![]() Milstein’s Media Guarantors, a unit of specialty insurer SpottedRisk, has started offering a completion bond that will also insure against any COVID-19 risks in a bid to jump-start indie productions again. That has allowed production in Los Angeles to return to pre-pandemic levels as insurers and financiers grow more confident about the risks of coronavirus outbreaks. It has been more than a year since production was shut down by the pandemic, and strict rules around testing, masking and social distancing on film sets led to very few positive COVID-19 cases, according to the Alliance of Motion Picture and Television Producers. “Trying to make it make financial sense for the people who are investing is not as easy as it was before,” Mechanic said. ![]() Mechanic had already moved his film, “The Divide,” about the building of the transcontinental railroad, from Canada to Australia, where rates of infection are lower and it is easier to get insurance and favorable film tax incentives. “I think it’s way harder now than it ever has been,” veteran producer Bill Mechanic said. The pandemic added to what had already become a tough market for indie producers, which operate on thin margins, as studios and theaters focused on releasing fewer but bigger-budget movies. production company behind the Ben Affleck heist thriller “Hypnotic” sued its insurance company in September for refusing to extend coverage without excluding losses linked to COVID-19. because it does not want to pay out $10 million in claims for certain delays of film and TV productions caused by the COVID-19 pandemic. Losses have triggered litigation in Hollywood over insurance payouts. was still able to make about 10 movies during the pandemic, but safety protocols inflated budgets by about 10% and interest rates jumped from about 4% to up to 14%, CEO Arianne Fraser said. Without access to inexpensive bank loans, producers have instead been forced to rely on more expensive sources of financing, eroding their profits. These bonds can cost between 1.6% and 2.5% of the production budget, Milstein said. If they aren’t, bond providers such as Media Guarantors are on the hook to pay the banks back. These bankers usually require a so-called completion bond that guarantees productions will be wrapped within budget and on time. ![]() ![]() Unlike deep-pocketed studios that have cash on hand to fund projects even if they run over budget, independent producers typically rely on bank loans charging a few percentage points of interest to fund their shoots. Milstein and his colleagues went from providing up to 65 completion guarantees in a year for films with budgets of $5 million to $70 million, to having about 20 movies in postproduction during the pandemic, including “Flag Day,” Milstein said. “The independent industry is being heroic in their effort to get back to production, get back distribution, notwithstanding a number of hurdles that really have never been worse,” said Jean Prewitt, president of IFTA. “The unavailability of production insurance has caused something of a logjam in the typical financing structures of independent films,” said Stuart Ford, CEO of AGC Studios, a film and television production and financing company. But the loss of insurance coverage and a surge in production costs have created a heavy burden for indie filmmakers, many of whom are struggling to get back to business. “There’s been tremendous market dislocation.”ĭuring the pandemic, Hollywood studios and streaming platforms found ways to keep the cameras rolling, filming overseas and developing safety protocols that were costly and slowed filming but limited virus outbreaks. “The pandemic had a real immediate and profound effect on the independent business, which relies heavily on commercial banks and lenders for their production financing,” said Milstein, chief executive of Media Guarantors. With those exclusions, banks were often unwilling to accept so-called completion guarantees or bonds that independent filmmakers rely on to get funding. Once the pandemic emerged, insurance companies began excluding COVID-19 from their policies. Sean Penn’s coming-of-age indie drama, released by MGM, is one the few features that Milstein’s West Hollywood bonding company, Media Guarantors, completed last year. But like many of his film industry colleagues, he is skipping this year’s delayed gala and instead will track Saturday’s premiere of his latest project, “Flag Day,” from his home in Los Angeles. Fred Milstein has been going to the Cannes Film Festival for decades to meet with existing and prospective clients.
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