Learning from-sharks(1)
- 1. Learning from Sharks: Lessons on Managing Projects in the Independent Film Industry Angus Finney There are few industries where project leaders and managers have as little control over results as in the independent film industry. Yet despite being a project-based industry, there is no formal way to impart knowledge to new entrants. The result is a process that is as idiosyncratic as each individual film producer, who follows his or her own path towards attempting to achieve a successful project. Here an executive producer in the independent sector imparts some of his lessons learned. Ó 2007 Published by Elsevier Ltd. Introduction The film industry is one of the best examples today of a project-based industry. If there is a business where participants can be said to live and die by projects, then film making is that business. Given this reality, it may be expected that the film industry would evolve a robust body of project man- agement knowledge, and that teaching and communicating this knowledge to novices entering the industry would be a principal task. But as I shall discuss in this essay, learning from an unstable and volatile business can be a frustrating process. Films get made and distributed, and a small percent- age make a substantial profit, but the knowledge that is required to take a concept from script to screen is dispersed and highly idiosyncratic. Some 25 years ago, William Goldman dramatised this contradiction in his infamous book Adventures in the Screen Trade, declaring, tongue in cheek, that in the movie business ‘‘nobody knows anything’’. For outsiders, Goldman’s dictum confirms the belief that the film industry is an area where aspirations and inspirations substitute for solid business knowledge. Outsiders do have a point: the film industry is an uncertain business. This is true in Hollywood where large stu- dios still wield considerable market power, and it is much more so in my territory: independent film production. Independent film production, which is essentially most film production outside the Hollywood system, is a fragmented, ill-structured and, for that reason, a highly demanding business. Whereas Long Range Planning 41 (2008) 107e115 http://www.elsevier.com/locate/lrp 0024-6301/$ - see front matter Ó 2007 Published by Elsevier Ltd. doi:10.1016/j.lrp.2007.11.002
- 2. in Hollywood, film projects are firmly anchored to the distribution arm of the studios, for indepen- dent film makers, taking a project into production and then finding a market for the finished product, is a solo enterprise. It is an entrepreneurial venture done without the support of a large corporate entity such as Sony or Times Warner. Gathering and sharing experience in this environment is an anathema to many film practitioners. This may be partly because in creative endeavours practical business experience is often regarded as secondary to inspiration and imagination, but it is also due to the simple factdas starkly stated by Goldmandthat there are no reliable rules or clear models on how to make successful films. What we do have is professional knowledge that is strongly grounded in personal experience. Each one of us comes to the film business with expectations of how films ought to be made. These expectations are a good starting point for transforming experience into solid professional knowledge on how to manage film projects. To understand project management in the film industry, it is therefore useful to begin with the basic elements of how films are managed. This, one may argue, is how films ought to be managed if all participants approach the process in a calm and deliberate fashion, and if the environment co- operates. Then we turn our attention to first-hand experience; to the things that go awry, and lessons that one takes away from the experience. Lessons that become part of the professional knowledge which ultimately helps you avoid similar traps and pitfalls in the future. Project management in the film industry Project management is a central pillar within the film business: each film is a ‘‘project’’ in itself. Professionals even refer to films as ‘‘projects’’ per se on a daily basis. The key project manager, from start to completion, is the film ‘‘producer’’. The producer’s role and responsibilities are wide-ranging and cover 10 key areas: 1. The production company’s entire slate of projects 2. The project’s inception and research and development 3. Creative development and attachments (to achieve a ‘‘package’’) 4. Financing parties and execution of contracts 5. Additional executives (executive producers, etc) 6. Lawyers, agents, accountants (services) 7. Budget, locations, schedule etc 8. Production crew 9. Distribution and marketing plan 10. Film launch followed by long-tail monitoring. There is a difference between what is supposed to happen in effective project management in the film industry, and what often happens in reality. The paradox of managing projects in the film in- dustry is that we need to master the principles of how projects are supposed to be managed to make films, but to be effective we must learn to cope with the failure of these very principles. So notwithstanding Goldman’s comment, what do we know about how to manage projects in the film industry? 1. In principle managing the film project should start and end with the film producer. Every de- cision the producer makes (or avoids) will impact on the way each level of a project advances. Managing the creative development process e meaning concept, story and screenplay ebegins There are no reliable rules or clear models on how to make successful films 108 Learning from Sharks
