Film entrepreneur draws mixed reviews
Los Angeles Times
Wade Bradley sells the Hollywood dream. But unlike the stories on screen, the ending isn’t always happy, some of his investors claim.
Bradley’s Media Society Inc. solicits wealthy people to invest in a slate of independent films that it produces and distributes through a subsidiary, with the minimum investment set at $150,000. If the movies make money, investors get a share of the profits.
Investors also get perks that few companies can offer, including trips to the Sundance Film Festival, Oscar parties at a swank West Hollywood hotel and visits to film sets, where a chance encounter with a movie star isn’t out of the question.
Ivan Williams, an executive at engineering firm WorleyParsons in Monrovia, was able to visit the set of Media Society’s first film, “Big Stone Gap,” when it was shooting on location in Virginia. The movie stars Ashley Judd, Patrick Wilson and Whoopi Goldberg, whom Williams met on his visit.
“That was absolutely a mind-blowing event to have somebody of Whoopi Goldberg’s caliber thank us for helping make the film a reality,” Williams said.
Others who have invested with Bradley have less fond memories. An arbitration action filed by five people against Bradley and others last year seeks the return of $1.6 million invested with IndieVest, a similar company run by Bradley.
IndieVest made two films — one starring Peter Dinklage of “Game of Thrones,” the other featuring Steve Buscemi of “Boardwalk Empire” — but both tanked at the box office, with neither one topping $125,000, according to Rentrak.
“We were just suckers — he got money from a bunch of easy suckers,” said Kurt Schellhas, who claims in the arbitration filing that he lost $200,000.
Bradley, 53, said that the claims in the arbitration complaint are “without merit” and that he expects to be “fully exonerated.”
In their action, the investors point out that Bradley was subject to a 2012 disciplinary proceeding brought by the Financial Industry Regulatory Authority, an oversight organization operated by the securities industry. Finra alleged that Bradley improperly took investor money out of an escrow account. His stockbroker’s license was suspended by Finra for one month last year.
In a statement submitted to Finra, Bradley said he had believed that “the minimum amount of investment required to break escrow … had been met at the time escrow was broken.” In an interview, he noted that his settlement with Finra did not include an admission of wrongdoing.
Bradley said that the typical Media Society backer is “a very serious investor that’s putting in very serious amounts of capital.”
“They love the idea of investing in films, but they want an end-to-end solution,” said Bradley, a former commodities trader and venture capitalist who is now chief executive of Media Society. “They realize what we really provide, 24/7, is studio-level discipline. One of the biggest lessons learned from everything I’ve done in my life — but certainly from the prior company I founded — is discipline.”
The arbitration case is also being handled by Finra, and a three-person panel is expected to make a ruling early next year.
Whatever the outcome, the dispute highlights what veteran Hollywood producers say is the inherent risk in financing small independent films, which often struggle to find an audience in a market dominated by bigger, slicker productions.
Mark Gill, president of Millennium Films, said that investing in low-budget indie productions can be “an invitation to lose money.”
But Gill acknowledges that, for well-heeled investors who can afford the risk, investing in Hollywood carries certain rewards beyond money.
“Some of this is for the fun of it,” said Gill, whose company produces “The Expendables” series of films. “They get social points and they will finally have something interesting to talk about at a cocktail party.”
That said, the lure of hitting a home run can be powerful. “The Blair Witch Project” was made for $60,000 and grossed $249 million worldwide. More recently, “Dallas Buyers Club,” with a budget of $5 million, did $55 million worldwide and won three Oscars.
But for every “Dallas Buyers Club,” there are dozens of failures.
“The Hollywood aura seems to drive people away from rational thinking. Film investing is extraordinarily risky, especially when you are dealing with outside-of-the-box projects,” said Philip Aidikoff, a Beverly Hills securities lawyer. “The problem is nobody puts the right due diligence into these guys because they get stars in their eyes.”
Media Society solicits investors with direct-mail brochures with images of clamoring paparazzi, shining klieg lights and a couple in a tuxedo and gown behind a velvet rope. The mailer says investors can become executive producers, touts opportunities to “walk the red carpet” and a “managed-risk approach.”
