Call them leaders of the pact
EmptyIt has been a year of frenetic activity within the independent sphere as Wall Street money that helped fund much studio moviemaking has turned to the indies. Among the biggest deals:
After months of speculation, Robert Friedman, the former vice chairman of Paramount Pictures, made it official just before May's Festival de Cannes: He was teaming with Summit International CEO Patrick Wachsberger to form a domestic production and distribution entity named Summit Entertainment. The venture was funded by Merrill Lynch and a consortium of other investors, with $1 billion to make movies and other forms of entertainment. Summit expects to release eight to 12 pictures annually (with four of those coming in the form of acquisitions), budgeted from $15 million-$60 million, as well as handling foreign sales for its old clients.
Pay TV and DVD distributor Starz, a division of Liberty Media Corp., leaped into the movie business late last year with the creation of Overture Films, a company headed by former MGM vice chairman Chris McGurk that will produce and distribute films. Overture will have $400 million-$500 million to cover production, P&A and overhead every year for the next five years. The studio will release eight to 12 new movies a year, generally budgeted at less than $30 million, with Paramount Vantage handling their international release.
A weaker-than-expected first quarter didn't get in the way of Lionsgate raising about $200 million from Wall Street in a deal brokered by Goldman Sachs. In May, the New York bankers helped it create a new umbrella company, LG Film Finance I Llc., to make and release 23 films during the next three years. True, the first film under the deal, May's "Bug," was somewhat of a boxoffice disappointment, but hopes are high for upcoming movies under the deal, including the Dane Cook-Jessica Alba comedy "Good Luck Chuck"; the Jet Li actioner "War"; and the Russell Crowe starrer from director James Mangold, "3:10 to Yuma."
Continental Entertainment Capital
Producer Graham King's longtime partner, Colin Cotter, closed a deal in April with Citigroup that provided him with $500 million for a new company, Continental Entertainment Capital, that will invest in and/or lend to a range of other entertainment entities. CEC will provide gap financing and P&A money and also will refinance companies that want to grow their activities. At the same time, Cotter — who remains partnered with King in Initial Entertainment Group — has launched a sales company, Continental Pictures, with a separate $150 million revolving credit facility from Citigroup. Continental Pictures will benefit from a "second-look" deal with Initial, giving it access to all of King and Cotter's movies after Warner Bros. Pictures has taken a first look at them.
The directors known as the three amigos (Guillermo del Toro, Alejandro Gonzalez Inarritu and Alfonso Cuaron) made headlines this year when they struck an eye-popping $100 million deal to make five movies for Focus Features. But that deal would never have taken place if Focus hadn't entered into a bigger pact with Wall Street in January. That's when investment bank Dresdner Kleinwort helped create Twins Financing Llc., a fund that will split the cost of 20-25 of Focus' films (though the deal does not include genre product from Focus' sister division, Rogue Pictures). While no dollar amount was announced, sources said that they expect it to be in excess of $200 million. The fund was Wall Street's biggest commitment yet to pure art house films and was soon followed by a similar fund created by Morgan Stanley to invest $150 million in Paramount Vantage films.
The Film Department
A year after leaving his post as president of Warner Independent Pictures, Mark Gill cobbled together $200 million for a slate of specialty films to be made through the Film Department, the company he has created with former Yari Film Group executive Neil Sacker. With financing from Wall Street and the Middle East's Sheikh Waleed al Ibrahim, Gill and Sacker plan to use their capital to generate more funds that will help them make six movies a year during the next five years, with budgets of $10 million-$35 million. Their company, which will have a sales division but no distribution deal, will focus on more mainstream, star-driven material.