CANNES 2008

by

Jeffrey Taylor

Compilation from various newswires around the world

Edited for clarity and content

May 31 -- After relatively flat markets at Toronto, AFM and Berlin, and the recent demise of New Line, indie filmmakers hoped that Cannes would spark a sluggish market.

Final results indicate that four titles now have US releases: Sony Pictures Classics has picked up Waltz With Bashir, IFC took both Grand Prix winner Gomorrah and Arnaud Desplechin's A Christmas Tale, and New Yorker bought Nuri Bilge Ceylan's Three Monkeys.

On the other hand, the early talk of a battle royal for the rights to Steven Soderbergh's Che fizzled out after the four-hour screening.

With the benefit of hindsight, it is easy to see that external conditions were going to make this a difficult market. There was simply too much overpriced product, fears of new wave digital technology (i.e. internet, cell phones, etc.), weakness of the dollar, potential change in federal and state tax laws affecting tax incentives and the potential for an actors’ strike by SAG this summer.

Focus Features International reported strong sales on Gus Van Sant's Milk, starring Sean Penn as the assassinated gay rights campaigner Harvey Milk, and the Coen brothers' upcoming dark comedy A Serious Man.

Summit was selling Terrence Malick's Tree Of Life and concluded a sale on Disaster Movie to the new five-territory Alliance network.

Inferno virtually sold out on The Women and Hachiko: A Dog's Story.

Lakeshore was close to selling out its Fame remake.

IM Global was launching sales on Bunraku.

Mandate International, QED International (selling Oliver Stone's George Bush biopic W), Icon Entertainment International, Hyde Park International and The Weinstein Company International were quietly concluding a raft of deals on their high-powered slates.

Paramount Vantage was expected to have done steady business on its slate, including Michael Moore's Fahrenheit 9/11 sequel.

The reordering of the international map has become an increasing theme at markets. At Cannes, the Latin American Film Co (Lafc) - a three-year-old joint venture between Eduardo Costantini of Costa Films and Harvey Weinstein of The Weinstein Company - announced it had established a new strategic partnership with The Otero Group in Brazil.

Julia Otero of The Otero Group will act as the senior partner of Lafc in Brazil and focus on the development of future projects to be shot in the country. Otero will also aim to secure tax incentive funds and evaluate potential investors to further expand the company.

The studios have been making those global connections for some time and Twentieth Century Fox's Fox International Productions (FIP) made its mark at Cannes, signing a production deal with Fuji TV in Japan to remake Alexander Payne's Oscar-winning Sideways.

India came to Cannes talking big numbers, which was a welcome relief in a generally cautious atmosphere. Reliance Big Entertainment, owned by India's massive Reliance ADA Group, signaled its intention to become one of the most aggressive players in the global film business.

The upstart studio unveiled its debut slate of 69 pictures in nine languages at Cannes, along with plans to invest $1bn in its film business by the end of 2009.

Reliance followed this by news of tie-ups with A-list Hollywood stars and US studios, including a home video output deal for India with Universal Pictures. It unveiled plans to provide development funds to the production vehicles of seven Hollywood stars, including Brad Pitt's Plan B Entertainment and Tom Hanks' Playtone Productions.

And, Lionsgate formed a wide-ranging joint venture with Eros International for distribution in India.

Cannes market in figures

5,613: films shown
2%: increase in attendance
101: countries represented
1,604: screenings
70: more screenings than 2007
36%: of films shown digitally
18%: of market participants from US
62%: increase in Russian presence

May 25 -- Business at Cannes' billion-dollar market was morose this year, dampened by too many films on offer and a grim global economic climate. Participation in the world's largest film market saw a slight increase with new countries Newcomers (Burkina Faso, Guatemala, Macedonia and Palestine) jetting in for the 10-day spree of buying and selling.

One factor depressing business was the massive number of films on offer which made it even more difficult for films to find buyers. More than 5,600 films either completed or still in production were up for grabs this year at Cannes: around 20 percent more than in 2007.

The drop in the US dollar should have helped accelerate sales of American films. But apparently that wasn't the case. Some not-yet-complete US movies did however attract interest, with a number of contracts signed during the festival.

European films found it hard to find buyers due to the strength of the euro, European TV channels not buying movies and the DVD market in decline.

On the other hand, Asian nations, including Korea, snapped up movies.

Due to the decline of the dollar, prices dropped slightly from last year.

Although the fast-growing Chinese and Indian film markets buoyed international sales, neither region was a major film importer for the moment. They are however poised to become important buyers in the future.

The number of multiplex cinemas is also developing at a slower rate in China than in India, but overall, the outlook for foreign films in China looks good.

Documentaries, which represented 10 percent of the market, were well received.

May 24 -- Buyers at the Cannes Film Festival have been so uninspired by most of the movies in the official selection, let alone the market, that many of them are returning home empty-handed this weekend.

The weak dollar, along with the rain on the French Riviera, may have dampened enthusiasm for films picked to compete for the Palme d'Or. A tepid Cannes market has been lean on deal-making among American studios and independent distributors.

