MMP 2014

Co-production Content Event

MMP 2014 – Producer Rudi Teichmann speaking on:
Co-production Content – from the perspective of a German film producer

Rudi Teichmann

Germany is one of the bigger producing countries and this makes a difference in international co-production. Historically Germany has not felt the same need to go for co-production in the same way as, e.g. Luxembourg, Belgium or Croatia.

But this has changed . If I as a producer look back on the last ten years, there was probably only one production that was not a co-production that I was involved in. Some co-productions were with France, some with Scandinavia, some with Belgium or Holland, and the reason is very simple: the structure of financing has become much more complex.

I can give you 2 examples of the last two films I have produced - one is a German majority/Norwegian minority co-production with a budget of 3.5 million Euros, and it had 16 different sources of finance.

As a single producer you can’t control that, or access all these sources of finance by yourself.

The other example is even more extreme - it’s not even an international co-production – and it has 15 sources of finance and we are 5 German producers from 5 different companies. So nowadays even an entirely national production will be a high-complexity co-production. Spends have to be served, and so does the tax incentive - so that the money comes back. I am a producer from Berlin and Hamburg, that’s easy, I can access financial sources from these two regions directly – but I cannot easily access Munich (Bavaria) or Nord-Rhein-Westphalen (NRW). So it is safer for me to invite a producer from Köln, or Munich, when I need them and it makes sense for the film.

So the reason why there are more co-productions than before is very simple - financing is ever more complex and difficult.

So that is the one answer. The question is: is it a burden or a good opportunity to produce better? I personally think of it as giving a lot of good chances - for example if I co-produce with Norway or Sweden I produce a product not only for the German market Which results in a completely different picture. My co-producers give me access to their markets and to their distributors so we need to create a product that makes sense for those markets.

Dean Sosa (of HRT in Croatia) just talked about categories of co-production and their usefulness for TV channels – we can also talk of platforms. In Germany today when we talk of a German-Norwegian co-production we are talking about a brand which is currently a good recognisable brand for the German public. So we can use the Norwegian market even here in Germany.

Thus co-production means co-production for different markets – not just the one market. You can benefit from this if you do it right.

Where content is concerned that is very difficult – I am often contacted with stories, screenplays, where other producers from other territories ask if that makes sense, and in the majority of cases it does not make sense because the majority of products do not make sense for the German market.

This is where I speak from the Point of view of a German producer - I have to take care of my market. If a story – a film – does not make sense for the German market there is no chance I can bring German money into such a production.

So what is co-production content that does make sense? It’s very difficult to say and there’s no clear answer. I will give you an example – I was contacted I would say 18 months ago by a Nordic producer with a script I liked a lot. The director was interesting, I knew the producer, and I still said no, because it was for me nothing for the German market.
And I was wrong. 6 months ago I have read that they indeed found a German producer, who in his turn found a German distributor. So it’s very difficult to forsee. And I would add that from project to project, picture to picture, product to product, a German producer has to see if it matches , and has a chance to go for the German domestic market.

Creative producing: how to use co-production for the creative process:

Producing a film is always personal work – you work with 10, 20, 25 and more people on one film, and you work for 2 years, perhaps 5 years, maybe 7 or maybe 10 years. It is a long time.

And it is a collaboration between several personalities – between producers, writers. development people, directors, production managers, accountants, cinematographers, costing, editors, and more. You have many collaborators. 

Why might it be a problem to include other producers? I always say the contrary – it’s good to have an experienced co-producer whom you can trust. It’s good to have a second opinion. Obviously trust is essential. Even so, my advice for any co-production would be to do a first draft agreement between the producing partners straight away. Don’t wait. It’s a test that can show how the relationship could work or even won’t work. And if it won’t work – then leave it.

Agreements in co-production have to be fair. If they are not fair, I bet you lose. If you have 3 partners in 1 film, and 1 partner brings in 50%, the second 30% and the last one 20% you have to find a way that is fair for all 3 If one of the three falls out of fair play he will not support you – its as simple as that. So agreements have to come in such a way that is fair for all partners involved, or the whole project becomes a waste of time and a waste of money and will not lead to a good product.