The company offers two avenues for investment. In addition to backing the film slates overseen by subsidiary Altar Identity Studios, individuals can also buy a stake in Media Society itself. Bradley said Media Society has about 80 shareholders.
“I have always been really happy with the way Wade and his team have been working,” said Media Society investor Fred Church, a Rockford, Ill., surgeon. “Doctors are notorious for making bad investments, so I don’t take it lightly. I do my research.”
Retired anesthesiologist Paul Curry of Corona del Mar said he made a $400,000 investment in the slate and the company even after his financial advisor counseled him against it.
Curry said he accepts the possibility that he could lose money on his investment.
“It is truly an entrepreneurial bet,” he said. “I am betting that the way [Bradley] has worked this through — and the innovative thinking — will provide a steady profit.”
The investors in the arbitration claim that when IndieVest failed, Bradley shut it down and started a new company that should be treated as a successor entity. The arbitration complaint alleges that Bradley created Media Society so as to “not be burdened by IndieVest’s previous issues and liabilities.”
Schellhas said he invested in the firm after learning about it from his son, who was employed by IndieVest and later left the company. An Edina, Minn., neuroradiologist, Schellhas also said that he lent IndieVest $200,000. He sued to get a portion of that money back, according to court files.
Bradley said that his company paid back the loan “as quickly as we could.” He said Schellhas sued to collect the balance “even though we had continued to keep an open line of communication with him and made it clear we would pay the note in full, which we did.”
Bradley also said that he personally made a similar loan to IndieVest that it did not pay off because his investment “was deliberately last in line behind all outside investors.” Bradley said that about 88% of IndieVest’s corporate shareholders have backed Media Society. But he disputed the claim that Media Society is technically a successor company of IndieVest.
“It doesn’t have the same assets whatsoever,” he said.
IndieVest, founded in 2005, funded just two movies: “Knights of Badassdom,” which starred Dinklage and was released in January, and “Saint John of Las Vegas,” which starred Buscemi and was released in 2010. Both of those films were produced by IndieVest Pictures, a wholly owned subsidiary of IndieVest.
Bradley said that “Knights of Badassdom” has performed well on home entertainment platforms and investors in it could eventually make money. The film was budgeted at $4.5 million, but went “vastly over budget … enough to deplete our marketing budget,” though he declined to say what it ultimately cost.
According to the arbitration complaint, the money that Bradley allegedly withdrew from the escrow account prematurely was meant to finance the production of “Knights of Badassdom.”
Bradley said that production problems on the picture “dramatically crippled” IndieVest.
The project had other legal issues. Last fall, visual effects firm Comen VFX was awarded $119,649 in arbitration after it claimed that IndieVest Pictures hadn’t paid for work it did on the film, court records show.
Bradley disputed the finding and said he had “no involvement in contracting the firm.”
Media Society launched in September 2012, about seven months after IndieVest went dormant. To invest in a slate, participants must become “members” of Media Society, with one tier of membership costing $950 and the other $4,950. Investors must have a net worth of at least $1 million.
The backers of the slate are paid using what Bradley described as a “first-dollar gross revenues” model. For each production within a slate, investors are paid revenue generated by the project until they recoup their investment plus a 15% “preference fee.” They would also get a percentage of any net profits.
Media Society has to yet to pay a dividend, but Bradley said the company would issue its first dividend Sept. 30.
Though it has many of the same investors, Bradley said that Media Society differs from IndieVest in a handful of key ways. Whereas the old company financed its pictures on a one-off basis, Media Society’s Altar Identity subsidiary raises money for a slate, which gives the company more flexibility. (“Big Stone Gap” is part of the initial slate, as was a Broadway production, “First Date,” which played for about six months and ended its run in January.)
And while IndieVest developed and produced films in-house, Bradley said that Media Society instead backs projects developed by proven filmmakers, and only works with pedigreed “A-level” producers. “Big Stone Gap” is produced by Donna Gigliotti, an Oscar winner for “Shakespeare in Love.”
“We sat down over a period of several months and figured out what were the things that went wrong — and how to correct them,” Bradley said.
Bradley said that postproduction of “Big Stone Gap” should be completed in August and that investors will be invited to the premiere.
“That is another amazing moment they are going to experience,” he said.
When will that be? Bradley couldn’t say. The film doesn’t have a release date yet.