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LIANNE HALFON & RUSSELL SMITH

Posted By Chris Green, Friday, February 9, 2018

There’s that favorite pastime among the putative hipsters of the world—adjudicating the relative authenticity and credibility of our icons within what we’d loosely call the independent regions of the film, music and media sphere. Who’s legit? Who’s a sellout? It’s really a matter of your taste and your readiness to argue about it. There’s no definitive answer.

Except for when there is. PGA members and producing partners Lianne Halfon and Russell Smith are independent filmmakers, the genuine article, full stop. The pair are the founders, along with colleague John Malkovich, of Mr. Mudd, the small but spirited company that has made a habit of punching above its weight class with critical and commercial success stories like Ghost World, The Perks of Being a Wallflower and Juno, which earned the partners their first Oscar nominations.

Given that track record (which extends beyond scripted features to the Emmy-winning doc Which Way Home and Zach Helm’s celebrated stage play El Buen Canario) and Mr. Mudd’s vigorous development slate (including projects bubbling at FX, Paramount and all over town), we could have spent our cover story recounting the highlights of a successful joint career in a brutally competitive business. That’s not the way the Mr. Mudd team—quite possibly the most vanity-free producers working today—likes to play it. Along with their fellow members of the PGA’s Independent Producers Committee, Halfon and Smith approached Produced By with a mission in mind: to spread the word about industry practices that today are battering the independent producing community.

Producers may find the accounts herein to be alternately ludicrous, chilling and—most depressing—familiar. Halfon and Smith are unsparing in their description of the obstacles the last 10 to 15 years have thrown at independent producers, from financier refusals to pay producing fees, to guilds’ insistence on bonds to cover foreign residuals, to even unscrupulous collaborators trying to game the system that determines eligibility for the PGA’s Producers Mark (p.g.a.).

Not every one of these stories will resonate with every PGA member. But even if your producing career isn’t routinely hamstrung by onerous requirements, the overall health of the U.S. independent filmmaking sector is something that should concern everyone who cares about the vitality of American entertainment. It may not be a pretty picture, but it’s one that we can’t in good conscience turn away from. Neither should you. Read on.

IT’S NEVER BEEN EASY TO PRODUCE AN INDEPENDENT MOVIE, BUT WHAT WERE THE OBSTACLES THEN AS OPPOSED TO THE OBSTACLES YOU’RE SEEING NOW? WHAT’S CHANGED OVER THE PAST 10-15 YEARS?

RUSS: I couldn’t even say how long ago this went away, but for independent producers, there was a period of time where if you had enough projects around town, you could limp by with enough development funding, you know, 25 [thousand dollars] for everything you set up, $12,500 up front, $12,500 when they kick it back to you. They stopped doing that. Now, they just say, “Hey, it’s all on you. Bring me everything and maybe even half the financing, and then we go.” Well in that period of putting together all that stuff, who’s paying for that? You’re paying out of pocket. That’s a pressure. So now it’s like you either have access to somebody else’s fortune, or you are just trying to figure it out.

LIANNE: And it means you need to have more projects. It means that while you’re producing something, you have to be actively developing five or six other projects. We start thinking about the movie as a finished product now, and then we kind of back into it. It used to be that we would sort of discover the movie as we made it and then try to find the best suitor for it. We can’t really afford to do that anymore, because there are just not that many places that will buy it. But there are some enormous positives, in that the buyers are as eclectic as our material. And it’s become easier to identify a compatible partner for production and distribution right from the start. It’s been a gradual process. The idea of the negative pickup and the combination of factors that surrounded the idea of the negative pickup … studios got comfortable with that idea: “You go and make the movie while we’re involved in a tangential way. You supervise it all the way through post and then bring it to us.” That was a great thing for independent producers, because it cultivated all those skills separate from the studios. For me, the difference was the slow emergence of streaming. As streaming came in, the business seemed to split, between the under five [-million dollar] movies and the movies that were 20, 30 and 40 [million]. The places that we used to go to slowly went out of business. Paramount Vantage closed up, and another half-dozen followed. Searchlight became more risk-averse. The ability to platform and to launch something slowly became prohibitively expensive. Because of social media, word-of-mouth was faster than platforming. The market started to separate—people were either on this side or on that side. And our films tended to be in the middle. They were from six to 15 [million]. And so this idea of picking something up that was execution-dependent, without enough time for an audience to discover something new, came to feel too risky. Execution-dependent—that was a good thing for us. Anything really good is execution-dependent.

photographed by Michael Neveux

RUSS: We could do that. Like, we knew we could do that.

