what MGM is.We also have an open door policy. Aproducer does not have to go throughsomeone to get to deal with MGM. As anexample, Dean Devlin came in and we dida deal directly with him.

THE BUSINESS OF FILM: That is goodnews for the industry because I think thereare a number of independent producers outthere, producing one or two prettyrespectable films who, knowing that theycould come to MGM, would probably havethe courage to knock on your door and youmight find yourself with a little gem.

RICK SANDS: Producers can knock on ourdoor because there is a lot of financing outthere, and because, as I said earlier, you'reeither competing with the telcos or you'recompeting with the studios or you'recreating content. And there are a lot of highnet worth individuals and hedge bonds whoare financing quality films that need studiolevel marketing and distribution.

CANNES FEATURE

FILM FINANCE


The production world of independent

motion pictures today is global in nature.

Where to shoot to take advantage of lower

costs, subsidies or other financial benefits,

as well as financial intricacies separate

and apart from production, results in most

films being shot in one or more countries,

post being done in another, the financing

coming from several more, and the actors

and crew hailing from many different

nations. Over the years many independent

producers have fought with the American

Guilds while shooting in America. Over the

last few years the American Guilds’ reach

has stretched to international shores, and the

problems have intensified as the need to use

well-known actors to add ‘value’ accelerates

for independent product. Greg S. Bernstein

argues that it is way past time for the

question of residuals to be re- looked

at as they no longer bear any semblance

to the product revenue stream and burden

independent product unjustly.

Regardless of where a film is shooting,one thing has become clear in today’smarket: actors, directors and writers

with worldwide recognition are necessary tomake the film a success. In all likelihood, thatmeans employing an actor, writer or directorwho is a member of one of the American talentguilds, namely the Screen Actors Guild (SAG),Director’s Guild of America (DGA), and theWriter’s Guild of America (WGA). That in turnmeans subjecting the production to the costs andburdens of such affiliation. Each of these guildshas rules for their members who are working onfilm projects anywhere in the world. Generally,if the member works for a production companythat does not have a contract with the guild(called a signatory company), then the membercan face fines, suspension or even expulsionfrom the guild. From the production companystandpoint, there is no legal obligation for any

production company to become a guildsignatory, but there is pressure to do so if theproduction company wants to employ aparticular actor, writer or director, and the talentinsists it will not work for the productioncompany until it becomes a signatory. Thethought of becoming a guild signatory typicallyelicits fear and loathing, particularly when timeand money are paramount. The process ofregistering with a guild can run from a few daysto weeks, and involve mountains of paper,deposits, security interests, and otherrequirements.The agreements that are signed with the guildsrequire the production company to a) pay theirmembers (writer, director, and/or actors) theminimum salaries and benefits (pensioncontributions) required by the applicableagreement, b) pay residuals, and c) comply withother terms and conditions concerning workingconditions, credits, and so forth. There is noquestion that the guild registration process candaunting and the resulting contractual

obligations costly. But, understanding theprocess and what is involved to properly plancan help. Each of the guilds has developeddifferent minimum salary rates applicable todifferent kinds of productions and budgets. Formost international productions, if the productionis employing American actors, director and/orwriter, they are employing them because theyare well known. That means the talent cancommand salaries well beyond the minimumguild rates. So, for the most part, the requiredminimum rates will not be an issue for aninternational production. That could be adifferent issue for an American production thatwill have to pay the entire cast the minimumrates (although lower rates tend to apply onlower budget films shooting in the US). Theguild agreements also have various rules oneverything from how credits for members haveto appear on the film and in ads, to travelrequirements (first class in most cases), howlong an actor can work each day, whether thedirector gets to edit, and other such minutia.Some rules, like the minimum editing period fordirectors, can have far reaching impacts onbudgets and delivery dates. Keep in mind thatthe DGA, even if shooting outside the UnitedStates, has requirements to employ other DGAmembers (such as the first AD) on the film, atthe minimum required salary and benefits.Local personnel, even if requested by thedirector, will not suffice.

Besides being required to pay minimumsalaries, most producers don’t realizethey also become obligated to pay

something called Pension, Health, and Welfare(PH&W) to the guild pension and health plans.This is on top of the salary. For most of theguilds, on average, this amounts to 13.5% of theamount being paid as compensation (there arelimits on the compensation to which it applies;for example, after $200,000, the rates eitherdrop or eliminate). If the PH&W payments arenot timely made, penalties and interest can becharged by the guilds. In addition, if theproduction is taking place in the United States,or the services of the actor, writer or director, arebeing rendered in the United States, Americanpayroll taxes may also apply. On top of thesalary and PH&W, guild agreements alsorequire ongoing payments to their members

THE VISIBLE & INVISIBLECOSTS INVOLVED IN WORKINGWITH THE AMERICAN GUILDS

The thought of becoming

a guild signatory typically elicits fear

and loathing particularly when time

and money are paramount.

