Defusing the Bomb

The indie business can avoid an implosion only if it adapts to the times

It's the best of times and the worst of times in the indie business -- except for that first part.

As the sector heads into the fourth quarter of its first full year of recession, there is plenty of reason for pessimism. Such startup distributors as Senator Entertainment and Yari Film Group have closed their doors because of a lack of P&A money. Maturing companies like Overture Films are still seeking their first boxoffice home run. Minimajors like the Weinstein Co. are running on fumes.

And if things are bad for distributors of indie movies, they're not much better for producers and financiers. Several of the bigger financing entities are basically out of the business, a list topped by the formerly high-flying Grosvenor Park and the Todd Wagner/Mark Cuban shingle 2929 Prods.

Those that are around to provide equity financing -- from Overnight Films to Groundswell Prods. to the Film Department -- are being more selective and frugal. The net effect could be a settling down to about 300 American-made movies per year instead of the roughly 550 this country produced just two years ago -- that's if the economy continues to strengthen and the whole indie business doesn't go up in flames.

"I've never seen anything this chaotic," says Anonymous Content producer Steve Golin, who has spent the better part of the past year trying to move forward on the hot Black List project "The Beaver" before it landed at Summit this month. "And then when you do get a movie made there are about one-and-a-half distributors to release it."

Amid the uncertainty, however, there are distinct reasons to believe the indie business will save itself from destruction. But there's a catch. To accomplish its goal, many believe the business will need to act counterintuitively, upending the rules that have governed the sector for the past decade.

With the Toronto International Film Festival less than two weeks away, three films from last year's fest provide lessons about not only how much the game has changed but also what needs to be done if the indie business hopes to recover.

"The Burning Plain"

For many, the problem in the indie world these past few years, particularly at the higher end of the budget spectrum, is that financiers simply took on projects that the studios cast off. With small nips and tucks to the budgets, producers then went ahead and made the same projects, only without distribution or the financial cushion that a studio might have provided.

A prime example is Guillermo Arriaga's "Plain." First developed at DreamWorks as "Four Elements," the dark drama about an estranged family in the American Southwest was extracted from the studio in 2007 by Wagner and Cuban's 2929, which decided to make it on an indie model (though, with a budget of $15 million-$20 million, not that indie).

The pic contained what for years had proved a winning specialty formula: an Oscar-winning star in Charlize Theron, a pedigreed producing team in Walter Parkes and Laurie MacDonald, and the directorial debut of screenwriter Arriaga, fresh off the $30 million success and multiple Oscar noms of his "Babel."

Then things began to sink. A high-profile Friday evening debut at Toronto failed to persuade buyers. Given the rash of recent high-profile indie disappointments, distributors just weren't willing to open their checkbooks -- and with the pic's production budget, they would have had to open them wider than usual -- for a drama that was far from a shoo-in at the boxoffice.

Eventually Magnolia, 2929's sister distribution label, opted to release the pic. The company is bringing out the movie in September, even debuting it on DirecTV a month ahead of its release, a creative marketing move but hardly a ringing endorsement of its theatrical potential.

In a previous era, "Plain" and other anointed festival dramas of the past year -- including such star-driven indies as the Pierce Brosnan-Susan Sarandon weepie "The Greatest" and the Jim Carrey-Ewan McGregor tragicomedy "I Love You, Philip Morris" -- would have been snapped up by domestic distributors. But the market's rejection of those films and others indicates that the business has fundamentally shifted.

"What we take from the last few years is that too many movies were made for too much money," ICM indie finance exec Hal Sadoff says. "And when you make a movie for too much money, you risk against a North American (acquisition fee), which you simply can't do any more."

In other words, the "Plain" model, in which dramas are independently financed at a budget as high as $20 million, is all but dead.

In its place is something both bigger and, in some ways, less indie. Movies with budgets in a higher range can still be financed outside the system and seek distribution after they're made, but they must be made in a far more commercial vein.

It's no accident that two of the most anticipated genre pics of the next year -- the James Cameron-produced "Sanctum" and the Matthew Vaughn directed "Kick-Ass" -- were financed independently.

Says CAA's Roeg Sutherland, who helped gather financing for "Sanctum": "I'm never worried about a commercial movie made for $25 million that

doesn't have distribution because they can always find a home these days. "

"The Wrestler"

Festival dramas can still be made and perform well, of course. They just need to be made on tighter budgets.

A perfect example of a movie that got bigger by going smaller is "The Wrestler." By now the story of last year's awards-season sleeper is well-documented: A one-time wunderkind, Darren Aronofsky was coming off a very rocky time with "The Fountain." Financiers were willing to make a drama from him for a reasonably high budget of about $15 million, but only if he would cast Nicolas Cage, a star who could fuel foreign presales.

