Integrity of Film Franchise Gets Terminated in Bankruptcy Auction
Published Friday, February 12, 2010 @ 10:44 pm
He said he’d be back. He just didn’t know it would be as the result of a bankruptcy.
In a southern California bankruptcy court this week, a U.S. judge granted ownership of “The Terminator” movie franchise to a California-based hedge fund called Pacificor, LLC.
Halcyon Holding, the previous rights holder of the film series about an apocalyptic time traveling, hell-bent-on-assassination cyborg lost the right to assemble more killer robots last summer when it had to file for bankruptcy.
As we have discussed in other bankruptcy news posts, movie rights can be worth a lot of money if handled correctly. Some people have made generational fortunes by holding the rights to just a single Hollywood character. George Lucas, for example, passed on a studio paycheck for his “Star Wars” films in exchange for the rights to the characters and creatures in his far, far away galaxy. Today, Lucas makes money than the President every time Verizon advertises its “Droid” phone.
The bankruptcy judge granted rights to Pacificor because he felt it would best serve the previous owner’s creditors.
However, for a Hollywood-area judge, the ruling was somewhat vexing to the region’s more film-friendly bidders, like Lions Gate Entertainment and Columbia Pictures. Both studios, which bid as a team on the rights, would be able to more quickly turn the franchise around and make money from it.
The fear of a purely corporate entity possessing the rights to a popular science-fiction franchise will not take long to permeate the fan boy message boards and tabloids. Without question, the company will market its new robot toy to several studios for the eventual production of a follow-up to 2007′s “Terminator Salvation.” And why not? It made almost $400 million.
But here’s the problem: they will do what every non-industry executive producer does.
That is, they’ll sell the idea to the studio with best track record of successful third-party licensing deals- companies that make video games, lunchboxes and t-shirts for cats. They will completely take over the production process with cost-cutting measures like MTV video directors and casting rejects from failed UPN pilots; and then show up on opening weekend with a deposit envelope from the local branch of their bank.
In the process, production difficulties will stigmatize the film, script leaks will happen, buzz will dissipate into movie fan site rants and pans and the franchise will implode not unlike most of the people in the film. And then a Pacificor intern in charge of the franchise will negotiate the rights to a failed screenwriter working at soon-to-close coffee shop on Vine for $50.00 and an free extra shot of caramel in his double-tall. That’s just how it happens.
The hedge fund, which backed Halycon for its purchase of the rights, beat a Columbia and Lions Gate joint bid of $35 million, which also included a couple of million bucks for each of the potential sixth and seventh films. However, a fifth one needs to be made before that can happen. Pacificor won with a bid of $38 million.
The deal happened as part of a credit bid, which is a common process in a bankruptcy auction. The process involves the creditors willingness to forgive the debt in return for ownership or control of a product or in this case, a movie franchise.
“Free credit reports” and Other Common Rip-offs.
Published Saturday, February 6, 2010 @ 8:29 am
As someone facing serious financial difficulty, learning how much money is made by the huge banks to which you owe money can be frustrating. While we understand that we need to be accountable for our decisions, it stings to realize that profit models are often based on customers going into debt. Therefore, we can’t help but a feel a bit had, like the rube who just bought a cure-all tonic from the traveling pitchman selling from a horse and buggy.
CNN.com published an article recently that described what it deemed the “biggest rip-offs” in today’s society. We thought it relevant because knowing how some of these products are sold may encourage you to quit buying, using or subscribing to them and in the process, start saving more money to pay down debt or keep rebuilding after bankruptcy. We’ve summarized a few here:
Text messages
Wow. Rapidly replacing e-mail as the communication tool of choice for everyone under 25, text messaging has seen nothing short of a meteoric rise in usage in just the last 24 months. It’s an entirely new communication vertical, spawning marketing strategies and literally changing the way cell phones are developed and sold.
No doubt you have seen teenagers, maybe even your own, thumbing madly away on their mobile device, ignorant to the world around them. Well, with every OMG and TTYL the cell phone companies are LOL. Really loudly.
Text messages, which are causing cell phone bills nationwide to climb to record amounts, cost wireless phone companies roughly one-third of a cent to deliver. However, they cost you on average up to 20 cents to send and 10 cents to accept. That’s a 6,500 percent mark-up. :(
“Free” Credit Reports
Here’s one that stings. In a time when the nation is collectively reeling from a historic recession, when foreclosures are rampant, bankruptcies booming and no one’s credit rating is safe, several organizations are profiting off of selling you your own personal financial data.