Greg S. Bernstein

FILM FINANCE


(and the PH&W on top of those payments aswell) based on the receipts the film earns.Residuals are something that most people have amisconception about. Most people believe thatresiduals are payable from a share of the profitsof a film. But this is not the case. Residuals arepayable regardless of whether the film hasrecouped its costs or not. Residuals are based ona percentage of receipts, not profits. Fortheatrical films (as opposed to those made underguild agreements for TV), residuals are payableon the receipts from video and television. Nottheatrical revenues. (There are some differencesif the film was registered to be a televisionmovie, and there are also some issues if the filmwas registered to be a “low budget” theatricalfilm and did not have a theatrical release).Different residual rates apply to revenues fromvideo vs TV. There is also a big difference inwhat receipts are subject to these rates. Forexample, on video, the percentage rate applies tothe amounts actually received by the productioncompany from video exploitation. In the case oftelevision revenues, the rate applies on thereceipts of the distributor, regardless of whetheror not the production company receives any ofthe revenues.

When you calculate the percentagesfor all three guilds (if you had allthree) and the PH&W that would be

due on top of the residuals for a film shot in theUS (for SAG there is a pro-ration formulabetween US and non-US actors), the percentageamounts to about 10% of revenues from videoand television. On most indie productions, thatis most, if not all, expected revenues. Thatamounts to a very hefty percentage of gross! Sayyou make your film for one million dollars.Since many indie films don’t really make muchfrom theatrical, most of the revenue comes fromvideo and TV. And, as we all know too well, manyfilms don’t make back as much as they cost.Assume a film cost $1 million, but only earns$800,000 in gross receipts to the producer, allfrom video and television. 10% of the $800,000would go to the union members as residuals. So abad situation gets worse (and if the distributor ofyour film does not assume the obligation to payongoing residuals, which many don’t, you couldbe paying out residuals on TV revenues thedistributor collects, for the life of the distribution

agreement, even if you never see another dollarbeyond the original minimum guarantee.) Mostof us in the world of independent film makingbelieve that the original concept of residuals hasgone awry, particularly for indie films. Not onlyshould we not be paying out residuals before werecoup, we should not be paying residuals onvideo revenues, which have become the primarysource of revenue for all films.

In the 1950’s when TV came on the scene,studios started to make money on top of theirrevenues and profits from theatrical. Actors,

writers and directors demanded a piece of thissupplemental income for their work on films. Inthe early 1960’s payments for revenues frommedia “supplemental” to theatrical revenues (i.e.residuals), came about. Back then, TV was trulysupplemental to the main revenue source oftheatrical for the studios. But for indiefilmmakers, there was nothing beyond theatrical

to earn a buck, so what did we care? Later with cable and video, residuals wereadded for these supplemental markets that wereadding to the profits from theatrical for thestudios. By the 1990’s, video and TV hadbecome the backbone of earnings for the indiefilmmaker. Not so for the studios. The studiosstill earned most of their revenue and profit fromtheatrical. As the 1990’s progressed, this beganto change. In the 21st century, the economics ofmovies has changed, both for the studios and theindies. Theatrical has become not the primary orsecondary media, but the tertiary one, eventhough the total box office take for all films hasgrown over the years. Because the costs ofadvertisement and promotion have grown sorapidly, for 90% or more of the filmsreleased each year, theatrical is not a profitmaking enterprise in and of itself, as more isspent to advertise and promote a film thancomes in to recoup those costs, let alone thecost of production. Distributors theatrical

release their films partly because they hopefor that lottery ticket winning film, but alsobecause it’s one giant advertisement forvideo. In 2005, revenues (not profit) to thestudios from worldwide theatrical amountedto less than 15% of total revenues! Videowas almost 50%. And for most indie films,any level of theatrical revenue isinfinitesimal.

If theatrical is just an advertisement forvideo, and the primary revenue on allfilms is video, then it would seem to be

that there is a need to rewrite the residualsrules. There should be no residuals payableon video or on theatrical (since it’s just anadvertisement mechanism, just as there is noextra payment for running ads for a film thatfeature the actors from the film) unless thereare net theatrical earnings (theatrical rentalless theatrical promo costs). And of course,TV should still be a supplemental source, inmost cases. Then again, maybe the entireresiduals rulebook needs to be thrown outand written from scratch.

