With one month left until SAG-AFTRA’s collective agreement with the AMPTP expires on June 30, independent films are in a panic.
With the SAG negotiating committee calling for a vote to authorize the strike, manufacturers are stuck in an endless cycle of existential crisis. They’re alternating between a rush to roll cameras, making minute-by-minute decisions about continuing prep work, or making the call to advance start dates until — fingers crossed — a strike is averted.
“Almost every day I get an emergency call about whether to push a movie, whether to keep spending money and see what happens,” an entertainment advocate told IndieWire. “Independently financed films, it’s very difficult. These are real people putting in real money. It’s not that a studio isn’t real money, but it comes with all kinds of risks.
For independent films, these risks require funding to be secured by guarantors of completion, and they’re not interested in waiting to see what happens at the end of June. The entertainment lawyer said that in the early days of Cannes, at least six different European productions were put on hold because bond companies were afraid to take the risks associated with a work stoppage. Another Cannes sales agent said he met with a financier who felt he had “the latest project tied up,” which was due to start this week and finish shortly before the current contract expired.
Expiration reported that “The Island,” the latest Pawel Pawlikowski (“Cold War”) film starring Joaquin Phoenix and Rooney Mara, was on hold because it could not secure a completion bond. An individual familiar with the production confirmed to IndieWire that it was on hold, but would-be enforcer Film Finances Inc. did not respond to IndieWire’s requests for comment.
One film finance executive explained that if one company like Film Finances, the largest guarantor in the industry, is concerned, so are everyone else. Almost any indie film with a loose tie is likely to run into the same problem. Many of the projects have locked scripts, but it’s the threat of a DGA or SAG work stoppage that needs clarity. If you’re not starting principal photography Right nowfew lenders want to risk being shut down mid-production.
“If you have a shoot that goes beyond the June 30 deadline or even closes, you won’t be able to get a bond. It’s that simple,” the sales rep said. “There’s just no practical way.”
At its most basic level, the completion bond ensures that a film can be turned over to a distributor and that the loans are repaid. The bond company also checks a film’s budget to make sure it’s sufficient to repay all costs, and will build in an emergency, about 10 percent of the overall budget, in case something goes wrong before the bond company knows of costs. Studios don’t have these problems, unless a film is independently financed; the studio handles these concerns in house.
Completion bonds are like earthquake insurance: it’s expensive and the odds of using it are very slim, but not having that protection against a budget exceeding a few million dollars is courting catastrophe. Terry Gilliam’s “The Adventures of Baron Munchausen” (1988) was called into escrow and was taken over by Film Finances after the budget increased by more than $20 million. “Highlander II: The Quickening” (1991) also received a bond when it went $10 million over budget.
One infamous example of a no-strings-attached film was David O. Russell’s 2008 production “Nailed,” financed by troubled Capitol Films. After IATSE shut down the film multiple times due to unpaid crew, Russell and producers Doug Wick and Lucy Fisher left the production and Capitol went bankrupt in 2010. It was released in 2015 under the title “Accidental Love” with one pseudonym director, Stephen Greene.
As a second attorney explained, a strike can be considered a force majeure event and won’t be ruled out as a risk, but while it could delay a film’s delivery date, the escrow company would still be hanging over any closing costs. .
A guarantor of boutique film bonds who spoke to IndieWire said his firm has granted bonds for projects that are starting soon, and even those with finish dates after the SAG contract expires. Some producers, said the guarantor, are willing to take the risk even with the high costs (and associated insurance premiums).
While American producers had long been preparing for a work stoppage, the former entertainment lawyer suspected that European producers – such as those of “The Island” – were caught off guard.
“It’s shocking, but that’s what’s happening,” the lawyer said. “If you’re the financier and you have to pay for the preparation and your bond is coming due, that’s fine, and then all of a sudden this happens, a lot of people are losing a lot of the money they were paying for the preparation.”
There is the outside possibility, however unlikely, that an independent production could persuade SAG to provide a strike waiver, much like the Tony Awards negotiated with the WGA. Very small independent projects not affiliated with the AMPTP may also attempt to enter into an interim agreement with SAG, where companies agree to different terms from the existing agreement. A representative of SAG-AFTRA did not respond to a request for comment.
“We have already gone through these periods and we have linked many films that have been threatened with strikes or during strikes, some linked to the corporations themselves,” said the guarantor. “It doesn’t mean all indie films will be shut down, but it sure does wreak havoc in the industry.”