‘Transporter’ TV Series Filming Early 2011; EuropaCorp Thinking About 'Taken' Show

A U.S. broadcaster is already on board the new Transporter TV show, based on the hit movie franchise from Luc Besson’s EuropaCorp movie factory. EuropaCorp won’t say who the US partner is, “but it’s a big one,” chairman Pierre-Ange Le Pogam tells me. Shooting on the $48 million 12-part series will start early next year, with the first episodes being delivered early November. French producer Lagardere Entertainment is fully-financing the show, having licensed The Transporter from EuropaCorp. Jason Statham starred in all three Transporter movies as the driver who delivers anything, anywhere – no questions asked. CW recently gave a full-season order to Nikita, another TV show based on a EuropaCorp franchise. EuropaCorp is also thinking about a Taken TV series, but only after Taken 2 begins filming in the spring with Liam Neeson. Le Pogam says they’re still locking down who the director will be.

Both shows are part of EuropaCorp’s push into TV production. Paris-based animation house Zagtoon is adapting another Besson movie, Arthur and the Invisibles, as a $13 million animated TV series. Le Pogam said he wanted to get 10-year-old EuropaCorp into TV as a way of smoothing out the company’s revenues. Being a publicly-quoted company on the Paris Stock Exchange doesn’t sit well with the ups-and-downs of the movie business. EuropaCorp made its first-ever net loss of €9.8 million ($13 million) during the 2009/10 financial year. “We’ve had to educate the financial market as to how the movie business works,” says Le Pogam.

Both Lagardere and Zagtoon are fully-financing their shows based on EuropaCorp characters. But EuropaCorp will start making its own shows from now on. It bought TV producer Cipango in April to kick-start its television production business. Cipango is currently shooting the 2nd series of conspiracy thriller XIII, starring Stuart Townsend, for French TV producer Canal Plus and NBC Universal.

On the movie side, Luc Besson begins filming his next as-yet-unannounced action movie this month. Lock-Out, a $30 million sci-fi action movie starring Guy Pearce as an astronaut who has to rescue Maggie Grace (Lost) from an orbital prison riot – think Escape From New York in space – is currently shooting in Poland and will wrap just before Christmas. FilmDistrict will release in the US early 2012. And Sony plans to release Colombiana, starring Zoe Saldana (Star Trek) and directed by Olivier Megaton (Transporter 3), next September. The film is currently in post.

EuropaCorp has also picked up on the craze for animated 3D, and is currently finishing two children’s films A Monster In Paris, starring Vanessa Paradis, and the Tim Burton-ish La Mécanique du C?ur based on the concept album by French band Dionysos.

EuropaCorp will make between 4 and 5 English-language movies in 2010/11, as well as another 6-7 French-language movies aimed at the home market. This is a third down on the number of movies it made last year. The company blamed its loss on how much cash it spent on production. French critics say the company is too American, producing movies like From Paris With Love, starring John Travolta, especially for the export market. That movie just made $2.8 million in France but grossed $24 million in the US. “From Paris With Love was not a success in France,” Le Pogam sighs. EuropaCorp began life in September 2000 as a producer/distributor before floating on the Paris Bourse in 2007. Like any big indie production company, the endgame is building up a library. Once all the movies are paid off, the library will generate revenue for decades to come. Just look at any of the studios. EuropaCorp tells me around 25 features are fully paid off so far. It bought the 450 title Roissy library three years ago, bringing its total library up to 600 titles. This library is currently valued at being worth $162 million.

Hollywood was buzzing round EuropaCorp earlier this year hoping to tie Besson into a multi-picture deal. Sony Worldwide Acquisitions Group was the front runner, along with Fox and Universal. In the end, EuropaCorp has decided to keep working on a movie-by-movie basis, trying to find the right home for each project. “We show US studios respect,” he says in a voice as rich as a good Burgundy. “We have a beautiful relationship with many people within the studios.”

But it is talking to European distributors about signing output deals in territories such as Spain, Italy and the UK. EuropaCorp recently signed a 3-year distribution deal with Germany’s Universum Film, with the German distributor putting up cash advances for movies about to start filming. It may sign a second European output deal next year.

Besson and Le Pogam have been working together since 1985, when Besson was directing Subway and Le Pogam ran distribution at Gaumont. They collaborated on The Big Blue, Nikita, Léon and The Fifth Element.

