Cannes: Why Hollywood Studios Are Squeezing Out Indie Distributors

From left: 'The Birth of a Nation,' 'Anomalisa' and 'The Fundamentals of Caring'

International dealmakers are finding it hard to compete as deep-pocketed Hollywood majors target mid-budget titles. "The buyers hate it," says one insider.

Cannes is a bastion of the independent film world, but the Hollywood majors increasingly are crashing the fesitval party.

Last year, the studios made some of the biggest deals on the Croisette, including Universal taking Lenny Abrahamson’s eventual Oscar-winner Room from Film Nation for most of Europe as well as Latin America and, in a reported $20 million deal, buying up worldwide rights on Tom Ford's Nocturnal Animals, also from FilmNation, for its specialty arm, Focus Features.

The studios, with their deeper pockets and the leverage that comes from having global marketing and distribution networks, can, if they so choose, outbid most independents. That hasn't traditionally been a problem. Until recently, beyond picking an occasional awards contender for U.S. release, the majors showed little interest in indies. But over the past few years, the studios have been upping their festival game.

”The A-level [indie] distributors understand that they’re not just competing with their territories, but they’re competing with the studios as well,” says Nick Meyer, CEO of Sierra/Affinity.

Paramount snatched global rights to Charlie Kaufman and Duke Johnson's stop-motion drama Anomalisa out of Toronto last year. In January, Sony scooped up international rights to Denis Villeneuve’s Blade Runner sequel, which had been a hot project for foreign buyers, and at Sundance, Fox Searchlight paid $17.5 million for worldwide rights to The Birth of a Nation. And just last month, MGM scooped up in-development project Deeper, based solely on a spec script from American Ultra writer Max Landis and the attachment of Bradley Cooper to star.

“Anything that has commercial potential gets snatched up by the studios, taking it off the indie market,” notes veteran acquisitions executive Dirk Schweizer of Germany's Splendid Film. Going into this year's market, he's skeptical of how many of the A-list titles will actually be available for the international buyers that have traditionally been at the core of Cannes.

“The buyers hate it,” Tamara Birkemoe of sales agent Foresight Unlimited says of the studios' more aggressive indie strategy. “We try to work with the buyers we have relationships with, so for us it’s a matter of if we can sell it to our buyers, we try to do it.”

The studios have one major advantage over all but the biggest independents: their international television deals. Every Hollywood major has multiyear licensing pacts in place in most international territories. If the studios pick up an indie film, they typically can slot it into those deals, meaning millions in ancillary revenue.

“If they go for a film that fits into those deals, there really is no way an independent distributor can compete because they can always outbid them,” notes David Garrett of sales group Mr. Smith Entertainment.

The studios' push into the indie world is driven, in part, by a shift in strategy that has seen the Hollywood majors make fewer, bigger films in-house, focusing on tentpole franchises at the expense of smaller, director-driven dramas. That, however, has left the studios with bigger gaps in their release schedules — gaps they are looking to plug with independent product. Paramount, Sony and Universal have been the most aggressive in this regard.

“It’s not a healthy development for anybody because the studios are not really structured to do this kind of product,” Joni Sighvatsson of Scandinavian distribution company Scanbox says of the major studios' interest in specialty films. “Their whole DNA is about doing mass-market films, so suddenly to throw something at them like Boyhood and Whiplash, both excellent films but which need very careful handling, they’re not really equipped to do that.”

Adding to the indie world's woes is Netflix, which has used its substantial financial means to muscle out international buyers of films like Paul Rudd road-trip film The Fundamentals of Caring, which the streamer snatched for nearly $7 million out of Sundance. Amazon has also been active — the company's recent deals include the $10 million acquisition of Kenneth Lonergan’s Sundance drama Manchester by the Sea — but Amazon's policy of working with traditional distributors, both in the U.S. and internationally, means its presence is less of a threat.

Mark Damon of Foresight Unlimited notes that while studio deals can initially be lucrative, the traditional indie model of splitting up rights around the world can mean a much larger upside.

“If a picture performs well and we’ve sold it to various buyers, rights are uncrossed," he says. "If you sell it to a studio, they cross all the territories, so the likelihood of seeing overages in the face of a successful release is much more diminished.”

Glen Basner of FilmNation, however, who negotiated Universal's international deals for Room and Nocturnal Animals, says that the studio did “a great job” with the Brie Larson starrer. “They are making it profitable for us,” he says. “They paid a sizable advance and we expect we will see some overages on it.”

Most insiders believe the studios are here to stay. Adds Basner: “When the studios first came in [to do indie film buys], I wouldn't have thought of them first, but now they have become such a consistent buyer, so we don't really see them as any different than a local distributor in France or in the U.K.”

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Four Studio (and One Netflix) Deals That Took Big Indie Titles Out of the Market

Anomalisa
Charlie Kaufman is an indie favorite, but Paramount snatched this festival favorite with a $10€ million global rights deal.

The Birth of a Nation
Fox Searchlight set a new record for a Sundance sale with a $17.5 million deal for Nate Parker’s drama.

Blade Runner 2
When Sony grabbed the iconic sci-fi film starring Ryan Gosling, it was among the biggest indie projects taken off the market by a studio.

The Fundamentals of Caring
Netflix snatched up this Paul Rudd road-trip movie straight out of Sundance for a cool $7 million.

Nocturnal Animals
Universal put up a reported $20 million for worldwide rights to Tom Ford’s new drama.

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