Sundance 2006

8/4/2006

(Originally published in ENTERTAINMENT & SPORTS LAWYER – A Publication of the ABA Forum on the Entertainment and Sports Industries. Volume 23, Number 4, Winter 2006)

Of the hundreds film festivals in the United States, the premiere film festival for the independent film industry is the Sundance Film Festival held each year in January in Park City, Utah.  Sundance, now in its 25th year, has defined and directed independent film industry for many years.  It is the over-caffeinated, over-crowded and over-affected must-attend event of the year for independent film.

Festivals vs. Markets.  Film festivals are supposed to be different than film markets.  A market is where buyers and sellers meet to buy and sell films and television programs.  The IFP market in New York and the American Film Market in Santa Monica are examples of film markets.  Real Screen and Hot Docs are examples of television markets.  The Sundance Film Festival, although a festival in name, is a de facto market and it begins the sales season for the most ambitious independent film projects.  During the weeks leading up to and the 10 days of the festival, the independent film world revolves around Sundance and the ski resort community of Park City, Utah 30 miles up the mountain from Salt Lake City.  Sundance is not just a U.S. sales market.  Increasingly, international buyers come to buy films they formerly would have bought at the Berlin Festival in February.

Independent Film Business As Farm Leagues.  By its very nature independent film is not an organized system.  Sundance and other festivals have acted as organizing forces.  One of the problems with the independent film “industry” is that there are so many inexperienced participants.  Even those lucky few whose films make it into Sundance have little clue about how to repeat the business side of their success as independents.  Successful participants rarely remain independents.  Perhaps John Sayles, Steven Soderbergh, Hal Hartley, John Cassavetes, and maybe the great Robert Altman should be considered experienced and successful independent filmmakers.  Most independents who achieve even modest success “graduate” to major studio financing and few return to the independent side of the industry.  The large budgets are too attractive despite the accompanying controls and compromises.  Consider Robert Rodriguez, Quentin Tarantino, Alexander Payne, Neil LaBute and many others who matriculated from the farm leagues of the independent world and are now pitching in the big leagues of the major studios.

Lawyers On The Independent Side Of The Film Industry.  Others who try to bring order to the chaos of the independent film industry are sales agents and lawyers (and lawyers who act as sales agents.)  The complexity of the distribution agreement requires the attention of an attorney.  By hiring an attorney as a sales agent you save fees and make the process more efficient.

Sales agents often referred to as ‘producers representatives,’ generally work on a commission basis, taking 10 to 20% of the filmmaker’s receipts.  Lawyer/agents may enter into relationships with filmmaker at any stage of the process, as early as before scripting to after the film is in the can.  Some lawyer agents are so involved in their client’s projects that they earn credits as executive or associate producers.   

Sundance Turns 25. When Sundance started 25 years ago the independent side of the U.S. film industry was dominated by mavericks like John Sayles, John Waters and foreign movies.  The theatrical venues for these works were art house theaters in the larger cities.  

Over the years Sundance has focused on American independent film, documentaries, short films including animation, world cinema and Native American cinema.  In no small part because of Sundance, present day low budget independent features like NAPOLEON DYNAMITE and SUPERSIZE ME have begun to outperform the big Hollywood blockbusters, and those independent features that formerly would have played the art houses have invaded the suburban mall multiplexes.   

The Majors Hijack The Concept Of “Independent Film”.  In recent years the ‘pseudo-independent’ film has increasingly come to dominate the Sundance Film Festival and correspondingly the industry.  These films, independent in name only, are driven by celebrity actors and robust budgets (by indie standards) and are quickly purchased by the specialty arms or classics divisions of the major distributors.  The major distributors have turned the concept of independent film into a marketing tool.  

The budgets of the pseudo-indies often exceed $8 million and can be as much as $40 million (granted this is small to moderate by studio standards where average budgets exceed $65 million).  Most independent films have budgets of under $3 million – frequently under $500,000.   

Even before the festival begins the pseudo-indies have been picked out of that year’s class and given ‘most likely to succeed’ status.  The pseudo-indies lord over the festival.  They are selected to be shown in the largest venues (usually Eccles).  Their entourages draw the most attention.  Practically the entire length of Main Street in Park City is lined with cattle gates to cordon off the unwashed and the paparazzi from the celebrities attending the after-parties for the pseudo-indies.  