On a recent co-production we have a little trouble with one of our distributors, because we think their distribution report is not quite right.

We discussed this among the co-producers to get a very clear common position, and now we can approach the distributor to examine what is right and what is wrong. If you are not fair among yourselves you will never manage this kind of situation optimally.

Back to Content, however: sometimes co-production by itself creates good content. I was approached by an Icelandic writer/director/producer quite recently with a very interesting Viking comedy. I loved the script, and I like his work, he has worked in English and I know the Irish producer attached, but I didn’t see any chance for a German producer to step in. It was and is really a very good script. So we did some research and found that when the Vikings overran Northern Germany, they took the best local warriors as mercenaries and used them for fighting the English. 

When we discovered this, then we immediately had a German element, and we changed the script in such a way that there is the Viking warlords and a Teutonic camp where everyday comic things happen like inventing games, etc. The path straightened towards this now being an Irish-German-Norwegian-Icelandic co-production, which is good because the Irish producer did not see a way forward without another big European partner to finance the film. Today the film is in the financing and casting process and with luck it might be ready in another 18 months from now (Nov.2014)

The need to balance local spend: frankly this is one of the issues in international co-production that worries me: too much and too many local spends become a nightmare. We are used to local or regional spend in Germany since many years – it used to be 150 to be spent locally for each 100 given – now such figures can reach 200, 250 even 400%. Then we have the tax incentive which is another spend – you get to a point where the mathematics doesn’t work any more. So this is getting more and more difficult and ways have to be found. To give an example: (my film) “Two Lives “ (“To Liv”) was 65% German and 35% Norwegian. as far as the finance was concerned. The story took place 85% in Norway , 5% in Denmark and the rest in Germany.

Shooting practically all the film in Norway could not be matched with the funds available - money had to be spent in Germany. So what did we do? We decided to shoot all the Norwegian interiors in Germany. Which brought its own difficulties – on one location we had to shoot the ground floor in Norway and the 1st floor in Germany.

In fact this meant we had to build a matching Ist floor in the new location. But we had no other choice: we had to spend 200% of what we were given by the relevant German Fund.

But co-production can also present financial opportunity: you can compare cost of labour, prices for equipment hire or post-production – there are big differences and my personal experience tells that especially equipment hire is a lot cheaper in Germany than elsewhere. When we shot three weeks in Norway, all the equipment including the trucks came from Germany. Thus co-production structures can lower a budget, of course.

Co-production pudding or how to avoid it?

Very difficult. Sometimes to achieve financing you are forced into compromises, but I think there is a very simple rule: each story has its own roots. If you damage these roots, - if you cut them – it’s over. You will lose and you might finance a film but it will be bad. The audience will smell it and they will not accept it. If this kind of compromise produces implausibility and the audience cannot follow the story, then it’s over. 

Sometimes it’s very very difficult. You have to trust yourself and your taste. For example, you can’t take “typically” German or English actors and make them into something else – you need to keep things plausible for the audience. Puddings are made to be eaten, not watched...

Day by Day practical issues, basic rules, no-go zones...

As we said, bringing a film to completion is a journey that lasts a long long time. A normal time-frame is not below 2 to 3 years. Since it can easily cost 5 years of your life, for me there is one basic rule - equally for majority or minority producer. Íif you don’t want to work with the person you are sitting with at a table for co-production, then don’t do it. It’s very simple – you have to like the people you work with. IF I don’t, then I don’t do it. You have to trust yourself on this, and that’s it – period. 

In every production there will be arguments, disagreements, difficult moments and times – it’s never easy. There will be tough times and decisions hard to find let alone execute. And if you don’t get on personally with your counterparts then it doesn’t work. Trust is important, and so turn to your own taste and feelings.

