Durban FilmMart 1: Pitfalls of Co-Production

I just returned from the Durban FilmMart Co-Production market, which featured a diverse slate of doc and narrative projects that are fostering collaboration between African countries and entities outside the continent. This is the first in a series of blogs about projects and issues related to co-productions in the South African industry. Durban FilmMart 1: Pitfalls of Co-Production

Michael Auret, Producer at South Africa’s Spier Films, delivered an excellent master class that catalogued in detail his last ten films done as co-productions. According to Auret, Co-Production (especially with European partners) is a very viable means of financing South African Films – nearly the only viable way at certain budget levels. South Africa’s Department of Trade and Industry offers a healthy tax incentive for qualifying national films or co-productions - a rebate of 35% for the first R6-million (about $662 000) spent, and 25% for the remainder of production expenditure in country. (Non-South-African films have a much higher budget threshold -- about 1.3 million -- to qualify for incentives).

Auret spoke to the Durban Talent Campus participants and shared his lessons, which are equally applicable to Co-Productions anywhere in the world. These lessons come from Auret’s experiences, especially cases in which he lost money because of problems described below.

Here are my takeaways from Auret’s presentation:

1. You must deliver your incentive. This is a no-brainer, but partners teaming up with you expect you to be able to successfully meet the requirements to get the agreed-upon tax rebate from your country. As the number of partners rise, the complications and distractions increase. Start with step one – make sure your production meets all incentive requirements and properly does all necessary reporting. If you fail to do that once, you likely won’t make another movie.

2. Be clear about deliverables. Industries in some countries tend to have more onerous requirements than others (according to Auret, films delivered in the U.S. and UK will require a mountain of legal paperwork relative to European films).

If you are the local production company for an international partner and you are handling the post deliverables, are you also responsible for delivering all the legal work for the international partner? Who is responsible for all releases, and do those releases meet the requirements of the partners in all countries? Who pays for versions of the film in different subtitle languages, etc.? Deliverables can be very expensive, and depending on the structure of a co-production agreement, often payment won’t come from a co-producer until you have met all deliverables.

3. Make sure everyone is on the conference call. If there are four countries involved, then the financial partners and producers/lawyers from all four countries need to be on the call. You don’t want a simple misunderstanding about the structure of an agreement to delay the deal or the film getting done.

4. Work with Co-Production partners that you like – or at least can share the red carpet with. Co-production is an intimate partnership, and whatever your level of involvement, you may be married to these people for several years.