Hannover House Inc (HHSE)

[Chance To See]

The article was very informative, but one heck of a rollercoaster ride.



-- So there are less distributors and films are cheaper to acquire, but the audience is very weak (“box office figures once considered minor are now the new standard”) and hard to get (“expensive”).
-- Seem to be plenty of films (films take years from concept to execution, I assume), but people are spending a lot of time wondering if the theatrical audience for independent films is still there.
-- And I was not real delighted with Eric’s final comment.

For what they're worth, my comments are in brackets.

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Cannes offers caution

Indie distribs recalibrate expections on eve of mart

It's all about the bottom line now, say indie film execs.

Two years after the crash of the sector and the studios' abandonment of the niche biz, domestic distribs have recalibrated to adapt to changing times and expectations. As they approach the upcoming Cannes market with level heads, there's a new mean: Acquisitions prices have dropped [good], and box office figures once considered minor are now the new standard [very bad].

While Sundance showed a thaw in the frigid marketplace [good], the indie biz is still cautious, careful of the costs in what remains a cool specialty landscape [bad], and yet eager to find films to fill their pipelines. And despite few blockbuster-size indies and frequent cries that new media platforms are changing the industry, execs refute the notion that theatrical is dead [Who’s notion is this?! Are they referring to independent films only?]. Rather, they say everything is just a lot mellower.

I think people are now able to make smarter decisions and take time making those decisions, looking more long-term, rather than try to grab every-thing in that crazy festival atmosphere," says acquisitions exec Peter Lawson at the Weinstein Co.

After just a year in business with Apparition, veteran exec Bob Berney concurs, sounding a lot more cautious than he did 12 months ago when he pre-bought Jane Campion's "Bright Star" on the eve of Cannes.

I'd be very leery of doing that this year," he says. "There's enough completed films for resonable prices, which makes pre-buys look too risky."

While Berney says high-end art films will still find buyers in Cannes, he admits, "I think those films will find deals, but not deals that will make the producers happy."

Such is the outcome of a market in which there's a large supply [good], fewer distributors [good] and more finicky audiences [bad].

But Sony Pictures Classics' Tom Bernard maintains the arthouse market is healthy -- SPC's Cannes acquisitions such as "A Prophet" ($1.6 million in B.O.) and "The White Ribbon" ($2 million in B.O.) performed well theatrically [$1.6 million and $2 million is performing well? I hope/assume this is referring to “art” films and not Eric’s “mid-level” films].

Oscilloscope's David Fenkel also says the moviegoing audience still exists [Here it is again. i didn’t know this was in question], and the theatrical release remains paramount -- "the first impression," he calls it -- but he acknowledges that the ticket-buying audience "is becoming more expensive to get."[expensive = bad] For that reason, Oscilloscope is embracing new digital release platforms, and will be releasing their first VOD day-and-date title, "Kisses," this summer.

But the new digital distribution models are not such a huge factor at the markets.

It's just a piece," argues Fenkel. "It's not a big piece, just a piece."

Although Fenkel and others see that piece getting bigger and bigger in the next two to five years, those at Cannes, he contends, will be focusing on but the immediate nine months, not the future.

Even Sony Classics' Bernard, an ardent defender of preserving the theatrical window, says digital delivery systems "are the future," from iTunes to PlayStation to Xbox. [Here they go again. Sounds like they really think people are going to stop going to theatres to see independent films. I’ve also been wondering if Eric’s Sony meeting had to do with VOD.] But for now, both theatrical and digital release models "can play in the same playground," according to Lawson, who says TWC is also developing a VOD strategy.

For niche pics looking for U.S. buyers, hybrid distribs Magnolia Pictures and IFC Films have certainly shown themselves to be the most aggressive shoppers. While Magnolia bought only three titles last year -- "Mother," "Red Cliff" and "District 13: Ultimatum" -- they acquired 15 the year before.

Magnolia senior vice president Tom Quinn says sellers are finally embracing new models. [What does this mean? Producers are now willing to have their movies distributed through VOD with no theatrical release?] "People are coming to us who I couldn't get on the phone five years ago," [good] he says. "And I'm not going to attribute that just to a shrinking buyer's market, but it's also our reputation: Our company has grown enormously and our DVD label is doing incredibly well in a down market." [Good. Confirms that what Eric is trying to do is very doable.]

For IFC Films' senior VP of acquisitions Arianna Bocco, who helped acquire 14 films for the company out of Cannes 2009, all the bits and pieces of digital delivery and theatrical exposure are adding up.

I'm very optimistic," she says. "I think the marketplace is recovering [good]. And whenever companies go away, you have new companies that fill the void and a new influx of capital that comes in."

Witness the sudden arrival of Hannover House, the book publisher and homevid distribber that was an active buyer at Sundance, picking up buzz title "Happythankyou-moreplease" [buzz title = very good] and "Twelve." It has also picked up Canadian pic "The Wild Hunt," which had screened at Sundance.

We would love to get some mid-level films at Cannes, "[excellent] says Hannover CEO Erik Parkinson, who isn't daunted by the droves who left the indie sector. "We think there's sales growth in favor of mid-level films [good]. If we're acquiring for the right price and controlling our P&A expenditures, we can run a profitable business." [Right price sounds very possible now, but if audiences are more expensive to get then being successful while controlling P&A seems less possible. Sounds like HH will have to be very skillful in their advertising and in their movie picks – hopefully just what they are doing.]

In a sign that the times aren't changing that much, Parkinson isn't sold on digital delivery systems. "Thus far, it's only 5% of what we've done on traditional DVD," he says.

And if the theatrical business turns out not to be all its cracked up to be, says Parkinson, "we'll just go back to our core business." [I wasn’t real delighted with this comment, and I doubt if his off-balance sheet financiers would be either. With this attitude it’s good the off-balance sheet financing has no recourse beyond a film’s receipts. I assume he was speaking off-the-cuff and just had a careless moment with a reporter.]