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Screen Forever 2013: Co-Financing with the USA

by Andrew Einspruch

Filmmaker Andrew Einspruch attended Screen Forever 2013, the conference of Screen Producers Australia, this past year and wrote a series of articles for the event, which he’s kindly allowing us to reprint here. These articles originally appeared in Screen Hub, the daily online newspaper for Australian film and television professionals.

A session at Screen Forever looked at some of the ins and outs of financing a feature film with some amount of money from the USA. Andrew Einspruch reports that success factors range from making sure the Aussie elements of the project work to developing credibility as a producer.

One of the key differences between making a film with a USA-based company versus, say, a Canadian, British or French firm, is there is no official co-production treaty. In fact, co-pro treaties are in place specifically to counter the might of Hollywood.

Even so, plenty of Australian productions have a USA component, and the lack of official co-pros simply means the deals have to stack up on some other basis. These elements were explored in a session called “Working with the USA: the Eagle and the Kangaroo”, moderated by lawyer Craig Emanuel of Loeb & Loeb, and which brought together producer Tony Ginane of FG film Productions, sales agent Clay Epstein of Arclight Films, distributor and EP Greg Coote of Larrikin and China Lion, and Tracey Vieira, representing Ausfilm.

The bad news is that the USA remains difficult terrain. It is still very hard to pre-sell North American rights, and the trend with studios (as reported previously) is they are making fewer, more expensive, mostly tentpole films. This, in turn, puts pressure on North American distribution, and forces projects to get financed without it.

The good news is that Australia is at least on the American radar (unlike many other countries). Australia has a reputation for quality actors, writers and crew, and this provides opportunities for producers who could easily work in the US to shoot in Australia, accessing the benefits available to Australian films (like the Producer Offset).

The trick is to put together a package that has significant Australian content (that is, it meets the SAC test), but which still is appealing to US partners. Clay Epstein spent some time talking about film packages, and how if you have the right elements – known cast, solid script, reasonable finance plan, well-known director – you can find the interest you need.

The problem is when elements are missing. “Most projects are not pre-sellable,” said Epstein. “You have to put yourself in the perspective of the buyer.” The analogy he gave was a real estate agent showing a potential buyer an empty piece of land and some architectural drawings. The agent can wax lyrical about the shopping centre, schools, parks, library and houses that will all be built. But if the architect has never designed a suburb before, and the builder has only has a couple of small houses under her belt, it may well end up the best subdivision every created, but your potential buyer will probably think, “I’ll wait until the house is built before I commit any money.”

And so it is with films.

So what do you do if you don’t have a pre-sellable package? You adjust. Maybe you need more equity, or the gap will be larger, or you try to find more soft money, or you lower the budget to compensate. 

Tracey Vieira talked about how the Producer Offset has changed the nature of Ausfilm’s business. It used to be that the LA-based organisation was mainly about getting off-shore production to locate in Australia. In essence, they were marketing locations. But the Producer Offset means that roughly 40% of a film’s budget is on the table from the start. This gets people’s attention. So now Ausfilm is more about facilitating good collaborative matches between Australians and the rest of the world than flogging places.

The implication is that if the involvement of Australian elements is baked into a film project from the beginning, with maybe an Aussie writer and an Aussie producer involved from the start, then big films, like Wolverine or The Great Gatsby can be made here. Ultimately, these are bottom line decisions, but if the Producer Offset can be made to work for a project, locating it in Australia can be made financially attractive.

And again, the film’s attached elements come into play. Tony Ginnane said he always allows a budget line item for casting agent, because they can be the key to getting an ex-pat Australian to look at your script and on board. A good casting agent knows who has a break in their schedule, or who needs to pay a tax bill, or who needs a bit of cash for a divorce. The information they have can help you make your casting wish list reasonable, and not just a dream list. 

There is more flexibility today than there was when pay-or-play deals were de rigueur. Even if a film is not fully financed, if it looks like it is a project being created by people with some credibility, and there’s a reasonable chance the film will get made, then agents and actors will look at it. But you need the connections to make that happen.

Greg Coote echoed the importance of being connected. “You’ll be bouncing off the walls over there unless you know exactly what you’re doing in terms of who you want to get to,” he said. “I don’t think there is anybody you can’t get to. Be persistent. Be focussed. If you have good material, you’ll get through the doors. But you’ve got to be connected. The Americans don’t care if you’re Australian or Afghani. They don’t care where you come from. They are not concerned about anything other than the commercial aspects of the movie.”

Ginnane spoke about the balance of international sales potential and a film’s budget. He cited Red Dog and Tomorrow When the War Began as two films that had virtually no export value in the market, and were “arguably overpriced” when made for the budgets they had. 

Coote took up the point, but added that whether a film makes a profit or not isn’t the only reason to make it. He said that unless producers only want to make a one-off, then they need to try to make a film every year to have a sustainable, on-going business. The way to do that is to get content up on the screen. “To some extent, if you make a film today and cover 100% of the financing out of pre-sales and rebates and some small gap that you then cover, and what you pull out of that project is producing fees, and you’ve made enough money to go off and develop and do the next one, there’s actually nothing wrong with that,” he said. “The more that you can do, the more you can demonstrate that you’ve got some credibility, the more doors that are going to open to you. ”

His example was See Saw Films, which he represents in the US. Coote said people would think that the Oscar for The King’s Speech would have opened a lot of doors for See Saw’s Emile Sherman and Iain Canning. And while it opened some, it was the success of subsequent films, like Shame and Tracks, that really made the difference. “Now all of a sudden, the studios and the producers in America are looking at them and thinking, ’You know what, these are real producers. They are real producers who know how to make a quality film. If we’ve got good material, we should be getting it in front of them.”

Coote’s point was that See Saw may not have made a huge amount of money on The King’s Speech, or even the next films after that. But it is about creating a body of work and building up credibility, which will help you get to the next level.

It is a strategy that makes sense, not just for producers who want to work with America, but who want to work anywhere over the long run.

Andrew Einspruch is a producer with Wild Pure Heart Productions. His latest projects are the feature film The Farmer, and the web seriesWisdom from the Paddock. You can follow him on Twitter at @einspruch and Facebook at Andrew Einspruch.

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