A talk with Anna Bagdasarian,
Vice President/Manager, Entertainment Finance
Union Bank of California
“Now get this and get it straight. A girl’s got to have three things nowadays: money, jack, and dough. ‘Bout time you learned it.”
– Marie Callahan in KANSAS CITY PRINCESS (1934)
ANNA BAGDASARIAN has been a financial lender in the entertainment industry for eleven years, the last six as Vice President/Manager, Entertainment Finance, for Union Bank of California, which has been providing various banking services to the entertainment industry since the early 1970s. During Ms Bagdasarian’s tenure at the Bank, she has arranged financing for major entertainment and production companies, and has been involved with financing in excess of 60 films ranging from $1 million to $37 million in budget size. She has arranged financing for such films as Smoke; Blue in the Face; Corinna, Corinna; and Terminal Velocity.
Ms. Bagdasarian began our talk by emphasizing that banks do not invest in films, nor do they take risks for films. Under the right circumstances, however, banks do lend money to films
FILMDEPENDENT: When do you come into the dealmaking process?
BAGDASARIAN: When we come into the picture is when you, the producer, have gone and sold the idea of a motion picture to a distributor. And the distributor has agreed to buy your film, with certain elements in it; to buy your film at a certain date. You will be agreeing to deliver your picture to the distributor on a certain date, with specific features. (elements) The distributor will state that he is willing to pay a certain price for it. Technically speaking, that price should be enough to cover your production and financing costs. And that is the price that you bring to the bank and borrow against. The distributor’s promise to pay you at the time of delivery becomes a valuable contract and you discount that contract to borrow against it.
FILMDEPENDENT: Who do you actually lend the money to?
BAGDASARIAN: We lend the money to the producer.
FILMDEPENDENT Not the distributor?
BAGDASARIAN: No. But the source of repayment is the distributor. The distributor agrees to assign payment under the distribution agreement to the bank. And for the bank to make sure that the film is going to be delivered based on the various stipulations under the distribution agreement, the bank hires a completion guarantor that insures that this film is delivered on time, on budget, with the specifics that are mentioned in the agreement. So the bank gets its money back. If the film is not delivered on time, if it’s not on budget, then it becomes an insurance risk. Otherwise, the film is delivered, and the bank is paid off, before the film is taken to a single theatre. We are basically providing a bridge loan.
FILMDEPENDENT: What comes across your desk when you get involved?
BAGDASARIAN: A little piece of paper that says, “I, Walt Disney Company, or Sony Pictures Entertainment, or Miramax Films, or October Films or a distribution entity, promise to pay Cynthia Johnston X Dollars on Date X or Y , for the following film.” And the distribution agreement will have attachments that will give you all the delivery items and everything that is required as part of the agreement.
FILMDEPENDENT: Is there a sample of a list like that around?
BAGDASARIAN: No, no. Basically what you need to do is get your script ready and knock on film buyers’ doors and have them review it and say yes, we’re interested in your film. We’ll buy it at a certain price. That’s what happens, and that’s when we come into the picture.
FILMDEPENDENT: Can a distributor write a letter of intent to the bank?
BAGDASARIAN: They can but it’s worthless to us. It has to be a distribution agreement, that they agree to buy the film from you, and they buy it for certain territories, be it all US domestic, or North America, or just home video, or television, it depends.
FILMDEPENDENT: So you’re actually the last party into a deal.
“Let me tell you one thing son. Noooobody ever lends money
to a man with a sense of humor.” – Peter Tork in HEAD (1968)
FILMDEPENDENT: Is there any reason to think an independent producer could come to you without a distribution deal?
BAGDASARIAN: They can come to us without a distribution deal but some investor will have to support it.
FILMDEPENDENT: How does that work?
BAGDASARIAN: Relatives for instance. Or you go to your rich friends and they’re saying, “Oh I’m not liquid right now. I can’t give you cash. But I will get a guarantee from my bank.” Let’s say that your rich friend has an account with Bank of America, or Bank ABC. They come to you saying, here is a guarantee from Bank ABC that stands behind me and will perform on my behalf to the tune of let’s say five million dollars for payment to you as producer for producing the film. At that point then we give value to that guarantee that’s coming from a reliable bank and we can lend against that also. But we never invest in films. We don’t take box office risk. We can’t.
FILMDEPENDENT: What did you come away from IFFCON with, if anything? What good did it do you?
BAGDASARIAN: A lot of people had already started discussions with distributors that gave us a call and said in a few months we’ll be ready to come to you with a distribution deal. We’ll discount so-and-so’s paper.
FILMDEPENDENT: Discounting someone’s paper, what does that mean?
BAGDASARIAN: That distribution agreement has value, right? They’re buying your film for let’s say ten million dollars. That ten million dollars is discounted for interest, and then lent to you for production. They’re discounting the distribution interest.
FILMDEPENDENT: Oh, so they take off the interest?
BAGDASARIAN: Exactly. The distribution agreement is the paper that we’re talking about.
FILMDEPENDENT: It’s actually more difficult than I thought. What advice can you give an independent fimmaker in terms of how to tailor their project towards the moment when they can come to you?
