By Cynthia Johnston
Editor’s note: Interviewing one of the most powerful lawyers in the entertainment business, with a star-studded client list, could intimidate a journalist like myself. But, after speaking with him for only a few minutes, I could see that he was very accessible. Bam! He was on the phone, and Bam! He was answering questions before I even asked them. The following is a taped conversation which followed an inital untaped interview. I very much enjoyed both conversations as Mr. Dekom is very entertaining.That’s the good news. And now, for the bad news, I give you Peter Dekom.FILMDEPENDENT: Last time we talked you mentioned a net negative return in indie filmmaking…PETER DEKOM: Correct. How about in filmmaking? Forget “indie” filmmaking. It includes studio filmmaking in that too.
DEKOM: Yes. MPAA companies are at approximately a zero percent rate of return.
FILMDEPENDENT: And this is industry wide, then?
DEKOM: Industry wide. Sure you’ll have some players who make money and some players who don’t, but the overall rotation is not good.
FILMDEPENDENT: Is the cost of production still going up disproportionate to revenues?
DEKOM: Not only cost of production, but cost of marketing. They’re both going up disproportionately to the revenue stream.
FILMDEPENDENT: Do you have a sense of when it might top out?
DEKOM: Well, let’s put it this way. My prognosis for this business becoming a meaningful business again – in my own internal numbers – is five years from now. You see, two things have to happen. You have to stem the tide of cost increases, and revenues have to continue to go up. Now I believe that because you had a spate of media buys at high prices, ad rates are not likely to settle down instantly. But when they do, that’s the first good sign; when advertising rates – media buys – increase no more than the rate of inflation. When we have that, that’ll be the first sign. Component number two will be a willingness on the part of the production companies, and studios, and others to say NO to price increases in excess of inflation rates at the time. When those two events happen, then it’s going to be a question of how long it takes until the revenue stream catches up to the costs that have already taken place.
FILMDEPENDENT: And that’s your five to seven year cycle…
DEKOM: That’s my perception, yes.
FILMDEPENDENT: So that would put five years on top of however long we’ve been moving into this situation.
DEKOM: That is correct.
FILMDEPENDENT: Which has been about how long?
DEKOM: We have been steadily doing this since probably the mid to late 1980’s.
FILMDEPENDENT: It’s a long one…Ever since the Reagan tax reforms filmmakers have been taxed unfairly compared to writers and other types of artists, and an independent filmmaker who’s been working on a film for years cannot write off any of his or her expenses until the film is done.
DEKOM: Because you don’t have any income.
DEKOM: It’s called a hobby law. That tax code has been in existence not just for filmmakers but for everybody for many, many years. So it’s not discriminatory against filmmakers, it’s discriminatory against people who invest consistently in businesses that don’t make money.
FILMDEPENDENT: They’re having enought trouble as it is.
DEKOM: But it’s not the government’s job to subsidize filmmaking. The United States has never, in it’s entire history, subsidized filmmaking on a commercial level. The tax code may or may not be advantageous for a filmmaker but it’s not directed negatively at filmmakers.
FILMDEPENDENT: Alright, then I don’t feel so bad. You had said earlier that it’s hard to get equity players on pure financing…
DEKOM: Yes, because basically …on a statistically average basis, you have better odds in Las Vegas. In other words, someone who gives you money has to love you so much they have to not care if they ever see it again.
FILMDEPENDENT: And where are “they?”
DEKOM: They’re called Mommy and Daddy and Uncle and Aunt and Cousin and Brother and Sister…
DEKOM: Or they’re people with extreme passion, who believe in something and are willing to believe that somehow they can beat the odds. Those are extremely rare players. The truth of the matter is that equity investment in film is very close to donating your money – without the tax writeoff.
FILMDEPENDENT: Are there any bold new players shelling out in Europe?
DEKOM: The only players who buy – or put money into films are in with..value.. for the buying itself. But normally those players insist on certain levels of motion pictures, with certain levels of cast, etc., and usually on some form of meaningful domestic distribution.
