December 5, 2018

Paul Raleigh on Film Bonds

A man with a wealth of experience as a producer, Paul Raleigh now works with Hollard Film Guarantors, bringing productions through the final leg in their often arduous journey from script to screen. In the last three years, the team – made up of Paul Raleigh, Buyisile Kubheka, Moroba Nkawe, Gail Radnitz and Wesley Raleigh – has bonded over 60 films with budgets totalling almost R1 billion. We speak to Paul to find out more about this process and how things work behind the scenes.

How has 2018 been for you at Hollard?

Our financial year runs from 1 July to 30 June. We target around 30 films annually, although we are focussing on bigger budgets, and it’s encouraging to see that producers are moving into bigger budget territory (relatively speaking) and we have several projects in the R20- to R40-million range. We are close to closing a US$27 million TV series, and in order to compete internationally, budgets have to increase – and so, too, the star value. This is sometimes a controversial subject, but sales agents will always ask ‘who is in it?’

What’s a typical day in the life of a film guarantor? How does one get into the ‘film finance’ game?

We generally have about six projects in prep or shooting at any one time. This keeps our team on our toes as the monitoring process is critical to the successful completion of every film.

There are two distinct divisions to a Completion Guarantee. The first is the management/monitoring of the production. This is the company that interfaces with the producers, assesses the production, and documents and lives with the production until the film is delivered. The second is the company that underwrites the Guarantee. From an investor’s perspective, this is a critical component. The reason insurance companies are the underwriters in the film business is that they have strong balance sheets and understand risk. The underwriter is the key to this business and can command 40% of the premium. In addition, we have re-insurers who stand behind the primary insurer where the budget is very big and the risk is perceived to be uncomfortably high. This slices off another piece of the pie. It’s not surprising, then, that there are only a handful of these businesses around the world.

How hard is it for filmmakers to find the finance to complete a film, and where does a guarantor fit into this process?

One of our challenges in the film industry is to attract an investor pool from the private sector. Generally, the financiers of local films are the same institutions, in different combinations and all government, with the exception of M-Net, who are active in funding local content. In order to attract new investors, we have to show commercial successes regularly. One swallow does not make a summer and we need more swallows! We like to interface with producers early on in the process so that we can walk the walk with them.

What are the trends these days in the types of films being made or requesting assistance from Hollard?

For the past ten years there has been this belief that budgets of R6 million are the magic number and R10 million is ‘high’. For ten years, budgets have hardly moved and if we wish to produce ‘export’ films, we need to resource producers far better. Most of the films we produce rarely see a screen outside of South Africa – and there are markets internationally that will consume good content. The USA is now 30-40% of the market, so even American producers need to sell their films in the rest of the world. Thirty years ago, the USA was 60% of the market. Times are changing.

Take us through the basics of how a completion guarantee works.

As an opening bid, we ask producers for a budget, script and a finance plan. This is uploaded to our online app. Based on these documents, we are able to determine what other documents are required, and we then unlock those tabs on the app. The producer will then see a list of documents that will be required and these are populated as they become available. There will be lots of interaction through mails and calls until we get to the point where the lawyers will commence drafting the Completion Guarantee and the Producers Undertaking.

What are your thoughts on the local film industry?

William Goldman (a screenwriter at Out Of Africa) in his book Adventures in the Screen Trade, said that ‘nobody knows anything’. What he meant was that there is no sure-fire hit and no recipe for success. Trends are mostly set by gems that break the mould and in the process set new trends. These are not easily predicted in advance. There is a school of thought that suggests that we are making too many films and we should put more resources into fewer productions. I’m not entirely persuaded by this argument, as the final arbiter will be the market. Bad films won’t get screens and that will be the filter that ultimately determines the number of productions that get made.

In terms of development and finding stories, this is the deep level mining of the business and this is where we should apply our resources to find those gems. We have a wealth of story material but buying options and developing scripts is time consuming and expensive – in many cases beyond the reach of local producers. The result of this is that some of our best material is snatched up by international producers with no guarantee that they will make the stories better than we would.