CANNES 2009

5/29/09 - Attendance was down by 30 percent at this year’s Cannes Film Festival. Not surprising, considering the recession still biting and Euro exchange rates keeping prices along the Croisette at ridiculously expensive levels.

Far from great but better than expected -- that's the assessment of buyers returning home from this year's Cannes market to tally up deal memos and tabulate expenses.

Most striking was the apparent continental drift, as the needs of the European, Asian and U.S. markets seem to float further and further apart.

The U.S. market continues to display a large trade deficit. While the amount of product that financiers and producers are churning out -- dozens of indie projects, many with big stars attached -- shows no sign of a letup, U.S. buyers' appetites remain more finicky than ever.

"There's no one left," one major European seller complained. "Everyone just goes to Sony Pictures Classics, and if they say no, you have to settle for one of the small guys."

As the Festival de Cannes wrapped, only a handful of buyers were active in either the finished film or market arenas. Those buying finished films included a narrow band of specialty distributors such as IFC and SPC. And most of the major studios and specialty divisions sat this one out.

"There is no doubt this year's Cannes was more low-key than ever before," one U.K. sales chief said. "Sure, properties were being sold, but there were fewer buyers and less outlets, and any deals struck were done only on solid leads."

One industry sales veteran places Cannes at the beginning of far harder times to come for everyone in the independent sales and financing biz.

"It's a fact that even the studio buyers who are always in the market for multiterritory acquisitions on independent movies were able to pay less and be far more cautious," he said.

That said, in Europe, distributors large and small continued to buy at a slower but steady pace.

Asian films were all over this year's festival, with Japanese, Filipino, Thai, Hong Kong and Chinese films playing alongside no fewer than nine Korean titles and the first film from Malaysia in more than a decade.

But take note: Buyers from Japan, Korea and China were not hungry for non-Asian films. Even the India boom appears over as the recent flood of new TV channels appears stocked up for launch.

If anything, Cannes reinforced the notion that Asia is becoming ever more a self-sustaining region in its own right. Korean, Japanese and Chinese films are capable of raising their budgets and making profits without recourse to wide international sales -- as long as they can sell strongly within the region. Similarly, local distributors showed themselves willing and able to prebuy the strongest Asian projects on offer while taking their time to cherry-pick from the rest of the world only the content that is Asian relevant or a boxoffice or festival champion.

5/25/09 - It was a bad year for business, a so-so year for celebrities, but a good year for movies at the Cannes Film Festival.

There were fewer dealmakers in the market, fewer stars on the red carpet — but on screen, the selection was one of the strongest in recent years.

Top prize, the Palme d'Or, went to Austria's Michael Haneke for "The White Ribbon," an austere study of evil in pre-World War I Germany.

Brad Pitt and Angelina Jolie swept into Cannes for the "Basterds" premiere, and Paris Hilton popped up everywhere, but overall there were fewer A-list stars and fewer headline-grabbing studio stunts — although Jim Carrey posed on a lawn of fake snow to promote the forthcoming "A Christmas Carol."

The festival also premiered the final performance of Heath Ledger in Terry Gilliam's "The Imaginarium of Doctor Parnassus," which screened to a muted reception.

Amid the recession, there were fewer buyers this year, although hot titles quickly found distributors, including U.S. deals for "Looking for Eric," "Antichrist," "The White Ribbon" and "A Prophet."

5/23/09 - Putting movies up for sale is not always a pretty business, and at this year's Cannes it has been particularly unsightly for B movies, that have neither big stars nor hefty budgets to entice buyers.

Sales have been slumping for all kinds of movies, and the same market forces that are impairing highbrow art films are taking an equal -- if not greater toll -- on the crime dramas, erotic thrillers and horror titles looking for homes

Only a few of the B movies with dreams of a theatrical release will be so lucky. The majority will premiere on DVD or pay or free television. Many other movies -- there are 4,500 films in various stages of production in the Cannes market, with 900 completed movies screening -- will not land any meaningful distribution at all.