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THE EARLY EVIDENCE: QE DOES MORE HARM THAN GOOD

What exactly has QE “lite” and the expectations of QE2 done for markets and the economy so far?? Two months following the initial rumors of of QE2 and well into QE “lite” we can make some early conclusions:

1) Equity markets have rallied, but this is of little significance.? There is no evidence supporting an equity market “wealth effect” according to Robert Shiller (see here) and James Bianco (see here). Bianco’s research actually finds that the corresponding commodity price increases are more likely to be a net negative for consumers.? And even if there is a “wealth effect” it only helps the rich because the middle class are only minority holders of equities on the whole.? Of course, this isn’t a crisis of the wealthy so this looks like another case of failing trickle down economics at best.? It’s also worth nothing that stock prices are nominal wealth so intentionally distorting prices from fundamentals is no recipe for sustained wealth.? Keeping equity prices “higher than they otherwise would be” only diminishes the Fed’s credibility while also creating distortions in markets.

2) The 10 year bond yield is HIGHER since the Jackson Hole speech. The 30 year bond yield is up 50 bps since the Jackson Hole speech. Therefore, there is unlikely to be a sustained refinancing effect and no increased demand to take on more debt (not that this would work in a balance sheet recession anyhow, but Mr. Bernanke fails to acknowledge that this is a demand side problem). 74% of all consumer debt is mortgage based so it’s baffling that they are targeting the short end of the yield curve.? Bernanke wants to stimulate borrowing, but his actions aren’t backing up his talk.? He is focusing his efforts on the short end of the curve where rates are already very low – astoundingly confusing and misguided policy.

3) Many commodities have rallied in recent weeks which will do nothing but put pressure on input costs and ultimately make life more difficult for the US consumer (assuming these costs even get passed along, which is unlikely due to weak end demand).? The consumer will either be hit with higher costs which they can’t afford to sustain or US corporations will continue to be hesitant to hire the millions that need jobs because they are too busy protecting their margins.? On the one hand, this one of the few certainties we have regarding QE – it hurts corporate margins by causing a speculative ramp up in commodity prices.

4) QE IS NOT MONEY PRINTING so there is no reason to believe that it will cause anything more than expectations of future inflation.? When the Fed implements a policy of QE they are merely purchasing an asset that already existed and swapping it with a deposit.? There is some debate over the price changes before these transactions take place and whether the Fed is buying at higher prices, but this is offset by the fact that the Fed is removing a high yielding asset for a lower yielding asset.? In this case, they are removing 1.2% paper (on average) in exchange for reserves that will earn just 0.25%.? Remember, in QE1 the Fed removed over ~$47.5B in interest income from the private sector.? So if anything, this has a marginal deflationary impact.

5) Borrowing didn’t pick-up after QE1 and there’s certainly no signs of a borrowing boom in recent data.? Of course, with real estate in the midst of a double dip there’s unlikely to be a surge in borrowing in the coming quarters anyhow.? As Robert Shiller detailed, the “wealth effect” of a housing boom can be quite substantial.? With home prices now declining again we’re actually seeing the opposite of a “wealth effect”. In other words, the majority of Americans don’t feel better because Wall Street rallies each and every day.? They feel worse because the asset they come home to every night, the asset that accounts for the majority of their net worth, has declined in value.

So just what exactly does QE do for the economy?? Even the people who are advocates of it don’t seem to know and certainly can’t back up their claims with any positive evidence.? Meanwhile the media and its misguided punditry are falling all over eachother to spread falsehoods and inaccuracies regarding this policy as they shower Ben Bernanke with praise for trying something.? I am not sure why Mr. Bernanke is worthy of any praise.? He did not foresee this crisis.? He responded too late when it was clear that a crisis was on our doorstep.? And when he finally did respond he saved the banking system and left the American public out to dry.? Thus far the evidence surrounding his latest tool looks poor at best and it in fact appears as though it could be causing more harm than good.

As for the markets there has been some interesting action in recent weeks.? It looks like the smart money markets (FX and fixed income) have slowly started coming around to the fact that QE won’t cause a dollar crash (because there is no interest rate effect and no “printed money”).? Meanwhile, risk markets (equities and commodities) are on fire as “buy the dip” and “don’t fight the Fed” become the motto on every trading desk.? The divergence here won’t last and given the early evidence it looks to me like a whole lot of investors are deep into the risk trade without the fundamentals to back it up.? They’ve placed a bet on a Fed Chief who has failed at nearly every step of his tenure.? A great deal of leveraged optimism has been priced into the market based on this “non-event“.? I do not know if I have ever seen the market rally so much around an event that involved more misguided and inaccurate analysis.

Mr. Bernanke has created dangerous distortions in many markets over a policy that appears to have no real economic impact.? He is playing games with the markets in an effort to give the appearance that he has not run out of policy tools.? This not only calls into question the independence of the Federal Reserve, but has to very seriously make one wonder whether Mr. Bernanke is fit to run the world’s most important Central Bank?? I have long maintained that he was never fit for this position and in my opinion the early evidence of QE only further confirms that belief.

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