Before their screening, Steven Soderbergh's Che Guevara films, The Argentine and Guerrilla, had been described as the most-anticipated pictures in competition, but they are among many movies that have failed to live up to expectations.

Although its director has an impressive track record that includes Sex, Lies and Videotape, which won the Palme d'Or in 1989, buyers have found themselves wary of taking on two Spanish-language films with a combined running time of four hours

For many, James Gray's Two Lovers, a romance set in New York, has also failed to live up to its pre-festival hype. Although the A-list actors Gwyneth Paltrow and Joaquin Phoenix, are among those being tipped for possible awards tomorrow night , the film has been dismissed by some buyers as too small and not particularly moving.

Steven Zeitchik, of The Hollywood Reporter, said: “Last year studios drove bidding on James Gray's We Own the Night up to $11.5 million, but this year buyers circled Gray's Two Lovers warily. Larger companies just seemed gun-shy about pulling the trigger.”

With the Palme d'Or and other prizes being awarded tomorrow, few can point to obvious prizewinning candidates this year, although many believe that one of the strongest contenders is Matteo Garrone's Gomorrah, an unsentimental and harrowing mafia movie that is being described as one of cinema's most realistic films on organised crime. The Times predicted that the film would be a commercial success as well as a critical one.

While Benicio del Toro's performance in the title role of Che has been tipped for the actor's prize, the best actress accolade could go to either Angelina Jolie, for her compelling performance as a distraught mother of a missing boy in Clint Eastwood's Changeling (billed as L'Échange in Cannes), or Catherine Deneuve, for Arnaud Desplechin's A Christmas Tale.

Robert De Niro's film, What Just Happened?, is screened tomorrow, as the closing film, but has already been condemned by Screen International.

May 22 -- As the festival winds down, no U.S. distributor has made a major acquisition. The tepid Cannes market continued what's been a dismal cycle for the finished-film market that began last year in Toronto.

Theatrical grosses have dropped, there's been a glut of product, and then came the closing of Warners' specialty divisions. The result, insiders say, is because specialty divisions can afford only so many costly in-house productions, there will be fewer overall indie releases during the coming year.

For the sellers, producers and filmmakers who rely on fests and had been enjoying the boom that preceded the current bust, it will mean adjusting both expectations and strategies at future fests.

Here at Cannes, signs of the soft market couldn't be ignored. Miramax made a big splash last year with its $3 million, North American purchase of "The Diving Bell and the Butterfly," but has made only one fest purchase since, the Cannes opener "Blindness," pre-buying U.S. rights at Toronto. Last year, studios drove bidding on James Gray's "We Own the Night" up to $11.5 million, but this year buyers circled Gray's "Two Lovers" warily.

Even the more commercially oriented Cannes market failed to seduce buyers, who took a wait-and-see attitude toward movies like Richard Linklater's "Me and Orson Welles" and Darren Aronofsky's "The Wrestler."

The companies that have opened their wallets since Toronto were the new, product-hungry mini-majors like Overture and companies that tend to get active in buyers' markets, like Sony Pictures Classics (which went on an unusual buying spree at Sundance when traditionally bigger gamblers like the Weinstein Co. failed to raise prices).

Here at Cannes, smaller outfits like Liberation, First Look and IFC picked up the slack. IFC took at least six Cannes titles, which will help fill its large VOD pipeline.

Larger companies just seemed gun-shy about pulling the trigger. "People are just shell-shocked from the absence of New Line, Picturehouse and Warner Independent, so they're very cautious," said Myriad Pictures' Kirk D'Amico.

But this caution was not just reactive. Companies also stayed out of the acquisitions game as a way of reducing their backlog of upcoming titles. Fox Searchlight has reduced acquisitions -- it bought only one film at the three fests combined -- as a way of limiting its exposure and risk. Paramount Vantage is continuing to up its production level and reduce its fest buys -- which means that it will have fewer movies, but will face higher risk/reward rations on each.

Distributors are also concerned that audiences are steering clear of downer films. "We took a gamble and bought the Atom Egoyan film before the festival, but while there are some good films, they're very specific art films, and we haven't found one or two we feel strong enough to buy at this point," SPC's Dylan Leine said.

Among sellers, the word is new strategies are needed to jump-start the market. Films will need be approaching completion before they are presented to buyers. "Buyers perceive that it's a buyers' market and they don't have to buy off footage; they can wait for the whole film," WMI's Cassian Elwes said.

Specialty divisions are also looking for higher-profile projects -- which could mean a tilt away from smaller passion projects. That's the tack CAA and Endeavor are taking with the Jim Carrey comedy "I Love You Philip Morris" and WMI is doing with the $30 million "Islands in the Stream," starring Tommy Lee Jones.

May 18 -- "Che," an epic drama about the Cuban revolutionary, and "Baby on Board," a low-budget sex comedy, have scarcely anything in common. Yet, both have come to the French Riviera with the same goal: finding distribution in an increasingly unreceptive market.

