The novel coronavirus pandemic has already taken a toll on Hollywood and everyone who works in the business, but the industry is bound to face a tough and potentially vastly different road ahead when the lockdown lifts and Hollywood productions are cleared to resume.
“Restarting a production is going to be difficult depending on how long this goes in terms of retaining actors, keeping the schedules available for the productions to restart, which means spending money to keep the production costs in place,” Jeff Zaks, senior vice president of media and entertainment banking at Opus Bank, said during TheWrap’s live webinar on Tuesday.
Zaks, along with Banc of California head of entertainment Adrian Ward and Viviana Zarragoitia, vice president of boutique lending firm Three Point Capital, joined TheWrap founder and Editor-in-Chief Sharon Waxman Tuesday on a Zoom virtual meet-up to discuss how the pandemic is, and will continue to, impact film financing.
“The whole landscape of production financing is going to change,” Zaks continued, “Primarily with how insurance companies are going to evaluate this moving forward.”
Whether production companies would be covered, or have to absorb the losses incurred from productions that were interrupted due to the spread of COVID-19, became a major talking point in the early days of the pandemic’s impact in the U.S. Most companies, experts said at the time, weren’t covered and would have to take the financial hit.
Zaks said that those production insurance packages are likely going to change in the aftermath of COVID-19, with insurers including exclusions for things like COVID-19, though it’s unclear how broad those exclusions would be.
“Other than going out and finding separate insurance, which undoubtedly would be very expensive, then I think there’ll just be that risk there is either another outbreak or a reemergence of this which could obviously cause a lot of problems for the production,” Ward said. “I spoke with one of the bond companies recently and they’re saying when production does start again there’s going to be a bunch of exclusions for COVID-19 and other things so it’s going to be a bit of different landscape as they won’t be covering those issues going forward.”
One potential bright side is that coming out of the pandemic — whenever that happens — there’s expected to be a clamoring for content from folks confined to their homes. That too, however, comes with its own challenges.
“There’s going to be a great need for content and in a few months once, hopefully, things return back and we can go outside again, people are going to want whatever is fresh,” Zarragoitia said. “But it’s going to be very hard to sort of manage and schedule the productions that were already scheduled and the ones that were pushed.”
Zaks agreed the industry should brace for some logistical challenges and anticipate an influx of delayed and new content, but also said the concerns will likely be much graver once the dust settles.
“It’s gonna be a bottleneck situation when resources are being clamored for by everybody at the same time,” Zaks said. “And frankly as far as lending goes, we don’t know what the other side of this is going to look like and two or three months from now we don’t know what companies will still be solvent enough to be bankable.”
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