Prologue

I’ve been a professional in the entertainment industry for more than four decades. I served on the board of directors of the Independent Film and Television Alliance (IFTA) from 2001 through 2009. I also served for several years as vice chairman, and then chairman, of the Independent Producers Association (IPA), which from time to time has been active in collective bargaining for independent producers and production companies. I have been involved in many guild negotiations with both the Screen Actors Guild (SAG) and the Directors Guild of America (DGA) on behalf of the constituency of the IPA, and I was one of the architects of the current DGA/IPA multi-tiered low-budget agreement (available on the DGA website).

I have been a member of the Academy of Motion Picture Arts and Sciences since 1979, the Screen Actors Guild since 1973, the Directors Guild of America from 1991 to 2008, SAG–AFTRA since 1973, and the American Society of Composers and Publishers (ASCAP) and Broadcast Music, Inc. (BMI).

Through a series of fluke events, during my senior year of high school in Memphis, Tennessee, I fell in love with the theater. I moved to Los Angeles as soon as I graduated and began studying and working as an actor.

I was fortunate enough to become an established and successful actor, starring in four network television series, five television miniseries, dozens of television movies and episodes, and more than fifty feature films. As a young actor, I also gained the invaluable experience of working with a galaxy of top industry stars and professionals. I received a Golden Globe nomination for my performance in the Vietnam War drama The Boys in Company C and was named “Star of Tomorrow” by the National Association of Theatre Owners in 1981 for my performance in The Seduction. I also won the Los Angeles Drama Critics Circle Award for my stage performance in the U.S. premiere of John Godber’s Bouncers in Los Angeles.

I was also part of the last generation of actors who were signed to term studio contracts, and was, for a few years, a contract player at Universal Studios. By 1979, I had starred in a number of feature films and was invited to join the Academy of Motion Picture Arts and Sciences (whose members, among other things, nominate, vote for, and determine the Academy Awards). My sponsors were Rock Hudson and James Stewart.

Although I continued acting as my predominant profession through 1992, by the late 1980s I had turned my aspirations to writing, producing, and directing.

In 1988, during a union strike when very few entertainment industry people were working, I was offered the lead role in a B-movie for the legendary Roger Corman called The Terror Within—a horror movie whose main special effect was a man in a rubber monster suit. I accepted the job, and apparently the film did quite well, because a year later Roger called and asked me to meet with him regarding making a sequel, offering me the same deal he had made Ron Howard. (Ron had appeared as an actor in Corman’s Grand Theft Auto, and Roger, knowing Ron’s directorial aspirations, contracted him to write, star in, and direct the sequel, Eat My Dust, and he offered me the same deal to write, direct, and star in the sequel to The Terror Within). When I agreed to make The Terror Within II, I requested a second-picture deal along the lines of other deals I knew Corman had made with certain other independent producers. The second picture was to be a co-production between him and me, whereby he would finance $300,000 in exchange for all domestic rights and I would finance $250,000 in exchange for all foreign rights. Roger agreed.

As a first-time director, my number-one objective was to find a director of photography (DP) who could light and shoot the rubber-suited monsters in the film in a creative way, so the audience wouldn’t see how truly bad the suits were. I scoured numerous DP reels at Corman Studios and finally a second-unit reel shot by a young Polish kid drew my attention. The sequence featured an actress dancing in a night club, but the set was lit with very dramatic backlight, cross-light, and diffusion, so that you couldn’t make out any of the actress’s distinct body parts. I immediately thought, This is the guy I have to have to shoot my movie and disguise these horrible rubber monster suits. I called the kid in for a meeting and hired him on the spot. His name was Janusz Kaminski. He won an Oscar for Schindler’s List four years later, then won another for Saving Private Ryan, having become Steven Spielberg’s favored DP.

As insightful as I was to recognize Janusz’s talent, I made a faux pas of equal import on the same film. During the casting process, I auditioned many actors and actresses. A young actress who was very green and had not yet had a professional break came in to read for one of the roles. I felt that another actress gave a stronger audition and didn’t hire the young neophyte, whose name happened to be Halle Berry.

Once I got this first film under my belt as a director, I used it to get other directing gigs, in both independent feature films and episodic television. Concurrently, having now written a script that was produced, I used my new-found credibility and my writing skills to create a series of very successful independent films. Once I had created my own film company I began directing features solely for myself and ceased working for hire.

At the same time that I was branching out as a writer, director, and producer, I started studying the independent film model in the international marketplace and realized that approximately 65 percent of the revenues for independent films came from sales to foreign territories (those outside of North America). I traveled to the Cannes and Milan film markets, as well as the American Film Market (AFM) in Santa Monica, California, on a regular basis, performing due diligence and studying the global marketplace (more on this later).

A year or so later, after learning the foreign sales ropes, I went back to Roger Corman and told him I was ready to exercise the clause in our contract to make our second film, the co-production. I made the movie, and I owned the foreign rights to the film free and clear.

