The CEO also discusses the Weinstein effect and why he savors being an indie: “We don’t report to anyone.”
Launched in 2011 by CEO Brian O’Shea as a self-owned, self-funded sales and finance company, The Exchange recently became a burgeoning film production and financing entity, with former Sony Pictures exec Tom McNulty brought on to head up the division. That was followed by O’Shea partnering with financier Forest Road to establish a film and TV fund to bankroll indie projects. And to top it off, O’Shea, 52, is keen to remain independent of any conglomerate in a fast-changing global entertainment business. Prior to Berlin, where the company will be repping worldwide rights for a slate that includes crime thriller The Corrupted, starring Sam Claflin and Timothy Spall, and The Stand-In, a romantic comedy starring Drew Barrymore, THR sat down with the Exchange boss to talk digital disruption, the post-Weinstein future and why he savors his independence.
What changes are you noticing in the international film sales and finance business?
Traditionally, we go to a distributor and represent the [film] producer and the product. And the distributor goes to the consumer. But with new technology advancement, distributors we’ve gone to have changed, their business model has changed. Their core relationship with the TV station, or with video companies, has changed dramatically. So their investment in product I bring to them has to change. So I have to represent projects that are more attractive for theatrical, or more attractive for SVOD platforms, or for TV. That’s the big change that I’ve seen. Now it’s more about creating product for us, than necessarily representing product.
How have Netflix and Amazon impacted you?
Amazon and very much Netflix were buying a lot of product, and they make high, aggressive bids. But sources from where they get their product can come from various places — studios, independent producer-distributors, with whom they do a lot of business. And as their relationships grow, particularly with studios as aggregators, the need for independent acquisitions becomes less. That’s not necessarily a bad thing, because there’s content out there from a company like our own. And the SVOD space is starting to have spinoffs of platforms that are multiterritory, like Blackpills and Shudder. Those are competitors, little brothers and sisters of Netflix and Amazon. We just did a deal with Crackle, which took North America. That’s where the new opportunity for us has been from a transactional standpoint.
Getting into production, getting onto platforms other than film, that’s happening across the distribution business. What makes The Exchange stand out?
We’ve spent a good amount of money to acquire properties and we’re hoping we’ll have our first film or two in production very shortly. But it’s important to remember we’re a self-owned company. No one gave money to start The Exchange. This is money I put in, with a profit participation for key executives. We don’t report to anyone but ourselves. We live by what we do.
Hollywood budgets are changing. Are you wary about investing in midrange movies in today’s climate?
Yes, but then you go to Sundance and see midrange movies sell very well, or the model makes sense and you feel a need to take a chance. This business is based upon risk and reward. And I like momentum and making product happen, because you never know. But I also like being very conservative and hitting my numbers. So when I sell a movie, or invest in a movie, I like to perform on my numbers. If I do a small or mid- range movie, my numbers reflect a business model where someone is taking a risk. And I usually hit my numbers. I lose a lot of pictures by being conservative. But I love the fact that, when I do a big-range, midrange or small movie, I hit my numbers. Sure, we’ve missed. More often than not, we’ve overexceeded. That makes our business model work.
Given the Weinstein issue, does it make you nervous to be in business with filmmakers who you can’t be certain won’t have skeletons that later fall out of the closet?
It really comes down to sales, [more] than judgment on the person. It’s about issues of distribution. Everyone’s value on a picture when it’s being made is equal. And I don’t want to ignore that value and ignore the art of making pictures. We’re not just in a transaction business, per se. We like films. So if we pick up a film, and later discover there’s an issue, we wouldn’t want to ignore the fact that we love the property. And it takes a village to make a film. There’s other people who worked on it than that one person accused of something.