The Cannes Film Festival is filled with glamorous premieres and indulgent parties but also is a market for independently financed movies looking for a theatrical release. The scores of new works being sold here face times tougher than several Cannes veterans can recall.

Not that long ago, the sellers of movies made outside the studio system knew that not only were there nearly a dozen forceful buyers competing for movies, but also that those distributors often were willing to roll the dice on less conventional fare. That's all changed in a hurry.

Two weeks ago, Warner Bros unexpectedly closed its two specialized movie divisions -- Warner Independent Pictures ("March of the Penguins") and Picturehouse ("Pan's Labyrinth") -- and the future of art-house distributor ThinkFilm looks uncertain.

Several distributors say the Weinsteins has been trying to sell off many of the movies they either bought or produced, and sellers say that both Focus Features ("Atonement") and Lionsgate Films ("Crash") are less enthusiastic buyers of challenging films than before.

Equally worrisome is what the sellers say (and even a few distributors admit) is a growing lack of enthusiasm for movies that do not initially seem to be inherently marketable. But some of the very movies that turn out to be minor art-house hits -- including last year's Oscar-winning "Once" -- were at first passed over because they were deemed uncommercial.

There are several factors shrinking an already competitive market:

First, thanks to the infusion of private equity into the film business, there are far too many films competing for the same number of moviegoers: 411 non-studio movies were released last year, up from 229 in 2002.

Second, specialized film distributors face rocketing advertising costs to establish a toehold in the marketplace, with marketing fees soaring to an average of $25.7 million per film last year, up from $17.8 million a year ago.

Third, due to increased overhead ("There Will Be Blood" distributor Paramount Vantage has nearly 100 employees, for instance, and has yet to make a profit) and corporate pressure to deliver material earnings, studio-owned specialty divisions are looking for art-house home runs, rather than the singles and doubles of a decade ago.

The studio's specialized film units are feeling the same pressure of their big studio partners: Keep costs down, but deliver more blockbusters. If not, layoffs could be looming.

That means acquisition executives charged with rooting out the next "Little Miss Sunshine" enter their Cannes screenings not only with no overdraft protection but also with unreasonably high benchmarks for what the movies need to gross. It used to be that specialty units would jump at a modest movie that could take in $10 million in domestic theaters. Now the expected floor has more than doubled.

With all the turmoil, though, some companies are weathering the storms well. Fox Searchlight has one of the best batting averages in the business. And Miramax Films, which bought the critical hit but commercial wash "The Diving Bell and the Butterfly" at last year's Cannes festival, has combined good taste with creative marketing.

May 16 -- Dollar-carrying movie moguls scandalized by the price of a cafe au lait ($8), a bottle of water ($5) or a short taxi ride ($18) still have good news.

U.S. companies who finance their movies in dollars sell to buyers who pay in euros, pounds and yen. Therefore, sellers essentially get a premium on the market value of a film when they close a deal. Far from taking a further chunk out of their bottom lines these currency disparities provide a boost to American film makers.

And they can offset what over the last year has otherwise been a rocky foreign market for U.S.-produced films, especially in Japan and Spain.

That's good news not just for the sales departments. The foreign-sales efforts at Cannes of U.S.-based companies such as Focus and Summit fund year-round efforts across the company.

Even firms which don't sell huge slates at a fest, like the Weinsteins, could benefit. Weinstein will rely on foreign-sales of mid-range projects like the John Cusack period picture "Shanghai," and it too could see higher revenues from international sales as a result of currency fluctuations.

The effect of this currency differential on large U.S. companies may be minimal, however, since most foreign films are sold to the U.S. for token amounts, and are meant more for the cachet of a U.S. theatrical release than actual cash.

But at the more indie end of Cannes, where many of the prestige competition titles get snapped up, every dollar counts. That means a weak dollar could be bad news for the distributors looking to acquire specialty movies made with foreign dough like "Waltzing with Bashir."

Take 2007. The Cannes acquisition of the Romanian Palme d'Or winner "4 Months, 3 Weeks and 2 Days" by IFC Films was for a low-mid six figure. A year later, such a deal would automatically cost 16 percent more right off the bat (the amount that the euro has risen relative to the dollar since the opening of last year's fest). Such an increase could give pause to already-jittery U.S. indies.

There also is bad news in the currency swings for U.S. companies on the production side -- they're making overseas shoots more expensive by the day.

A specialty movie that could have previously been budgeted at $10 million shooting in, say, eastern Europe, will find that it's increasingly difficult as more countries adopt the euro and its value continues to rise.

In a best-case scenario, this will chase productions back to the U.S. In the worst case, it will mean the movie won't get made.

With the Cannes market cranking into gear, buyers and sellers will go into their usual elaborate dance. Not all foreign buyers will be as willing to spend even as much as they otherwise might.

"I think international buyers are going to be savvy at this festival," one sales agent said. "They know what a movie is worth to them and they also know about the advantages the currency markets give the American seller, and they're going to build that into bids."