The American Guilds are squeezinginternational productions over residuals

the rate applies on the receipts of the distributor regardless

of whether or not the production company

receives any of the revenues

Continued on page 12

FILM FINANCE


If the original premise was to compensate forearnings (I know it was for use beyondtheatrical, but come on, everyone only cared

about money) above and beyond theatricalprofits, then maybe the entire basis forcomputation and application of residuals needsto be rethought with residuals being a profits-based payment, not gross receipts. (While somemight argue that the TV agreements are moreapplicable for straight to video, they don’t reallyfit that thought either, especially with any levelof theatrical.) Given what the rules are today forresiduals, we have to deal with the situation as itexists. If you have decided to employ a memberof an American talent guild, your productioncompany will need to register with that guild.None of the guilds will allow their members tostart work until the production company hascompleted the registration process (you don’thave to become a signatory with all the guilds,just the ones you need). Both SAG and DGAalso require deposits be made for the estimatedsalary before their members can begin work. Inthe case of a non-US production utilizingAmerican actors, SAG requires that the entireamount of estimated payroll for the Americanactors, as well as the associated PH&W, be fullypaid before the actor leaves the United States. For the WGA and DGA, whether the services ofthe writer or director, respectively, are beingperformed in or outside of the United States, theregistration process is exactly the same

(applications and other information on theregistration process can be found online atWGA.org, DGA.org and SAG.org). For SAG,however, if the film is shooting outside of theUnited States, there is a simplified process (theyneed to be congratulated for having establisheda fairly easy and relatively quick process).

In general, all of the unions require thecompletion of an application, which requiresinformation concerning the name of the

production company, the budget for the film,chain of title, and other information relevant tothe production. Once the information has beengiven to the guilds, they prepare standarddocumentation. The form of contract (and otherdocuments) between the guilds and theproduction company is not something that canbe negotiated. It’s a form agreement that wasnegotiated by the studios and the indies arestuck with it. It’s a take it or leave it situation.The production company is signing on to thesame form of agreement applicable to thestudios and every other production company,depending upon the particular circumstances ofthe production. That said, there can be some

negotiation on the amount of the deposit andcollateral required to secure payments to theguild and its members. The registration processgenerally takes two to four weeks. Other thanSAG on a film shooting outside the UnitedStates (known as GR1), the guilds, generally,require a lien on the film to assure that theirmembers receive the payments that are due tothem, including residuals and PH&W. Ifpayments are not timely made, the guild canforeclose on the film, just like a bank would ifpayments are not made on a loan. The guildsmay also require deposits, personal guarantees,collection accounts, or other collateral to bolsterthe guild’s payment security, both to theirmembers for the required salaries, as well as thepayment of residuals and PH&W. Thisrequirement for security, liens and/or personalguarantees, probably more than any other fact, isthe most troubling for companies based outsidethe United States who are trying to do businesswith the guilds. While there is no way aroundthe liens, deposits for salaries and pensioncontributions, a collection account at one of therecognized companies can help eliminate theneed for corporate or personal guaranteesrelative to the ongoing payment of residuals.

In conclusion, a film cannot succeed in theworld marketplace without particularly, wellknown actors. But employing that well-

known actor, writer or director usually requiresthe production to become a signatory with SAG,DGA and/or WGA, as applicable. While thereare benefits to employing such talent, theburdens of becoming a signatory company canbe extensive, both in the obvious, like minimumsalaries, and the unobvious, like residuals andworking rules. The “Catch 22” of having tobecome a signatory in order to employ that wellknown writer, director or actor means beingsmart about the process, and understanding allaspects of what is involved.

Greg S. Bernstein is an entertainment lawyer specializing in the finance and distribution of

indie films. Each year Mr. Bernstein provides legal and/or producer representative services on

dozens of indie films. Through his many years of experience in the industry, he has developed

particular insights into the nature of the indie film business. For almost 15 years, Mr. Bernstein

has made this insight available to students at UCLA Extension in a course he teaches called

“From Packaging to Delivery”. His entertainment industry clients include major and

independent motion picture producers, distributors, sales agents, production companies,

and financiers. For more info and copies of articles: www.thefilmlaw.com.

Mr. Bernstein is a regular contributor to The Business of Film.

