Is the Global Production Sector Ready to Get Back to Work?

Pinewood Toronto Studios - Publicity - H 2020
Courtesy PT Studios Inc.

Business is slowly beginning to return in territories where COVID-19 infection rates have dropped, but the international production map remains murky, with independent producers looking especially vulnerable if the pandemic returns to full force in the fall.

A game of ‘international chess’ is how Maxime Cottray describes the current state of the global production business. “Right now, everyone’s moving their pieces around the board, trying to find a place to shoot — Australia, Iceland, wherever,” says Cottray, a production executive with genre film specialists XYZ Films. “And you have to be ready, if COVID strikes, to be able to move fast to find somewhere else.”

The coronavirus pandemic shut down film production worldwide, with safety regulations forcing sets to shutter from London to Vancouver to Christ Church. As infection rates drop in certain territories, business is slowly beginning to return. But the international production map remains murky, with producers looking for stability before jumping back into the fray.

Still, locations in Australia and New Zealand have opened up. XYZ Films is prepping to begin shooting Down Under on its Elizabeth Moss-starrer Run Rabbit Run later this summer, and James Cameron has resumed filming at Kiwi locations for his Avatar sequels. Other regions with low or no COVID-19 infection, such as Scandinavia and countries in Eastern Europe, are moving back online. Major production hubs, including Canada and the U.K. are also re-opening. Universal Pictures has announced it plans to re-start the U.K. shoot for Jurassic World: Dominion by the first week of July.

For independently financed films, obtaining insurance has become a huge obstacle. In fact, insurers have begun to carve out specific language related to COVID-19 with all future policies. Even more problematic, the banks have started to balk at backing indie films whose policies include COVID-19 exceptions, knowing the potential exposure if even just one crewmember tests positive. It’s the catch-22 that has the film community bracing for tough times ahead, even in territories where production is deemed safe. Add to that the fact that the insurance industry is facing its own existential crisis as massive payouts loom for films that halted mid-production, some costing as much as $350,000 per day.
 
“It's a fucking mess right now with the insurance companies and the bond companies. They are reeling from how much liability they're going to have,” says a lawyer who works in the film financing space. “For indies, a bank's not going to loan you money if there's a COVID exception, especially if you know there's going to be a second wave of this. We're all going to go back to normal, and in September, it's going to be, ‘Oh shit, now it's back again.’”

Even so, production companies are chomping at the bit to emerge from months of lockdown and get back on set.

“We have put the time that we couldn't shoot into development,” says Martin Moskowicz, executive chairman at German mini-major Constantin Film. “So we have several projects, big and small, German and international, ready to go.”

To help companies realize those goals, law firm Fox Rothschild has launched a pro bono initiative to support financially impacted producers and production companies. The program offers a multi-disciplinary approach that joins the firm’s entertainment practice with its labor and employment practice and health care group. Lawyers at Fox Rothschild, which held a town hall webinar on June 15, will provide pro bono legal guidance to producing teams that engage the firm to navigate guidelines and surrounding issues.

“The small-to-medium budget independent film projects have the toughest uphill hike, and can succeed only if they have independent financiers willing to assume the additional budget and risks associated with the current Covid landscape,” said Marc H. Simon, chair of the entertainment and sports law department at the firm. “Despite the challenges, I have faith because producers [in that range] are that special breed that produce.”

Other factors are hampering U.S. productions, including travel restrictions that differ from country to country. Paul Bronfman, chairman of Pinewood Toronto Studios, says border controls and quarantine orders in Canada will slow Hollywood’s return to its key locale to the north with regards to restarting shuttered productions or starting new ones. That will give an early leg up to local Canadian film and TV shoots that get early access to local studios and crews. 

But he sees the Canadian production and studio sectors being well-placed to survive and thrive in a post-pandemic entertainment world once Hollywood returns to Canada in force in search of generous tax credits and currency savings. 

"There's a feeling that when the recovery happens, our production community is in the best position of anybody in the world to handle television and film. They're (studios and streamers) not running off to Europe, they not running off to Australia. They don't have to anymore," Bronfman says.

The number of new projects on offer at the Virtual Cannes Market is a testament to the pent-up demand. But as the indie industry ramps up again, there are several known unknowns to producing post-COVID-19.

“There are additional costs to producing under the necessary hygienic measures, ranging from changes to the catering to having a hygiene advisor on set, but they vary from production to production,” says Moskowicz. “We are currently gathering experience and will then have a better idea of what the impact will be on shooting schedules and budgets.”

Estimates of the additional cost for corona safety measures range from 7-25 percent: A sizable budget bump for indie productions. 

If, that is, you can get your movie financed. Equity players have pulled out of the indie film industry en-masse post-COVID, concerned about the increased risk of shooting a film before there is a vaccine, or effective treatment, for the virus. A major issue is the difficulty in bonding a film, securing insurance against losses in the case of another shutdown. It's something that is a very real possibility even in countries that have successfully managed the first wave of the pandemic.

Mikey Schwartz-Wright, an agent with UTA Independent Film Group, believes as established equity pulls back, new money people will step up and opportunistically back the most promising projects at this year's market.

“Because there is rightful uncertainty around production, with insurance, restrictions, etc. driving up costs, there are new challenges with traditional financing,” he says. “The bolder financiers will win the best product.”

While some U.S. states have reopened for business — including Los Angeles, the Virtual Cannes Market project Songbird, which Michael Bay is producing, hopes to be the first project to shoot in L.A. post-pandemic. But without proper insurance against coronavirus risks — and it could take new legislation to force that through, at least in the U.S.— indie production will likely remain a piecemeal affair.

In Europe there have been calls for national governments to step in to support the industry, with some success. Last week Austria introduced a government-backed fund to cover producers against COVID-19 related losses. Spain, which was enjoying a production boom before coronavirus, has sweetened its tax incentives to bring film shoots back. New measures, introduced May 6, have lifted the cap for qualifying spend to €10 million ($11 million) for a single feature film, up from €3 million, and boosted the total tax rebate to 30 percent on the first million Euros spent (from 25 percent) with a 25 percent (up from 20 percent) rebate after that.

Such measures will help and nimble indie players that can move quickly could be well-placed to capitalize on the new normal.

“We have some projects where we'll only need a week or two of prep, if we have a 10-12 week window when we can be in and out and be done before the fall, when many are worried about a second wave,” says David Garrett of Mister Smith Entertainment, whose Virtual Cannes Market line-up includes the Alison Janney drama To Leslie. “For the big studios, or for some of these big Netflix productions, they will need 2-3 months of prep before they can get going. So the smaller indies might have be at an advantage, if this state of uncertainty is to continue for some time.”

Etan Vlessing contributed to this report.