Global Opportunities

The LA Marathon was run this past weekend, and for the first time it finished down by the beach here in Santa Monica. It’s always inspiring to see so many people achieving their goal, this year more than 25,000 ran 26.2 miles and there was a great atmosphere at the finish line. It’s always especially great to see so many people from all over the world congregating in one great big event together. There’s been quite a bit of filming in our neighbourhood lately, with a few movies and TV shows using the beach as their backdrop, and we wondered how many sources of international money it’s taking to finance these various projects on the ground right now.

We’ve been going on for ages about international partnerships and movie production & funding solutions around the world. We’re currently discussing funding partnerships in China – a long-term discussion, that one - Japan, Singapore and Australia, as well as feeling out options in the Middle East. We have committed funding partners in Europe and there’s certainly a great deal of interest awakening in various markets about the opportunities available to investors into the film business. Many “Hollywood” movies have been financed over the years by funding structures around the world and while it’s commonplace these days to see producers take advantage of tax breaks and incentives on offer in the various US states, Canada and some other countries, there’s always some new stone being turned.

Last week it was reported following the Berlin festival that US producers had suddenly woken up to the potential of financing their movies from Europe. Producers are seeking not only co-financing money but also the opportunity to qualify for European content quotas – meaning that if a certain portion of their filming is done on location, they may qualify as “local” content and have more favourable distribution opportunities than typical Hollywood movies. As well as seeking additional opportunities in Europe, producers are also finding it tougher to close finance domestically in the US but conveniently it seems that European distributors are buying more English-language titles at present.

A nice combination of circumstances if you’re looking to finance your international movie, but it’s somehow surprising to us that the concept of international financing seems so novel. There are definitely great opportunities all over the world – we were recently invited to work with the producers of a new Hollywood movie being shot on location in Singapore and financed out of the US, the Middle East and Asia – but in our opinion your producer needs to be looking at all possible sources of finance to get that movie made, wherever the money’s available. We always think that the best place to find what you need is out in the world.

The Out Of Obscurity team.

All Over The World

Here at Movie Beach we’ve always felt that, whatever the question, “it’s out in the world” was a pretty good answer. There’s no substitute for travelling, living and working in different countries, making friends and interacting with people all over the world. Some people have an urge to travel and do new things and some don’t, but we think it’s just a simple necessity.

Our business has humble origins but throw in a couple of lifetimes of travelling the world, a company base in Singapore and significant time spent working out of mobile HQ’s in Asia, the Bahamas, Los Angeles and Europe and we like to think the world is our oyster. We’re not suggesting that we’ve got all the answers or a finger on every pulse, but in our daily business we do like to think “how would people in, say, Korea, see that” and “where is the best place in the world for us to be doing this job”. There’s never a simple answer and these days when you can do many jobs from almost anywhere you need to evaluate whether you actually need a physical community around you to achieve your goals. Of course it’s much more pleasant working with friends and colleagues around but you can build new teams around your efforts and sometimes you can make the most impact by being right out on the edge seeing things for yourself.

We’re currently looking at a couple of new fund projects in China and South-East Asia, as well as a potential new regional Asia fund and a couple of movie deals in Thailand and Japan. Our China discussions are proceeding well with our keystone investor still on board to kick things off. We may get to Beijing to shake hands on that one, which would be a blast. Another regional Asia fund deal has come back to life when we thought it at best dormant, and that may give us the chance to combine both the Singapore and Hollywood ends of our business. It seems as if Asia’s always calling us.

Today it was reported that global box-office revenues increased 7.6% to $29.9Bn in 2009, another record year in the international movie sector. Europe still dominates international revenue but the biggest increase, of 12.3%, was in the Asia Pacific region where new technologies and screens are busily rolling out. The movie sector still presents the great investment opportunity we keep going on about.

The Out Of Obscurity team.

Oscar Watching

Quite a few of the celebrities appearing at the Oscars this year were staying down by the beach before the show, and we watched a few heading off in limos from their hotel during the afternoon. So it was nice to watch the Oscars show and recognise a few of our “neighbours” on the red carpet looking just as they had appeared a few hours earlier.

