Foreign Affairs : Overseas Film Buyers, Distributors Continue to Flock to AFM

In these days of instant global communication by Internet, fax and cell phone, why do hundreds of independent film distributors and buyers converge on Santa Monica for nine days in late winter each year?

“You can create a bidding war here,” says Kathy Morgan of Kathy Morgan International, who’s been selling foreign rights for 25 years. “People come here when they’re ready to buy, and they know their competition is here too.”

“They create a hype, a pressure,” says Peter Fornstam, here to acquire rights for AB Svensk Filmindustri of Stockholm. “You have to be here. I can’t just say, ‘I’m not going to AFM this year.’ ”

A simpler explanation is offered by Tim Kittleson, executive director of the American Film Market: “This is California in March,” he says, gesturing toward the sun-drenched beach just outside the window of his temporary headquarters at the Loews Santa Monica Beach Hotel. “I mean, if you’re getting on a plane in Frankfurt . . . come on.”

Indeed, the opening of AFM is marked each year by the arrival of Europeans in sport jackets and open-neck shirts, obviously enjoying the seaside stroll as they make their way to the Loews.

Since its inception in 1981, AFM has quickly laid claim to being the largest film market in the world in terms of the value of deals made. Aided largely by a surging international television market, sales at last year’s AFM were up sharply. Reported sales by members of the AFMA--the American Film Marketing Assn., which stages AFM--were $342 million in 1996, up more than 25% over 1995. (The figures, reported to KPMG Peat Marwick, are unaudited.) This year’s market opened Feb. 27 and concludes Friday.

AFM’s strengths include being close to home for most exhibitors, the fact that its product is mainly in English--which travels best worldwide--and that all types of foreign rights are sold here.

But there have been some rough patches: The sales surge in 1996 followed weak years from 1993 to 1995. Recession, coupled with the decline of direct-to-video sales, accounted for much of that dip.

Most sellers continue to offer the traditional AFM fare of action pictures and soft-core titillation, although there also are children’s product and rights to bigger-budget movies such as Howard Stern’s “Private Parts” for sale. Producers of higher-brow indie fare generally try to get their films shown--and sold--at more prestigious venues such as the annual Sundance Film Festival.

Many say this year’s AFM seems quiet. But there are always new territories and media to buoy the hopes of sellers. Video is just coming into its own in at least one territory, the former Soviet Union. This year, the European contingent is particularly heavy on Russians; they seem to be everywhere, looking particularly for video rights to feed the country’s booming market. Sellers regard them cautiously, as Russia, along with China, has a reputation as a big source of bootleg videos.

“If someone comes to us from China or Russia and just wants to buy video rights, we try to make them buy all rights,” says Thomas B. Devlin, senior vice president of international sales for Hearst Entertainment Distribution. Hearst sells its TV movies, such as “A Different Kind of Christmas,” starring Shelley Long, to the international market. “Once they get the intellectual property, they’re going to exploit all the rights anyway. So at least that way we’ve made enough money to justify not worrying about how they use it. It’s impossible to police.”

While video is flat, and theatrical markets are flat in most territories, AFMA members last year made nearly half their revenue on pay- and free-TV rights, with the latter being where the biggest money is.

Though about half the 270 exhibitors this year are not AFMA members, by far the biggest guns are: Multimillion-dollar companies like Disney-controlled Miramax and Viacom unit Spelling Films International are considered independents for the purposes of AFMA.

AFMA members are asked to report anonymously each year on how well (if at all) their buyers pay them. These reports are made available to AFMA members and bankers who provide financing, as a reference and cautionary guide. But in general, the rule is buyer and seller beware.

The majors have been coming to AFM for years to feed their international channels. Buena Vista has become more active lately in foreign acquisitions, as Disney reduces its own slate of live-action productions to focus on blockbusters.

Stan Golden, president of Saban International, said: “I can see 12 or 15 people a day here from all around the world. It would take me over a month to travel to see those people.”

Saban, known for producing such children’s TV shows as “Power Rangers Zeo,” makes and sells to the international market films starring faded U.S. stars such as Lee Majors.

“This is a relatively cost-effective market to attend, unlike going to Cannes or Milan,” Golden says. “I think there needs to be a shakeout in the number of markets; there’s just too many now.”

Still, nobody is expecting the Russians and Swedes, among others, to cross Santa Monica off the list as long as there are deals and money to be made.

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Reeling It In

Strong sales have made the American Film Market the world’s largest for independent films. In millions of dollars:

1996: $342

Source: KPMG Peat Marwick