LIANNE: I don’t know that it’s gotten harder to finance any individual film. It still takes a long time. But the possibility of taking a film from inception all the way through the process has gotten trickier because there are fewer places to go to and less infrastructure. So for us, the difference has been that for a certain kind of film, it used to be you could go to Sundance and compete with your peers. It was kind of like a beauty contest.

THE OPEN MARKETPLACE.

LIANNE: Yes, the marketplace. But now fewer and fewer films are picked up there. The market has sped up so much that even going into a festival, you need support, you need marketing, social media, you need everything at the start.

YOU NEED MARKETING EVEN JUST TO GET INTO THE MARKET.

LIANNE: Yeah. You have to be fully prepped. You have to be able to use the festival platform to your benefit. You can’t use it as we’d done before, where you build off of that and release six months, eight months later.

SO, LET’S DIG INTO IT. WHAT ARE SOME OF THE PROJECTS WHERE THESE TRENDS HURT YOUR ABILITY TO DO THE JOB, OR EVEN CAME TO THREATEN YOUR LIVELIHOOD?

LIANNE: Young Adult was a perfect example of the predicament. Let me preface this by noting one thing we learned when we talked to other producers. On the Independent Producers Committee, it was amazing to us that everybody in that room had been in the same position as we had been in on Young Adult. We were intent on getting that made and we weren’t going to spend two years getting to that point and then walk away. So when somebody says to you, “This almost works … if you would cut 30% of your fee,” you’re not going to turn around and say, “No, no, no. It’s this or nothing.” That was something that we had in common with all those other producers. We all made those deals. It’s hard not to make that deal. If a serious financier can’t make the numbers work, most producers are going to say okay, we’ll do it. We’re the weak link in that chain as far as who’s going to bend to get the thing done, because we have to make films to stay in business. And to stay sane. But once you bend …

RUSS: They know. You’re on a list.

LIANNE: You’re on a list. [chuckles]

RUSS: Another thing that’s happened, though, is that the middle has completely fallen out.

LIANNE: Yep.

RUSS: I had somebody talking about a movie they were working on that they were being offered, and they named five really well-known names. I thought, wow … I’d go see that movie. It had a $4.5 million budget, and the financer said, “I’m giving you four and a half million dollars; not a penny more. Go make this.” Well, this is the decision that you have to make as a producer, which is: Okay, all those well-known names are going to take a big chunk of the $4.5 million. What is left to make the movie and can that movie compete? In this case, I was talking to an AD friend who said, “I got a first-time writer-director and the only way we can shoot this thing with all these people is maybe a 19-day shoot.” Well a 19-day shoot; that means you can’t have a single thing go wrong. And even then you have to have a script that matches those limitations. And by the time you go through all that, you’re asking if this is going to ever play in a marketplace where it can compete? We used to be able to say, “You give us 15 million; we’ll give you a movie that competes with the studio movies.” For the look, for the performances—across the board. I don’t know how interested they are in that anymore. Those movies may not ever see the light of day or make a profit, however they’re distributed. A lot of them aren’t even expected to have box office except for gross comedies and horror films. But everything else is shoved in that same budget category.

LIANNE: Then there are movies like The Libertine, where your margin as a producer is so narrow. When we were making that movie, we posted a SAG residual bond. It’s a number that you can’t anticipate because it’s wholly determined by SAG. For us, it’s a very unpredictable thing. It boils down to a kind of bill that you get. And once you get it, there’s no negotiation. We structured that deal on The Libertine with the idea that we would get that bond back, so it wasn’t part of our budget. We thought of it like a deposit we would get back. It didn’t come back. We had no control over when or how we got it back.
 

I KNOW THAT A HUGE ISSUE FOR INDEPENDENT PRODUCERS IS THE REQUIREMENT BY SAG-AFTRA AND SOME OF THE OTHER GUILDS FOR PRODUCERS TO GUARANTEE RESIDUAL PAYMENTS. COULD YOU UNPACK THAT ISSUE A LITTLE?