The class of Sundance 2006 features the follow pseudo-indies: THANK YOU FOR SMOKING, $8 million budget; THE ILLUSIONIST, $40 million budget; A LITTLE TRIP TO HEAVEN, $12 million budget.  Class of Sundance 2005 pseudo-indies include:  HUSTLE & FLOW, $8 million budget, picked up for $16 million by Paramount; and THE MATADOR budget of $10 million, sold to Miramax for $7.5 million.  

What Is An Independent Film?  It is these three factors (star-power, robust budgets and distribution by major affiliates), rather than content, that characterize the pseudo-indies.  It is hard to categorize these films by their approach to the material, but plenty of pseudo-indies tend toward the safe and formulaic.  In their larval stage these films spend just enough time in the indie film world to acquire a hip patina, quickly chrysalizing at Sundance, to emerge into a beautiful butterfly in wide theatrical release.  Many genuinely independent films, including those that don’t make it into Sundance, are destined for permanent larval stage.     

There are a couple of troubling aspects about the rise of the pseudo-indie.  First, pseudo-indies create audience expectation of what an independent film should be like.  That is, the familiarity of the same actors, the cinematography and art direction that replicates the ‘look and feel’ of major releases, and the undemanding approach to the material.  Pseudo-indie films make it nearly impossible for truly independent features without celebrity power to find distribution.  

The second factor is budget inflation.  Despite the lower access to entry created by the digital tools available to filmmaker, the budgets of independent films are increasing, not decreasing.  The production of pseudo-indies is a popular game among wealthy individuals, who exhibit a growing sophistication associating themselves with the veteran producers of the indie world such as Ted Hope and James Shamus.  

Is Sundance founder Robert Redford going to return the festival to its roots?  In recent comments on Sundance and its growth, Redford said, "To the outside world, it's a big fat market where you have people like Paris Hilton going to parties. Now, she doesn't have anything to do with anything. I think the festival is close to being out of control."  

Sundance Helped Create A Market for Feature Documentaries.  Yet Sundance still preserves and nurtures independent filmmaking in another way.  From its early beginnings, Sundance served to create and expand the markets for documentary films.  Through its support of and focus, the Sundance Film Festival has helped build audiences and brought popular culture attention to documentary films.

Documentary films are to the movie industry what independent films once were when Sundance got its start 25 years ago.

The feature documentary film market has matured considerably over the last five-plus years with successes such as Michael Moore’s FAHRENHEIT 9/11 (2004), $6 million budget, distributed by Lion’s Gate and IFC Films, BOWLING FOR COLUMBINE (2002) $6 million budget; Errol Morris’ FOG OF WAR (2003) made by Sony Pictures Classics; SPELLBOUND (2002), distributed by Columbia/TriStar; CAPTURING THE FRIEDMANS (2003) HBO; SUPER SIZE ME (2004) $300,000 budget, distributed by Hart Sharp Ent.; MURDERBALL (2005) distributed by ThinkFilms; MARCH OF THE PENGUINS (2005) $8 million budget, distributed by Warner Bros. Classics; and MAD HOT BALLROOM (2005) sold to Paramount Classics for $2.7 million out of Slamdance.  Documentarians have learned how to tap into the mass market by making their stories more narrative-like and compelling, and thereby more appealing to mainstream audiences.   

PBS and the Nature Channel are no longer the only venue for long-form documentary films.  There is now a broad range of distribution options with distributors like Touchstone (Disney), Miramax, New Line, Lion’s Gate, Fox Searchlight, Warner Bros. Classics, Columbia/TriStar, Paramount, and Sony Picture Classics, are regularly picking up and distributing feature-length documentary films.  Consequently, more PR films, producer representatives and entertainment attorneys are working documentary films at Sundance and other festivals and markets.   

Sundance has also supported short films; not only a wonderful format in themselves, but also the incubator/farm league for feature length films.  New developments in technology such as cell phones, IPODs and PDAs further assist the short film which is well-suited to those formats.  Short films may become commercially valuable in their own right.  As Robert Redford has said, short films are perfect for short attention span viewers.  

Lawyers are scrambling to map the complex rights issues in the new media distribution systems.  Issues such as how do you describe and define these rights in contracts, how do you monetize each format, what do you do with these rights for older works where the contracts did not contemplated the new formats?  