The American Guilds continue to bolster the financial coffers from the independents domestically & internationally

it’s a form agreement that was negotiated by the studios

and the indies are stuck with it


INDEPENDENT PICTURE PROFILE CANNES 2006

Samuel L. Jackson appearing in HOME OF THE BRAVE available from NU IMAGE

CANNES PROFILE


In 1988 The Business of Film featured JeremyThomas in a Cover profile entitled TheIndependent Independent. Eighteeen years

later he is still very much the independentIndependent, and has produced or executiveproduced 40 films. Since The Last Emperor,Thomas has completed films that include KarelReisz's film of Arthur Miller’s screenplayEverybody Wins; Bertolucci's film of PaulBowles’ The Sheltering Sky; Little Buddha andStealing Beauty; and David Cronenberg's filmsof William S. Burroughs’ Naked Lunch and J.G.Ballard’s Crash. In 1997 he directed All TheLittle Animals, starring John Hurt and ChristianBale, which was an official selection at the

Cannes Film Festival. Other recent creditsinclude Jonathan Glazer’s Sexy Beast; TakeshiKitano’s Brother; Khyentse Norbu’s The Cup;Phillip Noyce’s Rabbit-Proof Fence, DavidMackenzie’s film of Alexander Trocchi’s YoungAdam; Bernardo Bertolucci’s The Dreamers;Terry Gilliam’s Tideland; and Wim Wenders’Don’t Come Knocking. Contrary to a number ofproducers currently maintaining an output ofseveral films per year, Thomas has managed tomaintain a definable quality of film unique to histaste and desire as a film producer. A UK-Japanco-production with Nagisa Oshima and anassociation with Terry Glinwood of Glinwoodfilms (Merry Christmas, Mr Lawrence (1982)

were the catalysts for his present day operations;nine Oscar wins for The Last Emperor (1987)catapulted him into the big league. Cinema, notfame, continues to be his driving momentum, andhis energies continue to be absorbed with thepursuit of top directors to work with or executiveproduce for. How has he managed to adhere to hisunique recognizable brand of independent filmsand the preservation of his own sense of self?

JEREMY THOMAS: I don't have an overridingplan. I built a structure by necessity rather thanwanting to build anything. Overall, a very small,modest group of people work with me. It'shappened picture by picture, year by year, andit's been a way of keeping my independence. Bychoosing only quality films that interest me, wekeep very close to the development anddistribution process. Since we last spoke, I'vebeen taking on the role of executive producer onsome films as opposed to my traditional role ofproducer, and we have also established HanwayFilms a sales company. Hanway evolved as away of keeping close to the distribution processthat is complementary to the productioncompany Recorded Picture Company and offersa security cushion as it services our catalogue.This enables us to take on films from outsideproducers that fit with our philosophy and stillremain small, and I feel able to continue in thisway. As everyone knows, I grew up in thebusiness and learned how film works as aneditor. I started working with Terry Glinwood onMerry Christmas, Mr Lawrence. He is a veryexperienced forward thinking person, who wasvery instrumental in my path onward. It wasand is wonderful to work with him. He kept meon the straight and narrow, and I learned a greatdeal about the business from him. We made a lotof films and managed to keep them independent. Embarking on The Last Emperor with Bernardo

At the recent Berlin Film Festival, Chairman of the Berlinale Talent Campus Dieter Kosslick and Program Manager Cathy Rohnke took on thechallenge to interconnect the elements of Film, Hunger, Food and Taste. The creative vision was captured in the words of Campus Talent ManagerThomas Struck: “Your body is a Cinema. Films are food for your soul. Cinemas are restaurants for feelings.” Jeremy Thomas sat on the panel of afascinating seminar that was focused on the interconnectivity of Film and Food. Together with Tom Luddy, co-director of the Telluride Film Festival,Carlo Petrini, Alice Waters, and Jim Clark, Thomas discussed his latest film Fast Food Nation, which he produced and which is selected in Competitionat this year’s Cannes Film Festival. The Business of Film caught up with Jeremy Thomas after the seminar in Berlin, and he candidly shared his thoughtson aspects of the industry and how he has continued to make his own distinctive brand of movies.

STILL THE

INDEPENDENT

INDEPENDENTJeremy Thomas

Greg Kinnear & Kris Kristofferson in Fast Food Nation

Bertolucci was an incredible, super-ambitiousproject, which was to become a very fulfillingexperience in many ways. That was thelandmark, the economic trajectory that movedme forward, not only in terms of what I was ableto do, but also in losing fear of any sizeproduction. I then went on to make films likeSheltering Sky shot in real locations withenormous armies of people. I don't know if Icould do that again on limited resources sincetoday a film like that would cost many millionsto make. As for a film like The Last Emperor, Idon't know how you'd make that today. It waspre-digital, and of course it would be madedifferently today using digital multiplication. In my view, what is happening in digital is anunstoppable inevitability. A generation of peopleare moving up in the industry, and they onlyknow digital. They don't know the analog way,they don't know how to edit a film on aSteenbeck, or how to shoot with 35 mm using theart of laboratory processing and film stocks.They've only shot digital. Many films are beingmade as adaptations of video games, which isanother aspect of what is going on in cinema.With multiple films made from video games,cinema and film are no longer at the top of thepyramid, as they clearly were, even 5 years ago.The reality is we are competing in a market withso many other forms of leisure, and of course weare all trying to work out what is going to be thenext revenue stream. As a producer one has tolook at Napster and the music industry assomething that's going to happen, as well as newdelivery systems like the video iPod. We don’twant to think too much about it, but very soonthere will be a way of downloading films. The technology is just running forward, howeverI do believe the power of film is exceptional. Istill believe that the communal experience ofwatching a film in the cinema is a much morepowerful experience, than watching it at home.Of course the basics of telling stories – howthey're structured, the craft of filmmaking – willcontinue whatever the technology. On the onehand, it's a combination of artistic endeavoursthat involves a lot of craftsmanship andexperience, but it's also an industrializedendeavour, because there are different sorts offilm and many different film industries withinthe film business. At the top end, stand the majorstudios with their film production costs. Theamount of money between cost and P & A is ahuge legitimate investment, and they have to befocused on marketing to succeed and get theirmoney back. That is an industrialized process ofremakes and franchises and the need to feed amultinational machine.