On the other hand use your partners, because each partner has some exclusive knowledge, has experience from a number of films through which he/she has learnt production and that is great to have.

Last not least, if you have co-producers you limit your risk – that’s very simple. When I raise a 3million euro budget film on my own I carry the whole risk. And film production is a very risky business, so in co-production your risk should be limited. 

Things do change in a co-production: so the flexibility to allow changes as needed is required: changes in cast, location, shooting.

As we said before, you need to set a co-production agreement as soon as possible that stipulates and clarifies all the basic arrangements as to who is responsible for what, covering all the project’s basic elements – again cast, location, regional elements, script , national spend , etc) . Once this is worked out it does not mean that all co-producers should not be informed about each others’ work. Indeed the opposite should be the rule – but nevertheless all separate responsibilities should be included in the binding co-production agreement, even if things change. 

Because a film is like a big ship : It travels the sea at a certain cruising speed, so stopping it is very difficult and sometimes you need to find a way to change course. - flexibility , always flexibility.

Sales Agents:

Proposals for sales agents can be discussed among the co-producers based on performance and experience.

For festival distribution sales agents should be able to agree with the producers on a festival strategy. It may well be that the sales agent then has final say – so long as He/she stays successful in that strategy.

Pre-sales are a theoretical option but only if you have somebody or something really huge to offer – today pre-sales are the privilege of the very very few.

Rights, recoupments, sharing income, etc.

If you have e.g. three co-producers you can share the entire world income according to the percentage of the budget each producer is bringing in, or at an especially negotiated percentage – it is up to the partners.

You can also stipulate exclusive territories for each co-producer with the R.O.W. being then shared according to shares or equally. 

The final structure has to be fair and make sense for the project. There is no rule except fairness. Without that rule, it won’t work. 

(Where agreement cannot be found on e.g. sharing territories and income, the majority producer can have the right of final decision.)

Hiring a collecting agent is strongly recommended. There are agents in the UK, Netherlands, Denmark, and recently also in Germany.

A collecting agent takes away the burden of any unfair distribution of recoupment or profits, and has access to all internal production contracts. The more producers involved, the stronger the case to hire one.

Marketing, Promotion, Distribution 

How to turn the differences of national and international needs into opportunity? 

A co-production, as we have mentioned, should open up chances in at least one if not two additional territories.

So it is important for all the involved co-producers to understand those other markets – and they can be very different. If we go back to the example of the German-Norwegian “Two Lives” it was almost a disaster theatrically in Norway, very good in Germany and quite brilliant in some third territories. Since different markets represent different chances, it is important, where possible, to sign distribution partners as soon as viable.

Producers are not responsible for financing of marketing. That is up to the distributor. Also there is the question of which territory goes first: the later partners can learn from the plus or minus points of the primary release, whether they are among the co-producers’ territories or in third territories that have been sold by the sales agent. Ultimately the producer pays the distributors’ costs from income.

A look in the future:

It does not seem as if production itself will change very much in the coming years, but the distribution/exploitation of film is changing. Through digitalisation it is possible to produce for less money. and there are more productions on the market as a result – in fact in a country like Germany, too many products by far. Making it difficult to keep a film in the cinemas for a longer period of time. And this situation is deteriorating further. 

The future of distribution: as different digital points of exhibition increase, there will be in fact fewer theatrical releases.

In Germany there are 2 sleeping public TV giants and the 3 Private TV giants - they have lost the audience under 30 irredeemably. Netflix and Pay tv shape that TV screen audience behaviour today. Sky TV does not produce (yet) but it is up to German producers to tackle the problem of producing for the “new digital screens”.

And for all this, financing will not be simpler, and co-production will probably increase. 

Summing up: 

In international co-production if you choose the wrong people to work with it will be a burden. With the right partners whom you can trust it is an opportunity. A (co)production is as complex as building a house, and one prefers not to take the whole risk on one’s own.

(Transcript of the event held during IFF Mannheim Heidelberg at the MMP, November 2014)