BAGDASARIAN: You need to get yourself a good attorney who’s really tuned in with the various distribution companies. First of all, you need to determine what genre of film you are producing and which distribution entity will do the best job for your film and then find an attorney or an agent that will take your script and help sell it for you.
FILMDEPENDENT: What advice do you have for filmmakers who have moved beyond that point and have sort of gotten themselves into the middle of making a film and …
BAGDASARIAN: And they don’t have money to finish it.
FILMDEPENDENT: Right. They don’t have money to finish it but everybody wants to wait to see the rough cut.
BAGDASARIAN: Well if they have enough rough cut to show people, they could still show half of it. I mean if people are interested to that point, then the filmmaker could put something together and take it to whoever is interested to see the rough cut. That’s what I would do.
FILMDEPENDENT: What if the response is, “I love it. It’s obvious you can make a movie. We love your work. Come to us when it’s finished. We can’t give you any money. We love the project. We’d love to work with you, but we have no money.”?
BAGDASARIAN: Well then at that point, when it’s finished, they may not have it. But they really like it.
FILMDEPENDENT: But it’s really a “no”, isn’t it?
BAGDASARIAN: Yes. (Laughter) It’s a gentle one.
FILMDEPENDENT: It’s a gentle no, but they’re also keeping the door open.
BAGDASARIAN: Yes. For themselves.
BAGDASARIAN: But hey, the film might not be around when they want it. So this is their opportunity to reserve the film.
FILMDEPENDENT: However, if you want to sail through this process as easily as possible, you put the whole package together before you start spending money.
BAGDASARIAN: Exactly. Don’t get into production unless you know there’s someone out there that really wants your film. There are a lot of finished films that don’t get distributed. They’re still sitting on shelves.
FILMDEPENDENT: Is there any hope in straight-to-video?
BAGDASARIAN: Maybe. But again, maybe not. You really want to get your idea sold before you start production.
FD: Again, for the filmmaker who has done it the other way ’round, who’s mortgaged the house and car, still hasn’t completed shooting, and maybe has sent what they have around with still no nibbles…
BAGDASARIAN: They can take it to video companies like Live or Columbia Tri-Star Home Video, or places like that. They’re specifically video companies.
FD: And just do a video release, without the theatre…?
FD: If nothing else came through… Some of them break out the back door that way.
BAGDASARIAN: Yes. Or you can take it to a cable company and see if they can help. I know every producer’s dream is to take a film to the theatre but at least you can recover your costs.
FILMDEPENDENT: Is working with filmmakers different from working with other clients?
BAGDASARIAN: Well, you’re financing a different product. It takes different nucances to finance that product. It’s not real estate, it’s not widgets, it has a different life cycle, operating cycle. Yes, that’s why we specialize in it. You don’t find a lot of banks who have the ability to be in film financing because it takes a special knowledge to do that.
FILMDEPENDENT: Do you have any comments on what they are calling “Hollywood accounting”, where the movie has made millions but the filmmaker has made nothing?
BAGDASARIAN: Again, it depends on how your contract is written.
FILMDEPENDENT: The lawyer…
BAGDASARIAN: It depends on, first of all how much power you have as a producer, whether they really want your film or not. Remember the distributor is taking a risk on your film. They are putting up the costs for distribution. Early on, unless you have a proven track record, they can be very tough and demanding and write the contract such that even if the film makes a gazillion dollars you won’t see a penny. It all depends on how it’s written so that goes back to finding a good lawyer to help you.
FILMDEPENDENT: If you don’t have power, you get a lawyer with power.
BAGDASARIAN: Yes, one that helps you negotiate, because you’re delivering a product, you’re a creative person, you’re not an attorney to come up with a contract that ensures protection of your rights. So you need a good attorney.
FILMDEPENDENT: Are there any forms that you can show us, or is everything strictly a matter of what you get from the distributor?
BAGDASARIAN: Exactly, yes. Every film is different. Every distribution agreement is confidential. Every term and condition in every distribution agreement is different and unique. Film specific. Producer specific. And more importantly, we do have a fiduciary responsibility to keep things confidential for our clients and I seriously couldn’t show you one. They’re each different. There’s nothing standard.
FILMDEPENDENT: But when a film comes to you it’s pretty much a done deal.
BAGDASARIAN: When a film comes to us it’s in pre-production, there’s a budget in place, there’s a script in place, it’s been revised several times, the studio has agreed on the script, on the cast, and when they come to us, all the elements are in place and the last piece is “here take it and finance it”.
FILMDEPENDENT: But you can’t start by going to the bank?
BAGDASARIAN: You can. You can go to a bank and say, I’m working on this film and I’m working with this distributor, do they have the financial wherewithall to pay you in a year when I deliver the film? That you can do. And then we can tell you, this entity is having financial difficulties, you don’t want your film ending up in this institution, why don’t you go to the following place. We can help you with that. We can tell you what’s bankable.
FILMDEPENDENT: If you were shown a script?
BAGDASARIAN: You don’t have to show me the script. You can just ask me, “If I went to Miramax is that a bankable distribution company?”.