FILMDEPENDENT: Are there any options in Europe for films with no stars? Basically I’m hearing you say they need a star.
DEKOM: They need something. It could be a high concept film, or else they have to see it when it’s finished. But people keep forgetting that even though the words “film business”, or “movie business”, appear to be an oxymoron, most of the people who provide money for films actually expect to make money on it or have an expectation or desire to do it. A filmmaker’s passion is nice, but largely irrelevant. They need to know, when they’re taking a risk, how do they get their money back and if you can’t answer the question, “How do I get my money back?”… You know, “Oh, I’m making a good film.” Good films don’t necessarily market well. They have to figure out how they’re going to come up with a company: how they’re going to get people into the theatre; how they are going to get people to rent or buy videos? There are a lot of issues here and a lot of filmmakers think, “Well, gee, my project is so good and so wonderful, when they see it, they’ll understand.
FILMDEPENDENT: Uh huh.
DEKOM: The problem with investors is, “Well that’s great. What if when we see they don’t understand. What am I going to do?” And so what they want to have is some kind of protection for their investment, where they think they can get it back. Unless they love you so much, and care about you so much, on an interpersonal basis that they don’t care.
FILMDEPENDENT: Uh huh.
DEKOM: And that falls into the generic category of “pick your parents carefully or marry well”.
FILMDEPENDENT: (Laughter) Ahh, it’s too late for both.
DEKOM: Oh well.
FILMDEPENDENT: Back to passion.
DEKOM: You have to understand. Right now it’s sort of like, let’s say the real estate market in, say, Chicago, Illinois, is decreasing at five to ten percent per year and you’re trying to convince people to build new buildings in Chicago. How successful do you think you might be?
DEKOM: That’s what you’re faced with. Costs are going up. Revenues are stable, or going up slightly. The business doesn’t make money at all. How do you say to an investor, “Gee, ignore reality, and come and talk to me.”? How do you do that?
FILMDEPENDENT: Because mine is “The One.”
DEKOM: Mine is “The One.” Every single filmmaker. By the way, if you want to start your article, say, Every filmmaker in the known Universe always says, “My picture is a great idea, it’ll make a lot of money.” And every investor in the world knows those words have absolutely no meaning whatsoever. Unless they’re very naive..
So then you move to the second question which is, assuming that your picture isn’t the most exciting picture ever made, how do I protect my investment, and the proverbial answer from independent filmmakers is, “Trust me.”
FILMDEPENDENT: Ha hah.
DEKOM: And that’s just not good enough. So the way of independent filmmaking in the United States, it’s still done by people who can put up their own money or their family’s money or their friends’ money and there’s very little other ways of doing it. If you want to start getting commercial, you start having to put in commercial elements. If you start wanting to go to the traditional financing sources you have to start putting in traditional commercial value.
FILMDEPENDENT: As in a star, or a stable…
DEKOM: Stars, special effects, and it probably needs to have some form of meaningful domestic distribution. Making a movie and entering it into festivals… you and millions like you. There are so many pictures entered into festivals today, just to get into a festival is a major achievement. So there’s a glut of independent people pushing products which they made for ten, twenty, thirty, forty, a hundred thousand dollars and the truth of the matter is, with rare exception, nobody really wants to see them.
FILMDEPENDENT: So is there any point in making a 16mm, no star, character driven, low budget indie film?
DEKOM: For your own gratification.
DEKOM: And perhaps you will be the one in one hundred movies that generates enough interest to go somewhere else. But there are much better places to put your time, effort and money. The fact that you really want to do something with your life, and that you’re passionate and driven is wonderful, but it’s not a mandate for anyone else to support you.
