The Producers’ Problem: Falling Foreign Dollars

Starry Hollywood is looking less bright these days: The firmament, once twinkling with dollar signs, has dulled as the fat times have grown thinner, and foreign wallets have grown tighter.

Several producers I spoke to this week gave me a brief lesson on the current state of one aspect of independent film financing: foreign pre-sales.

As it was explained to me, in the old days (i.e. not so many years ago), the majority of a movie could be financed from foreign cash.  By that model, prior to a movie being made, a producer would sell rights to buyers in foreign markets to distribute the film.  If the project had a big-name star or director attached, even better. 

In recent years, as one contact said, “Buyers got a lot more sophisticated.”  They saw that an A-list name didn’t always equate to an A-list product, or watched as a movie that was meant to receive a wide-release merely trickled into theaters before drying up.

Then they, along with the rest the world, looked on as the economy screeched to a halt.

Foreign buyers crunched down on their credit and have either closed their doors or turned to financing (presumably more cost effective) local product.  Meanwhile, U.S. movie-making price tags didn’t get a price reduction.  According to the previously quoted producer, many actors were unwilling to take a pay-cut, causing an unfortunate (and lingering) “disconnect in Hollywood” and keeping budgets inflated.

It’s disconcerting, to be sure, and the years to come will need see a shift in the way movies are made.