Phase 4 Chief on Theatrical Opportunities, Digital Challenges

Berry Meyerowitz also talks to THR about seeking out alternative markets for distribution.

Toronto-based Phase 4 films is making its first prebuys at this year's American Film Market, picking up North American rights to the martial arts thriller Breaking Point. The company's president and CEO Berry Meyerowitz spoke with Hollywood Reporter film editor Gregg Kilday about current opportunities for theatrical releases, the challenges of the digital download business and seeking out alternative markets for distribution.

The Hollywood Reporter: How have you found the mood at this year's AFM?

Berry Meyerowitz: It's more positive than I thought it was going to be. When I talk to my friends who are in the foreign sales business, they say the business has been fairly brisk so far. The quality of the content is actually somewhat better. There is just less of it. The guys who've been able to secure better content are actually selling it in the major territories and a bunch of the smaller territories.

THR: As a buyer, what's the selection of available films like -- is there a lot to choose from or are you really having to hunt?

Meyerowitz: We're always hunters. It's almost like looking for a needle in a haystack because there is so much content out there. It boggles my mind how all of this gets made, how are the funds raised. We're looking for bigger content. We're looking for higher profile content that we can potentially play theatrically and then play in all media, all channels. That's challenging these days, and it's one of the reasons we're starting to prebuy, which was not a strategy for us in the past. On the finished film side, we've made some offers on some movies. The challenge is that a lot of movies cost too much to make, don't have the right casts. If you put an expensive movie together with a B-level cast, it's really hard. It's about the expectations of the producers. Many sales agents and producers still feel their film warrants a 500-screen release, and I'm upfront and say that's not the way we would go. Even if you could raise the money and spend the money, I don't think you could ever recoup it. And then you'd be in the hole even more so before you ever got to the DVD and ancillary markets. So we're looking for the content, but I think it's a reality waiting game for some of the producers.

THR: What opportunities do you see in the theatrical market?

Meyerowitz: Last year, we had some success with Valentino: The Last Emperor. That movie did very well. It opened our eyes to the potential of commercial documentaries. We had another one before that about marijuana, and it also did quite well. This year, we just released the Hugh Hefner documentary. We thought there was this home for more commercial, almost biopic films. The Hefner was very disappointing, frankly. We put a bunch of money behind it, but it did not perform the way we would have liked. It's still playing regionally. We generated tremendous publicity. But audiences didn't want to go to it. It makes you more cautious. We have our next theatrical coming out in February. It's the Vidal Sassoon documentary. I'm bullish on it. Not only do I think it's a terrific movie, but it's got a very targeted audience. We're going to try to spend our time trying to reach people in the beauty industry, target hairstylists, designers. We're setting up some partnerships that we'll announce shortly that should drive awareness of the film.

THR: How about on the narrative film side?

Meyerowitz: We have another one we acquired, the audience winner at Southwest by Southwest this year, called Brotherhood. It's a really fast-paced thriller about a fraternity pledge gone bad. I actually think it's the most commercial movie we've ever had. We think the college market should be terrific for it. The problem with releasing all of these movies in New York is it's just so expensive. Just to do a couple of ads in the Times so you're complying with what the theaters want, you've spend 50 or 60 grand, and you haven't done anything. So we're looking at alternative strategies like going to smaller, secondary college markets and build from there.

THR: How wide can your releases go?

Meyerowitz: I don't have a ceiling on it. Typically, we're looking to launch films in the top 10 markets. We're also looking at all the other unique hybrid models that are out there -- potential release day-and-date on VOD with theatrical, how to get more partners involved earlier than with just the traditional windowing.

THR: In the ancillary area, how big is the market for digital and download right now?

Meyerowitz: I wish I could forecast more accurately, and that's a frustration for us. Once in a while we have a film that we think is perfect for digital downloading or VOD online or on cable, and it just doesn't perform. And then you have a genre movie that you didn't spend much for and it blows all the numbers out of the water. So it really depends case by case. But I would say it's got the potential on a film that really works to be about 25% of revenue, much more so on the rental side than the download-to-own or electronic sell-through side.

THR: So how many films are you currently looking at releasing theatrically?

Meyerowitz: We're looking at about six to 10 a year. A minimum of one per quarter, but we'd really like to be in the bi-monthly business.

THR: And at the same time do you continue to make deals that involve just home entertainment rights?

Meyerowitz: Absolutely. One of the unique things about our company is that we are a U.S. and Canadian distributor. There are few independents that have their own distribution operations in both the U.S. and Canada. Most of our competition is only in one territory and then has sub-distribution deals in the other. So at this market, we've made offers for DVD content only in the U.S. We've made offers for content only for release in Canada. And offers for both the U.S. and Canada. Ideally, we'd like to have U.S. and Canada for everything we have, but we're also very opportunistic.