The Sundance Suckers

If you accept the premise that the film business is the folly of the filthy rich, then the independent-film business must seem the folly of the stupidly rich.

Look at the winner of this year‘s documentary award at the just-finished Sundance Film Festival: Capturing the Friedmans, produced and directed and, most importantly, financed by Andrew Jarecki, who at age 25 co-founded MovieFone and sold it to AOL in a deal valued at $388 million. The Sundance media were agog, suffering from amnesia that rich guys are a dime a dozen behind the scenes and, now, even in front of the camera.

Lore has it that, if a sucker is born every minute, all eventually land in Hollywood -- with a detour to Park City during January alongside stars and wannabes (hard to tell them apart in identical Roc-a-Wear and Juicy Couture beneath those real and fake shearlings). As for financing independent films, it’s a case study in pigeon finding. But now birds of a different feather are flocking to it: hard-nosed businessmen.

Every day, filmmakers who sound more like flimflammers are scouting the next financing angel. Hate those high-pressure supper-time telemarketing calls to your home? Those guys are amateurs compared with the ballsy pros currently crisscrossing the country doing dog-and-pony shows for -- no kidding! -- dentists in Wyoming.

Their spiel is that, given the bursting of the Internet bubble, the declining price of stocks and the tanking of rates on fixed securities to their lowest point in 50 years, the potential returns on the movie business look like attractive investments by comparison. ”Just think: There are a dozen states offering budget-based rebates to lure movie business inside their borders. The current incentive deals range from Hawaii‘s offer of 7 to 8 percent to Louisiana’s staggering 13 to 14 percent. And money markets are paying what?“

The bait is not just another art-house loser but the next Blair Witch Project. Yes, the most successful independent film ever made, My Big Fat Greek Wedding (domestic box office take to date: $236 million), scored producer Paul Brooks that recent big, fat profile in the Los Angeles Times. Barely mentioned is Brooks‘ investor and the movie’s backer -- Norm Waitt, who co-founded Gateway computers with his brother in an Iowa barn 17 years ago and formed the film, music and television outfit Gold Circle Entertainment after Hollywood rejected a screenplay written by his martial-arts instructor. With a net worth of $1 billion, Waitt lost a lot on prior bombs but had the capital to stay in the game. ”He just loves movies,“ Brooks told the Weekly.

Everyone in Hollywood has heard of the film company Alcon Entertainment and its two Princeton alums, Andrew Kosove and Broderick Johnson, and its first monster hit, My Dog Skip. But few know that backing them is the founder of Federal Express, Fred Smith (who claims his canine picture makes everyone ”get a lump in the throat“).

The two wunderkinds‘ mantra was that making money in the movie business is difficult but not impossible, given the right formula. Theirs was to spot the trend earlier than most that the movies business was soon going to mirror the music industry: a handful of distribution and marketing entities, with production and finance coming from the labels, which not only could be more nimble but also negotiate better terms with talent and unions. A go-between helped put the two partners in a room with Smith.

”But we didn’t go to Memphis and charm this man with our card tricks. What Fred responded to was our business plan,“ Kosove tells the Weekly. ”Different investors invest for different reasons. Fred‘s motivation was much more about creating a business than it was about the idealism of making one great movie to change the world.“ (Smith later described how the ”two young men pitched something they thought they could do in the movie business in a way that nobody had ever done before. And it made a lot of sense to me. So I decided to back them -- because they reminded me of me.“)

Waitt and Smith join a growing list of self-made success stories gambling on Hollywood, like Microsoft co-founder Paul Allen, whose $600 million investment jump-started DreamWorks. In Vegas, they’re called the whales. In Hollywood, they‘ve been known as minnows, because so many of the fortunate guys who come to town with a fortune already -- Steve Tisch (heir to New York’s Loews‘ fortune), Ted Fields (member of Chicago’s Marshall Fields family), the late Dodi Fayed (son of Britain‘s Harrods owner) -- were babe-seeking scions of wealthy families located outside California. Here, along with mother’s milk, the well-to-do babies suckle on warnings about the movie biz.

Others have been weaned. In the 1980s and 1990s, Wall Street flashes in the pan were financing independent films because of Something Wild fantasies about Melanie Griffith. In 1999 and 2000, German film distributors raised more than $3 billion in capital from IPOs, then went on a buying spree of Hollywood scripts until the Neuer Markt collapsed. Dutch tax money disappeared. Before that, the Japanese fled. South Africans became a thing of the past. The Australians never lived up to their hype.