Dutch bankers dictate future films

Press, 13 July 1988, Page 22

Dutch bankers dictate future films

By

MARCEL MICHELSON,

of Reuter

The scripts might not be ready or the cast list might be incomplete, but Dutch bankers have already decided which films will be shown in cinemas over the next two years. Most big international films are sold world wide to cinema owners before even a single camera shot has been taken, because pre-sales contracts are the backbone of film financing.

A leading financier of independently produced feature films, Mr Frans Afman, has his offices in the industrial Dutch sea port of Rotterdam, where nothing resembles the luxurious resorts usually associated with the glittering world of movie-mak-ing. His distinguished manners and three-piece dark grey suit make the middle-aged Dutchman look like any other banker, but an office crammed with scripts and film posters belies his role.

Mr Afman is a banker of day-dreams. More than 400 films have been financed by Credit Lyonnais Bank Nederland, and its name is connected with such Academy Award winners as “Platoon,” “Room with a View” and “The Name of the Rose,” and box-office hits like the “Rambo” series. He also financed the independently made film, “River’s Edge,” which is now showing at the Metro. Still slightly tanned after attending the Cannes film festival in France in May, Mr Afman said his approach to the cinema industry was strictly businesslike.

“It’s just project finance, really, like ships, planes or offices,” he said. "We give money to the producer to make a movie and when it’s finished and sold to the theatres and television networks we get our money back, with profit.” It is for such support that the producer of the Vietnam war saga, “Platoon,” Arnold Kopelson, told the 1987 Academy Award audience in Hollywood: “Thanks to Afman, for having the money in the Philippine jungle when I needed it.”

Simple as its sounds

nowadays, the notion of film banking was regarded as financial wizardry when Afman developed it with the Italian producer, Dino de Laurentiis,. about 15 years ago. “Pre-sales contracts are the crux of the scheme. The bank provides capital to a producer on the basis of pledges by film distributors that they are going to take the picture when released,” Mr Afman said. In the recent past, producers readily sold the “world rights” for a film to just one company. But now contracts are more detailed, specifying countries, periods and television showings, and video releases and rights are sold to an array of foreign firms, he added. Not many banks are active in the field. Such big U.S. institutions as Chemical Bank, First National of Boston and Bank of America provide credit to the large entertainment conglomerates like Metro Goldwyn Mayer, Paramount or Col-

umbia. An independent producer has to seek either a Wall Street firm or merchant bank willing to invest venture capital in the film in return for a share of the profit, or find a banker like Mr Afman for a straight loan at pre-set conditions.

In 1987, about SUS 2.4 billion (5NZ3.36 billion) was lent to producers by banks.

As a banker, Mr Afman refrains from making value judgments about movies, though he said he avoids pornographic films. “The main risk is, of course, that the film is not ready on time, or not according to the specifications in distributors’ contracts. You can’t just change the actors,” Mr Afman said. He said there was insurpossible against such risks at a fee of about six per cent of the film’s budget. “It’s very much a people’s business. You have to know which producer is credit worthy,

which distributor is trust worthy and also which director can stay within his budget,” Mr Afman said.

He spent a lot of his time in the first five years of film financing attending society parties to meet people and hear the latest gossip. To get a feel for filming, he closely followed the production of “Superman,” which his bank helped finance. “The shooting of a movie is actually the shortest bit, one to two months. The preparation before and the postproduction afterwards take most of the time, sometimes even a year,” he said. Mr Afman has a clear preference for methodical directors.

“Sometimes you have guys who have some idea in their head and want you to give lhem a million dollars to develop the project. You can’t really put your money on something that vague. But other directors have a clearly

defined plan, already know what they are going to do and how. It’s easy to work with them,” Mr Afman said.

He noted that the rise of satellite television networks was not affecting the size of cinema audiences, adding that worldwide attendance had rissen about 10 per cent last year.

Moreover, the new television stations needed films for their programming. “Those stations have an insatiable appetite for pictures. New films and old ones,” he said.

His bank was therefore changing its approach from project financing to balance sheet financing.

With balance sheet financing, a bank looks at a firm’s total assets and liabilities to base its financing decisions on. “If you have the rights for sonie older movies, you can make a lot of money with them,” Mr Afman said.