- 3. early. This critical stage of the management process can be compared with the design and laying of a foundation for a tall building. If it’s slightly out at the start, the rest will collapse later. 2. The ambitious producer is also a dealmaker. An experienced producer knows the number of pro- jects he or she is able to manage successfully. From the perspective of a hands-on film producer (who is dedicated to the making of films rather than acting in a more removed ‘‘executive’’ capacity), he or she will only be able to make one feature film a year. More might impact on the effectiveness of their ‘‘project management’’. By contrast, a top Hollywood producer making blockbusters (films of budgets in excess of $50m, but now normally more than $100m excluding prints and advertising release costs) can normally manage one film every two years or so due to the sheer scale and demands of each project. If they achieve more, they probably fall into the Hollywood ‘‘A list’’ category, topped by producers such as Jerry Bruckheimer and Scott Rudin. 3. A producer is by definition in the business of multi-tasking; but their focus is in three key areas when managing a film project: development, production and distribution. At the development stage, an established producer would be reading (and where appropriate optioning) a range of books for adaptation, considering film treatment outlines, commissioning scripts, reading original screenplays and packaging more advanced films. These activities form the R&D element of their business. So while overseeing the physical production process on any given film project, a producer should be concurrently developing a slate of projects at varying stages of advancement. 4. As films come closer to achieving financing and entering the production stage, the producer needs to identify and attach value to the project. For example, by attaching ‘‘elements’’ such as a director, cast etc, financiers and distributors are able to assess the project’s market potential. That same producer is also responsible for securing distribution for the film e a challenge that they should be considering from the early stage of a project’s conception. Alongside the distri- bution stage is the marketing and commercial exploitation of each completed film through a se- ries of windows, albeit the detailed management is delegated to third-party distributors around the world. 5. The producer is a pivotal figure in the production process, but he or she normally works along- side the executive producer or producers. The ‘‘executive producer’’ is responsible for raising part or all of the finance, but is expected to complement and assist the producer’s day-to-day management of each film project. Most executive producers manage larger companies than the sole producer with an active slate of 10 or 15 films on an annual basis. They are therefore expected to oversee each project with specific focus on financing and exploitation. While financ- ing entails raising funds to cover the costs of production and marketing, exploitation focuses on maximising revenues from all release and distribution formats: cinema release, DVDs, pay- per-view etc. 6. Producers must also negotiate and liaise with international or local distributors. International distributors are responsible for selling films to each territory around the world, whereas local distributors take charge of releasing films in a specific territory. Distributors normally see the product at a later stage and therefore have a different perspective to that of the producer. They often play the role of executive producers, helping to finance films. For the most part, how- ever, their overriding imperative is to manage the film release process in their respective territories. 7. Within each film project, a range of additional practitioners play a role. They divide into four key sectors: a) creative, including writers, directors and actors; b) the crew who make the film; c) third-party financiers, including banks, investors, broadcasters; and d) ‘‘services’’, including lawyers, accountants and agents. Translating expertise into control e when possible No producer is expected to be a leading expert in all these areas. Their respective project manage- ment skills, however, will dictate which areas they control and lead directly; and which they dele- gate, including what appropriate teams and levels of responsibility are given down the line. Each Long Range Planning, vol 41 2008 109