I have been with the company ten yearsduring which time I have developed intoManaging Director, a dual role that has

me working on the business side of each film toensure that every project set up minimizes ourrisks and is structured in a way that plays intoour distribution and ownership strategy.Sometimes I'm successful in all the above, andsometimes one must to give away a little morethan planned. I focus on the back end of filmsand seek to hold onto the distribution control ifnot distribution rights that we license to regulatethe destiny of films going into their secondcycles. When the rights revert back, the film isin good shape for us to continue to enjoy it as anasset, whether it's in RPC or Hanway. AsManaging Director, I orchestrate 28 employeeswithin two companies that are two separateentities. Doing that requires a wide managerialrole of running a company involved indeveloping, producing, executive producing,arranging finance through third parties, andselling films as a sales agent. The twocompanies are legally two completely separateentities that share a common majorityshareholder, who is Jeremy, but Hanway alsohas other shareholders, including me and someof the senior executives. There is no co-shareholding between the companies, andthey're run as two separate profit centers.Although there is no contractual outputrelationship between RPC and Hanway, inreality the two companies are able to feed eachother in terms of the marketplace, whether it'sfinding talent and filmmakers, creatingdistribution relationships, or bringing finance.The symbiosis occurs mainly through thecolleagues in both companies working veryclosely together. We work in the same building;we meeting regularly – even daily; we traveltogether. We move as a single group, and itworks very well. One of our recognizedstrengths – one Jeremy has, and we continue

that legacy – is in being able to hold onto andown rights in our films, and Hanway is vital tothat function. Since its inception eight yearsago, there must be 75 films in the library, andthat process is getting stronger as Hanwaygrows. Creatively, Jeremy is the principleauthority and force, in terms of talentrelationships. That's where Jeremy excels.Compared to many other European producers,the depth of his friendships and socialrelationships is quite remarkable. One of hissecrets in building his business is choosing thecocktail of personalities and talents that workvery well together. There's a power in the factthat we're a team of people who all love eachother and have worked together for many years,which is unusual in any company. Jeremy's verygood about creating that particular type ofenvironment. Another thing that makes thecompany interesting and different from a lot ofother companies in the UK is its internationalfocus. As a group, we speak every Europeanlanguage. As a group, we travel a lot, and notjust for the film festivals. We cultivate particularterritories like Japan. We make films in Japan.We take finance out of Japan. We have Japanesedistributors investing in our films, and not justfor Japanese distribution rights. We also workwith Japanese talent. There is a spirit ofinternationalism, which also embraces ourrelationship with Europe. As a relatively smallgroup of Europeans, we distinguish ourselvesand set both ourselves and our companies apart. Is there a definition of a European film?Personally, I don't think you can define a film as‘European’ culturally, legally, and politically.There is a European film industry that makesfilms, and there's quite a lot of co-productionactivity in Europe, but there are too manycultural differences between the countries tomake what one could term a ‘European’ film.

The Business of Film also had the opportunity to chat withPeter Watson MD (pictured) of Recorded Picture Companyand Hanway Films.Peter Watson covers both companies’separate but symbiotic connection and how the company isbuilt on the philosophy and creativity of Jeremy Thomas,bringing together a cocktail of multifaceted talents thatintertwine and fit as a whole, on which the companycontinues to build its solid businesses and are in a positionto develop and make the quality films for which RecordedPicture Company is known.

PETER WATSON MDRECORDED PICTURE COMPANY

Continued on page 17Continued on page 16

‘‘

CANNES PROFILE

CANNES PROFILE


On the other side of the equation is independentcinema. Thinking about it, one can draw a parallelbetween the food and film industries. The idea ofthe Slow Food movement and mass manufacturedGM foods can be compared to independent cinemaand the major studios. I must say, I found the SlowFood seminar very interesting. I was delighted tosee a panel that didn't include people talking aboutsubsidies and co-productions. It was veryrefreshing to see another angle, because everythinghas to be taken as an angle to understand it, and itwas very inspirational listening to people likeVandana Shiva and Carlo Petrini.