DEKOM: And in truth, if you were a person of some modest substance and some crazy kid came to you with an idea to do a 16mm character driven independent film, what possible reason would you have to give them money? Ask yourself that question from the investor’s perspective. And assume that every investor in the world who’s ever been approached on a movie hears, “This is The One.” So those words are meaningless. Why should you give money? And that question is just not asked by filmmakers. “Because I deserve it.” “Because my idea is brilliant.” “Because the world needs to hear my expression.” The truth of the matter is that the world isn’t going to change one iota whether you make or don’t make your film. And that’s tough to realize. The world is tough. Money is tight. People want a rate of return. In a world of capital these days, where the major studios are at break even, what in the world is an independent filmmaker making an esoteric art film thinking even an inkling that he can make a dime on the movie. That’s arrogance. And unfortunately there is a thing called “creative arrogance.” But what I always say is if there is enough passion, if someone really believes enough, and they work hard enough, eventually they’ll rise to the surface. So perhaps all of these barriers are being placed out there so that the best really do come out.
FILMDEPENDENT: Well that’s actually kind of encouraging.
DEKOM: Because after all, the filmmakers of the future have to come from somewhere. It’s like becoming the person who graduates first in their class at Yale. Somebody has to graduate first in their class at Yale. Are you good enough?
FILMDEPENDENT: Survival of the fittest.
DEKOM: Absolutely. Darwinian theory pushed to the N’th degree.
FILMDEPENDENT: I want to go back to content that makes up for no stars, in Europe or here…
DEKOM: That’s extreme… extreme uniqueness, entertainment value and excellence…sex, lies and videotape.
FILMDEPENDENT: And so that’s what you were referring to as high concept?
DEKOM: Well, high concept is something that can be marketed in a single sentence. But when you have a sex, lies and videotape, it was such a unique and interesting movie that it didn’t need stars. The whole idea, the whole project carried itself out and swept onto the Earth. When Pulp Fiction came out it didn’t really have any stars, it had a bunch of has-beens who are now superstars. But ultimately things that are really good – and the strange thing is there’s a bit of serrendipity in all this, you have to hit a social cord at exactly the right moment, which means when you start to make a movie, you kind of have to know how everyone’s going to feel a year later. Isn’t that an interesting challenge?
FILMDEPENDENT: Yes. What’s the magic? How do you learn to do that?
DEKOM: You don’t learn how to do it. God gave it to you, or God didn’t. Or you’re lucky. Just wanting it isn’t enough. Going to film school isn’t enough. You have to be blessed and perhaps some serendipity should move your way.
FILMDEPENDENT: Between good karma and the lucky sperm club…
DEKOM: Hey! Don’t discount the egg.
FILMDEPENDENT: No, I’m not…
DEKOM: Until it’s ova!
FILMDEPENDENT: (Loud laughter) Oh, God… Alright. What about shooting on video for indie filmmakers? Is that a viable option?
DEKOM: I don’t think so. There’s no market for it.
FILMDEPENDENT: Except for something like the flashback scenes in Gravesend?
DEKOM: Well, what you wind up getting is an image quality which doesn’t translate well onto a big screen except for momentary stylized inserts. You can’t blow up video except for HD and HD isn’t very heavily available. So there’s no point in shooting on video. It just doesn’t blow up. You can’t show it on a screen. Not from beginning to end. You can have bits and pieces of it. But to have an extremely unclear, grainy image up on the screen that looks like a tv image? It’s great for practice, but it don’t mean much in the marketplace. Unless you’re in the X rated business which I don’t think we’re talking about.
FILMDEPENDENT: No. I don’t think so.
DEKOM: Or as they say in the X rated business, don’t put all your X in one basket.
FILMDEPENDENT: (Feeble laughter) You said that you were not open to solicitation by indie filmmakers?
DEKOM: I’m not even in the motion picture business anymore.
FILMDEPENDENT: My question is, why?
DEKOM: I’m a businessman. I’m not in the business of building neophyte careers from nothing. I used to represent Ron Howard, Rob Reiner, Andy Davis, George Lucas, John Travolta. Why would I take those revenue streams and say no to them so I could spend time on people who are making nothing? Can you think of a good reason?
DEKOM: It would probably be worse than that. I think that if in fact I did that, I would no longer be a practicing lawyer. Had I done that, a) I would have been fired or at worst my partners would have driven me out, and b) I would not have been able to eat, sleep, or otherwise deal with my life because nobody would have paid me. So I think that frankly that’s wishful thinking and not something that anyone of my stature would ever dream of doing.