The biggest winner of the night featured one of the biggest Oscar schmucks, The Hurt Locker’s producer Nicholas Chartier, who had managed to get himself banned from the event after lobbying members of the Academy by email to vote for his movie above others, in particular Avatar. Ironically, although he wasn’t able to be there his wish came true with Avatar receiving only three technical awards. He may have been over-zealous in pitching his movie, but we were thrilled to hear Kathryn Bigelow underscore how crucial he was to the process. Chartier had believed in the movie enough to bet big on it by assembling the finance from mainly overseas sources when domestic money couldn’t be found. It was nice to hear a film financier mentioned so glowingly in dispatches.

It was also thrilling to hear Bigelow herself repeat her mantra to “never give up on your dream” after the show. Of course such personal advice can sound trite in sound-bite form but how many people actually do follow their dream day after day, year after year, with dogged determination and sometimes with blind faith until they achieve their goals? Not too many that we know, and it’s all too easy for many folks to find excuses to give up or turn to something else when the going gets tough. We believe firmly that if you put in the hard yards then you will achieve rewards, but it’s probably fair to say you have to put in a whole lot more yards than you could ever have anticipated before you begin to see the finish line. Be prepared, do as much as you can, and then get ready to do a little more. Nothing real comes easily.

The Out Of Obscurity team

What We Do

Apologies for being a little tardy on our posts of late, we’ve been distracted by a few projects and time has flown by. It’s been a busy time for us, and it seems that things are picking up in general in the movie business.

We met up with a few friends at the beach yesterday, along with a big crowd of dogs. We were all talking about what we do and of course a lot of folks around here are in the movie business. The feedback at the production level is that there’s a little more going on right now. A couple of friends are working more regularly and our mad hairdresser buddy has been working almost exclusively on movie shoots for the last year or so. He’s doing great contracting to be on set for a couple of weeks at a time and even travels internationally as crew. There’s quite a lot brewing at the Movie Beach right now so we thought we’d jot down a few snippets of the sort of stuff we work on every day:

We’re currently advising a maverick genius who has defined a completely new method of creating movies in order to ensure they gross $1 billion or more. Sounds fanciful, for sure, but there’s a lot of precise methodology behind it, including several years of analysis and non-conventional modeling. We’re encouraging gently as he aims to secure financing for a prototype movie, then slate, then movie company, to become a beacon for this new approach to the science of making movies.

We’re moving ahead with our China fund plans, cautiously optimistic and taking things step by step. We’re now discussing a proposed business plan, and the next step may be to meet the partners and their official backers in China in the near future. We had been expecting things to progress reasonably slowly, but they’re actually moving fairly rapidly for now. This is an exciting prospect.

We’re working on a couple of new film funding structures which will enable us to offer a capital guarantee to institutional investors looking to profit from the movie sector but uncomfortable with the risk profile. The holy grail in film finance is to offer investors a way to benefit from this great investment sector while still protecting their capital. No risk and great profit potential? – that’s the plan.

One interesting deal we’re working on is to secure 70% of a budget for a friend who’s got 30% pledged to his movie. It’s a formula that can work well, but usually in practice we find that most producers who say, or believe, that they’ve got their 30% funding in place, actually don’t. This is usually because they quantify their project funding extremely optimistically – it’s the producer’s job – and they tell us they’ve got 5% here, 10% there, or even 30% in place, when most of the time it’s in some form of soft money. This can run the gamut from simple pledges of talent or crew working on deferred payment, to P&A services pledged to the production at cost back-end, to tax credits from some state or country. In short, it’s not money. If our producer has 30% in real money, then they can get their movie made.

Most days of the week we’re patiently tracking down some investment commitment or other. Somehow there are always plenty of folks out there who really want to say “yes” to becoming a part of the movie business, but when it comes to writing a cheque they’re a little less committed. That’s the story with one particular participant of ours: we’re already contracted to make movies together, bring in investors, introduce partners and basically all live happily ever after. But getting this much-loved partner to pull the trigger and transfer the money has proved trying, to say the least. We’re still optimistic that he really means what he says but we can’t figure out what makes him continue to be so elusive. That’s usually not a good sign.

We had an approach the other week from an East Coast capital management group with a diverse range of media interests. They have a goal to invest into movies and are seeking to partner with a group which has access not only to Hollywood projects but also a solid financing structure to work within, so we’re evaluating where we might combine some of our efforts there. It could be a nice fit and enable us to look at a wider range of projects.

Stay tuned for more from Movie Beach.

The Out Of Obscurity team.