The picture was so successful for Roger that he agreed to do three more pictures under the same terms. Suddenly I owned and controlled the foreign rights for four films, and, along with two partners, I entered the foreign sales and production business virtually overnight. We created a company called Sunset Films International for the purpose of marketing and selling not only our own film productions but films that we would acquire as sales agents from outside producers and charge them a sales/distribution fee and market expenses. Foreign pre-sales also served as collateral for a component of financing pictures. At this time, in early 1993, I formally quit acting as my main profession, although I’ve since done the occasional cameo appearance.

I committed all my time and resources to foreign sales, financing, developing, producing, writing, and directing projects for my own company. I began traveling to the major international foreign sales film markets, selling all rights in all territories and all media worldwide, and cultivated relationships with buyers all over the world. During approximately one year at Sunset Films International, I produced seven in-house films and acquired twelve others for foreign distribution.

Since my partners at Sunset Films were nonexclusive and had other outside film ventures, I also pursued ventures with another producing partner. Based on my now very savvy, empirical knowledge of the independent marketplace, I convinced him that we should personally finance our own pictures, because I now firmly believed in what I could produce and sell in the global marketplace and for what price. We each put up personal money and made a picture, which we sold for double our investment before we had even finished post-production. We put our personal money back in our pockets and made a second film on the profits from the first. We sold that film for double and suddenly had not only profit but a production fund derived from profits generated by the two films. We made a third film in the same manner; on the fourth, we decided to step up to a bigger budget and a star cast, which enabled us to triple our return. Our little “mom and pop” business was so successful that we decided to pool our resources exclusively and form a new full-service production, finance, and foreign sales company. At that time, I sold my shares in Sunset Films International to my former partners and started a new company—Royal Oaks Entertainment.

At Royal Oaks, our mandate was to get as many domestic pre-sales for straight-to-home-entertainment films as possible and fill them as quickly as possible, since we realized that the domestic market, as it existed at the time, was soon going to change, to the detriment of the independent producer. Under the Royal Oaks auspices, I made multiple domestic (United States and Canada) pre-sales for films that had not yet been produced. Pre-sales were very important to me, since bank financing was essential for a production slate of more than fifty-six films in three years, and I needed both foreign and domestic pre-sale contracts as collateral for bank loans. I then set about quickly filling those pre-sale purchase orders, actually making the films I had pre-sold and collecting on the contracts before the business changed and the various home entertainment companies went out of business.

For the remainder of the collateral for the financing of the movies, I would create a concept that was commercial on a worldwide basis, based on the type of product that my most lucrative international buyers were looking for. I had three distinct lines of film product: thrillers, family films, and action films. For the better part of eight years, I conceived, marketed, pre-sold, financed, and produced on average almost twenty films a year. Under the Royal Oaks’ auspices, we also acquired another fourteen titles for foreign distribution, amassing seventy films over just three years. I also found myself running and administering a company with over twenty employees. I had no formal business training, having worked on the creative side of the business my entire adult life, so I had to learn on the job. However, with the crazy cast of characters I was now dealing with, my bachelor’s degree in psychology was probably more useful than I ever imagined it would be.

The Cannes Film Market (Marché du Film) is a large trade show coinciding yearly with the Cannes Film Festival, where movies are sold prior to and overlapping with the glitz and glamor of the festival screenings. In mid-1997, after returning from the market, I noticed a distinct change in trends in the independent foreign sales marketplace. Suddenly, a couple of competitor companies that had previously made films similar to those I was making debuted independent films for sale in the international marketplace with big-star names in low-budget productions. At the time, it was irrelevant that most of these big stars were appearing in films that were either pet projects or art house, non-commercial films, because the star value transcended the generally noncommercial nature of the pictures. I suggested to my partner that we should change our business plan and bring in someone who had talent relations with movie stars, which we did. By the fall of 1997, we had collectively formed Franchise Pictures, and shortly thereafter its sister company, Phoenician Entertainment.

Within the course of the next year and a half, Franchise and Phoenician consolidated under one roof, one of the partners was bought out of the collective companies, I ceased operations of Royal Oaks and began functioning as president and chief operating officer of both Franchise and Phoenician. Again, I created three distinct brands and product lines of movies.

The first comprised studio theatrical pictures, branded as Franchise Pictures through an output deal with Warner Bros. These movies—which require large print, advertising, and media (P&A) expenditures—are the longest payback to the banks for production loans, plus the additional loan from the studios for the P&A funds. In some cases, a film might cost $25 million to produce, and the P&A expenditure might be $35 million or more.

The second product line comprised art house, or specialty, films, which I branded as Franchise Classics Pictures. These were predominantly smaller, noncommercial films with star names that had festival and/or art house appeal.