FILMDEPENDENT: I see. If they have enough money to come up with their end of the deal.
FILMDEPENDENT: Any last bit of advice?
BAGDASARIAN: Get a good lawyer.
FILMDEPENDENT: Have you been to CineMart as well as IFFCON?
BAGDASARIAN: That was my first IFFCON. I haven’t been to CineMart. Where is that held?
BAGDASARIAN: No, I have not. We have a huge market in the US, going out overseas. We may in the future, but at this point it’s not a market we’re covering.
FILMDEPENDENT: You’re not terribly interested in foreign pre-sales?
BAGDASARIAN: Oh, we are. We will look at foreign distribution companies.
FILMDEPENDENT: Foreign money for American films?
BAGDASARIAN: Yes, of course. We will evaluate that. We would as another distribution agreement. When you make a pre-sale, it’s a distribution agreement.
FILMDEPENDENT: Do you have files on all the distributors?
BAGDASARIAN: No, not necessarily. We have a feel for them.
FILMDEPENDENT: And you have access to information about them?
BAGDASARIAN: If it’s a publicly traded entity, yes. If it’s privately held, no. So we would look to the producer to give us financial information.
FILMDEPENDENT: And do you think that a producer can get accurate financial information from a company like that, or would that again be the lawyer’s job?
BAGDASARIAN: If it’s privately held it may be very difficult to get financial information, unless they really, really want your film. Then they will give you the financial information to make you feel comfortable that a) they’re going to be around to distribute your film and b) they’re going to be around to pay off the bank loan on your behalf. So you want to make sure that you sell your film to an entity that has financial stability and viability to be around when they are ready to distribute your film. Otherwise it will be another shelf item or end up with another company that doesn’t have the same level of expertise to take your film to the market and release it.
FILMDEPENDENT: Like if somebody was starting out a distribution company, they might be hungry for films but have no track record?
BAGDASARIAN: For payment, exactly. So you should watch out.
FILMDEPENDENT: You’ve been doing this for ten years?
BAGDASARIAN: Yes, I’m in my eleventh year.
FILMDEPENDENT: Sixty films?
BAGDASARIAN: Yes, or even more.
FILMDEPENDENT: How did you get into this part of banking?
BAGDASARIAN: Actually, it was not planned. It was odd. It just happened that way. I was given a mandate in a different bank to start entertainment finance. I was part of a team that was given a mandate to do that, and I was lucky to be part of that team and I found it to be really interesting.
FILMDEPENDENT: I would imagine so.
BAGDASARIAN: It’s fun. You get the result of your product and create a sense of ownership. It’s fun.
FILMDEPENDENT: I noticed from just the four films that were mentioned in the bio, I’ve seen three of them…
BAGDASARIAN: Oh, which ones were they?
FILMDEPENDENT: I saw SMOKE on video. BLUE IN THE FACE isn’t out on video yet. It’s not even out for preview copies.
BAGDASARIAN: It’s a fun film.
FILMDEPENDENT: CORINNA, CORINNA. They seem to have a gentler, well, except for TERMINAL VELOCITY, they seem to be a little kinder.
BAGDASARIAN: It just happens. We don’t review scripts, we don’t choose topics, because we don’t have the creative ability that you do, so it’s not our job to tell you what to make and what not to make.
FILMDEPENDENT: It’s strictly based on the bankability.
BAGDASARIAN: Of your source of repayment.
FILMDEPENDENT: What have I missed?
BAGDASARIAN: Get a good attorney.
FILMDEPENDENT: Do attorneys create deals? If you’ve got a good enough attorney can they call the right parties on your behalf?
BAGDASARIAN: They can call the right parties, or they can give you direction.
FILMDEPENDENT: Do you think a director should try to sell the film or is that just too emotionally draining?
BAGDASARIAN: I don’t think it matters who sells it, as long as it gets sold. Do you care who sells it?
FILMDEPENDENT: Not at all.
BAGDASARIAN: Whatever is going to sell your film, you should try. Don’t get into emotional stuff.
FILMDEPENDENT: Are there any particular attorneys you would like to name?
BAGDASARIAN: The attorneys we use are bank attorneys. I would try to go back and see if there was anyone attending IFFCON.
FILMDEPENDENT: As a lawyer? I think there was at least one.
BAGDASARIAN: So I would call them, actually, because clearly they had an interest to be there, and be with this community of producers, so I would call them. Our circle is banking attorneys. It’s a different niche. So it doesn’t mean much.
FILMDEPENDENT: Would it make any sense for a filmmaker to talk to a bank attorney?
BAGDASARIAN: No. You’re better off calling a producer’s rep or attorney, someone to take your project around that you haven’t already taken it to. That’s what I would do.
FILMDEPENDENT: Let’s say you’re involved with a film, once that deal has gone through, what sort of relationship develops with the filmmaker?
BAGDASARIAN: Well, you would become our borrower, and then, hopefully, you would have a successful film. Then we may be able to fund your future films. That’s basically how we establish relationships.
FILMDEPENDENT: Thank you for your time.
END OF INTERVIEW