Last week, The Phantom revealed what he saw as the greedy behavior of the distributor of "My Big Fat Greek Wedding," a runaway sleeper hit. He now sheds light on a questionable distribution deal just made in Toronto...

The acquisition under scrutiny here is "Cabin Fever," an independently produced horror film. In the largest deal of the Toronto International Film Festival, Lions Gate Films reportedly paid seven figures to the filmmakers, while committing another $12 million toward prints and advertising. Other offers for "Cabin Fever were said to be in the $4-5 million range, but without that hefty commitment to marketing.

All told, perhaps a dozen independently financed movies were sold to distributors last week in Toronto. This activity should help Toronto retain its reputation as one of the best markets for independent filmmakers to sell distribution rights to their movies. But when all the checks have cleared, these deals will amount to good news for only a handful of the thousands of people who have invested in little movies.

And, perhaps more important, it's very bad news for anyone who loves small quirky movies. Why is that? Because when the only picture to get more than $1.5 million in advance is a mass-market horror movie that will probably open in over 2,000 theaters, the independent film business is obviously in serious trouble. In other words, if Toronto is an indicator, a filmmaker who spends more than $1.5 million to make an independent movie has very little chance of getting money back, unless the budding auteur has been smart enough to spin his plot around flesh-eaters hanging out in a cabin in the woods.

But, wait a second. "My Big Fat Greek Wedding," a movie that cost $5 million to make (funded through a cable TV deal by HBO and Gold Circle), has just blown through the $100 million domestic box-office barrier. Isn't that reason for optimism? Not really. My guess is that, if screened at a festival or market, "Wedding" would have gotten no more than a small advance--less than the negative cost of the movie.

Don't forget--this is a market, and the top price offered is the best price you're going to get. It's easy to see how "Cabin Fever," a conventional shocker, started a frenzied bidding war at Toronto, and you've got to wonder whether "My Big Fat Greek Wedding," a romantic comedy aimed at a non-teen audience and boasting no stars, could have elicited the same excitement among wary acquisition executives.

The nature of a "bidding war" is that the buyers know what their competitors are offering. Multiple bidders can drive the price up, but collusion, fear of being outbid, or fear of over-paying can also keep prices down. Clearly, the distributors have become accustomed to paying pennies-on-the-dollar for movie rights acquired at festivals and markets. As Tom Ortenberg, president of Lions Gate Films Releasing, said in a conversation with indieWire, "We believe the economic model for producing arthouse films is a limited one. We've had great success acquiring specialized arthouse films at festivals for a fraction of the production cost and so, I would argue, in general, that the better economic model for arthouse films is acquiring them at festivals."

The trend of paying less than the movie cost to make comes at a time when the key distributors of independently produced movies are in fact divisions of the major studios: Miramax is owned by Disney, Fine Line is part of Time Warner/AOL, Good Machine has been absorbed into Universal, and so on and on. The paltry payments for independently produced pictures also come as marketing departments rely more on polls and focus groups. In recent years, Miramax has gained a reputation for asking filmmakers to re-cut movies based on these group endeavors. And, of course, Miramax has started producing larger budget pictures such as "Serendipity" and "The Four Feathers"--movies which are indistinguishable from routine studio fare.

At the same time, Miramax has begun to rely on expensive pre-release marketing for more and more of their movies. The patient build of a "platform" release is almost a lost art. Today, lower-budget independent films are often marketed as if they were studio pictures. Rather than being given a chance to build word-of-mouth, independent movies are being lumped together with studio movies. The rule is, "Open big or you're gone."

Miramax started this trend by spending huge amounts to market certain independent movies. But as they--and other distributors of small movies--have learned, this is a very risky game. While some small movies have benefited from expensive pre-release marketing, the broader result has been the closing of theatrical markets to movies that don't have $5-million budgets for splashy launches. The reality is that most specialty fare can't be marketed as if it were intended for a mass market.

To compete with Miramax, independent distributors now must take out large ads in major newspapers and be prepared to spend freely if the movie seems on the verge of becoming a hit. Because they are competing with divisions of major studios, small independent distributors know that the cost of marketing their movies in theatrical release will be enormous. So the distributors are understandably cautious with their advances to filmmakers. If a movie doesn't have an obvious pre-release marketing hook (i.e. a big star, genre appeal, or notoriety of some kind), it simply isn't deemed a sound investment.

Today, instead of being encouraged to make a unique film, independent filmmakers are advised by executives like Jonathan Sehring, president of IFC Entertainment--the company that gave us "My Big Fat Greek Wedding"--to make bigger-budget movies with big stars. "It's a distribution market that is increasingly reliant on higher budgeted films, with name casts," he has said, seemingly forgetting that there was not one big name in the phenomenally profitable "Wedding."

The irony is that lavish spending on pre-release marketing can bankrupt those few small companies that risk spending to sell their "star" vehicles. Take "Scotland PA," a well-reviewed comic spin on "Macbeth" that starred Christopher Walken, Maura Tierney and Andy Dick. The movie made an auspicious bow at the Sundance Film Festival in 2001. A small New York-based distributor, Lot 47, acquired the film. Lot 47's marketing strategy was to find a quiet weekend and buy large newspaper ads to launch the black comedy as if it were a big studio movie. After all, "Scotland PA" had name actors and "buzz" out of Sundance. But the quiet February weekend carefully selected to open the movie (away from studio competition) turned out to be the nightmare weekend eventually chosen by Warner Bros. to open "Collateral Damage" and for Universal and MGM to release "Big Fat Liar" and "Rollerball."

No one had huge hopes for these three mainstream movies. Yet, unfortunately for "Scotland PA," the studio marketing departments have learned how to spend unsparingly to maximize the opening weekend when they know that subsequent poor reviews and word-of-mouth are inevitable. Thus, "Scotland PA 's" advertising campaign was swamped in a sea of two-page ads and relentless TV hype from the studios.

Despite spending big on ads and posters, the promoters of this little movie could not get the public's attention. "Scotland PA" never even recouped its advertising expenses. Six months later, Lot 47 was all but out of the business.

The Phantom Indie Producer
New York City