Franchise Classics came about in an interesting way. Having produced four pictures in three years that screened or competed in the Sundance Film Festival, as well as many other festivals around the world, I began to believe that there was collusion among domestic buyers, judging from the identical deal terms they would, with only rare exceptions, offer independents. We have all heard or read about the bidding wars that have taken place on certain films discovered at film festivals, but, in my experience, the usual players at the time (Fox Searchlight, Sony Classics, Paramount Classics, Lionsgate, and others) all had a standard offer that they would make for most art house/specialty films: $250,000 plus a $500,000 P&A commitment, which would buy a very small vanity theatrical release. The distributor would then have the option to build on—or “platform”—from the initial small release and expand the number of theaters and release dates. This would happen only if the picture were performing successfully and warranted the advertising and media expenditure that it would take to expand the number of screens.

After a $250,000 advance and a “royalty” participation thereafter, the reality is that, with only rare exceptions, no producer would ever see another dime beyond the initial advance. The response was uniform: “We’re not Sony, we’re Sony Classics,” or “We’re not Fox, we’re Fox Searchlight,” or “Universal Focus,” or “Paramount Classics” (at that time). “We don’t have that kind of money, we’re a specialty division.” A lightbulb lit up above my head and I immediately created “Franchise Classics.” Thereafter, when I negotiated with agents, attorneys, and managers, I would stick to the mantra: “I can’t pay your talent any substantial money. This isn’t a Franchise Pictures film, it’s a Franchise Classics film.” In almost all cases, it worked. We then created talent pools and profit participations for actors, writers, and directors, without paying big upfront salaries for talent. The trade-off for getting star talent to work cheaply, so that the films could be made cost- effectively, was making pet projects—art house and specialty films that were not mainstream commercial undertakings, such as The Big Kahuna, starring Kevin Spacey and Danny DeVito, which was made for a net $1.8 million, and Things You Can Tell Just by Looking at Her, starring Glenn Close, Holly Hunter, Cameron Diaz, and Calista Flockhart, which was made for under $2.5 million.

The third product line comprised non-theatrical, straight-to-home-entertainment films, under the Phoenician Entertainment brand. The straight-to-DVD line provided instant cash flow. If international buyers wanted The Whole Nine Yards, with Bruce Willis and Matthew Perry, they would need to buy a number of straight-to-DVD titles along with it. Films like Storm Catcher, starring Dolph Lundgren, Gale Force, starring Treat Williams, and Air Rage, starring Ice-T, were instantly profitable and often had no bank loan, which provided a much faster return on investment and unencumbered cash flow to the company.

During my five and a half years at the Franchise Pictures companies, I produced, executive produced, and/or financed and handled the foreign sales on approximately seventy-five pictures of all genres and sizes, with budgets ranging from $60,000 to $70 million. We made close to twenty mainstream theatrical features, including: The Whole Nine Yards and The Whole Ten Yards, The Pledge, starring Jack Nicholson and directed by Sean Penn, and City by the Sea, starring Robert De Niro, all through Warner Bros.; Half Past Dead, starring Steven Seagal, through Sony Screen Gems; and Caveman’s Valentine, starring Samuel L. Jackson, through Universal; as well as numerous Franchise Classics films and a steady stream of straight-to-DVD pictures.

I left Franchise Pictures in December 2002, and the following year embarked on financing and producing films through my personal auspices, initially through foreign and/or domestic pre-sales coupled with subsidies and often with an equity component. I have produced or financed over thirty-five films since 2003. I finance a film only when:

• I know there is a specific market desire for it;
• there are specific buyers for it;
• I know what I can sell it for, within a very small variance; and
• I can produce it for a profit margin (I will go into detail about this in subsequent chapters).

In my experience, the key to successful survival in the entertainment business is doing ongoing due diligence and updating one’s knowledge of the current marketplace, as well as anticipating new trends. An independent producer must be able to shift strategies constantly and fluidly, and reinvent as the business changes on a continuum. In the span of my entertainment career, I have functioned in almost every imaginable capacity of filmmaking, from conceiving an idea to writing a story or screenplay, to creating advertising and publicity campaigns for the marketing and sales of pictures, as well as pre-selling films before they were made, financing pictures in many forms, brokering subsidies and rebates from various states and foreign countries, producing, directing, acting, editing, art directing, post-producing, composing songs and music, delivering elements to buyers worldwide, collecting payments on contracts, distributing films, and grooming and selling libraries. I have interfaced with the lowest level of guerrilla independent filmmaking as well as the highest level of studio theatrical releases.

My goal in writing this book is to use my knowledge and experience to inspire and teach aspiring filmmakers by explaining the reality rather than the theory of making independent movies. In 2008, I wrote a two-year, fully accredited college degree program offering an associate of applied arts degree in motion picture production. I have incorporated much of that material into this book, based on my experience of actually making films over the course of four decades. I hope you find it insightful and can use it as a guide to understanding filmmaking in a way that enables you to have a focused and linear plan from the beginning and safeguards you from making naive or uneducated mistakes.