Novice Movie Investors Took Leap of Faith on Gritty 'Precious' - WSJ.

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BUSINESS

NOVEMBER 16, 2009, 11:01 A.M. ET

By LAUREN A. E. SCHUKER

"Precious," a raw movie about an obese black teen growing up in an abusive Harlem household, got off the ground with some unlikely angels: A wealthy Denver couple new to the film business. The surprise success of the movie marks a vindication for Sarah Siegel-Magness and her husband, Gary Magness, a pair of novice film investors who put up roughly $12 million to finance a project that wouldn't appeal to Hollywood studios. "No way, no studio would make a film about an overweight black girl," says "Precious" director Lee Daniels, who produced "Monster's Ball," which won Halle Berry an Oscar. The 36-year-old Ms. Siegel-Magness runs her own clothing company called So Low, which began with an underwear line for low-rise jeans. Her parents started the tea company Celestial Seasonings, where she worked growing up. Mr. Magness, 55, whose parents began the cable company Tele-Communications Inc. that later merged with AT&T, is a cattle rancher and oversees an investment group. Their foray into film financing and producing wasn't part of a carefully planned strategy. "When I began to get outside counseling from Hollywood about what we had done, people were mortified," remembers Ms. Siegel-Magness. "They told us we should have instead invested in this or that fund to make 11 different movies, that we were crazy for financing an African-American movie about incest," she says. In today's cash-starved Hollywood, where the billions Wall Street poured into Hollywood between 2004 and 2008 have dried up, individual "angel" investors like the Magnesses are more crucial than everand one of the only ways that gritty, independent films like "Precious" ever live to see the silver screen. "Liquidity has dried up in a big way, and those big financing deals are gone for the moment, says Premila Hoon, who previously ran film financing at Socit Gnrale and now has her own boutique film investment advisory firm, Entertainment Capital Advisors. "I think we will see more angel investors, and they will be a little smarter about risk." "Precious" has already grossed nearly $9 million on just a handful of screens since opening last weekend, and Lionsgate, which bought rights to the film for $5.5 million, is preparing to release the movie on as many as 1,000 screens by Thanksgiving, initially focusing on art-house and African-American audiences before expanding it to 2,000 screens in the coming months. "The film is not, on paper, the obvious home-run," says Joe Drake, president of Lionsgate's motion picture group. "But it offers a lot of life and humor and a real emotional journey."

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Novice Movie Investors Took Leap of Faith on Gritty 'Precious' - WSJ.com

http://online.wsj.com/article/SB10001424052748704538404574537721...

Industry experts say its tough to project how "Precious" will perform over the long-haul because it hasn't yet opened in the mass market. Paul Dergarabedian, president of Hollywood.com's box-office division, says that with the promotional push the movie is getting from Oprah and Tyler Perry it could go far at the box office. "It wouldn't surprise me if it made $25 million and $50 million would not shock me." The Magnesses connected first with Mr. Daniels when one of his producers, Tom Heller, cold-called Ms. Siegel-Magness after reading about her clothing line. "She seemed like a passionate entrepreneur," he says. "I had a gut feeling she might like what we were doing." They set a meeting with Mr. Daniels in 2006, which was later canceled. "I assumed he found his funding," says Ms. Siegel-Magness. "I thought, 'Fine. We don't want to spend that money anyway." But then they got another call from Mr. Heller about financing a film called "Tennessee." The Magnesses flew down to Albuquerque, N.M., the next day to meet Mr. Daniels. "We were totally captivated by Lee from the moment he sat down," says Ms. Siegel-Magness." At one point while they were talking Mariah Carey walked by, and Mr. Daniels pulled her into the conversation. "It was the best little trick," says Ms. Siegel-Magness. The next day, they agreed to foot the bill for 80% of the $5 million budget for "Tennessee." The movie, released earlier this year, was a flop. The Magnesses will endure a loss in the millions. "We knew going into this that it would be nearly impossible to strike a gold mine the first time out," says Ms. SiegelMagness. "We planned on a possible loss, but we also believed in Lee." The couple decided they wanted to dig deeper into the movie businessand produce Mr. Daniels' next project. Earlier, Mr. Daniels had secured the rights to the novel "Push," the story that would be turned into "Precious: Based on the Novel Push by Sapphire," which stars newcomer Gabourey Sidibe. He was interested in making the movie but worried about its appeal. "The script is written directly from the book, and the book is X-rated. It's bleak, man." The Magnesses pressed him to make the film as soon as "Tennessee" wrapped. Even when the movie hit a snag that caused its budget to balloon, the couple didn't pull out. "I don't know if other investors would have hung in there through that," says Mr. Daniels. The couple, meanwhile, is ready to make more films. Ms. Siegel-Magness, who spent nearly every day on the set of "Precious," says she and her husband have secured the rights to the "Judy Moody" children's book series and are preparing to shoot a larger-budget movie based on it next summer. They are also wrapping a documentary they made about philanthropy in Brazil, which they hope to enter in the Tribeca film festival. "We know 'Precious' is an anomaly, that it won't be a consistent thing for us in this business," says Ms. Siegel-Magness. But, she adds, "We never just wanted to write a check.. We always said to Lee, 'we want to produce 'Precious' with you.'... This was our shot at being part of the film industry." Write to Lauren A. E. Schuker at lauren.schuker@wsj.com

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