It’s a long day when you are at Cannes. You work the festival hours, and then you come back to the hotel and work your insurance hours. But the meetings over dinner or drinks or dessert grant a solid 360-degree view of the business.
Today, bankers are the foundation of the independent production world. If they do not lend, producers do not make. For the last four years though, there has been reluctance on the part of banks to lend, as producers have been having a harder and harder time being paid on their pre-sales contracts, and the value of the contracts themselves has been falling. The last two years at Cannes, producers were very stressed about getting deals made.
This year however, that stress was replaced with a lot more sales activity. Pre-sale activity is getting stronger again. As opposed to allowing a large number of individual sales agents to vet deals, and relying on their expertise, banks are now vetting the individual sales agents better than they ever have before. The result is a much smaller field of sales agents that the banks are willing to work with, but the ones who remain have strong relationships and the wherewithal to make sure pre-sales contracts are placed in territories where the money promised will actually be paid. These specific sales agents have the trust of the bank, and so when they secure a pre-sale contract for a producer, the banks are much more confident in the integrity of that contract, and will be willing to use it as collateral.
The other outside factor at Cannes this year is the continued emergence of China as a major player in the motion picture industry. While it has been clear for some time that Chinese capital and audiences would have significant impact on studio tent pole films, it has been less clear as to whether or not China is legitimately the next frontier for the independent business. It is now clear that it is. The Chinese investors are prepared to back independent film, and the investing rules that Chinese capital follow actually encourage larger budgets in the independents in which they invest.
The results are apparent by observing various companies’ year over year budgets and slates. One specific production company brought four films last year to the market, and none of them had a budget over 10 million. This year they brought seven, and 6 of them had budgets over 25 million dollars.
Independent film production continually renews its financing strategy as key markets and players emerge or disappear. For 2016, and looking to 2017, strong relationships between banks and a few expert sales agents, a better understanding of the various investment funds out there and the strong surge of Chinese investors are enough to see a an uptick in deals being made, and films being financed.
About Greg Jones
Greg has been in the insurance industry since 1977, beginning his career as an underwriter and later becoming a licensed broker. His main focus is production insurance, dealing almost exclusively with independent Film & TV production companies. Over the course of his career, Greg has placed insurance for over 1,000 films, TV shows and commercials. He has given lectures at the University of Southern California, University of California, Los Angeles and the American Film Institute; and has been featured in such publications as Black Enterprise and Insurance Journal.
Momentous Insurance Brokerage is a top 100 firm in the United States and is dedicated to providing the highest caliber of insurance and risk management consultation. We write all lines of insurance products including personal, commercial, professional, employee benefits, specialized entertainment risk, and more. For more information, please visit www.momentousins.com.