QUESTION FOR FILMTVLAW.COM:
Hey, I heard like over 100 feature films are in production right now? I’m an indie producer and have been in limbo all this time cause I thought we had to wait to start development till the Screen Actors Guild Strike ended. What’s going on?
ANSWER BY BRANDON BLAKE, ENTERTAINMENT LAWYER:
Appreciate the great question about the ongoing SAG strike. I’m a big supporter of the Screen Actors Guild, which has done a lot not just for actors, but together with the other guilds has made film and television one of the only creative fields where artists can earn a living wage.
Despite the strike, SAG has provided a way for indie filmmakers who support SAG and will agree to the new Basic Agreement to keep making films, even while the big studios are sidelined! It’s one of the best moves the Screen Actors Guild ever made, and it sends a huge signal that they really are the good guys in this whole process.
SAG is taking a page from the WGA playbook during the WGA’s brilliant campaign against the agencies, where the WGA allowed agencies to sign individually to the new agency agreement. First the little independents signed, then the medium sized firms, and eventually it was just WME and CAA that were locked out of representation of WGA writers, and so they signed too.
In addition to this article, I share more than a hundred in-depth entertainment industry articles on my website at www.filmtvlaw.com/entertainment-lawyer-qa. Please also check out my bio at www.imdb.me/brandonblake.
The 2023 SAG Strike
An Update
For anyone who has been living under a rock, or in production in Antarctica for 6 months, we are more than a month into the Screen Actors Guild strike, and all studio film and television production has been halted. SAG is on strike for some very basic cost of living increases, and to address the potential for AI to become a real problem in terms of reproducing the likeness, voices and performances of actors without compensation.
However, there are hundreds of feature films either in production, or that have signed the Interim Agreement and that will soon go into production. These are all independent projects, that do not have distribution or financing through AMPTP (Alliance of Motion Picture and Television Producers) companies.
This is all part of the SAG strategy to isolate the major US studios and put pressure on them to sign a new Basic Agreement with SAG, while at the same time keeping actors working.
The Effect
SAG’s strategy has already created a renaissance in independent film production. Why? Because all of a sudden independent filmmakers without access to studio financing can cast literally the best actors in the world. SAG members understand that by supporting independent film, they are supporting the strike and working towards better conditions for all performers.
There is no better way to say it than that for independent filmmakers, the 2023 SAG Strike is literally the best thing to happen in over a decade. As filmmakers have been struggling against streamers, who have yet to replace the financing that came from the home video market, and then the COVID shutdowns that made independent productions almost impossible, indie film has had a rough ten years.
The effect of the 2023 Strike by SAG is also going far beyond just casting, unlocking new financing for independent films.
Independent Financing
Ever since the COVID lockdowns and the closing of theaters, independent filmmakers have been struggling to find equity financing. The reasons were self-evident: While studios could guarantee streaming runs on their vertical streaming platform, independent films would have to be shopped between streamers that already had their own content streams. That put pressure on both production financing and also minimum guarantees for distribution. Streamers are incredibly opaque, and so it is nearly impossible to determine how many views an independent film is getting, and how much those views are worth to the streamer.
Due to anti-trust lawsuits a generation ago, theaters had to publish box office figures, so it was easier for independent filmmakers to judge their success in the market and negotiate agreements that would provide for fair returns for blockbuster successes. This then made equity financing more available because investors would be able to chart the success of the film they invested in and profit if the film profited.
The 2023 SAG strike has resulted in increased equity financing for independent films for multiple reasons:
1) There is an overall pot of equity money available for film financing. The studios typically take the majority of that pot, around 80% to 90% of it. Remember, studios need equity financing just as much as independent filmmakers. No film can be 100% debt financed. Because of the SAG strike, the US studio share of the equity financing pot is now down to 0%. Because independent filmmakers can still make movies, they now have substantially more financial resources available.
2) Cast drives financing. Ever heard the term “bankable star”? It’s not just a film-ism. It means that a particular actor or actress is so famous that banks will lend to films, solely because of the cast member that will appear in the film. So, what happens when studios can’t make movies anymore? There are a ton of “bankable” stars that are looking for movies to make, right now.
3) Demand without Supply: Finally, given that the studio content pipeline of films is now drying up, distributors are looking for new supplies. That supply of films will come from independent producers and from foreign producers. Increased demand will mean higher MGs and bigger acquisition prices for films, as well as more expenditures in advertising and marketing for independent films. All these things create a virtuous cycle for independent filmmakers, bringing in more equity investment, etc.
Interim Agreement
So, let’s take a look at what is making this the best year in decades for independent producers. It is all about the SAG Interim Agreement, which basically provides independent filmmakers a chance to agree to the next Basic Agreement before it is signed between SAG and the AMPTP.
Does that sound scary? It shouldn’t. Because remember, before the next Basic Agreement comes online, it will have to be signed off by the AMPTP. The studios are going to fight for a fair (and then some) deal, so independent filmmakers don’t have to worry that they will be agreeing to an overly draconian SAG agreement.
So far it has become apparent that both SAG and WGA and requesting relatively modest cost of living increases, some working condition changes that don’t affect independent films much, and some guarantees that future AI technology won’t be able to copy writers’ and performers’ performances and essentially re-use them in perpetuity without payment. None of these conditions affect the ordinary independent producer.
However, there was one unfortunate change to the SAG Interim Agreement.
US Production Locations Exempted
Unfortunately, SAG has modified the Interim Agreement to require films to be shot outside the US. That means locations like Louisiana, New Mexico and Georgia will see big declines in production activity because of this decision.
Hopefully SAG will rethink this change, because American independent producers should not be driven to Canada or Mexico to be able to make movies under the Interim Agreement.
Qualifying Under the SAG Interim Agreement
There is not a simple check the box for whether a movie qualifies for the Interim Agreement. It is something that has to be determined by SAG during the signatory process. However, there are several things that SAG is looking for right now:
1) The film must have access to financing. The usual SAG bond and financial assurances are still required.
2) The film cannot be directly or indirectly financed by or have distribution through an AMPTP member company. SAG is requiring real independent productions.
3) The movie must be non-WGA. So, the writer of the literary property cannot be a WGA member.
4) The movie must be shot outside the United States.
The Time for Independent Film
If you are in development on an independent feature film, contact us and let’s discuss the opportunities. As I delineated above, it’s easy to see why independent film is seeing the best production climate in at least a decade. That’s not to say that the road to producing an independent film is ever easy, but with increased access to cast, financing and distribution, this is the moment for indie films to shine.
As with all complex entertainment matters, please seek experienced entertainment legal counsel before making legal and financial decisions. This article is for informational purposes only and does not represent legal, accounting or tax advice. Do not act on this article without hiring legal representation.
- By Brandon Blake, Entertainment Lawyer
Brandon A. Blake is an entertainment lawyer and producer who works with Academy Award winning actors, directors and filmmakers. A complete biography is available at www.imdb.me/brandonblake.
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