RUSS: Well they passed a rule. It was called Global Rule One. This was 15 years ago, maybe a little longer than that. But before that period of time, if you were a SAG actor, say you were John Malkovich, and you were doing a Working Title film shot in Germany—well SAG got whatever residuals SAG would get from when that movie came out in America. Of course, they figured, we’ve got all these people working around the world, and so we need SAG residuals on all those movies across the world that use SAG actors. Well most of those movies (or a good portion of those movies) are put together by a producer whose process is like, “Let’s see … I need product for German television. Get me a story where the artwork can have a guy with a gun, a girl in a bikini and a house on fire.” They just put those things out—and never pay anything to any guild or anybody anywhere.

LIANNE: It was the honor system, and it didn’t work.

RUSS: SAG got shit on all these years by all of these people pulling this. That drove this push to pay residuals. Well it’s one thing to say you’re going to pay residuals by putting it in a contract and leaving it to the various distributors in those countries to make that reporting. But producers are expected to guarantee a certain amount of that. SAG said, “We’re going to come up with an amount of money that we think this film can afford; give it to us.” And they did.

LIANNE: The problem gets worse with something like The Libertine. We had Johnny Depp in it, and so the guarantee was based on the comps from Johnny’s previous films, even though in this one, he’s playing the Earl of Rochester in an English drama.


SO THEY ASSUME JACK SPARROW FOREIGN RESIDUALS EVEN THOUGH HE’S PLAYING AN OBSCURE ENGLISH EARL?

LIANNE: Yeah. It was before Jack Sparrow, but yes, that’s the idea. Johnny was huge. And so they based it on that. There are all these companies that are set up to make sure that the residuals that are owed, get paid. They’re called CAMAs (Collection Account Management Agreements). So it’s in your contract that all funds will go through this CAMA and the CAMA will distribute those funds per the contract. It’s great. Honestly it was not as much at risk as it had been before, but it still leaves producers at risk, because independent producers are often asked to sign personal guarantees. You know, when we go into production, it’s Russ and I signing on behalf of Mr. Mudd. We’re the responsible party. So if somebody for some reason doesn’t pay their residuals, the guilds will come to collect. I got a letter from the Writers Guild on one of our films which was set up with Fox—I don’t remember if it was Demolition or Juno—but instead of going to Fox, the letter from the Writers Guild comes to me. I called them up and I said, obviously it’s not me who’s holding on to this money, but the truth is it’s my name on the contract. What they’re counting on is that rattling my cage is going to be heard much more noisily than rattling Fox’s cage. And I understand it, because we’ve gone after profits on a film, too. We understand that if somebody has your money and you go and say, “I would like it,” it’ll take you three or four years to get a response. So we understand the impulse. But the Writers Guild, even as they tell you on the phone, “We know it’s not you [who has the money],” are quick to remind you whose name is on the contract.

RUSS: And when you have a film like that one, which I think was Demolition, Fox Searchlight has a portion of the world, probably 70%, but somebody else has got 30%. However it’s distributed, the deal that they work out should have nothing to do with us. But say they sold it to Russia, Poland and the Ukraine, and guess what, the distributor there didn’t pay. So who are they calling?

THEY’RE CALLING YOU GUYS.

RUSS: That’s pretty weird, isn’t it?

YEAH THAT’S WEIRD ENOUGH THAT IT ALMOST DARES YOU TO TRY AND FIGURE OUT THE SOLUTION.

LIANNE: Well that’s what we’re trying to do as members of the PGA. If the PGA was a union, our rep would be on their phone with their rep. But the PGA is a trade association, so there isn’t the same kind of bite there. Also, because the AMPTP are often called the producers during collective bargaining, people think that we are sitting on bags of money. Even the ones who recognize that confusion, where the distributors are called producers, all the unions are said to be negotiating against the producers.

AS THE PGA COMMUNICATIONS GUY, THAT MISSTATEMENT IS THE BANE OF MY EXISTENCE. EVERY TIME THERE’S A LABOR NEGOTIATION, THE PRESS CAN’T HELP BUT CALL THE MANAGEMENT SIDE “THE PRODUCERS.” EVEN THOUGH THE ACTUAL PRODUCERS AREN’T AT THE BARGAINING TABLE.

RUSS: In other countries, that might be more accurate. In most countries outside the United States, producers own the copyright on their films.