Not that long ago, B movies could reliably turn out a steady if unspectacular profit. The genre created its own stars -- people like Eric Roberts, Dolph Lundgren, Kevin Sorbo, Jean-Claude Van Damme, David Carradine and any of the lesser Baldwin brothers -- who would guarantee almost instant sales in foreign territories.

But a deluge of low-budget productions cluttered the marketplace. At the same time, the global recession, spiraling piracy and a stronger foreign interest in local-language productions has crimped foreign returns.

That has forced the makers and distributors of B movies to come up with three strategies: hold budgets down, look for new distribution outlets such as video-on-demand cable channels and find a way to make their movies stand out.

"It's simple math," said CineTel President Paul Hertzberg. "You better make the movies for less than what they are selling for."

5/13/09 - The Cannes Film Festival is looking to the premiere of Disney-Pixar's latest animated movie, "Up," to boost spirits. Fewer attendees and lavish parties due to the global economic slowdown may make this year's preeminent world-cinema showcase more downbeat. But the international film industry is banding together more than ever to fight the financial crisis.

In the absence of domestic funding from hedge funds and private investors, many of the festival's high-profile films -- including Quentin Tarantino's "Inglourious Basterds" and Terry Gilliam's "The Imaginarium of Doctor Parnassus" -- had to scrape together a hodgepodge of support, including funding from foreign pockets and tax incentives. The growth of homegrown movies in overseas markets such as Italy and Japan has also helped upend the traditional financing model, displacing the need for American imports, along with the presale of distribution rights to foreign countries -- one of the key ways movies were financed.

For Universal Pictures subsidiary Focus Features International, that has meant playing nice with the overseas competition -- the studio turned to foreign partners to produce movies for both global and local audiences abroad. "Thirst," a Korean-language vampire thriller, was co-produced with Korea's CJ Entertainment, and Spanish director Pedro Almodovar's "Broken Embraces" was co-financed with Spanish firm El Deseo.

Focus International co-CEO Christian Grass says that ticket-buying trends in overseas countries reflect an increasing appetite among local audiences for their own indigenous cinema. Indeed, "Thirst" handily beat out "Wolverine" in South Korea when they both premiered April 30, garnering more than 1 million admissions in comparison to 622,500 for the 20th Century Fox "X-Men" film, according to the Korean Film Council.

Looking to foreign partners also alleviates risk, because by partnering with those entities, they have access to local talents, which can help sell the film in local and neighboring international markets. The local companies may also qualify for government subsidy systems, which can contribute significant monies to a film's budget. And increasingly, film studios and filmmakers are looking to these "soft money" sources, or tax incentives offered by U.S. states and foreign countries which are enacted to lure film production and boost their economies.

This continues a Cannes trend of costly art-film projects, such as Steven Soderbergh's 2008 Cannes submission "Che," which might seem too risky for American studios, but are high-profile enough to turn a profit globally -- and thus attract overseas investors. Even if films don't seal significant U.S. sales -- buyers predict another cool market this year, with lowered prices all around -- they have potential to still do well internationally because of their American talent.

Long-time industry observers believe that a "deconsolidation" of the studio system is currently taking place -- where major film studios, previously in control of all phases of a film's making, are increasingly becoming the providers of a service: distribution, sometimes capital, and less often production advice.

In addition, they believe that there is a systemic change in the way films are financed where risk is being pushed up and up, both by studios and foreign distributors, towards independent financiers and equity providers.

Cited for their recent $100 million fund, National Geographic Entertainment and Abu Dhabi Media Company's film unit Imagenation Abu Dhabi (partially funded by the government), the fund will finance 10 to 15 films with budgets from $5 million to $60 million over the next five years.

While the oil-rich Middle East and other foreign investors may just seem like the film industry's latest saviors, equity relationships are far more mutually beneficial these days, with films increasingly needing outside capital, and investors seeing positive returns.