Film Fund-amentals: The Film Department and Other Wrecks

Sometimes experience just isn’t enough. That appears to be the immediate lesson provided by the announcement this week that The Film Department will call it quits by the end of May. In one sense, this doesn’t mean much. During its incredibly brief history (a mere three years), The Film Department barely produced three movies (only one of which even got wide release).

But The Film Department was the indie company with a strong pedigree. Co-founded by former Warner Independent Pictures and Miramax president Mark Gill and former Yari Film Group Chief Operating Officer Neil Sacker, The Film Department had experience on its side. It also had the ironic sense of Gill testing the Fates, since the company was founded barely a year before he delivered the keynote address at the 2008 Los Angeles Film Festival film financing conference, making his spiel a pretty brave show for an indie honcho with no new titles to show. In a speech entitled “Yes, the Sky Really is Falling,” Gill gave a succinct outline of almost everything that is currently wrong with the modern state of indie film production.

On paper, Gill and Sacker looked to be the best and the brightest. The most solid couple of guys you could get. Total troopers. So what went wrong? According to Gill, it was the credit crunch. No doubt he is half-right. In fact, he is easily three-fourths accurate. Despite rumors of an economic recovery in process, no one is all too clear just where exactly this recovery is taking place, and the effects are very few and extremely far between. Money is tight and the people with money are even tighter about handing it out and extremely quick at taking it back, which is the story Gill told The Wrap.

However, there are some other issues worth noting. For example, of the three movies produced by The Film Department, only one actually got widely distributed (Law Abiding Citizen). It was a hit. Sort of. Well, not exactly. Produced for an estimated $40 million, the film took in $82.4 million worldwide. By the old guard procedure for making estimates, this flick barely broke even. The other two films (The Rebound and A Little Bit of Heaven) have barely received a limited run in Britain (two to three weeks each) and so far have grossed a mere $3.13 million. I cannot locate a budget for these movies, but a reasonable guess would suggest each film was made for at least $20 million a pop (probably something more like $25 to $30 million for The Rebound).

With the exception of Law Abiding Citizen, the other movies were both star-driven romantic comedies. Of course, Law Abiding Citizen was basically a star-driven action movie. Stars like Kate Hudson and Catherine Zeta-Jones can be expensive and they do not offer any real return at the box office. Oh, by the way, romantic comedies (at least of the old school order) are pretty much dead these days. Likewise, the return made by both films during their limited run in Britain actually wasn’t that bad (the totals were okay, though the per screen averages were less than impressive). But the distributor (The Weinstein Company) did not seem inclined to a more aggressive approach in distribution.

So I’m starting to see why they were having a credit crunch. They were racking up debt in lieu of profit. With the outgo running higher than the income, they were living on borrowed funds until the lenders ran out.

I seem to recall that in his speech at the 2008 LAFF, Gill was very critical about indie movies depending on star-driven genre vehicles. Perhaps he forgot what he had said. The Film Department was moving in virtually the exact opposite direction of everything Gill stated back in 2008 (including his original commitment that the average production by The Film Department would cost between $6 and $20 million). Most likely, Gill thought he was playing safe by going with these movies, only to discover that he had no more of a clue as to the changes going on than anyone else in Hollywood. He now insists that he wants to pursue business ventures in the realm of digital distribution. We now know where The Rebound II will end up.

On a slightly lesser (but half-equal note) was the non-surprising discovery that Miramax’s new owner, Ron Tutor, is going to Cannes sans David Bergstein. Tutor is the construction tycoon who spearheaded the purchase last year of Miramax for reasons that never really made any sense (except for that line in Get Shorty about why live in LA if you’re not making films). Bergstein has been sort of a partner and sort of not a partner to Tutor (I’ll let Nikki Finke sort this one out — though there is a federal judge working on it, too) and is now a major albatross around Tutor’s neck.

Bergstein is another old pro in the Hollywood industry and actually has some pretty solid credits. He also has some investigators and a federal judge trying to make sense out of his crash-and-burn business practices. Since the now unsealed investigation report filed in Federal Bankruptcy Court presents a strong suggestion of financial collusion between Bergstein and Tutor (which might explain their sort-of partnership), Tutor may want to go further than France in his effort to place distance between himself and Bergstein. The investigation report is a long list of bad news.

Regardless of what may or may not happen in court, the Miramax rebound has seemingly been run over by a cement mixer. It also means that the Hollywood approach to indie filmmaking has just taken another series of major dives. Fortunately, the Hollywood approach is no longer the major business model for indie cinema.

Otherwise we would all be sitting in court filing briefs.