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Tax Credits Help Little Rock Company Raise $1.25M for Movies

6 min read

Gary Newton hopes the movie “Antiquities,” which finished filming last month, primarily in North Little Rock, will be the first in a string of movies to come out of the startup film production company he created with Little Rock screenwriter Graham Gordy and director Daniel Campbell.

Newton, 55, the executive producer of the comedy, said he wanted to create the production company, Mortuus Pater Pictures LLC of Little Rock, after HBO Studio Productions chose Louisiana over Arkansas in 2013 to film a television series that Gordy created.

Newton said he realized that if he waited for production companies to pick Arkansas to film movies or television shows, it might never happen.

So he, Gordy and Campbell set out to create the state’s only independent motion picture production company. And he’s encouraging others to follow their blueprint.

Arkansas Film Commissioner Christopher Crane praised their decision to start a production company in the state.

“It’s beyond a positive approach to the industry,” Crane told Arkansas Business. “They are basically set up to produce content year-round in the state.”

The Arkansas Economic Development Commission helped Mortuus Pater become the first production company to qualify for the state’s Equity Investment Tax Credit. The tax credits were used to help raise $1.25 million from 17 investors and through debt, a sum that is enough to cover the cost of “Antiquities” and another movie, Newton said.

“Antiquities” is in post-production, which should continue into early next year. After that’s done, Newton said, he hopes a distributor will buy the film. While the film is being shopped, production of the next project is expected to start next year.

Mortuus Pater Pictures will be operated as a business, not as a passion project, said Newton, who is the managing partner of the company. “In this business too many people get stars in their eyes,” Newton said. “We have relied on the craft of business principles and applied them to show business.”

Arkansas’ Film Revival
In 2011 it looked as if Arkansas was experiencing a film revival. “Mud,” starring Matthew McConaughey and directed by Little Rock native Jeff Nichols, was described as the largest movie production filmed in Arkansas. It was expected to usher in a wave of movie productions in the state.

But that didn’t happen.

Gordy, who worked with Mike Myers on 2008’s “The Love Guru,” thought he could bring a television series to Arkansas. Gordy created a television thriller called “Quarry,” and HBO Studio Productions bought it.

Gordy lobbied for the show to be filmed in Arkansas, and in the summer of 2013 HBO was scouting locations in the Natural State.

“Landing a series is the holy grail because it’s not a one-off production coming in and then leaving,” Newton said.

Newton, who was a former executive vice president of the Little Rock Regional Chamber of Commerce, also pushed to have the show filmed in Arkansas. Newton, currently the president and CEO of Arkansas Learns of Little Rock, a nonprofit, nonpartisan advocacy group for education options for all students, also had been a screenwriter and actor.

Arkansas had incentives to offer, but it didn’t have the funds available to pay for a multiyear series. “Quarry” ended up being filmed primarily in New Orleans.

“We were the first choice of HBO Productions, but we … couldn’t even come through with our statutory incentives,” Newton said.

Newton said he wasn’t sure exactly how much would have been needed from the state of Arkansas for the series, which premiered on Cinemax on Sept. 9.

“And to have won that series, and then lost it because we weren’t prepared for success — so that’s what really told me if we’re going to wait for others to choose us, we’ll never get there.”

Building a Business
In 2013, Gordy came to Newton and asked him to produce “Antiquities,” a feature movie to be based on a short film that Campbell made in 2009 and which won a number of awards. Campbell and Gordy would write the film and Campbell would direct it.

The movie is about a young man whose father is killed in a car accident. The son then returns to his father’s hometown to search through his father’s possessions to discover who his father was.

Newton was attracted to the project because of Gordy’s success. Variety named him among 10 TV Writers to Watch in 2016 for his work on “Quarry.”

Newton agreed to produce it.

“But I don’t want to do it as one feature,” Newton said he told Gordy. “I want to build a business for you and for Daniel Campbell.”

Thus, Mortuus Pater Pictures was born. (“Mortuus Pater” means dead father in Latin. Newton, however, said he wanted to keep the meaning a mystery.)

Newton first went to the Arkansas Economic Development Commission, which referred him to Innovate Arkansas. Innovate Arkansas is funded by the AEDC and helps technology entrepreneurs turn their startups into thriving companies.

Newton worked with Innovate Arkansas for about a year and developed Mortuus’ business plan. During that time, he was visiting with potential investors.

But attracting investors to the project wasn’t easy. “There’s no history in Arkansas of investors being enriched” through film projects, Newton said. “It’s usually something people put money in and it’s gone.”

He said the project was pitched to three angel funds in Arkansas but all turned it down. “They wanted to invest in things they understood,” Newton said.

A turning point for the project came in August 2014 when Mortuus applied for the Arkansas Equity Investment Tax Credit through the AEDC. It had never before been approved for a production company.

“But our pitch was our business is proprietary, intellectual property that’s manufactured digitally,” Newton said. “Ultimately, we’re content.”

The tax credit was approved in October 2014. Investors would receive 33 1/3 percent in tax credits for every dollar invested up to $1.25 million. “So that was very attractive to people,” Newton said.

Investors could invest $25,000 for a unit, which earned them 2 percent of the net profits of “Antiquities” and 0.2 percent ownership of Mortuus Pater. The investors could either keep the tax credits or sell them. The credits were issued in July 2016, with First National Bank of Fort Smith buying most of them. The money allowed Newton to move forward with the filming of “Antiquities.”

Now Seeking Buyers
“Antiquities” took 22 days to film and employed about 40 crew members and 18 student interns from Southern Arkansas University Tech in Camden.

The movie is in post-production and is expected to be finished by the end of the first quarter of 2017. Newton said he hopes a movie distributor will buy the film before it starts making the rounds in festivals around the country. If not, the film festivals could be used to showcase “Antiquities” for potential buyers.

The investors will get paid before the partners, Newton said.

“We will not be able to do this again if we don’t make our investors successful,” he said.

In the meantime, Newton said, among the three partners they have 13 screenplays, and one of those might be Mortuus Pater’s next project.

“At minimum, our wish is to get these guys in production at least twice a year,” Newton said.

Newton said his hope is that others copy their business model to build the film industry in Arkansas. “I will give this model to anybody. It’s open,” Newton said. “Because so far, it’s working.”

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