Market Side Economics.  To be eligible to submit a film to Sundance, it must not have been shown in any other American film festival and in no more than one or two foreign festivals and must not have been distributed or broadcast.  In 2006, 3,148 feature films submitted to Sundance, 1,764 were from the United States, 1,384 were international films, 1,000 were U.S. dramatic features, and 760 were U.S. documentary features.  Each of these feature films cost from hundreds of thousands of dollars to tens of millions of dollars.  Of those 3,148 feature film submissions (up from 2,613 films in 2005), 120 features were selected for the Festival; 16 of those 120 films were selected for dramatic competition, 16 were selected for documentary competition. Of those 120 dramatic features, perhaps ten were sold at the Festival.   

Getting The Deal Done At Sundance.  When buyer and seller enter into negotiations at Sundance there is pressure on both sides to make the deal during the festival.  Early in the festival films can sell within hours of their first screening as was the case with LITTLE MISS SUNSHINE and THE SCIENCE OF SLEEP this year.  Other times, negotiators work through the night to hammer out deals.   

Filmmakers never want a deal announced before it is closed and the documentation is signed because as soon as a deal becomes public all other bidders move on to other films.  There have been instances in which a deal was announced by the distributor, but was not closed leaving the filmmaker scrambling to put the film back on the bidding block.   

The concentration of buyers at Sundance can create a feeding frenzy leading to a bidding wars.  Competitive bidding is great for the filmmaker.  There is pressure on the buyers to take films away from competitors and to come home from Sundance with a new picture.  Distributors fear these situations and, predictably, they put great pressure on the filmmakers to send them screeners prior to Sundance hoping to buy films before the frenzy starts.  

In 2005, Miramax picked up WOLF CREEK before the festival started.  Many cried foul and accused the sales agents of sending out screeners to the privileged few.  Miramax claimed they bought the film sight unseen based only on the buzz.  But its worth considering whether Miramax, arguably the savviest and successful distributor of independent film, would pay $3 million for a film it has not seen.   

Even though it is not in the financial interests of the filmmaker to make a deal prior to the festival, it was reported again this year that most Sundance entries had been seen by a number of acquisition people prior to the festival, an indication of the considerable pressure buyers put on filmmakers.  

Also, the national press attention that focuses on deals made during the Sundance Film Festival give “lift” to those pictures.  

This Year’s Sales At Sundance:  

• LITTLE MISS SUNSHINE

• PAN’S LABYRINTH

•  THE SCIENCE OF SLEEP

•  THE NIGHT LISTENER

•  RIGHT AT YOUR DOOR

•  WORDPLAY

•  THE DARWIN AWARDS

Scene And Be Seen.  With 45,000 attending the Festival, it had better be well organized, and this year was one of the best for Sundance.  The festival tests the limits of Park City’s capacities (and contributes $40 million to the local economy).  For a large part of its history the Executive Director of the Film Festival has been Geoff Gilmore.  The spiritual leader and founder is Robert Redford.  Redford gets personally involved in festival events and makes regular appearances, including taking the time to do Q&A or to introduce films that he regards as important.   

Sundance is not only the epicenter of independent film, but for 10 days in January, the beautiful people make it the place to be seen.  In addition to Hollywood stars, media celebrities, power brokers and entertainment attorneys, politicians such as Al Gore and Ralph Nader are frequently spotted at Festival events.  During the day the 20-somethings and 30-somethings dressed in black with their sunglasses, drag themselves through Main Street balancing a Starbucks in one hand and emailing from their Blackberries with the other.  

The parties at Sundance are an art form unto themselves.  The early evening parties, where most connections are made are the business of the Festival.  The conga-lines of late night parties are legendary and could have been designed by Caligula.  Gaining entrance to these parties qualifies as an Olympic event.   

Expect a re-tooled festival next year.  With luck, the leadership of the festival will make bold and innovative changes which will lead independent film over the next 25 years to a new industry that attracts a robust audience exists, that is not obsessed with glitz, that is focused on compelling stories told with fresh insight.

 

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(Originally published in ENTERTAINMENT & SPORTS LAWYER – A Publication of the American Bar Association’s Forum on the Entertainment and Sports Industries. Volume 23, Number 4, Winter 2006.)  

DANIEL M. SATORIUS is a shareholder and officer of the firm of Lommen Abdo Cole King & Stageberg, P.A.  He practices in the area of entertainment law and intellectual property.  His clients include individuals and businesses in the motion picture, television, music, book publishing, and internet industries.  Contact Dan at IDS Center, Suite 2000, 80 South Eighth Street, Minneapolis, MN  55402.  Phone: (612) 336-9332.  Email: dsatorius@lommen.com.