Weak dollar drives sales for U.S. pics
But currency game is a one-way street
By Steven Zeitchik

May 14, 2008, 12:07 PM

CANNES -- Dollar-carrying Americans in Cannes scandalized by the price of a cafe au lait ($8), a bottle of water ($5) or a short taxi ride ($17) can take solace in this: Currency devaluation can sometimes be a beautiful thing.

A weak dollar tends to benefit exporters and disadvantage importers. That's good news for U.S. companies at a film market, where the bulk of sales go in one direction: from the U.S. to overseas.

Because these U.S. companies generally finance their movies in dollars but sell to companies who make their money in euros, pounds or other strong currencies, the sellers essentially could get a premium on the market value of a film when they close a deal. Far from taking a further chunk out of their bottom lines, these currency disparities could provide a boost to Yank revenue.

And they could offset what over the last year has otherwise been a rocky foreign market for U.S.-produced films, especially in Japan and Spain.

"U.S. entertainment companies are in the export business, and these currency fluctuations are a big net positive for them," said Stephen Prough, managing director of investment bank Salem Partners.

Or as William Morris Independent's Cassian Elwes put it: "In the current economic climate, this is the one big advantage."

That's good news not just for the sales departments. The foreign-sales efforts at Cannes of U.S.-based companies such as Focus and Summit fund year-round efforts across the company.

Even firms which don't sell huge slates at a fest, like the Weinstein Co., could benefit. TWC will rely on foreign sales of midrange projects like the John Cusack period pic "Shanghai," and it, too, could see higher revenue from international sales as a result of currency fluctuations.

On the down side, it's pricey to buy from those countries if you're paying in dollars to companies who conduct their business in euros: You essentially have to spend that much more for the same rights.

The effect of this currency differential on large U.S. companies may be minimal, however, since most foreign films are sold to the U.S. for token amounts, and are meant more for the cachet of a U.S. theatrical release than actual cash. When asked about what a weak dollar might do to A-title imports, one sales agent quipped: "And a few dollars more than zero makes how much exactly?"