Big Bankroll for Indie Producer

Hoping to cash in on the independent film renaissance, two equity investment firms have agreed to bankroll Oscar-nominated producer Michael London in a venture to make low-cost movies under his own banner, Groundswell Productions.

London, whose films “Sideways,” “Thirteen,” “House of Sand and Fog” and “The Family Stone” were developed outside the studio system, will have access to an initial fund of $55 million. That amount is expected to double within six months.

Under a five-year agreement with Beverly Hills-based Lexington Film Funding, created by real estate mogul and philanthropist Lou Gonda, and New York-based Crescendo Independent Film Fund, London will have the power to make five films a year, each with budgets of as much as $20 million.

“The holy grail as a producer is knowing that when you really love something you can say yes,” said London, 47, who plans to hang out his new shingle in Beverly Hills within the next six weeks.

Independent movies are enjoying a heyday in Hollywood both critically and commercially. This year, four of the five best-picture Oscar-nominated films -- “Brokeback Mountain,” “Crash,” “Good Night, and Good Luck” and “Capote” -- are indies that relied heavily on outside financing. Though none is a blockbuster, each moderately budgeted movie has crossed over to mainstream audiences.

Still, London’s deal is only the latest to illustrate a Hollywood truism: No matter how unpredictable the movie business can be, private investors are drawn to it like moths to flame.

“It certainly involves a lot of risk,” acknowledged Harvey Gettleson, chief operating officer of Gonda’s Lexington Ventures, which invests in real estate, start-ups and entertainment. “But we did a lot of homework on this.”

Gettleson said that by controlling costs, he expected to average $20 million to $25 million in profit per film over a slate of movies once all the revenue streams, including home video and TV sales, were factored in.

Peter Herzig, managing principal of Crescendo Capital Group, said that when he met London 1 1/2 years ago and began discussing a potential arrangement, “I was very impressed with Michael’s business acumen. I have a lot of confidence in him.”

London’s track record helped seal the deal. The producer’s most recent film, the ensemble comedy “The Family Stone,” cost $17.5 million and has grossed $90 million worldwide to date. It was released by 20th Century Fox Film Corp. in December.

London’s Oscar-nominated “Sideways,” an offbeat comedy about a lonely would-be novelist and his washed-up-actor buddy, cost $17 million and took in $110 million worldwide. Fox Searchlight released it in 2004.

London will be an equity partner in the new venture, sharing ownership in the movies with his investors. He will also be able to offer talent and filmmakers attractive “back-end” profit participation deals “that they’d never see working for a studio unless you’re Tom Cruise,” London said.

London said he would continue to make the kinds of filmmaker-driven movies for which he’s become known, as well as some commercial comedies and genre films (horror and thriller) that have a unique bent.

He said he would seek to defray production costs on star-driven movies by co-financing them with a studio partner or selling foreign rights in advance.

One major motivator for London in securing his own financing was that it would enable him not only to continue developing projects independent of the studios but also to actually make the films and share in the spoils.

“As a producer without financing, there comes a moment when you have to give up control and the financial upside of your movies,” said London, who to this point had received producer fees only on the films he made. He said he planned to negotiate domestic distribution deals on a movie-by-movie basis but would entertain making an overall distribution deal with a studio.

Because Paramount Pictures Corp., owned by Viacom Inc., let London out of a three-year producing deal to form Groundswell, the studio will get first crack at any project of London’s budgeted at more than $25 million.

Groundswell has two projects on deck to start filming this summer: “The Mysteries of Pittsburgh,” a coming-of-age story that “Dodgeball” writer-director Rawson Thurber adapted from the first novel by Pulitzer Prize winner Michael Chabon; and “Trust,” a spy thriller written by Robert Edward and directed by Neil LaBute.

London, who worked as a staff entertainment writer for the Los Angeles Times in the 1980s, began his film career as a top production executive for Simpson-Bruckheimer Productions and later was an executive at Fox.

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A Michael London filmography

Producer Michael London’s upcoming “The Illusionist,” a period romantic thriller written and directed by Neil Burger, is set to hit theaters this fall. Here are some of his other credits.

*--* Year of Worldwide Title Studio release Cost box office (In millions) Sideways Fox 2004 $17.0 $110 Searchlight 40 Days...40 Universal 2002 $15.0 $95 Nights Family Stone 20th 2005 $17.5 $90 Century Fox The Guru Universal 2002 $16.0 $25 House of Sand DreamWorks 2003 $17.0 $25* and Fog Thirteen Fox 2003 $1.5 $11 Searchlight

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*Estimate

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Source: Times research

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