- 4. area is extremely demanding. A producer who is inexperienced in certain areas will fail if he or she does not delegate effectively; a producer who cannot co-ordinate executives and representatives and drive timelines will be unable to achieve financing. A producer who can complete the package and finance for a film but has not considered the market for distribution and exploitation will fail to recoup. In summary, producers need to know a huge amount about a) themselves, and b) effective, specialised project management, if they are to succeed. We’ve moved a long way from Goldman’s assertion that nobody knows anything. Knowledge of what may happen is not the same as control of the process. There are few indus- tries where project leaders and managers have as little control over results as in the film industry. This applies even more so to independent film producers. Ultimately, the only way that film pro- ducers learn how to deal with the gap between knowledge of how the process is supposed to unfold, and control over this process, is on the job: dealing with crises. The knowledge that emerges from learning to manage this gap is based on individual experiences. It is therefore idiosyncratic in as far as most film makers are fortunate (or unfortunate) enough to directly experience only a small number of crises in one professional lifetime. But the lessons that film makers acquire from these incidents are well understood and appreciated by other film makers precisely because they deal with how we operate while knowing how little control we have over the process. My own experience can illustrate the lessons that are repeatedly learned by so many others in the film industry. To highlight these lessons I will discuss three short cases. In each case, my relation- ship to the project was as a financier, and as an executive producer. To protect the innocent and to exercise a measure of charity towards the guilty, the names of the individuals and firms involved have been changed. All examples are for independent (non-studio), English language films, and each sheds light on my thesis: the gap between what is supposed to happen and what actually takes place; and what can be learned from the way the industry deals with that gap. The first case, which we call Alpha, focuses on a project during the creative and financial development process; the second, or Beta Case, examines a project being prepared for physical production; and the third, or Gamma, analyses a project being prepared for distribution in the market-place. The Alpha project: managing the development process The Alpha case demonstrates the difficulty of managing talent during the development period of a project. During early 2000, an LA-based production company (the ‘‘producer’’) approached a UK company (the ‘‘executive producers’’) to finance the development of writer-director Brown’s new project. The story was to be an offbeat, truly ‘‘independent’’ project, not suited for in-house Hollywood studio development. The agreement between the two companies stated that Brown would adapt the novella and direct the film. The Hollywood company would produce, while the UK executive producers would finance, control and exploit world rights. The dates of writing commencement (two drafts and a polish) were initially left vague, as Brown had some ‘‘prior commitments’’, but the LA producer assured the UK executive producers that she would be able to make the writer/director focus on the screenplay once his current film was completed. During a meeting prior to signature of the three-way development deal between LA, Brown and the UK, the executive producers stressed that some of the more extreme elements of the story needed to be handled carefully if the script wasn’t to alienate the potential cast and the project’s intended audience. They were mindful of the budget figures of the director’s previous two films There are few industries where project leaders and managers have as little control over results as in the film industry 110 Learning from Sharks
- 5. (in the $25m-$30m range), as the material in question was riskier and might demand a lower bud- get. The UK executive producers debated whether they should consider including the right for them to appoint a third-party writer to the project as an insurance for timely delivery and a greater level of creative control e with Brown writing a ‘‘director’s draft’’ rather than two full drafts and a polish e but nothing was decided upon. Instead, the executives allowed Brown more than six months from signature to delivery. The first draft of the script from the writer/director was delayed by 12 months (delivery ended up being in February 2003) due to Brown changing tack, and deciding to direct a new movie of one of his plays. This project was not mentioned when the original development deal was agreed. Although the first draft was potentially strong, it needed significant rewriting. Specifically, the writing in the more extreme and emotional scenes in the script required attention. Most problematic was that the first 40 pages read like a zestful romantic comedy; the following 80 read like a noir psycho-thriller. The writer-director did not see that this was a particular problem, while the producer correctly pointed out that the script was following the book. After notes and a phone ‘‘meeting’’ with the executive producers, Brown made some minor revisions. The executives, however, were under time pressure to package the film (i.e. attach key cast and agree a budget) prior to the next film market in May: the Cannes Film Festival. They were aware that their ‘‘window’’ for financing was short, and would be virtually shut over the