FILMDEPENDENT: You mentioned that you are now in location based entertainment and music.
DEKOM: That’s right.
FILMDEPENDENT: Is there a place for indie films at Disneyland or Disney World or Paramount’s Great America?
DEKOM: I don’t think so.
FILMDEPENDENT: So these are not new openings for indies?
DEKOM: Don’t think it’s a shot in hell.
FILMDEPENDENT: I heard there was an indie channel for in-flight movies in First Class on certain airlines?
DEKOM: There may be. You can also get videos in that area but the revenues are so infinitessimal they don’t even begin to compensate the filmmakers for the effort. But as I said, if you’re willing to take all these barriers and work your butt off and get out there with product anyway, somebody eventually scores. People do become famous directors. I’ve represented a number of them. Andy Davis is an example of somebody who made an independent film. George Lucas made an independent film. They all came from that realm.
FILMDEPENDENT: Did they all have the serendipity, the luck, the friends with money…?
DEKOM: In the case of Andy Davis, he had all of those things after twenty years of hard work.
FILMDEPENDENT: In the business?
DEKOM: In the business. He was a DP. The idea of an overnight success where the night time lasts for twenty years.
FILMDEPENDENT: I would imagine this also applies to hotel chains, indie cable tv channels…
DEKOM: There are no markets there. There is no money there.
FILMDEPENDENT: What is the anatomy of a deal?
DEKOM: There is no anatomy of a deal. The reality is it’s whatever you can get. Typically distribution companies try to charge fees North of 30%. You try to reduce those distribution fees. You try to get the distributor to advance significant costs to market the movie. Distributors try to reduce that commitment unless it’s a known commodity. So it’s an entire tension between whatever. In some cases when you finish a movie you try to sell it for cash, like The Spitfire Grill, which I also represented that director, Lee David Zlotoff. The realities are that those movies happen and people pay a lot of money for what they think are winners, but the rest of them you can’t even get distribution. You can’t find anybody who’s willing to do it under any terms. There are three levels: 90% of the movies can’t find distribution and then you’re talking about the other 10%. Some of that 10% can find distribution which doesn’t give them back all the money but there’s a potential someday of getting your money back and then there’s that rare one or two per cent where they get their money back plus a profit and that’s like The Spitfire Grill.
FILMDEPENDENT: Who would somebody on the bottom rung call to get representation?
DEKOM: Damn if I know. Your local lawyers… There are probably young lawyers in (all the) firms. Look at Martindale Hubble, it’s a book that lists law firms with specialties, and find the most junior lawyer in the place to find somebody. Having your family lawyer, with no background in entertainment, do the work is going to cost you a lot of money someday because you will not to be able to deliver clean chain of title. You do need to find an entertainment lawyer. Alternatively, write checks. If you go to some of the big firms, and you hire them, and you pay them the twenty five, thirty, forth, fifty, sixty thousand, a hundred thousand (dollars) that it takes to get it done, they’ll do the work.
FILMDEPENDENT: For that I could make a movie…
DEKOM: Well, you know something? The world isn’t designed to support people’s passion. People’s passion has to overcome those barriers. Your dreams are not your lawyer’s dreams. And that’s something that’s really hard to remember.
DEKOM: Just because you want it doesn’t mean that someone else has to make a sacrifice to get you there. It’s up to you to make the sacrifice. It’s up to you to find the people. It’s up to you to make that happen. It’s your dream. And keep remembering that. It’s your dream, it’s not anyone else’s dream.
FILMDEPENDENT: So it’s your passion that gets the film made, your passion that gets the film marketed.
DEKOM: That’s right. Not the lawyer’s.
FILMDEPENDENT: Can passion alone do it?
DEKOM: Nope. Hard work, passion, serendipity, and some connections. And you do need some street smarts. The idea, I’m an artist and I don’t want to be involved in that… Great. Stand by for a life time of unemployment and welfare lines. You know, the world doesn’t care what you want. The world basically wants you to bust your ass and make yourself special and do things you might not necessarily want to do to prove how much you care. And if you do all of those things, and you make the connections, and you work, then maybe, and underline the word maybe, you might score. People do score. Marty Scorsese scored, Andy Davis, Ron Howard, they all did it. You can do it too. If you’re one of the ones that are willing to go through the process and if you have the talent. A lot of people tell themselves they have the talent, but they don’t.