You know the biggest name, Freecreditreport.com. The cheesy songs and redundant commercials sure do hit their target. But what they don’t do is sing honesty. At this site, and others like it, your credit report is not free, it’s simply provided for you in return for a monthly credit monitoring service. It’s like the cable company telling you HD programming is free.
Chances are, if you are worried about your credit report, you can’t afford another $15.00/month. The company is owned by Experian, a credit reporting agency, which means it costs them nothing to give that report to you. Let this sink in: a representative for the company had this to say: “We do realize there are a very small percentage of consumers who genuinely do not understand they have signed up for a credit monitoring service. We work to resolve issues with these consumers on a case by case basis.”
For a truly free report, as provided by law, go to: annualcreditreport.com
Movie popcorn
On the lighter side, it’s no surprise that movie food is expensive. Heck, they don’t even hide it. However, the movie industry is set up so theaters see a very small cut of the ticket proceeds. Therefore, concessions are their true money maker. Popcorn, for example, has a 900 percent mark-up, costing about $.06 to make and around $6.00 to eat. Many theater owners consider themselves to be in the concession business, not the film industry. As the recession continues its grip on the country, watch for more theaters to start offering beer and wine.
If you reserve a night out at the movies for the occasional reward for good financial behavior, skip the concession stand. Sneak in a bottle of water and some gum. Your cholesterol level will thank you.
On the Eve of the Sundance Film Festival, Recession and Credit Limits are Hurting, and Helping, the Independent Filmmaker
Published Friday, January 22, 2010 @ 5:58 pm
Recent bankruptcy news includes a headline about industry icon MGM filing a prepackaged bankruptcy, which, relative to the movie industry, may carry as much as impact as the General Motors and Chrysler filings had in Detroit.
However, operating with excessive debt is not a new concept in the film industry. In fact, it’s how most filmmakers get started. One has only to ask the nearest independent movie director how he’s funding his latest effort and your likely to hear the words “Visa,” “Mastercard” and “American Express.”
Today, access to the credit market is slowly changing the small film market. Just a couple of years ago, aspiring directors and producers would have little fear about maxing out their credit cards because of the prospect of a major studio discovering their unpolished cinematic gem and putting it on screens across the country.
Hollywood is rife with stories of how the one-time small-time filmmaker thrived on friends’ couches and ramen noodles while making their “dream project.” With banks squashing credit limits and destroying all but one copy of the vault key, the creative collective in California is afraid that the recession is also hampering the future of film, not just the unemployment rate.
And, for those who took the credit card route to financing their films before the recession tsunami swept ashore, bankruptcy has become their best route back to dry land.
On the eve of the Sundance Film Festival, the crossroads of all things independent and Hollywood, little known movie makers are working harder than ever to see their dreams realized turned into record weekend box office gross. Thankfully, those behind the now red carpet event have found a way to deal with the recession’s toll on the individual director by creating a new category called “Next” that is only for those films made on little to no budget. This year, six pictures were selected.
In 2003, two documentary filmmakers made it to Sundance with a piece about children and spelling bees. They used to the limit 14 different credit cards to pay for the travel and production that went into the movie. One of the filmmakers said in a CNN.com article, “Over the course of several months, we hit the road, using our credit cards to fund the project … Then we’d come home between shooting the film, pay down some of the debt and resume shooting.” Their film, once picked up by a major studio, made $6 million.
In this credit drought, some indie producers are turning to a new loan concept powered primarily by the Internet called “crowdfunding.” One site in particular, www.indiegogo.com, allows filmmakers to propose their idea to whomever comes on to the site. They can include clips, story ideas and other production updates. Donations can be of just about any amount. Currently, the site boasts 2,300 projects and more than $200,000 in funds raised.
Crowdfunding has become a big hit with movie folks because it establishes a fan base early on that could eventually contribute marketability and in the end, butts in seats.
Still, the lack of credit has saved a lot of independent filmmakers from going too far into the hole. David Spaltro, a low-budget filmmaker, amassed $150,000 in debt on a total of 40 different credit cards.
“My credit score looks like a batting average. And that’s being conservative,” he said. The film was finished in 2008 and since then, he has been able to pay off a substantial amount of what he owes.
Wow, talk about a horror show.