summer months if the project’s progress was further impeded. The ‘‘one draft plus revisions’’ version of the script was sent out to cast in early March by Creative Artists Agency, acting on the behalf of the UK company. However, the agency also represented one of the likely stars, and was keen to push the project towards a green light as soon as possible. Within six weeks, two famous actors committed to play the leads. Crucially, the director assumed that now that key talent was attached, the script was in shape and required no major additional work. The UK team argued that the draft suffered from mixed-genre confusion, and was not yet in shape for key distributors and financiers to read. The lead executive producer, however, pointed out that the script needed to be sent to North American and foreign distributors at least three weeks prior to the commencement of Cannes. Otherwise the script wouldn’t be read, the project not considered and no crucial pre-sales and financing partner deals would be closed. In turn, the stars attached would move on to other projects, and the project would be dead. Despite misgivings, the UK executives sent the interim script out two weeks ahead of Cannes, and Brown attended the festival to meet distributors. However, while the project was taken very seri- ously, the script was not widely liked, mainly because of the mixed-genre problem. The project failed to be financed, in spite of efforts by both LA and the UK to continue to raise finance over the summer and autumn. Lessons learned The Alpha case demonstrates the difficulties both producers and executives can face in controlling talent, and managing a timeline that works for financing a project in the wider market. Successful project management requires both producers and executive producers to agree on how to handle and, where possible, discipline talent (normally through the withholding of payments!). The lead executive producer learned that it is important to: a) consider the most appropriate contract for creative talent; and b) not shy away from ‘‘sitting’’ on talent, and making them aware that their work, and its timeliness, has a direct impact on the successful advancement of the project. It could be argued that the lead producer should, in this case, have been taking the lead role in this disciplining action, and that the UK company could have demanded that more clearly. The Beta project: managing the production process The Beta project is a period drama, adapted from a well-known author’s prize-winning novel by a different name. The film was fully financed and produced by Old Style Films, a London-based production and financing company. It went into pre-production in autumn 2005. A $12m budget was green-lit by the Old Style Board. Long Range Planning, vol 41 2008 111
- 6. The film was to be shot in Italy for 11 weeks, and in Scotland for one week. The film’s physical production build was very ambitious and demanding. The director and his production designer had planned to build a large set (a medieval village and castle) in Italy, with the intention of burning the entire set down as demanded by the final scenes of the movie. Five weeks into pre-production, it became clear to the producer and production manager that the film was severely under-budgeted. The director’s vision for the film had expanded. He de- manded a huge set build, including additional props, extras, extended camera set-ups and film stock. This was increasing the budget by an estimated $1.5m. The film’s completion guarantor, Film Finances (a company that guarantees completion of production and final delivery of the film to the financiers), had agreed in principle to the $12m budget, although no ‘‘strike price’’ e the sum actually insured by the bond e had been finalised. Film Finances was waiting for a final schedule and budget before signing off on the bond. It took the producer and production manager a further two weeks to estimate the over-costs, and send this information in a one-page document back to the financiers in London. Project management had clearly already failed prior to first day of principal photography. Mis- takes in the pre-production stage will always affect the quality of the final product. What manage- ment options were left to Old Style’s management and board? They could close the film down; fire the line producer; replace both the line producer and the in-house producer; and bring in the bond company, Film Finances, to re-examine the budget and shooting script prior to a final strike price being agreed. They could obviously execute a number of the above in tandem. What actually happened? Nobody was fired or replaced. Film Finances bonded the film at a strike price relating to the original $12m budget, and excluded all pre-production over costs. Ultimately, the film went a further $1m over budget, on top of the $1.5m estimate, costing in total $14.5m. What should have happened if the financier was to regain control of the project? The financier should have done a cost-benefit analysis, examining the cost/loss of a) closing the production, b) the cost of continuing the production. No such exercise was done, nor requested by the board. Both the producer and the production manager should have been fired at the point that a one- page ‘‘estimate’’ was delivered to the financier in London. Any document so late, and limited in scope, depth of numbers and analysis should have indicated to the financer that neither of the executives was up to the job, and that the film’s budget was unlikely to be controlled during the actual shoot. Further overages should have been anticipated. Following a change in production personnel, the financier should have re-examined, in tandem with Film Financers, the new cost estimate, and executed a further cost-benefit analysis on a) closure, or b) production. Only then could the board have known what their options really were. Lessons learned The above project was a turning point for Old Style. The damage and cost of this film signalled the demise of Old Style’s entire business. More generally, it highlights the catastrophic dangers when the day-to-day project management team falls apart. When the creative ambitions of a director and an inexperienced producer were unchecked during the planning stage of a production, the costs can spiral very quickly. The project expands on a range of levels, leaving it more vulnerable to ul- timate collapse. The case also highlights how impotent executive producers and boards can be when dependent on second-hand information about a project from managers on the ground, delivered in an untimely manner. Mistakes in the pre-production stage will always affect the quality of the final product 112 Learning from Sharks
- 7. The example also underlines why the studio and larger independent production entities equip themselves with an array of production executives, whose role is often to demand, check and report on each stage of a film’s production, in extreme detail. These middle managers and their timely reports form a protection layer, setting off warning bells before escalation has had a chance to blow the project in its entirety. The Gamma project: managing film distribution My next case is a North American independent film, co-financed by a US and UK company on a 50e50 basis, with each acting as co-executive producers on the project. Prior to and during production, key distribution deals in foreign territories including Spain, Italy, the UK, France and Benelux, were successfully pre-sold by the UK partner. For a film budgeted at more than $8m, the pre-sales were worth nearly $2m, a significant financing component. The film was completed in summer 2001, and was selected for a world premiere at the Toronto Film Festival that September. After the screening (and despite the impact of 9/11), an independent distributor and cable operator AAA made an offer of $750,000 for North American rights. The offer included ‘‘bumps’’, stating that on certain levels of theatrical performance, the financiers would receive additional advances against receipts, making the overall deal potentially worth as much as $1.5m. The distribution contract stated that AAA would release the film theatrically within nine months of signature of the agreement. This clause was vital to the foreign distributors who had bought the film already, and who intended to wait until the US release of the film before taking it out to cin- emas in their respective territories. It was also important for the film not to be held back longer than this period, as press and talent start to suspect the film suffers from a ‘‘problem’’ or will be ‘‘difficult’’ to place and market. In many cases, lengthy delays lead to talent being unable to commit to supporting a film, both because of schedule and their ‘‘reputation’’ in the eyes of their agents, managers and press advisers. Nine months passed. All the UK financier’s foreign distributors grew increasingly anxious about the film’s plans in North America, as AAA had still not given clear dates for the theatrical release. A con- ference call was set up between the producers, the UK and US financiers and the US distributor, AAA. During the conference call, held 10 months after the signature of the agreement, AAA’s chief ex- ecutive explained that because the company’s main shareholder owned a cinema that was under construction in downtown New York, he was under pressure to hold back the film for the theatre’s opening premiere. AAA’s plan was for the film’s star to open the cinema, and attend the premiere. However, nothing had been agreed with the star or her agents. The construction was also bogged down, with only a vague estimate of a further six months before completion. The film was unlikely to open before April 2004. The UK executive producers were facing a dilemma, as were the US financing partner and the producers of the film. What should the partners do about the original foreign distributors, who had not accepted full delivery of the film (and hence held back 80 per cent of their minimum guar- antees), as they were waiting for the North American release plan and opening? Should the film’s financiers and producers tear up the US contract and find a new US distributor? Should they demand an earlier release plan, and insist that AAA abandon its cinema premiere? As a damage-limiting strategy, they could try to keep talent onside, be patient and not block foreign distributors from releasing the film prior to the US release. Finally, they could take AAA to court for breach of contract and material damages. Lessons learned What actually happened in this case demonstrates the extreme lack of controls both producers and financiers can bring to bear on the key stages of a film’s exploitation process. AAA released the film in autumn 2003, two years after it had bought the film. (The new cinema was still under construction and hence was not used for the release). Long Range Planning, vol 41 2008 113