FILMDEPENDENT: How did you know they had the talent?
DEKOM: Most of them, well, I just knew. I don’t know how or what. And I made mistakes along the way.
FILMDEPENDENT: Can you give any examples of things you might have done along the way that would have helped a Ron Howard or a…
DEKOM: No. I did those guys. They made it. I did what I had to do. Look at his career. I was there when he made his first major studio picture. I was there. I’ve been there. So the answer is I did what I had to do. When I took a client I gave ’em my best and my best was always enough.
FILMDEPENDENT: You said revenues were on the rise?
DEKOM: Revenues are always on the rise. But they’re not rising as rapidly. Principally off of international theatres, that’s the single largest increase in revenues. The international marketplace is where the growth is. And it is growing. Absolutely and unequivocally.
FILMDEPENDENT: Thank you for your time.
Peter Dekom Biography
During a 22-year career as an entertainment lawyer, Mr. Dekom has become one of the leading figures in the business of entertainment. He has demonstrated an acute business and financial acumen which goes well beyond lawyering. He has designed the financial, business, and legal structure of many of today’s most successful entertainment companies and is the architect of many of the large on- and off-balance sheet entertainment financing funds.
Prior to his current entrepreneurial ventures, Mr. Dekom was a senior partner in the firm of Bloom, Dekom, Hergott and Cook and his clients included executives such as Larry Gordon, Joe Roth and Peter Chernin; entertainment companies such as The Geffen Co., Largo, JVC, Pearson Group, Spelling Entertainment, IndieProd., King World, Lucasfilm, Neufeld/Rehme, and Alive Films; individual producers such as Gary Adelson/Craig Baumgarten, Don Simpson/Jerry Bruckheimer, Robert Lawrence, Will Vinton, Brian Grazer, and Martin Bregman; writers such as Robert Towne, Dan Petrie, Jr., and Lee Zlotoff; directors such as Rob Reiner, Ron Howard, Andy Davis, Bobby Roth, and Wolfgang Peterson; actors such as John Travolta, Shelley Duvall, and Diane Ladd, and Fortune 500 companies such as Sears, Roebuck and Co., Pacific Telesis, andU.S West.
Mr Dekom’s former firm also represents Ivan Reitman, Arnold Schwarzenegger, andSylvester Stallone, and was principally involved in the creation of the phenomenally successful Planet Hollywood restaurant chain. Moreover, Dekom’s former firm has a significant practice in the field of music, representing clients such as U2, Babyface, T.L.C., Ry Cooder, Anita Baker and Melissa Etheridge.
Mr. Dekom attended high school in Beirut, Lebanon (as the stepson of an American diplomat stationed with the embassy), where he graduated first in his class. He attended Yale University in 1968 and was then accepted into the prestigious UCLA Film School, which he attended for one year. After film school, Mr. Dekom attended law school at UCLA, graduating first in his class, Order of the Coif, and was elected to Associate Editor of the Law Review. In 1973, he joined Pollock and Bloom, which was the predecessor to the above named law firm. Mr. Dekom’s former partner is Thomas P. Pollock, Vice Chairman of MCA, Inc..
After joining Pollock and Bloom, Mr. Dekom became a noted lecturer and author of numerous entertainment industry publications. He is a former board member of the Foundation of the Academy of Television Arts and Sciences (since 1985), and now Chairman and member of the board of directors of the American Cinematheque (since 1988), former member of the board of directors of Imagine Films Entertainment, inc. (1987-1993), which subsequently went private, and a member of the Advisory Board for the Shanghai International Film Festival. Mr. Dekom also served as an Adjunct Professor at UCLA’a film, law and business schools (1979-1985). He was also honored as the Man of the Year (1991) by the Family Assistance Program for his work with the homeless.