STX's David Kosse on 'The Irishman' Debacle and the Industry's "Fear and Envy" of Netflix

Executive Suite - David Kosse - Photographed by Dan Kennedy-H 2018
Photographed by Dan Kennedy

The company's international guru talks the saga surrounding Martin Scorsese's upcoming film, how come navigating the Chinese market remains a challenge and why he's heading to Saudi Arabia right after Cannes.

STX International president David Kosse has one simple strategy when it comes to keeping up his endurance level at grueling markets like Cannes: “Just saying no to, ‘Hey, one more quick drink,’” he says. “Because you’re going to bump into somebody else, and they’re going to bump into somebody else. And then it’s deadly.”

Kosse, 55, needs to maintain his stamina given his busy schedule this year. He’ll be selling the red-hot Mark Wahlberg-Peter Berg reunion Mile 22 as well as keeping on the lookout for acquisitions like the Alicia Vikander starrer The Marsh King’s Daughter, which STX International picked up in February in Berlin.

The married father of three previously launched and built the distribution giant Universal Pictures International, which he headed for nearly a decade (think overseas box-office hits like Mamma Mia! and the Bourne franchise).

When he joined STX in June 2016 after a brief stint at Film4, it meant a reunion with STX chair Adam Fogelson, with whom he has worked for 20 years. Kosse oversees a staff of 34 from his London-based office, where he spoke to THR about the saga surrounding Martin Scorsese’s The Irishman and why navigating the Chinese market remains a challenge.

Two years ago in Cannes, you won international rights to Scorsese’s The Irishman. Then Netflix bought worldwide rights. Then you came back in with China rights. What happened here?

We had fully negotiated the long-form deal, both sides were acting on it, and we were just awaiting signatures from the producer [Gaston Pavlovich]. Suddenly, the signature was getting delayed, and we were getting excuses and then were told it was because they couldn’t get the budget sorted out. We were hearing that the budget needed to be at least $40 million higher than what we agreed. The backstory to this was the producer had a window from Paramount to go out and get the movie made, with [Paramount] keeping domestic at the higher budget. Given this information, our deal didn’t work for the producer. Then WME managed to find Netflix willing to fund the bigger budget. So the producer wanted us to walk away. And we said, “We have a deal, you have to deliver this movie.” Once Netflix was saying they wanted to do it at the higher budget level, the filmmakers wanted to go that route. And there didn’t appear to be a way for Marty to make the film he wanted to make for the previously agreed budget. It was a very difficult spot for everyone involved. We tried to offer to finance the movie at a higher budget and put equity together, but ultimately that couldn’t be worked out. In the end, we ended up holding on to China because of our strength in that region and because Netflix doesn’t have a service there. We acted honorably from start to finish.

Is there bad blood in the industry because of Netflix?

I think there is more fear than bad blood; probably a mix of fear and envy. They’re disrupting the industry. I think anybody who is spending money creating content is a good thing. Competition is a good thing. But it’s certainly making it very, very challenging. From an independent distribution and finance standpoint, it’s another very difficult market change that comes on the heels of other challenging market changes like the decline of DVD.

Is China becoming increasingly important to a company like STX?

Yes. One STX movie where China was really important was [the Jackie Chan starrer] The Foreigner. I think it’s the first really commercially successful Chinese-English co-production in quite a while where it worked in China and it worked in America and it did business around the world.

Why is that so hard to pull off?

You have to have something that passes the [government regulator] SARFT. The rules of what becomes a co-production in China are more opaque than they might be in a lot of other markets, so it’s not a box-ticking exercise. It’s going into a gray world, and you’ve got to invest a lot of money before you get the answer to that. That’s just to even get the co-production status.

Are you in talks to release any films in Saudi Arabia?

I’m scheduled to do my first trip to Saudi Arabia just after Cannes. I’m headed there to see what’s up myself. The Middle East, particularly the Emirates, has become a significant market for the independent film business the past five years. These are significant minimum guarantees we get out of that region, so it’s a place I want to go, just as I started going to China maybe 10 years ago.

A version of this story appears in The Hollywood Reporter's May 8 daily issue from the Cannes Film Festival. Click here to download.