MAJOR PLAYERS SAY THEY ARE STARTING TO SEE A BOTTOM TO THEIR RECESSION-WEARY MARKET THAT FORTELLS BETTER TIMES AHEAD.
By Bob Tourtellotte Bob Tourtellotte 30 mins ago CANNES, France (Reuters) â€“ Major players of the independent film industry gathered here for the giant Cannes film festival say they are starting to see a bottom to their recession-weary market that foretells better times ahead.
The Cannes film market is a massive event for buying and selling rights to show movies in theaters, on TV and in other media around the world. Each year, executives gather here to haggle over film prices that, due to the recession and other factors, have fallen 15 percent to 20 percent from last year.
But company chiefs are now seeing a glut of indie movies slowly ending, funding for media companies freeing up and business plans being scaled back to the point where bigger profits -- or at least fewer losses -- loom ahead for makers and distributors of quality movies with big-name stars.
"What you see is there is starting to be more capital coming into the market," said Mark Gill, chief executive of Los Angeles-based independent movie maker The Film Department. While movie fans follow Penelope Cruz or Brad Pitt walking up Cannes' glamorous red carpet for premieres, industry chiefs follow business deals made at Cannes' movie market.
In the commercial arena, low-budget "B" and "C" movies like "Hitler goes Kaput!" compete for buyers against "A" titles such as the upcoming musical "Nine," made by Harvey Weinstein's The Weinsten Co., starring Cruz and Oscar winner Marion Cotillard.
Well-funded producers with "A" titles are finding ready buyers, the experts said, but companies with "B" titles and poor business plans that thrived in good times because easy money flowed in from Wall Street may soon be out of business.
"Where you have those ("A" movies), business is as buoyant as ever. Deals are a little tougher to get made, and there is pressure on pricing. But the truth is the right movie still fetches the same and, in some cases, actually more," said Joe Drake, president of the motion picture group for independent film company Lionsgate.
Buyers and sellers agree that how much the recession and global financial meltdown have impacted the film market depends on what countries and companies one is talking about. For instance, last year at the Cannes' market, Russians were particularly active in acquiring film rights as their overall economy boomed, but troubled times in Russia have dimmed the prospects for the companies doing business there. Conversely, in Germany conservative posturing in good times has led to more stability this year among movie and TV companies so German players are as active as ever, said Steve Bickel, who heads international sales for The Film Department. Christopher Chia, chief executive of the Media Development Authority of Singapore, said his government has a new five-year plan calling for just over $150 million in media investment, up 40 percent from a previous plan. Still, all is not sunshine on the French Riviera.
In recent years, easy money fueled an oversupply of films looking for distributors and meant buyers could easily pay for movies and soak up excess supply. Those days are gone.
The global recession has curtailed TV advertising, meaning broadcasters can no longer pay ever-higher prices to license movies for screening in their home territories. Lower DVD revenues -- in the U.S. alone, home entertainment sales were off 5 percent in 2009's first quarter -- has meant companies can no longer rely on home video to boost profits. Yet, producers said they have responded by cutting costs, and business plans have readjusted to the recession.
Jonathan Wolf, executive vice president of the trade group Independent Film and Television Alliance, said the movie glut should ease in about six months as current titles work their way through the system and fewer new movies get made.
Finally, new businesses like TV video-on-demand, Web downloads and video on mobile phones are slowly beginning to take hold with consumers and generate real revenue.
(Editing by Will Dunham)