LIANNE: Yeah.

RUSS: But not here. There are maybe seven that have negotiated themselves into positions to be able to do that. But there aren’t 40. In France, distributors have seven years where they can exploit the film, in its various forms, and then the rights come back to the producer. If we renegotiate for another seven years, they would always revert back. What a huge difference! Because in France, you could just walk your film into a bank and say here’s some collateral to secure the loan for my next film. We don’t have that here. The distributors own it in perpetuity, in outer space, in the next galaxy over that we haven’t discovered yet. That’s the language that you get now in contracts.

LIANNE: It’s one of the reasons that television is such an appealing world for independent producers, because there’s a tradition of writer-producers. This idea of a producer as a creative force is not a difficult one for them to absorb. There is no confusion there about who does what. But in the theatrical world, with the financiers listed as producers on films, can we be surprised that the crew doesn’t know which producers do what? Because there are 14 of them on the call sheet, usually listed alphabetically. We know from serving on arbitration panels that how you delineate that has become foggier and foggier. Now we’re nostalgic for the days when only three producers could qualify. Now it’s become an awarded title for directors. It’s kind of like being knighted. It’s kind of a perk of being at a certain point in your company’s existence or of your status as a director.

*

WELL, THAT’S THE POINT OF THE PRODUCERS MARK [p.g.a.]. WHEN YOU SEE A LIST OF PRODUCERS AND SOME HAVE THE MARK AND SOME DON’T, THAT TELLS YOU SOMETHING.

LIANNE: Yeah, it is an amazing thing, because it makes people pay attention. It’s powerful when you go into those arbitrations, where it breaks down what a producer is and does on the whiteboard. It’s a big deal, that p.g.a. mark. Without that, there would be no delineation whatsoever.

RUSS: But now there are a lot of people that have seen that board. Financiers are all of a sudden going, “I’ll be on the set.” What? Why? Well we know why. And a lot of times, you’re even paying for their hotel while they’re sitting out there for the requisite amount of time on the set, enough that the AD, the costume designer, whoever, is able to say, “Oh, yeah, I saw that guy on set.” Right? So now he’s ready to go for his mark.

Any time you have a system, you’re going to have people who try to game that system. Our job is to keep improving it, keep refining it.

LIANNE: That’s exactly it, and I think it will get refined. I think they’re doing that. I think that’s some of what the arbitrations are for. We’re figuring out in those arbitrations how to account for that.
 

I WANT TO GET BACK TO WATERFALLS, WHICH IS AN ISSUE I’VE HEARD OTHER PRODUCERS COMPLAIN ABOUT—THE DEGREE TO WHICH PRODUCERS ARE CONSIDERED INSIDE OR OUTSIDE THE WATERFALL, AND THE MISCONCEPTIONS THAT CREATES.

LIANNE: Once you sell a film, you’re never part of the mechanism by which the money flows. You can be a beneficiary of it the same way a writer or director or an actor would be a beneficiary of it, but we are never part of that mechanism. It’s entirely out of our hands. Once the film is sold for distribution, it goes to Fox or Lionsgate or wherever. When we see that a film has done well, and because we know exactly what the budget is, we can gauge when it might start to show a profit and what that profit might be. If there’s a question about whether we should be seeing some of that back end—usually we don’t—but if there’s a question about that, we’re always in a collective with the writer and the director and one or more of the actors. We have to be in a position to be able to pay for any kind of audit, because the amount of money that it costs you to investigate can be prohibitive. In the case of Ghost World, with a UK co-production, we simply can’t afford to get our money.

RUSS: Especially if you’re going to be doing it on an ongoing basis. Because you get in line, you get in a “flight pattern,” and then nothing happens. So you go okay, what happened there? “Oh, we got kicked out of line. Something else came in, and we’re back to number 24 in the flight pattern.” Because they just don’t want to pay! There are people that just flat out don’t. They’re on the wrong side of that naughty/nice list that everyone knows …which studios will pay, which don’t pay, which might pay when prodded, all that kind of stuff. You get in with one of those that doesn’t like to pay and it can last you six, seven years of putting out bait, fishing, chumming the water for something that doesn’t come.

LIANNE: We had to borrow some money recently to continue an ongoing audit that was double the amount that we thought the audit was going to be.