THE BUSINESS OF FILM:.The Slow foodseminar centered on the simple but powerful ideathat ‘we are what we eat’ and that how we react,how we behave, is affected by what we ingesteither by way of food or visually. Do you thinkthere is a correlation?

JEREMY THOMAS: I think that it's completelyunderestimated what the intake of food does topeople’s personality and makeup. We are veryprivileged to decide what sort of food we eat,because many people don't have any food to eatat all. There's a gulf between mass production ofGM food and what's happened to actual foodproduction and delivery, as opposed to peoplegrowing their food or eating seasonal food orworking in keeping with the ideas of someonelike Carlo Petrini, and it all involves the same oldmovitation: not just profit but super profit. Thatwas what was good about the seminar, gettinginformation about what is going on.

THE BUSINESS OF FILM: In view of the manyfilms that you have produced or executiveproduced through Recorded Picture Company,was establishing Hanway a logical step that youneeded to take or could you have just gone onproducing films?

JEREMY THOMAS: I feel that after all theseyears when you look at the movies RecordedPicture Company has produced and the actors wehave worked with in our movies I could continuejust putting the films together. That said, Hanwayhas been a very enjoyable experience and it'sbecome an energy source for Recorded PictureCompany to enable it to make films. It's not anambition to become gigantic, but rather to be aspecialized entity for our product, and forproducers like Woody Allen or Saul Zaentz.

THE BUSINESS OF FILM: As an independentproducer, you are considered – both creatively andfinancially – ‘successful’. However the point of

the question is not about the monetary success,whatever it may be, but how easy is it to attainyour level, because talking to a number ofproducers it's quite a difficult business.

JEREMY THOMAS: It's a very, very difficult,very hard, tricky business. We often find itincredible that we manage to remain independentand can continue. It is a fairly single-mindedendeavour, you know. I can't really say howwe've managed to continue to maintain health inmoving forward. It has happened like the river oflife. We have floated down the river at the righttime and in the right places. It’s a stream that hascontinued along. Hanway was a naturalprogression, and it’s important becauseproducers are so far removed from the market.Hanway is a model of the film industry today. Ofcourse, the new delivery systems are going tobring the producer closer to the market. Thepoint is that today there are many different sortsof producers on the credit block of a film. Tofinance films in the independent sector you haveto give away a lot of credits, and they're often notrepresentative of what really went on. You usedto be able to read the credits and know the rolean individual played, and I hate saying ‘it used tobe.’ One has to forget about ‘used to be’ becausethe reality is that a Producer will often doanything to get his film financed, and that's whathappens today when there are many producerson an independent film.

THE BUSINESS OF FILM: When we look at thenumber of producers in America, it would appearthat in the UK film industry there seems to be alack of Producers such as yourself who are able

to able to get films made. Is that a fairreflection?

JEREMY THOMAS: In the UK, there are manyproducers. We don’t have the entrepreneurialclimate within the entertainment business thatexists in America, but I think that we havewonderful producers in England, and they'revery, very good. I can name a number ofproducers who are able to find the script, and themoney, and make a movie, and that in my viewis still the real producer. There is a new range ofworking producers – some in their early 20's –working in the UK, and across Europe andAmerica. There has to be a whole newgeneration of people working, or else the processof filmmaking would stop. In London there areprobably a dozen well-known producers, butonly a few have managed to build a business.There are naturally more producers in Americabecause the film industry is an area for bankers,investors, and in America making films is amanufacturing way of life.

THE BUSINESS OF FILM: Have you beentempted to live in America?

JEREMY THOMAS: I've spent lots oftime in America. I love being there, and I loveworking there. I make movies there and interactwith an office in LA. But London is home; it’swhere I have my family and all the things I'mused to. I have a lot of good relationships withAmerican talent and executives that I'vetravelled with throughout my career. Many ofthem are in the studio system, and I'm stillinteracting with them. It’s very important forproducers to have relationships in othercountries, because the film industry is a globalbusiness. It's what I was saying at the seminar:there's a difference between globalization andglobal. Globalization is a concept; it’s about thehuge multinationals. Global means worldwideand thinking about the world.

THE BUSINESS OF FILM: So what keepsyou going? Is it just the passion for films?

JEREMY THOMAS: It's better than work, andalthough it is extremely demanding, I still enjoyit. Film encompasses so many aspects ofliterature, photography, art, design, music andbusiness, and there is also an element ofgambling. You have to be many things to be aProducer, and by making films I can enjoy all ofthat. It's constantly very interesting, and there isstill an audience that enjoys original films.

