"Lights, Camera, Family"

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Peter Aalbaeck Jensen is surely the busiest hippie on the commune he lives in outside Copenhagen. Last month he helped his partner, Danish filmmaker Lars von Trier, launch an Internet-based film school, and this month he's in Cannes promoting Von Trier's new $15 million musical melodrama, Dancer in the Dark, which stars techno-pop diva Björk and French icon Catherine Deneuve. He's also in the early stages of managing the initial public offering of Zentropa Entertainment, the holding company at the head of a quirky conglomeration of 43 production and distribution companies that funded the movie.

The "family" began coming together just over a decade ago when Von Trier and Jensen found themselves locked out of Denmark's centralized filmmaking apparatus. Now they've turned that apparatus on its ear and created a business model which has shifted control of Denmark's films away from government arts councils and toward writers and directors — all without having to pander to blockbuster-hungry investors.

"It started in 1988," Jensen recalls. "Right after my first bankruptcy." The volatile Von Trier had alienated anyone who could help him make films in Denmark, and Jensen had just produced a film called Perfect World, which sold only 69 tickets and remains, according to Jensen, the biggest flop in the history of Danish filmmaking. "It was love at first sight," Jensen says of his first meeting with Von Trier. Within an hour, the two formed a partnership and came up with a motto: "Against Everything."

Putting their mantra into practice meant that when advisers told them to get established at home before looking abroad, they started making commercials for German advertising agencies; and when advisers told them to piggyback on the resources of larger partners, they built their own studio. "We learned to combine the artsy-fartsy side with some kind of business," Jensen says. That reduced their dependence on the Danish Film Institute, which distributes government film subsidies. And it brought them in contact with cross-border financiers, who helped them produce Von Trier's biggest hit to date, Cannes Grand Prix winner Breaking the Waves. Three-fourths of the $5 million needed to produce that film came from outside Denmark — as did 90% of the audience.

When the government began trimming film subsidies in the mid '90s, it was Von Trier and three other Danes who came up with the idea of making a series of what they christened Dogme films using hand-held digital cameras, natural lighting and little else. The inadvertent result was a series of worldwide hits that emboldened directors to demand more say in how films are funded. When the Film Institute announced it was consolidating all decisions regarding film subsidies in a two-man committee, directors and producers rebelled. In the midst of the outcry, the institute balked at a $1.5 million loan for Dancer — ostensibly due to a minor paperwork glitch — and Jensen whipped this interest into a major scandal, threatening to pull Zentropa out of the country if the entire funding apparatus wasn't changed. "Even with subsidies, we could make movies cheaper if we went somewhere else," he explains. "We simply pointed out it would be a shame if we had to put a little German flag on Lars' movies."

Jensen and Von Trier live frugally — Jensen in a hippie commune and Von Trier in the family home — and reinvest all their profits. Last year they put $8 million into their studio and doubled the number of the Zentropa family to the current 42 production companies and one distribution firm. Each production company is 50% owned by Jensen and Von Trier's holding company and 50% by a filmmaker they've taken a liking to. When a would-be partners can't get the money together to fund his share, Jensen and Von Trier will cover the whole amount and then grant options on the filmmaker's half, providing the opportunity to buy them out with his earnings.

Members are encouraged to support and profit from each other's productions, which average around $1 million each to produce. "A family member usually has some equity of his own, or government grants, or pre-sales from TV," says Lene Boerglum, the company head of legal affairs and now a full-fledged family member herself. "If they can't cover all their costs through those routes — and that's usually the case — then they give other family members a chance to invest before looking elsewhere. This way if there's a hit, the winnings have a chance of staying in the family." Members are also encouraged to share facilities, and Zentropa's main studio is constantly overrun with members' productions.

Boerglum, who in her younger days produced underground films, joined the filmmaking part of the family in 1997, with a company called Puzzy Power to make what Jensen describes as "sensitive porno from a woman's point of view." In her case, the other members of the family have warmed up only slowly. Her first three projects were funded completely by the holding company. "There's no contractual obligation to invest in each other's productions, but we encourage it," Jensen says. "Sometimes five or six companies will invest in one production, and for really big projects like Dancer, they'll all pull together as one."

Zentropa hopes to use its growing brand awareness among theater owners to increase pre-sale income for members. Trust Film Sales, Zentropa's international distribution company, placed two films in the Cannes Film Festival last year and two in the Berlin Film Festival. This year, they've got 10 films in Cannes and 6 in Berlin, and they're planning to bundle pre-sale rights to films they distribute in the future, most of which are produced by Zentropa companies.

Jensen and Von Trier are now getting ready to float 40% of the holding company through a self-managed ipo. And naturally, their idea of an ipo demands a very personal involvement, and a face-to-face meeting with all potential investors. "We can't decide who to sell to unless we shake hands with them," Jensen says. "Investing with us is probably going to be the biggest mistake these people make, so we might as well let them have some fun."

Two of last year's newcomers are Russian and Taiwanese directors, and Jensen says they've found some American talent as well. "Our great accomplishment," he says, "is that we've managed to put a brand name on locally produced, low-budget independent productions that can be sold worldwide." That doesn't mean Jensen will be looking for a new commune anytime soon. He likes the one he's in.