- 8. The theatrical release was a failure The film grossed $350,000 over three weeks, having been re- leased on more than 250 screens in the first weekend, dropping to 180 screens in the second week and 90 by the third. All agents blocked the film’s stars from supporting the film where possible. Foreign distributors decided to release the film before the much-delayed US release. The pro- ducers and financiers did not try to block them. Most released on very limited theatrical runs, and some went straight to a video/DVD release, missing out the cinema window. The financiers received full payment of the $750,000 advance, and three years later overages (profits) of around $150,000. What could the financiers and producers have done to avoid the damaging delays and subsequent negative effect on the film’s foreign distribution plans? Suing is never a realistic option. As a project management tool, you know you’ve failed when you even start to consider it. It would be fair, how- ever, to argue that the financiers should have been much more focused and vigilant about the out- side release date agreed with AAA from the start of the North American deal negotiations. It would have made the US distributor more committed and aware of the ‘‘foreign release date’’ problem, and less likely to keep delaying. Strategically, the producers should have utilised the stars’ agents and managers to put pressure on AAA. But most critically, what the case underlines is the frag- mented nature and danger of delinkage between production and distribution in the independent film business. Studios that control world rights, and release their films on a ‘‘day and date’’ basis, have protected themselves from territorial and political divisions to a large extent. Conclusions Each of the three examples exposes the producer’s struggle for control over the filmmaking process. The overriding challenge of managing each and all of these three stages e development, production and distribution e requires a strong producer who can see both the ‘‘bigger picture’’ and the demands of the specific film in question. They also need to be making the project with a market and business objective in mind, beyond just pocketing their production fee. Given the fragmented nature of the management, financing and talent structure in the independent film industry, coher- ence and consolidation are difficult to find. As one works up the power chain, however, and starts to reach integrated companies that control the three main areas of development, production and distribution, the structural gaps start to be covered, and the risk lowered to some extent. While it is often said that ‘‘the buck stops with the producer’’, the truth is that unless the pro- ducer has a long successful record, wields considerable power in the Hollywood system, or is backed by a big studio or a major independent, he or she will find it harder to manage the range of tasks and differing third parties to achieve a successful outcome. While there are important lessons to be learned for analysis of project management within the independent film industry, mistakes and problems can only shed light up to a limited glass ceiling. The producer’s experience and personality has much sway over the process. Each film project has a huge number of individual variables and each ‘‘sub-manager’’ along the film cycle often has conflicting interests. There is also an inherent paradox that lies at the centre of the film business e as management has to contend with both ‘‘creative’’ and ‘‘commercial’’ imperatives. Managing the creative process and ‘‘talent’’ while at the same time trying to control large sums of money and ensure returns on investment makes for a highly challenging environment. On reflection, we can start to understand why the Hollywood studios take such a heavy-handed, invasive attitude to the filmmaking process. It’s not by accident that they have developed their own brand of ‘‘project management’’ when handling billion-dollar slates of movies. They clearly know rather a lot about the creative and the commercial business, and how to at least attempt to manage them. If independent producers are to succeed in the long run, they face an enormous challenge of knowing much more than the basic skills, but also being able to craft superior solutions. 114 Learning from Sharks
- 9. Biography Angus Finney has written three books on the independent film industry. He was a journalist for a decade before being appointed co-managing director of Renaissance Films, which he ran for six years. Finney is currently writing a film business text book, a screenplay, and is the project manager for Film London’s Production Finance Market, to run as an annual event. He is a guest lecturer at the Film Business Academy, Cass Business School, London EC1Y 8TZ. Angus.Finney@gmail.com Long Range Planning, vol 41 2008 115