St. Rose company goes Hollywood
Spends millions to finance film
Magnolia Companies spent $4.8 million to finance the film "Zipper," which stars Richard Dreyfus, Patrick Wilson and Lena Headey.
The Magnolia Companies in St. Rose is a conglomeration of 24 businesses ranging from real estate and offshore dredging to the production of LED light bulbs. Founded as a construction firm in the late 1950s by Henry Smith, the business has seen substantial growth over the years and their latest venture into the movie business is further proof that the company is not afraid to invest big bucks in something they believe in.
Spent $4.8 million to finance “Zipper”
Two years ago Magnolia Companies entered into a partnership with Quixote Studios to build a 30,000-square-foot soundstage on Airline Highway in St. Rose. That space has already been used for several television and film productions.
Now that the group has started investing in locally shot films, Magnolia Companies has put the last piece of the puzzle together to become a major player not only in the Louisiana film and television production world, but nationwide.
Their introduction into the financing side of film production was a small equity stake in the New Orleans shot “The Butler,” starring Forrest Whitaker and Oprah Winfrey. The film had a $30 million budget and made nearly $170 million.
“It was a success to say the least,” Glen Smith, CEO of Magnolia Companies, said. “I wish we would have had a bigger equity and less tax credits, but it all worked out fine.”
Now Magnolia Companies is taking a bigger role in film production financing and has bought a library of scripts they plan on turning into movies in the next few years.
“We are teaming up with some of the big producers. We bought some scripts and are actually inventorying scripts now,” Smith said. “You develop this inventory of scripts and then you figure out the right time and the right type of script to turn into a film”
This year the company is rolling out their first film in which they are the sole investors. The movie, “Zipper,” is a political drama starring Patrick Wilson, Richard Dreyfus and Lena Headey and came at cost of $4.8 million to produce.
“We were able to grab (the actors), make our deal and get the production done,” Smith said.
“Zipper” was shot in Baton Rouge earlier this year. The film’s final cut was just finished last week and should be released in February 2015, but now the task of finding the right distributor for the movie is at hand. A trailer shown at the Cannes Film Festival resulted in a company buying the overseas distribution rights and now the film will see its debut at the Toronto International Film Festival this September. Smith believes a domestic distribution deal will be signed in Toronto.
“When you go to Toronto they actually cut the deal right there. There is no ‘we’ll do it in a week or two weeks,’ everyone that goes there has money to spend,” Smith said.
Although Magnolia did well on their return from “The Butler,” Smith is very aware that the success of any film is dictated by fans, which makes the movie business a risky one.
“When you move into the equity part of the film you make money if the movie makes money. When you are buying the tax credits, it has nothing to do with the picture. They spend the money, we get the tax credits. What happens to the movie doesn’t make a difference,” he said. “But when you move into the equity portion of it, what happens to the movie really is a big thing. We are working with it and we feel comfortable with the risk.”
Foray into movie business began with motorcycles
Magnolia Companies first got into the movie business five years ago through their customized motorcycle shop at G. Smith Motorsports. They created prop motorcycles for “Meet the Spartans,” “The Expendables” and other films.
“Instead of just building a bike for them, we would lease it to them and send our guys to take care of them,” Smith said. From that introduction into the film business, the St. Rose company went about buying a firm that handles tax credits. The state of Louisiana offers up to a 30 percent tax break for companies involved in the film industry that are shooting in the state.
The tax credit was first passed in 2002. Last year, Louisiana surpassed California - the longtime leader in film productions - for the largest number of major films produced in North America in one year.
Smith said the incremental investments their business has made into the film industry has come full circle and the next step is to film the movies they produce using Quixote Studios, their tax credits and props developed by G. Smith Motorsports.
“We have the tax credit, we have the equity position, we are into production and we developed the studios, so we are pretty well covered in the film industry,” Smith said. “To my knowledge we are the only company in Louisiana that has that capability.”
Plans include huge studio on Airline Highway
Although they have made quite a few moves thus far, the company plans to join with Quixote Studios to construct the largest film production studio in the South on Airline Highway. With a bigger studio the company believes they can lure in big-budget films and service production companies from beginning to end.
“It will be a full-fledged film facility,” Smith said.
They are planning on adding an outdoor production space where canals lining land in St. Rose would be used to simulate swamp scenes. In addition, the facility would feature post-production space so that films can be edited and even animated in St. Rose.
“The post-production will be good for the local employment and the salaries are great,” Smith said.
The long-range plan for Magnolia Companies is to turn the area between I-310 and Louis Armstrong International Airport into a film production powerhouse worthy of competing with any such space in the country.
Whatever happens, Smith said Magnolia Companies will approach their newest venture much like they have those they have been successful with in the past.
“Our operations, whatever one you are talking about, we enjoy it being right and we’ve worked hard to get it that way,” Smith said.
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