Movie Magician graphic

Martin Katz, LLB 1984, cut deals across continents to finance Hotel Rwanda. But that was the easy part.

By Chris Graham, JD 2007

From the Fall/Winter 2013 issue of  Nexus.

“There are two major challenges to making a film,” says Martin Katz (pronounced “KAY-tz”), from the front of a theatre at the TIFF Bell Lightbox in downtown Toronto. The theatre’s seats are filled with students, mostly film, some law, who’ve come to hear Katz talk about the international financing package he negotiated for the acclaimed film Hotel Rwanda, which debuted in 2004. The Oct. 4th event is part of the TIFF’s Higher Learning series and co-presented by the Faculty’s Centre for Innovation Law and Policy.

Katz is an engaging mix of ebullience and charm. He’s wearing yellow leather shoes and jeans with rolled cuffs. He’s healthily tanned despite the day’s grim weather, having just returned from Los Angeles, where he was checking-in on his latest project (a film called Maps to the Stars, starring Julianne Moore and Mia Wasikowska.) He looks, in other words, exactly as you’d imagine a successful film producer would look, and he’s about to tell us how films are kind of miraculous, finance-wise, at least.

“The first challenge is that there is not enough money in the world to make a film.” Katz beams, film students sink lower in their seats. “The global pre-sale rights to a film’s exploitation,” Katz explains, “are nowhere near enough to cover the cost of production.”

That means the film business makes products even it doesn’t think will be profitable, which makes Katz a kind of magician: he makes films appear where there should be nothing. “Because you can’t do a film using foreign and domestic pre-sales, you need something else—what I’ve taken to calling ‘The X-Factor’.”

Katz is the founder of Prospero Pictures, a Toronto-based production company. In addition to Hotel Rwanda, which we’ll watch after his talk, Katz has produced numerous award-winning feature films, including three with Canadian director David Cronenberg (Spider (2002), A Dangerous Method (2011) and Cosmopolis (2012)). Katz graduated from the Faculty of Law in 1984, using his legal training to specialize in the kind of international co-production deals that he pioneered with Hotel Rwanda.

Otherwise known as soft money, Katz’s X-Factor typically comprises a mix of public and private investment specifically designed to support cultural products. The best-known Canadian example would be Telefilm, but for Hotel Rwanda—a $20-million film about the Rwandan genocide in 1994 and the efforts of hotelier Paul Rusesabagina to shelter Tutsi refugees from Hutu militias—the cultural connections that Katz needed were wholly international. After selling the U.S. rights for $3-million, Katz went looking for $17-million worth of foreign cultural interest.

Katz first pitched the film to South Africa’s Industrial Development Corporation, which was very enthusiastic: not only was the story of supreme national interest, the entire film would be shot on location in Kigali, Rwanda and Johannesburg, South Africa. Katz then leveraged the film’s British-born writer and director, Terrence George, to secure a group of UK-based investors.

Now a fun legal problem: it turns out there are dozens of international treaties that facilitate co-production of cultural media; Canada alone is party to 51, says Katz. The treaties make possible precisely the international financing Katz was trying to assemble for Hotel Rwanda—but, at the time, there was no treaty between the U.K. and South Africa.

There was, however, a treaty connecting the U.K. and South Africa, individually, to Italy. Katz reached out to an Italian investor who was interested but wanted to cast an Italian actor to cement the cultural touchstone. The suggestion was: “How about a priest?” So Katz got Terry George to write six pages into the script featuring an Italian priest (played by Roberto Citran, on screen for roughly 30 seconds).

Katz smiles wryly: “We could now hang our hat on this cultural link between the three countries.”

But investment is just the first challenge to making a film. The second is that a film’s investors don’t pay until the film is delivered. The actual production—actors, crew, sets, cameras, editing—is paid with loans against this eventual payment and secured against the film’s copyright. This interim financing is provided via an Interparty Agreement, or IPA, which, for Hotel Rwanda, involved parties in the U.S., U.K., Italy, and South Africa.

“Thus began a long process of two or three problems per day, all literally insurmountable, and trying to get them resolved.” Katz looks tired just saying this. “Then we would start the process again the next day.”

A few weeks before shooting began, Katz and his partner flew to the U.K. to negotiate the IPA. “We thought it would take three days, there would be a dinner and we’d all go home.” Instead, the negotiations turned into “a sixteen-day hostage taking,” with Katz and his partner on the phone from 7AM to midnight (covering all four time zones) trying to resolve conflicts, all the while knowing sets were being built in South Africa with money not yet secured.

“If we didn’t finalize the IPA we’d all be bankrupt, basically,” says Katz. “And I’d have to pay my own hotel bill.”

At one point during the negotiations, a South African Premier intervened—deep behind the scenes—to secure the IDC’s financing. Katz recalls his contact’s cagey assurance: “I can’t tell you why, but don’t worry, everything will be OK.”

The biggest challenge, in true Hollywood fashion, came right at the end: the weekend before shooting the Italian investors balked: “Their lawyer went home on Friday, refused to talk, and we’re supposed to start shooting on Monday.”

In order to continue, the Italians demanded renegotiation of the entire deal, starting at noon on Sunday. Katz holds up his hands: “A binder of contracts nine inches thick.”

Taking only 45-minutes for dinner and a 17-minute morning coffee break, the agreements were finalized just after 1PM on Monday afternoon. Almost 26 hours after the deal looked scuttled, Katz finally called South Africa:

“OK,” he said. “Start shooting.”