Hit film producer Jason Cloth knows what can lift the spirits of cinema audiences depressed by the grim world of Covid-19. “People are afraid, they’re tired,” says the 54-year-old Canadian, who is one of the industry’s biggest private financiers. “If we can truly give them some uplifting escapism, they will go back.”
With a string of box office successes to his name, Cloth has a record of understanding what audiences want. His biggest success was the 2019 film Joker starring Joaquin Phoenix as Batman’s nemesis. He says he put up 25 per cent of the reported $64m cost of the movie which took more than $1bn at box offices worldwide, making it one of the most profitable comic-book productions of all time.
Cloth questions whether that film, which was criticised for its violence, would still be a hit in today’s bleaker times. “Would Joker have done as well if it had been released after people had been battered and bruised through this pandemic?” But musicals and family shows are a different matter — they could attract the big audiences “more than they might have a year ago”, he says.
Joker’s success seems an age away for a sector that has suffered globally this year from cinemas closing, audiences staying away and studios postponing shoots and delaying releases, including the latest James Bond movie No Time To Die, which had been scheduled to open this spring but is now set for April next year.
Box office revenues worldwide were down 64 per cent year-on-year over the weekend of September 12-13 (the latest for which data was available at the time of writing) on average across 45 countries analysed by the FT using data from Box Office Mojo, a statistics provider. Between April and July inclusive, no Hollywood production received a wide release in the US. In September, there were signs of a faltering recovery, as three films finally secured wide releases, but that was still well down from an average of 16 for September in the previous four years.
But film fans are not abandoning movies entirely. Many are switching to home viewing, subscribing to streaming services in record numbers. Netflix, the market leader, reported its largest-ever growth in subscriptions in the three months to June 2020, with a 27 per cent rise over the same quarter last year. The success of streaming services has convinced many technology enthusiasts that the film industry has changed for ever, not least because companies such as Netflix are increasingly funding their own productions in competition with Hollywood studios.
Cloth, too, has opted for streaming with his most recent big-ticket film, Greyhound, a second world war story starring Tom Hanks. It was originally scheduled for a cinema release but, because of the pandemic, was launched on Apple TV+, the tech company’s streaming platform. But Cloth believes audiences will return to cinemas — as long as they feel they are in a safe environment and the choice of films is attractive.
Film production has become much more difficult, both in terms of practicalities and cost, says Cloth. “There’s insurance and all sorts of underlying issues that need to be worked out,” he says. “Covid protocols that need to be put in place add a substantial amount to every budget. Never in my wildest dreams would you think you would put up a boatload of money for a project but not be able to set foot on set.”
The making, marketing and promotion of films have all had to be rethought, he says: “This is a different world — no premieres, no film festivals, no hoopla. Now we’re just running the business.”
Cloth has loved cinema for as long as he can remember. The son of a chartered accountant, he was born and raised in Toronto, studied finance and economics there at York University and landed his first job at an investment bank based in the city. He recalls getting “the itch to do something on my own”, much to the concern of his parents. “As some of the projects that I’ve been part of have been critically acclaimed, my mum gets prouder because her friends have gone to see the film,” he says.
In 1992, he founded Creative Wealth Media, a film and television financing company, with a producing partner in Bron Studios, a Canadian film company of which he is a director. Launched with $5m in loans from friends and family, CWM has been an executive producer and has provided more than $650m in financing for films, ranging from small independent movies to studio blockbusters.
Together CWM and Bron have produced more than 67 feature films, raising and deploying capital from Canadian pension plans, family offices and high-net-worth individuals. Besides Joker and Greyhound, notable productions have included Tumbledown, a 2015 romantic comedy starring Rebecca Hall, and Fences, a period drama starring, produced and directed by Denzel Washington, which won an Oscar nomination for best picture in 2017.
The two companies also have about $750m invested in 15 forthcoming films, including blockbusters from studios such as Warner Bros and MGM, says Cloth. These include Those Who Wish Me Dead, a thriller starring Angelina Jolie and directed by Taylor Sheridan, and Ghostbusters: Afterlife, a sequel to the 1984 supernatural hit.
