“Suddenly, Hollywood Seems a Conservative Investment”

Joshua James emailed me about this article in today’s NY Times, “Suddenly, Hollywood Seems a Conservative Investment”:

Now that the economic crisis has washed away much of that money, a new pickup line is starting to waft through the air in deal-making hot spots like the Sundance Film Festival. The new line is this: Wall Street, real estate, the art market — all of those other supposedly stable investment areas — are now such a mess that Hollywood is one of the safer places you can park money. Although the movie business has been hurt along with nearly every other industry, it’s proving far more resilient to recession than most.

“I can legitimately say: ‘Hey, wait a minute. My company is outperforming almost everything,’” said Jana Edelbaum, co-founder of an independent financing and production company called iDeal Partners Film Fund. “I think that’s a pretty strong selling point.”

Okay, so wasn’t it like, um, as recently as yester-freaking-day that we had yet another article about the crash-and-burn of indie movies, following up on previous posts here, here, here, here, here, and here? But now we’ve got Ms. Edelbaum and iDeal Partners Film Fund riding high:

NOW three years old, iDeal operates out of New York, with financing to make about eight movies. It manages risk to investors through a variety of routes: preselling its films to foreign distributors, casting commercially tested actors, taking advantage of state tax incentives for filming. With that approach, Ms. Edelbaum at the outset was able to promise her investors a risk floor of 70 percent on the chance that none of iDeal’s films succeeded.

But as iDeal rounds the home stretch on its first batch of movies, Ms. Edelbaum is projecting at least a 15 percent return for her investors and — if something big happens with “Motherhood” or “Arlen Faber” — as much as 40 percent.

Granted the two movies iDeal funded — Motherhood and Arlen Faber — are not your typical indie fare. For starters, both movies “cost less than $12 million” (per the NY Times), but if they’re north of $10M, then that’s significantly more than most of the indie titles at Sundance this year. Moreover, both movies have high concept storylines with mainstream potential. Here they are:

“A reclusive author of spiritual books, is pursued for advice by a single mother and a man fresh out of rehab.” — Arlen Faber

“In Manhattan, a mother of two preparing for her daughter’s sixth birthday party has no idea of the challenges she’s about to face in order to pull off the event.” — Motherhood

Before the current ‘crisis’ in indie movies, a few years back conventional wisdom was that any movie between $5–20M was certain death: Too expensive to recoup costs in the indie movie circuit, not expensive enough to have the stars or special effects to compete with bigger major studio releases. I had a friend who had a script go from one top director to another, probably 5 or 6 different ones attached over several years, everybody loved the material, but because of its proposed budget ($10M), it never got off the ground. And now here’s iDeal promoting a business model featuring movies right in that same supposedly deadly price range.

Once again, we learn what William Goldman said about Hwood is true: “Nobody knows anything.” 

I hope iDeal succeeds. Sounds like they’re making just the kind of movies I’m interested in — watching and producing.

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