Scene from Fast Food Nation In Competition Cannes 2006

CANNES PROFILE


I do think there is a concept that you could calla European sensibility, and I don't mean that inthe ‘high art’ sense. One of the trends that we’reseeing in cinema, for example, is a resurgenceof the documentary. I think that comes out ofEuropean curiosity. I think Europeans ask morequestions and interrogate the world more thanothers, so I suppose you could call that aEuropean sensibility. In terms of our ability tomake movies, we carefully choose what to beinvolved with and its degree of profitability.Hanway is a commercial concern that we havebeen growing, and its turnover has expanded.There have been some obvious blips, but thegrowth has been solidly positive and we intendto continue the growth of our balance sheets, aswell as the company’s film assets so that anythird party can appraise the business and say,‘this is a going concern, this is a healthybusiness.’ We will continue to grow RPC’sbusiness but there is a lifestyle component to itfor everyone involved with it, not just Jeremy.We're not about to give up. Whilst we will beable to live well from the business, it's not aboutmaking huge profits. Those come about whenyou have a hit. Hanway is building an asset-based business. RPC is a developmentcompany. It's a vehicle for Jeremy personally,and it's a vehicle for our big productions withour principle directors. It's not a business thatwould ever be put ‘on the block’, as it were.Jeremy and the business are absolutely boundup with each other. You couldn't have RecordedPicture Company without Jeremy, whereasHanway Films can be a separate entity as it getsits films from different sources.Jeremy, of course, is the realc o r n e r s t o n e o f t h e b u s i n e s s .

Jeremy wants to produce very directordriven films for Recorded PictureCompany. Having worked with the finest

auteur directors in the business, we're veryinterested in looking at material that wouldeither have a director of that calibre alreadyattached or something that would be verycompelling for one of those directors. In recentyears, Jeremy has worked with first timedirectors – the new auteurs: Jonathan Glazer onSexy Beast and Dave Mackenzie on YoungAdam – and we're continuing in that traditionwith projects like Franklin which is from firsttime writer/director Gerald McMorrow. Weintend to continue that same ethos withHanway's current diverse slate, which includestitles from Richard Linklater, Woody Allen, andMilos Forman, and some new talents. It’s abouta fifty-fifty split of projects that come to bothcompanies, and it works very well. Often indeveloping you are looking at interestingprojects early on that might not necessarilyalways be right for Jeremy and RPC, but we cantrack and consider for Hanway for a laterstage.Finding that rare great script is always avery elusive creative process. It takes a lot ofplotting and detective work. To my mind, a

good script is very evocative. The images falloff the page when you read it and you can seethe very clear intention of what the film willultimately be. It is unique, in whatever aspect.Sexy Beast is an example of a good script and awonderful movie. Development resources arevery rare in the UK, and RPC is very specialamongst the UK production companiesbecause it does put great emphasis ondevelopment. The UK Film Council do whatthey can with their funds to work with writersand directors to develop a voice, but I thinkthat one of the sad aspects of our film culturein recent times is that you don't have thatopportunity filmmakers had in the 80's toactually find their own vision over the courseof several films. Nowadays, films have toperform, perform, perform, and that is veryhard for up-and-coming new filmmakers. Atour companies we have a very limited slate.So we do try to develop projects that we areactually going to make and that we areabsolutely passionate about. Writing a greatscript to bring to companies such as ours isalways going to be a struggle forfilmmakers. Good scripts have that differenttwist to the subject or subject matter.

PETER WATSON MDRECORDED PICTURE COMPANY

Cont. from page 17

The Business of Film also had the opportunity to chatwith Matthew Baker (pictured) Head of Developmentand Acquisitions for Recorded Picture Company andHanway Films, he comments on how both companiesapproach finding scripts and that indefinable criteriaelement: What is a good script? Does RPC deliberatelyseek out eclectic offbeat scripts?

MATTHEW BAKERHEAD OF DEVELOPMENT &

ACQUISITIONS FOR RECORDEDPICTURE COMPANY

‘‘‘‘‘‘

During Cannes Contact The Business Of Film Carlton Hotel Office 149 Tel 04 • 93 • 06 • 41 • 49

Email your press releases only during Cannes to:[email protected]


GE Entertainment Debut At Cannes

You cannot keep a passionate filmmaker awayfrom the Cannes Film Festival for long. Golan-Eran Entertainment makes its debut at Cannes2006, headed by Menahem Golan and partner-producer and director Doran Eran. During thesummer of 2005, the two renowned award-winning filmmakers in their own rights teamedup to establish Golan-Eran Entertainment (GEEntertainment). Menahem Golan (RunawayTrain – starring John Voight, Eric Roberts andRebecca DeMorney; Over The Brooklyn

Bridge – starring Eliot Gould and MargauxHemingway; Operation Thunderbolt (Entebbe)– Academy Award nominee for Best ForeignFilm; Bloodsport – starring Jean Claude VanDamme; Over the Top and Cobra – starringSylvester Stallone; Delta Force and Missing inAction – starring Chuck Norris; Death Wish –starring Charles Bronson), a veteran of the filmindustry who launched many actors on theirway to stardom, is considered by many to be thegrand-daddy of the independent film business.

