With one hit movie under its belt and two promising films in the can, The Film Department is shutting down May 27 — a victim of the credit crunch and, perhaps, shifts in the industry.
The company's 2009 "Law Abiding Citizen" starring Gerard Butler and Jamie Foxx, was a $40 million project that grossed $133 million at the worldwide box office. And The Film Department has finished "The Rebound," with Catherine Zeta-Jones, and "A Little Bit of Heaven," starring Kate Hudson, Gael Garcia Bernal, Whoopi Goldberg and Kathy Bates.
Yet the company, which had 11 employees, is closing after three years.
"We had impeccably difficult timing with the credit crisis," Chairman and CEO Mark Gill (left) told TheWrap. "We had a big hit and some other films that we are getting out now, but that didn't ultimately matter enough because the financial challenges that are a lot bigger than any of us just overwhelmed us."
Vice Chair and COO Neil Sacker said the company was profitable in 2010, and generated $90 million in revenue, but the credit crisis knocked the wind right out of the company.
"During the credit crisis we had to pay off our debt immediately," Sacker (below right) said. So we had the weird position of, we had a hit movie generating lots and lots of money for us, that would ordinarily go to us, it went to repaying our debt — basically five, six, seven years in advance of when it was otherwise due."
The duo said that over the past 18 months, the company paid off $40 million in senior debt under customary terms, but "in the aftermath of the credit crisis, the company was forced to accelerate repayment of its second-lien notes, which ultimately resulted in $50 million in early payments to a lender."
At the same time, studios largely stopped paying advances for independent films.
"For us and all the independents, it constrained everybody's cash flow," Sacker said. "You couldn't depend on upfront payments for your rights."
The two remain optimistic about the industry, wondering how streaming will move things forward.
"There's a future for a well-capitalized industry," Gill said. "But only if you're well capitalized."