But if New Mexico’s incentive program has spurred copycats, other states have not rushed to follow the state’s other film incentive—the loan program.
It’s a bit of alchemy, devised at the start of Gov. Richardson’s first term, which takes coal and turns it into finance guarantees for low-budget horror flicks.
The film loan funds come from a small slice of the state’s “severance tax permanent fund,” a multibillion-dollar pot of tax money paid by energy companies that extract—or “sever”—natural resources from the earth.
The interest rate on the film loans is a whopping zero percent. The state is supposed to make its money on the back end by taking a stake in a production: If the film makes a profit, the state makes a profit.
It hasn’t quite worked out that way yet. Still, Dekom says he’s done better than most stockbrokers.
“We haven’t lost a single dollar of principal,” he says. “We rock. The taxpayers should be smiling and grinning.”
The first film to get a loan was 2002’s Suspect Zero, an old script originally intended for Tom Cruise. It had a $27 million budget and grossed $11 million worldwide—enough to pay back the $7.5 million state loan, but an otherwise embarrassing
The only film with a New Mexican producer to get a loan was Cruel World, a horror flick, in 2004. The film remains unreleased. The $1.7 million loan for Cruel World amounts to less than 1 percent of the film loans given out by the state. Producer Nick Maniatis did not return a message left at his Albuquerque office. The number for his company, Primetime Pictures, is disconnected, and its physical address turns out to be a mailbox in Beverly Hills.
While the film loan portfolio may not have lost money, not many borrowers are in a great hurry to pay back their debts.
As of Feb. 28, the last time the state published an accounting, film studios owed New Mexico $127 million in principal on production loans—only $87 million had been repaid.
The single biggest debtor was Lions Gate Entertainment, or Lionsgate, with more than $80 million outstanding on six loans. Most of that was for three seasons of the ABC Family TV series Wildfire, which the network cancelled last year.
Lionsgate owes nearly double the amount owed by the four other studios with outstanding loans. And three years after state officials approved the first of those loans, Lionsgate hasn’t paid back a dime in principal.
Last year, the state “rolled over” $15 million of Lionsgate’s debt to finance another production by the studio: the TV series Crash, co-produced by the Starz network and based on the Paul Haggis movie that robbed the 2006 Best Picture Oscar from Brokeback Mountain.
Haggis also directed In the Valley of Elah, a 2007 movie about Iraq war veterans, which got $15 million from the State Investment Council.
Haggis is a client of Dekom’s, information the attorney disclosed to the SIC before that group approved the Crash loan. Asked by a board member, Film Office Director Strout “had no problem” with Dekom’s previous relationship, according to minutes of the meeting.
“You can’t be in this business for 35 years and not know a lot of folks on some level. But if it’s someone who’s a client, he will bring that up,” Strout tells SFR.
Haggis isn’t Dekom’s only past connection to Lionsgate.
US Securities and Exchange Commission filings show that Dekom was a director of Trimark Pictures when Lionsgate purchased the company in 2000. According to a trade publication, the Weekly Corporate Growth Report, Lionsgate paid a 54 percent premium—good news for Dekom and his Trimark stock holdings.
Dekom still holds Lionsgate stock but he says he’s not sure how much.
“I’ve got so miniscule an amount—which, of course, I disclose—I don’t even know what I’ve got,” Dekom says. “I think I just hold on to it for nostalgic reasons.”