Doran Eran has over 30 films to his credit as aproducer and director of documentaries, featurefilms and television; many of his feature filmshave received international recognitionincluding the prizewinning controversial God’sSandbox; Beyond The Walls II – directed byUri Barabash; White Night (Cannes FilmFestival, Prix de la Jeunesse - Quinzaine desRealisateurs); and award-winning DesertLove, theatrically distributed in the US. Thecompany highlights seven completed filmsand Super Ninja in pre production. The GEEntertainment slate includes DangerousDance, a Romantic dance musical, directedby Menahem starring Eliana Bekier, ZoharLiba, Michal Amdurski, Omer Barnea, andHilik Cohen; Doomsday, an action Thrillerdirected by Doron Eran, starring Tony Peckand Alessandra Mussolini; Magic & Wonder,a Drama Thriller directed by Ken Russell,starring Terence Stamp; and A WeddingFilm, a Romantic Comedy directed: byDoron Eran, starring Hila Vidor, Ron Shahar,Iris Penn, Zion Baruch, and Hila Eran.During Cannes, GE Entertainment,Menahem Golan, Doran Eran, and businessaffairs executive Ron Hantman are based inRiviera Hall, Booth G5.

From Filmmakers in South Africa comes thefamily adventure motion picture White Lionwhose stars are the real lions of the SouthAfrican wilds. White Lion is the realization ofthe film’s financiers and exec-producersRodney and Ilana Fuhr. White Lion is RodneyFuhr’s long-standing dream to produce a

feature film about the life of a lion in the wild.Producer Kevin Richardson said: “To date,most lion pictures shot in South Africa haveseen the importation of Hollywood trainedlions. Our lions look great…they’re lean, meanand heroic – not spoiled, fat and lazy.” Helmedby Ben Horowitz and Michael Swan (regardedas one of the country’s top lion wranglers),White Lion is a family adventure story thatfollows the life of an exquisite white lion,Letsatsi, who is born into a tawny pride in thewilds of Africa. His color difference makes lifevery difficult for him, and he has to find hisown way in the world, against all odds. Hiswild, exultant, sometimes heartbreaking, andfinally triumphant journey takes him fromhelpless cub to rebellious teenager, and finallyinto a strong and capable adult with his ownpride. “It’s a classic story, not a documentary or awildlife picture,” says Horowitz, “with originalitysimilar to Jean Jacques-Annaud’s acclaimed TheBear. The parameters set by Rodney Fuhr arestringent and incredibly difficult to achieve. Wehave to represent real wild lion behavior and thechallenge is to tell the story entirely through theaction of the lions. This isn’t The Lion King; nolips move, and we aren’t relying entirely onanimatronics, puppets, or many visual effects. Thepicture only features three human beings – castingof which we will attend to once the bulk of the lionfootage is shot.”

“What you see in the picture is virtually writtenby the lions,” says Kevin Richardson. “We startshooting sequences, without fixedchoreography, capturing their typical behavior.We adjust the sequences and the scriptaccording to the behavior we film. It’s nervewracking, but our results are fantastic.” SamKelly of Chop Productions said, “We feel sohonored to be producing a film with soul.Opportunities like this come around once inyour lifetime, if you are lucky, and everyoneinvolved in the project feels it too. We have200% commitment from every crewmember &every supplier.” Kevin Richardson added:“White Lion is for all age groups, the cubs willpull the heart strings of even seasonedmoviegoers. We’re very optimistic that this typeof family entertainment will find a place in theinternational market, and we expect a verypositive response from Cannes. We believeWhite Lion holds significant business for adistributor. It has all the ingredients to be a run-away hit.” The film was shot entirely in theLion Park, a commercial enterprise 50 milesoutside the city of Johannesburg, and onlocation near the Crocodile River. Severalphases of principle photography were shot overmany months since December 2005. The film is seeking international distribution atCannes, and buyers can contact The SouthAfrican Pavilion in the International Village.

Menahem Golan & Doran Eran on location in Tel Aviv shooting Dangerous Dance

White Lion The Pride Of Africa

White Lions in the wild

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