Is Hollywood a Safe Investment?

Roeg Sutherland Finance Film Forum

Roeg Sutherland, co-head of the film finance and sales group at Creative Artists Agency (CAA), will be a panelist at the Zurich Film Festival’s Film Finance Forum on September 22. When it comes to investing in movies, the prevailing wisdom is that it is a risky venture where flops outnumber hits. But Sutherland says the transforming media landscape has extended the business life cycle of films, ensuring that a feature can make money years after its box office release. This new reality, combined with some good due diligence and market insight, has mitigated the risks typically linked with film investing and convinced an influx of new investors from Eastern Europe, Brazil and China to get in the game.

 

Jürg Schiess: Who invests in films?

Roeg Sutherland: Investors range from high-net-worth individuals, to funds and banks. Whether films are financed by groups of backers or individuals is dependent on the projects. In some instances, one person finances a movie, or, as with a recent project, there were twelve financiers.

 

 

What makes a film project interesting to potential investors?

It depends, some investors are driven by directors, others by subject matter or the actors involved. For the most part, they are driven by foreign sales. As long as 70% – to – 80% of the budget is covered by estimates and soft money, an investor will usually be interested.

 

Can you name films you’ve helped finance?

CAA has arranged the financing for “The Wrestler,” “Hurt Locker,” “Black Swan,” “The Grey,” “Zero Dark Thirty,” “Looper,” “Ides of March,” “Lawless,” “Killing Them Softly,” and “The Master,” among many others.

 

What risks do investors have to look out for when considering putting money into a film project?

We believe risks are minimized when there is a deep understanding of the people and the project in which you’re investing. We are very careful to make sure investors have this thorough understanding or at least are given the opportunity to understand their investment.

 

Which films generate the best returns: small independent productions or large Hollywood productions?

This all dependent on the film – how well it is received; how the prints & advertising spend is structured, and how much of the film the investor owns. “Black Swan” was a small independent production and the investor did really well. “The Grey” was a bigger genre film and the investor also did really well.

 

Is it possible to predict a film’s future box office receipts?

From our perspective, it isn’t difficult to make sure an investor is protected. It can be difficult to predict if you will hit a homerun, but we are able to structure deals in such a way that an investor can reasonably expect at least a single or a double.

 

Is your work in film finance all based on instinct and experience or do you also use concrete data like viewer surveys?

Experience, instinct and a little science always play into any decision.

 

Do famous names automatically guarantee success?

The film has to be good. That’s the primary criterion in predicting success.

 

Are there any kinds of film projects that you would never consider?

We’re here to serve our clients’ best interests and help investors best understand each project. So we look at each film independently, with its own opportunities and challenges.

 

Can investor influence the film’s contents and realization or the selection of those involved in making it?

Yes they can, but it depends on how early an investor is involved with the process.

 

Does this happen often?

It does.

 

What advice would you give an up-and-coming filmmaker who is looking for financing?

Think micro-budget or very commercial projects. If a filmmaker has a budget over $2 million, it is important to attract a cast that has foreign value.