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Brett Ratner is involved in a partnership that is investing in 100 movies, including indie projects and films for Warner Bros., and he continues to produce and direct his own movies (most recently Hercules).
However, during the opening Finance Conference panel at the American Film Market on Friday morning, he said what has him most excited is the potential for the movie business that he sees in China.
The opening AFM conference in Santa Monica was moderated by P. John Burke of the law firm Akin, Gump, Strauss, Hauer & Feld, and along with Ratner, included UTA partner Rich Klubeck and The Hollywood Reporter‘s executive editor Matthew Belloni. And while the panel covered a range of topics, China loomed large in all of the discussions.
Ratner said he recently traveled to China and marveled at the rapid pace new movie theaters are being built, estimating 12 to 14 new multiplexes are opening every day to add to about 14,000 that already opened in recent years.
“I think China is going to be our saving grace for this business,” said Ratner. “There’s a time coming when a movie is going to be made here and it will cost a few hundred million dollars and l I don’t think the studio will even care if it gets a release here. They will care but they can make hundreds of millions more in China.”
Ratner formed the company RatPac Entertainment in late 2012 with Australian investor James Packer, which is the vehicle that a year later made a deal with Warner Bros. that made it a 25 percent equity player in every movie the studio produces. Three days after that deal closed, the movie Gravity opened with RatPac as an investor, and became a huge hit (even though at least two other companies passed on the same opportunity, said Ratner).
“Because we had some success and because my partner is more intent on building a media business rather than just finance films,” said Ratner, “he wanted to focus on China. Last week we closed a deal, a credit facility, to co-finance movies outside Warner Bros. and within Warner Bros.”
“Going forward our plan is to move on to China,” continued Ratner. “I went to China a few times and did some due diligence and really, while everybody in the U.S. is looking for Chinese money, I analyzed the marketplace and saw what the Chinese want is for their local theatrical films to thrive.”
As a result, Ratner said they have now joined another content fund with a Chinese partner, along with Japan’s Softbank, Channel 7 in Australia and others.
However, Ratner said he won’t be spending time reading Chinese scripts. That is one reason he also asked Warner Bros. to come in as a partner on the new content fund. He said his role now is to trust his partners.
Ratner said that is the way he handles a lot of his investments. He said his companies are involved in making about 20 movies with top directors and Ratner tells them he is there to help, but not to tell them how to do their job. However on movies he directs, or where he is a key producing partner, he is involved in every aspect, including commenting on the movie trailers and poster.
Another film RatPac has invested in is Water Diviner, a historical drama directed by Russell Crowe. Ratner revealed during the panel it will be distributed domestically by Warner Bros.
Belloni raised the question of what role the Chinese company Alibaba will play in the movie business now that it has raised over $23 billion on the U.S. stock market and indicated that it plans to be a content player.
Belloni said he expects Alibaba Group to either buy or invest in a major American movie studio within two years. “I do believe in the next five years,” added Belloni, “there will be a change in ownership in one of the studios.”
Klubeck agreed, predicting that Alibaba is likely to follow the model used by Reliance, the Indian company that invested in DreamWorks in 2008. “They made a targeted investment,” said Klubeck, adding: “If Alibaba comes in, chances are they will do what most people do and make a few targeted investments to learn [the business]…I think they probably want to live with it a bit.”
Klubeck added that these companies have realized “content is not commoditized,” meaning movies and TV shows are not like minerals that are all the same, and thus all have the same value.
Burke said there has been a lot of “buyers kicking tires with little activity” so far. The difference he sees it that it used to be “promoters who came over and said I’ve got a fund to buy this or that. Now we see the actual companies.”
Ratner said initially the plan for RatPac and his other investments was to back studio movies like those from Warner Bros., and then trust they will get the best material, develop well and then market and distribute.
He is doing that, but said once he had financing to offer he also heard from a lot of independents and other directors. Now he is doing both studio movies — where he is really a passive investor — and independent projects where he must love the material and the filmmaker; and sometimes is more hands-on.
“There is creativity on the business side in the independent space,” said Ratner. “But for me doing the deal was fun. It was really an educational process.”
“I described it to one of my friends,” added Ratner, “It’s almost like it should be illegal for me to invest in movies. It’s like I have inside information. I know all the moving parts.”
Ratner said having the funds has allowed him to exercise his creativity on the business side. When an indie movie was presented to him about country star Hank Williams — that nobody else would finance for fear it wouldn’t do business outside the U.S. — he says he wrote a check because he believed in it and he could.
When he met with Arnon Milchan at New Regency after seeing Birdman shortly after it was finished but before it was released, he was so “blown away” that he said he “just about begged on my hands and knees to invest in it.” His company ended up a minority investor, although the deal was made so late in the process it receives no screen credit.
“You have to be in the movie business for the right reasons,” said Ratner. “I had a dream to be a director not because I wanted to be famous or have a chance to meet beautiful women. You have to want to tell stories and when you finance it has to be for the right reason.”
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