A Bidding War at Sundance

By on / Dealmaking

Filmmaker Nate Parker sticks to his dreams in a heated “negotiauction.”

Most sellers dream about driving up the price of a commodity in a bidding war. But how can you stay true to your nonfinancial goals in an auction fixated on price? Nate Parker, the filmmaker, star, and producer behind the film The Birth of a Nation, and his representatives answered that question in their handling of negotiations for the sale of the film’s worldwide distribution rights at the Sundance Film Festival this past January.

A red-carpet release

When introducing his film in Sundance, Colorado, this winter, Parker received a standing ovation even before the film was screened.

The film had hit Sundance with no small amount of hype. Even the story of how it came to be was Oscar worthy: Parker had quit other acting jobs for two years to write, produce, direct, and star in the film, a drama about Nat Turner’s slave rebellion in the 1830s. Spending $100,000 of his own money on the film, he flew around the country lining up investors, including at least two pro basketball players.

At Sundance, The Birth of a Nation, like Parker himself, garnered a standing ovation.

For industry reps from Los Angeles, the film seemed likely to follow in the footsteps of recent successful historical dramas focused on and starring African Americans, including 12 Years a Slave and Django Unchained. And with the Oscars under fire for their all-white acting nominations for 2015, it was a good time for a high-quality film about the African American experience to emerge.

The frenzy begins

The sharks began circling Parker at the film premiere’s after-party, held at a lounge on Sundance’s Main Street. The agent representing The Birth of a Nation, Graham Taylor of William Morris Endeavor, set a $12 million minimum bid in order to gain a sit-down with Parker and the film’s other producers. Taylor also said they were expecting a deal in the $15–$20 million range and a 2016 theatrical release, according to entertainment news blog The Wrap.

Those stipulations narrowed the bidding down to a handful of traditional film studios, including Fox Searchlight, The Weinstein Company (TWC), Paramount, and Sony. Two less-established contenders also made a play for the film. The first was Netflix, which, along with its rival Amazon Prime, had gone on a spending spree at Sundance, buying up subscription video-on-demand (SVOD) rights to indie films. The second was African American media mogul Byron Allen’s Entertainment Studios, a TV production company trying to branch into feature-film distribution.
The first formal pitch came at around 11 p.m. from Fox Searchlight, according to the Hollywood Reporter. Having nurtured 12 Years a Slave to box office and critical success—the film won the 2014 Best Picture Oscar—the studio’s executives “believed they knew how to handle Parker’s baby,” according to The Wrap.

Late-night bargaining

Around midnight, Parker and the other producers decamped to a hotel to meet with producers Harvey Weinstein and David Glasser of TWC. Weinstein said he could bid up to $14 million, an offer that Taylor took to the other interested bidders. Deep into the night, offers from Paramount and Sony drove the bidding up to $15 million.

Allen of Entertainment Studios reportedly made a passionate pitch that he was the right man to bring The Birth of a Nation to a wide audience. Entertainment Studios and Netflix were believed to have each offered a staggering $20 million for the rights to the film, according to The Wrap.

In the end, though, Fox Searchlight was the winner, with a $17.5 million bid for worldwide rights to the film—reportedly the largest sum ever paid for a film at any festival.

A “negotiauction” success

Why didn’t Parker and the film’s other producers go with an even higher offer? Entertainment Studios was a wild card with no track record to prove its abilities. And Netflix was insisting on pairing a theatrical release with an SVOD release, which would have jeopardized the box office splash that Parker and his team envisioned.

By allowing the most promising bidders to negotiate privately with The Birth of a Nation’s producers, the film’s agents ensured that issues other than price—such as the shared vision and experience that Fox Searchlight was able to demonstrate—wouldn’t get lost in the bidding frenzy. When planned with care, this type of negotiauction, or negotiation-auction hybrid, can help sellers maximize the price competition of auctions as well as the one-on-one discussions possible only in negotiations, writes Harvard Business School and Harvard Law School professor Guhan Subramanian in his book Dealmaking: The New Strategy of Negotiauctions (W. W. Norton & Company, 2011).

In the end, Searchlight executives won Parker over by listening to his ideas about how to release the film, including his hope to show it in high schools and colleges. “It just felt like we were speaking the same language,” Parker told the Reporter.

Related Posts

Comments

Leave a Reply