Dud dollar perks pic prices
Currency shift gives U.S. studios edge on sales to Cannes buyersDollar-carrying Americans in Cannes scandalized by the price of a cafe au lait ($8), a bottle of water ($5) or a short taxi ride ($17) can take solace in this: Currency devaluation sometimes can be a beautiful thing.
A weak dollar tends to benefit exporters and disadvantage importers. That's good news for U.S. companies at a film market, where the bulk of sales go in one direction: from the U.S. to overseas.
Because these U.S. companies generally finance their movies in dollars but sell to companies that make their money in euros, pounds or other strong currencies, the sellers essentially could get a premium on the market value of a film when they close a deal. Far from taking a further chunk out of their bottom lines, these currency disparities could provide a boost to Yank revenue.
And they could offset what during the past year has otherwise been a rocky foreign market for U.S.-produced films, especially in Japan and Spain.
"U.S. entertainment companies are in the export business, and these currency fluctuations area big net positive for them," said Stephen Prough, managing director of investment bank Salem Partners.
Or as William Morris Independent's Cassian Elwes put it, "In the current economic climate, this is the one big advantage."
That's good news not just for the sales departments. The foreign-sales efforts at Cannes of U.S.-based companies such as Focus and Summit fund year-round efforts across the company.
Even firms that don't sell huge slates at a fest, like the Weinstein Co., could benefit. The Weinstein Co. will rely on foreign-sales of midrange projects like the John Cusack period pic "Shanghai," and it too could see higher revenue from international sales as a result of currency fluctuations. On the down side, it's pricey to buy from those countries if you're paying in dollars to companies who conduct their business in euros.
The effect of this currency differential on large U.S. companies may be minimal, however, because most foreign films are sold to the U.S. for token amounts, mainly for the cachet of a U.S. release.
But at the more indie end of Cannes, where many of the prestige Competition titles get snapped up, every dollar counts. That means a weak dollar could be bad news for the distributors looking to acquire specialty movies made with foreign dough like "Waltzing With Bashir."
"I think international buyers are going to be savvy at this festival," one sales agent said. "They know what a movie is worth to them, and they also know about the advantages the currency markets give the American seller."
As one seller put it, "Without the dollar weakening, the market would really look like a disaster."
Scott Roxborough contributed to this report.