Asked whether he has developed a gut instinct for a hit, Cloth says: “Nobody’s perfect. The film business is inherently imperfect because you can’t model out human taste. In a film, the most you can lose is all your money. That is a staggering thing to say but, if we put up a dollar, the most we can lose is a dollar. But, when we have a hit like a Joker, we make multiples of that dollar.”
The key, he says, is to spread the risk by backing several productions in one deal. “On a five-, six- or seven-picture deal, you hope to have a few of them that break even or make a little bit of money, a couple that lose money, maybe one that loses all its money, and then you hope that one project will lift all of the projects to profitability. That was the Joker.”
Cloth says returns for investors depend on the financing structure. “If we lend money to a production that is categorised as secured debt, we would expect a lower return, given the lower risk. When we finance studio films, we invest equity capital, with full-on risk, but we would do that in a multi-picture structure.”
Losses can be demoralising, he says. “But if you look at it on a picture-by-picture basis, you’re in the wrong business. If you look at it on the aggregate of what you’re doing, then you hope to be on top in the aggregate.”
The pandemic has made negotiations tougher, Cloth says. “What happens if there’s a second or third wave of the virus?” he asks. “What happens if the vaccine they’re developing doesn’t work? What happens if theatres don’t open [permanently]?”
The advance of streaming services has raised “new issues”, he says. “If we’re putting up money that is dependent on us having a full theatrical release to get paid, what happens when there isn’t a theatrical release? Is [the film] too expensive to sell to a streamer? By what date does it have to sell to a streamer? Can we hold back the film for a certain length of time before it goes into a theatre? All those things are very front and centre for us now.”
Recent developments bear him out. Greyhound switched from the cinema to streaming, and the Walt Disney Company has done the same with Mulan, an action film based on Chinese folklore, which was released in early September on the Disney streaming service in the US and other major markets.
As the pandemic continues to dictate the business environment, Cloth will focus increasingly on “high-quality smaller films and digital animation for smaller-screen distribution”, alongside studio films for cinemas. The independent companies, which make films outside the big Hollywood-type studios, may have become less attractive because of the increased risks, he says. “It’s the equivalent of the Wild West: there’s no security, no protection. There are tens of thousands of [independent] movies that get made every year — you’re talking about a small handful that are any good.”
But he adds that a “great indie” such as Lady Bird, the acclaimed 2017 comedy-drama starring Saoirse Ronan, “would be just as exciting for us” even if “we just have to be a little more careful now” because of Covid-related risks.
As cinemas organise extra screenings to make up for the seats they can’t fill because of social-distancing, Cloth predicts that “marginal” films such as modest romantic comedies will suffer, being unable to compete with releases such as Warner Bros’ Tenet, Christopher Nolan’s 2020 spy thriller, which had a reported $200m production budget. “If you need to show Tenet over and over again to half-filled cinemas, then there won’t be space available for [much else],” he says.
Cloth’s view that audiences will return to cinemas under the right circumstances is supported by British writers and producers Nick Moorcroft and Meg Leonard, whose adaptation of Noël Coward’s comedy Blithe Spirit, starring Judi Dench, is due for cinema release at the year-end. “Cinema is a unique experience and a uniting one, and you never laugh at a comedy in your living room the same way you do in a packed theatre,” says Moorcroft.
But Donald Rosenfeld, former president of Merchant Ivory Productions, which made period classics such as Howards End starring Emma Thompson, feels audiences will want serious films. “When great life-and-death crises have occurred, people want meaning,” he says. “They want something profound. The last thing they want is to be distracted from reality.”
Rosenfeld is directing a screen adaptation of Mark Twain’s novel Adventures of Huckleberry Finn, which was due to begin filming on July 1, only to be postponed because of Covid-19. “My investors are sticking with me, but we’re going to have to wait a year,” he says.
He predicts that until a vaccine is developed, drive-ins and outdoor cinemas will gain in popularity and new “movie palaces” will be built with better ventilation and room for social distancing. “There will be a return to the glory days,” he says. “The big screen will always be meaningful and it will come back. A return to powerful and profound cinema will be the result of this.”
Cloth’s forecasts are more cautious, but he, too, still believes in the power of cinema. “People are a little shell-shocked all over the world. If you want to entice them into a cinema, I think [you’ll have to] offer them something better and different than what they can find on their television.”
This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment.
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