FILM—Buy My Movie, Please

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End of Video Boom Casting Shadows Over Indie Market

Drive around Los Angeles and the advertising is omnipresent: Posters and fliers are everywhere touting this year’s American Film Market, the annual bazaar in which buyers and sellers of independent motion pictures flock to Loews Santa Monica Beach Hotel to haggle their wares.

Each year, the organizers of the AFM (being held Feb. 21-28 this year) tout the event as being bigger and better than ever before. And yet the reality is, except for a few huge companies that are flourishing, most of the companies that attend the AFM are struggling just to survive.

“The smaller companies have been having a hard time,” said Jerome Bliah, president of International Film Distribution Co. “The buyers are being much more selective than they used to be, and it is harder and harder for the little companies.”

You wouldn’t know this from the numbers. According to the AFM, its members’ combined revenues jumped to $2.79 billion for 1999 up 22 percent from the year before. But that was largely fueled by a few big-time companies with major releases like “American Pie” and the upcoming “Lord of the Rings” trilogy. The small companies that the AFM was created for are still suffering.

The AFM was launched in 1981 as a venue for worldwide traders of indie movies a place where they could get together in one space and do business. It is one of three major annual film markets, the others being Cannes (which doubles as a film festival) and MIFED in Milan, Italy.

These markets rose on the wave of the great video boom that swelled like an economic tsunami throughout the 1980s and early 1990s. In those years, the com-panies that buy and sell independent movies could do no wrong.

Paul Hertzberg, president of CineTel Films Inc., a highly regarded independent production and distribution entity, recalls the surprise he had when he first went to Cannes in 1983 with an ultra-low-budget acquisition named “The Courier of Death.” At that market, he found his film selling like hotcakes.

“It was just incredible we were walking around the halls and borrowing a VCR to show the trailer,” said Hertzberg. “There were no production values, it was shot out-of-focus. But anyone who saw it wanted to buy it.”

Those were the days when it was possible to sell almost anything, when newly sprouting video chains and television stations around the world were hungry for product.

Not any more.

“The market has changed a lot,” said Andreas Klein, CEO of German distributor Splendid Medien AG. “The smaller films on video don’t work well, and television doesn’t have so many slots any more.”

Increasingly, the video business is in the hands of giant firms like Blockbuster Inc., which would rather buy 20 copies of a studio picture like “Jurassic Park” than a smattering of the typical indie product that is bought and sold at AFM.

Similarly, foreign distributors have found that there is too little business for movies that are not top-lined by major names.

The slowdown of video, the increased expense of marketing independent films, the swelling costs of production, and the difficulty of accessing theaters to show these movies all have delivered a blow to the solar plexus of the independent film industry and most of the 300 little companies that rent hotel suites at the AFM.

As if those problems weren’t enough, many sales companies that grew rich from hawking low-budget movies to Asia and Eastern Europe suffered greatly when those economies went into a tailspin in the mid-1990s. Although several of those areas have made a comeback, they are still not buying to the extent they were.

Even though most of those who attend the AFM won’t admit it, their business is hurting, several industry veterans agreed.

While pointing out how business has grown, Jonathan Wolf, executive vice president of the American Film Market Association, conceded that “a small percentage of companies are doing a large percentage of the business.”

As a means of striking back at the shifting realities of the independent film business, many AFM veterans have modified their business plans.

NuImage, a company led by one of the kings of the indie business, Avi Lerner, has diversified its product, creating a sister company to make more highbrow fare than NuImage’s “Shark Attack” and similar titles. Lerner’s Millennium Films instead concentrates on art-house movies like “Shadrac,” based on a short story by William Styron.

At the same time, Lerner and others have increasingly been looking for ways to minimize their costs. Many of Lerner’s pictures are now shot in Canada or South Africa, where they can be made for considerably less than in the United States.

Other companies, like Klein’s Splendid Medien, have decided that bigger-budget fare is the way to go. “We have found the market is now for theatrical films that means films with stars and bigger budgets,” he said.

The really big independent companies, like Gary Barber and Roger Burlage’s Spyglass Entertainment (“The Sixth Sense”), are independent in name only: They co-finance studio films, and have long-term deals with individual distributors around the world. With no new deals to make, they have no real reason to attend the AFM.

With all these problems, can the companies that flock to the AFM survive? Unless there is a radical new source of revenue, the answer, many believe, is no.

But there are flashes of hope on the horizon. Some insiders remain convinced that the Internet will offer a financial olive branch for the future although it hasn’t arrived anywhere near as quickly as they anticipated. Others find potential in the new market that DVD offers.

Still, not even the most optimistic players predict that there will be anything like the video boom of the 1980s again for a long time.

“DVD is growing, but that is a market mainly for companies with large libraries (that is, collections of films which they own),” said IFDC’s Bliah. “I don’t think there will ever be another boom like video. The big companies and maybe the ones that make art-house films and high-quality television will flourish. The rest will slowly disappear.”

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