CANNES, France -- "Che," an epic drama about the Cuban revolutionary, and "Baby on Board," a low-budget sex comedy, have scarcely anything in common except actors speaking lines in movies projected on a big screen. But both have come to the French Riviera with the same goal: finding distribution in an increasingly unreceptive market.
The Cannes Film Festival is filled with glamorous premieres and indulgent parties but also is a market for independently financed movies looking for a theatrical release. The scores of new works being sold here face times tougher than several Cannes veterans can recall.
Not that long ago, the sellers of movies made outside the studio system knew that not only were there nearly a dozen forceful buyers competing for movies, but also that those distributors often were willing to roll the dice on less conventional fare. That's all changed in a hurry.
Two weeks ago, Warner Bros. unexpectedly closed its two specialized movie divisions -- Warner Independent Pictures ("March of the Penguins") and Picturehouse ("Pan's Labyrinth") -- and the future of art-house distributor ThinkFilm ("Spellbound") looks uncertain.
Several distributors say the Weinstein Co. has been trying to sell off many of the movies it either bought or produced, and sellers say that both Focus Features ("Atonement") and Lionsgate Films ("Crash") are less enthusiastic buyers of challenging films than before.
"The sales opportunities are definitely diminishing," says Steven Beer, a lawyer at the international firm Greenberg Traurig, who has come to Cannes to sell the bullfighting documentary "Matador" and the Spanish-language thriller "Perro Come Perro."
Equally worrisome is what the sellers say (and even a few distributors admit) is a growing lack of enthusiasm for movies that do not initially seem to be inherently marketable. But some of the very movies that turn out to be minor art-house hits -- including last year's Oscar-winning "Once" -- were at first passed over because they were deemed uncommercial.
"People who are afraid to take risks shouldn't be in the specialized film business, because you need to have a passion for these films," says David Dinerstein, marketing chief at Lakeshore Entertainment, which financed "Henry Poole is Here," a challenging story about faith and redemption that Overture Films bought at this year's Sundance festival.
There are several factors shrinking an already competitive market, according to interviews with a number of distributors, sales agents and producers attending this year's Cannes festival.
First, thanks to the infusion of private equity into the film business, there are far too many films competing for the same number of moviegoers: 411 non-studio movies were released last year, up from 229 in 2002. Second, specialized film distributors face rocketing advertising costs to establish a toehold in the marketplace, with marketing fees soaring to an average of $25.7 million per film last year, up from $17.8 million a year ago. Third, due to increased overhead ("There Will Be Blood" distributor Paramount Vantage has nearly 100 employees, for instance, and has yet to make a profit) and corporate pressure to deliver material earnings, studio-owned specialty divisions are looking for art-house home runs, rather than the singles and doubles of a decade ago.
"If you're going to operate in the art film business, you need to remember that it's a portfolio business," says Overture Chief Executive Chris McGurk, who acquired the immigration drama "The Visitor" at last year's Toronto International Film Festival for $1 million and watched it become a modest success.
"You have to come in knowing that 30% or 40% of your movies are going to lose money. But you're never going to get a 'Juno' or a 'Pulp Fiction' or a 'Bowling for Columbine' unless you take some chances," McGurk says.
The studio's specialized film units are feeling the same pressure of their big studio partners: Keep costs down, but deliver more blockbusters. If not, layoffs could be looming.
That means acquisition executives charged with rooting out the next "Little Miss Sunshine" enter their Cannes screenings not only with no overdraft protection but also with unreasonably high benchmarks for what the movies need to gross. It used to be that specialty units would jump at a modest movie that could take in $10 million in domestic theaters. Now the expected floor has more than doubled.
Two prominent acquisition executives said privately that they hope "Che," which is actually two films, sells before its screenings next week so that they won't have to tell director Steven Soderbergh that they are passing on the film.
Emilio Ferrari, whose Entertainment 7 made the Heather Graham comedy "Baby on Board," is realistic about the film's prospects. "There's a good chance it won't get a theatrical release," he says.
With all the turmoil, though, some companies are weathering the storms well. Fox Searchlight has one of the best batting averages in the business. And Miramax Films, which bought the critical hit but commercial wash "The Diving Bell and the Butterfly" at last year's Cannes festival, has combined good taste with creative marketing.
"We want to make a profit on every acquisition," says Miramax President Daniel Battsek. "But we also believe in filmmakers who really have a singular voice and movies that are fascinating."