AJC On Location
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A filmmaker is building buzz around his plans for a Georgia film studio on a swampy stretch of land near Savannah, saying it would be vaster than any moviemaking campus in Hollywood.
Manu Kumaran says he will reinvent the movie business — and hire at least 1,000 people — with the project, which in renderings blends Willy Wonka’s factory and the Land of Oz.
The plan is marketed to investors in part based on local government promises of money and tax breaks as well as the potential for sizeable state film and jobs tax incentives. A conditional state offer of $3 million in grants could be announced soon.
Yet Kumaran’s California-based company has limited financial resources, according to regulatory filings, in which an auditor warned it was in danger of failing. Kumaran says he has made 19 movies and documentaries, but few are likely familiar to U.S. audiences.
If realized, Kumaran’s dream could become an epic chapter in the state’s burgeoning love affair with the film industry. If not, critics say it could be a cautionary tale in betting tax-funded incentives on private ventures.
“What you have here is an unfunded company with no credible (financial) track record looking for state and local handouts for a project that is suspect,” said Brink Dickerson, a securities attorney with Atlanta-based law firm Troutman Sanders who reviewed Medient’s financial records for the AJC.
Chris Cummiskey, the head of the Georgia Department of Economic Development, said Medient “has a great upside potential,” but added it’s pitching “an aggressive plan for any company” - especially one that might be considered in the development stage.
Cummiskey said any state grants would require Medient to create and retain jobs for at least a year before it gets any money, a departure from normal practice. He called the state’s safeguards “more than adequate protection” for state taxpayers.
Effingham County, where the project would be located, has already offered to reimburse Medient for up to $1.25 million in infrastructure work. It also would allow two years free rent as part of a 20-year land purchase deal, and would levy no property taxes over that time.
Kumaran, 43, said all the risk is his.
Recently moved to Savannah from Los Angeles, Kumaran said he’s assembled a team that can pull off and fund his vision for making quality action, sci-fi and horror movies at well below typical film studio costs. He said he picked Georgia over Pennsylvania, New York, New Mexico and several other countries that offered more.
Tax credits Georgia offers every filmmaker come only after movies are finished, he said. Noting the conditions on any other state grants, he said: “We’re going to create a center for excellence that’s going to make Savannah a globally renowned city. All the money comes after steep performance targets. Where is the risk for the taxpayer?”
He said he agreed to the incentive structure because, “We realized we are a small company and we’re taking on a huge enterprise. So we don’t want anyone to lose their jobs because they gave us some kind of grant and it didn’t come to fruition properly.”
Kumaran’s company bio touts not only the 19 international films and documentaries that he’s helped produce — among the latest is “Yellow,” with Ray Liotta and Gena Rowlands and now on the festival circuit — but also his prowess in obtaining government incentives.
Effingham officials are confident of Kumaran’s track record, and the county’s inducements are contingent on Medient meeting goals, said John Henry, chief executive of the Effingham County Industrial Development Authority.
“This is a project I didn’t want to ride by and see in another community,” Henry said.
The project is one of several headline-grabbing studio proposals announced in Georgia so far this year. Georgia cites the industry as having a $3 billion-plus annual economic impact.
The emergence of massive permanent studios is a sign the state’s film tax credits help build permanent jobs and entertainment infrastructure, proponents of the incentives say. But states are increasingly competitive with incentives, critics say, and often the highest paying film jobs — such as actors, directors and writers — can be transient.
According to Kumaran’s plan, Medient’s studio and entertainment campus will include a video game development center and a giant leaf-shaped concert venue that could hold 25,000 people. Renderings show giant solar “trees” powering the complex, and eventually on-site, retail, health care and day care centers. An investor presentation boasts of facilities for underwater scenes and advanced 3D production. The campus wouldn’t use vehicles that burn fossil fuels.
Dennis Webb, chairman of the Effingham IDA, told a local paper he “stayed awake at night thinking about how so far beyond the imagination this is,” but that the business plan “makes sense.”
Kumaran foresees a film factory similar to the B-movie machine of producer-director Roger Corman, who helped spawn the careers of Francis Ford Coppola and Jack Nicholson. The company is also exploring miniseries, television shows and content for mobile devices.
Kumaran plans to reduce costs using a nonunion work crew and continuously producing content to reduce downtime.
Medient will crank out at least eight pictures a year to start, eventually doing more, particularly for international markets, Kumaran says, with post-production and visual effects done on-site. The strategy is to fill a gap of low- and mid-priced projects left by Hollywood studios that focus on blockbusters.
Medient was unprofitable in 2012. Though it reported a $561,000 profit in the first three months of 2013, the company said it had no cash on hand.
Kumaran, who is Indian, said he is lining up financial backers who will bring resources needed to make the project happen. The company recently announced a preliminary deal with a unit of Prime Focus, a visual effects company with Indian roots that has done work on major Hollywood films, that Kumaran values at $40 million.
A pending three-year deal with a European film company to finance new productions is worth up to $30 million a year, Kumaran said. He said he’s in talks with a developer to build $40 million in infrastructure and facilities for the first phase. He didn’t name those two companies.
Medient executives include Graham Bradstreet, a film financier and co-founder in the 1980s of Britain’s renowned Working Title studio. He left the company in the 1990s, but Working Title has gone on to make smashes including “Les Miserables” and the Bridget Jones’ Diary films. Kumaran said Medient has added a construction chief experienced in large-scale industrial projects to lead site development.
Medient also is preparing a stock sale to raise additional money, Kumaran said.
The company hopes to begin filming in Effingham by the end of the year, though the first phase of the studio complex will take a year or more to complete.
Henry, the Effingham development authority executive, said the effect on the local economy could be substantial.
“They’re building an intellectual property factory here,” Henry said. “He’s got a great-looking business plan.”
Two securities experts, however, told the AJC they see significant problems with Medient and its financial history.
Medient shares are a “penny stock,” which typically are thinly traded stocks valued less than $1 per share. They are bought and sold over the counter, not on major exchanges.
Medient went public last year when it acquired a Nevada company, Fairway Properties. By acquiring a public company, Medient avoided some of the regulatory scrutiny that accompanies a traditional initial public offering.
Kumaran said he is funding the company with his own money and spent about $1 million so far on the plans. Medient had revenue of more than $3.2 million in 2012, mostly related to its 2012 U.K. horror movie “Storage 24.”
Medient is reliant on the value of film tax breaks for “a substantial portion” of revenue and does not have a “credit facility” to finance “development, production and exploitation of our motion pictures,” according to a regulatory filing. An auditor in the filing expressed “substantial doubt” about Medient’s viability.
“There are a number of red flags that would concern me as an investor,” said Alex Rue, a former regulator with the Securities and Exchange Commission who is now an attorney in private practice.
Kumaran dismissed the auditor’s concerns.
The leadership team, Kumaran said, has a proven track record and deep connections to entities that can finance and operate his dream. “We’re bringing very strong partners to the table,” he said.