RUSS: An audit we did not initiate. But once the train starts rolling, you’ve got to get on.

LIANNE: It’s the equivalent of optioning a New York Times bestseller for a year. [laughs] You pay for the money you’re owed.

“YOU PAY FOR THE MONEY YOU’RE OWED.” THAT SUMS THINGS UP ALMOST TOO PERFECTLY.

LIANNE: I’m sorry. I feel like we’re making you just sit there and shake your head.

[LAUGHS] I NEVER GUESSED THERE WOULD BE QUITE SO MANY WAYS OF WASTING TIME AND MONEY. THIS STUFF IS JUST SO FAR AWAY FROM THE REASONS ANYONE I’VE EVER SPOKEN TO HAS GOTTEN INTO THE JOB OF PRODUCING.

LIANNE: Yeah. And to stay in business, you have to be doing that all the time. You’re trying to collect from the stuff that you made that succeeded. And all you’re going to do with that is fold it into more development, into an option or kickstarting a documentary. You’re just going to fold it into keeping your business. You’re going to reinvest it.

Producers Russ Smith and Lianne Halfon on the set of one of their early collaborations, Art School Confidential 

SO WHAT NEEDS TO HAPPEN TO CHANGE THIS? I THINK PART OF WHAT’S SO FRUSTRATING IS THAT SO MANY OF THESE THINGS ARE NOT JUST OUTSIDE PRODUCERS’ CONTROL, BUT ARE IN MANY WAYS OUTSIDE THE DOMESTIC ENTERTAINMENT INDUSTRY, WHETHER IT’S FOREIGN DISTRIBUTORS WITHHOLDING RESIDUALS, OR THE SHEER ACCOUNTING COMPLEXITY OF MULTI-PARTY FINANCING DEALS.

RUSS: One problem that is closer to home, for example—just in terms of the studio and the producer—SAG does not treat them equally. That’s something that could change very easily and take a huge burden off an independent producer, the requirement to pay a residual bond. Studios don’t have to pay that. How can it be that we do? How about if our ducks are in line and we provide the CAMA, then there’s no bond? How about you make a distinction between who knows how to do this and who doesn’t? If a guild isn’t sure how to make that call, the bond company can give you an idea of who can be a little iffy.

LIANNE: That’s why there is a bond company.

RUSS: Just do a little research! You know, “These guys have forfeited their bond a bunch of times and they’ve gone bankrupt twice. If I were you, I’d get a little money to put off to the side on these guys.” As opposed to “These guys have a stellar track record. Why are you fucking with them?” Decide who actually knows what they’re doing and who doesn’t, and if you have some fears about somebody that doesn’t, work them out.

LIANNE: None of the things that are difficult for us are irreparable or systemic to working in the business, because we do have a good relationship with the studios. The studios are necessary to us. They’re part of that chain that’s hugely supportive of what we’re doing. We need them. But in any other business, it would be clear that we are not part of that cash flow after the film is sold. When the person you sold a car to crashes into a bus, the bus company doesn’t come after you because you once were in that car. It just doesn’t happen, right? They know who’s driving. But when the WGA tells you that they know you’re not responsible, but still your name is on the envelope and they’re going to come after you … I mean, you understand the end, if not the means. They negotiate with those studios. There are sensitive relationships there. Just because it’s easier or more comfortable to come to us doesn’t make it the right thing to do. There has to be a better way. With the SAG residual bond, there’s no way for us to calculate it, there’s no way for us to negotiate, and there’s no way for us to demand it back. The Libertine was made 18 years ago. I negotiated it with a person who said, “I promise you you’ll get it back on X date,” and then she left SAG. What kind of negotiation do you do with any union where it’s based on a verbal assurance and is so unpredictable? That seems like something that could be easily remedied. Everything is based on the chain of title. So they completely understand who owns the underlying rights to that film—that even if we once had them, that we transfer it to the studio. They know that. None of this is mysterious. It’s just that as the business changed from the studio era to now, the group who was not represented is today at a disadvantage. The jaws with the least bite are the producers. Not the AMPTP “producers” [laughs] but the producers like the ones in the PGA. For independent producers especially, we’ve found strength in numbers. That’s a good thing, right? We love what we do. We just need to be able to stay afloat as we do it.


*photo by Peter Land

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