They wanted the "Burning Plain" model: dramatic premise; name star; relatively high budget.

But instead of going with Cage, Aronofsky slashed his budget to $6 million and cast Mickey Rourke, who had little appeal overseas but fit the part to a tee.

That move made all the difference. In addition to making the pic better, a smaller budget also allowed a distributor to come in with a reasonable offer (about $4 million, which Fox Searchlight paid) to snap up the movie.

After an Oscar run for Rourke, the film earned $26 million at the domestic boxoffice, the fifth-most for any specialty release last year (and the most for any project financed without studio support).

The success of "The Wrestler" suggests more indie prestige projects will do better if they deliberately go small. In fact, incoming Sundance chief John Cooper says he's expecting a serious decline in slick, highly capitalized star-driven indies but a spike in low-budget, digitally shot movies with no stars in the presumably sub-$2 million range.

One example is Lionsgate's dramatic thriller "The Next Three Days," which is set to go into production in the fall. Despite a commercial premise -- a man tries to break his wife out of jail -- and a collaboration between A-listers Paul Haggis and Russell Crowe, the pic is said to have a budget only in the $10 million-$12 million range.

And if projects do attempt to go bigger budget, as many are touting, the casting of stars might not lead to the deals that film backers want.

It's a lesson being learned by "The Rebound," the Film Department romantic comedy with Catherine Zeta-Jones, a star who is perceived to travel. The movie went with a bigger name, a bigger budget (likely in the $25 million range) and has sold foreign territories. But it has sat without a U.S. distributor for several months, not because there aren't offers, but in part because it needs to sell for a higher figure to recoup production costs.

Film Department principal Mark Gill also says he'd rather wait for a company with deep P&A pockets: "What we don't want to do is take the movie and put it out in a platform release. It's hard to make a movie that's both good and commercial, and we're not going to blow it because we couldn't figure out the cash situation quickly enough," he says.

Still, even as high-concept midrange-budgeted movies are cited as a commercial savior for indie financiers, to some "The Rebound" illustrates the problems of going big: If filmmakers try to make a movie above a certain budget without studio support, simply on the basis of its star, they're putting themselves in a vulnerable position.

"The Hurt Locker"

And then there's the wildcard, the hybrid. Not quite a mainstream commercial play but certainly not a small drama, this is a category exemplified by the Iraq action-drama "The Hurt Locker."

Its budget was close to $15 million, more than twice that of "The Wrestler" and flirting with "Plain" territory. But unlike "Plain," it had a key element: an action premise and the suspenseful story of soldiers who defuse bombs.

The budget was high for a serious movie with serious implications. But the appeal here wasn't a big actor in a performance piece (indeed, director Kathryn Bigelow deliberately decided against recognizable stars). It was an element that worked in action movies from "Rambo" to "Speed": life-or-death tension.

Still, the pic arrived at Toronto with modest expectations, an unproven screenwriter in journalist Mark Boal and a director who seemed on the Hollywood outs: after an auspicious early career, she'd had just one (modest) hit in the previous 18 years.

Most perilously, the film had the taint of the Iraq War on it -- the one stigma worse than the "bleak drama." The Iraq factor had destroyed movies from Gavin Hood's star-studded "Rendition" to Kimberly Peirce's "Stop-Loss" to another movie based on Boal's reporting, Paul Haggis' "In the Valley of Elah." Studios wanted to dump the Iraq movies they did have; why would they go out and get a new one?

And yet Summit Entertainment decided to step up and buy it. Three months later, as the company began rolling in the solid returns of "Twilight," it very well might not have made the purchase. Even as it was, the pic was hardly a surefire success; as much as Summit execs liked it, they knew they had, well, a battle in front of them. "I don't think we knew how much potential it had," Summit acquisitions chief Michael Schaefer admits.

But after a deliberate wait of 10 months, the movie has managed to combine the best of the indie and commercial worlds. It's undoubtedly a difficult pic; a character played by Guy Pearce, who in a more commercial movie might be its star, dies in the opening scene. The film has caught on primarily because of critics' endorsements and word-of-mouth.

And yet television spots focusing on the action and tension have galvanized a more general male audience. The pic has thus far earned $11.1 million and maintained solid per-screen averages even as it widened to about 400 screens.

"Hurt Locker" demonstrates that the right mix of indie drama and commercial appeal (particularly a filmmaker in Bigelow, who has reached broad audiences before with movies like "Point Break") can be a winning formula.

And maybe even more important, it demonstrates another lesson. "For the right pricing, we were not exposed as we could have been," Schaefer says of his company's decision to spend about $1.5 million for U.S. rights.

For both distributors and producers, that might be the biggest guiding principle in the current indie climate: Make a more commercial movie. And whether you're producing or distributing, spend less.