Business plan film financing terms

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Business plan film financing terms

Pre-sales[ edit ] Pre-sales is, based on the script and cast, selling the right to distribute a film in different territories before the film is completed.

Television pre-sales[ edit ] Although it is more usual for a producer to sell the TV rights of this film after it has been made, it is sometimes possible to sell the rights in advance and use the money to pay for the production. Negative pickup deal[ edit ] A negative pickup deal is a contract entered into by an independent producer and a movie studio wherein the studio agrees to purchase the movie from the producer at a given date and for a fixed sum.

Until then, the financing is up to the producer, who must pay any additional costs if the film goes over-budget. This is commonly referred to as "factoring paper". Most major North American studio and network contracts incl. A practice known as "deficit financing" consequently developed — an arrangement in which the network pays the studio that make a show a license fee in exchange for the right to air the show, but the studio retains ownership.

The license fee does not fully cover the costs of production — hence the "deficit" of deficit financing. A studio has ownership of the production, but as license fees are handed out in exchange to air a show, the phrase deficit financing comes into play as costs were not being met and paid.

Profits from any other sales, including syndication, generally benefited the production community.

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Because of this, production companies produced original shows at a loss, hoping that they would eventually be run by syndication and make their money back.

Most gap financiers will only lend against the value of unsold foreign non-North American rights, as domestic North American: This is still an unpredictable practice.

Domestic distribution is also unpredictable and far from ever a sure thing e. Any certainty in the entertainment business, lending against foreign value estimates is preferable to betting on strictly a domestic success comedies and urban films being two notable exceptions: But at the same time it is not unlike buying a house: Supergap financing works by the same principle: The Internet portal germanfilmfinance.

Bridge financing[ edit ] Bridge finance has increased in prevalence in filmmaking in recent years. Bridge financing is an answer to the common "catch" problem of needing funding to get the actors, but not being able to get the funding without actors.

There were three main advantages to this strategy: Slate financing preserved the benefits of the earlier credit lines, as it allows them to risk less of their own capital when financing high-budget films. In general, production costs can be recouped through federal and state tax incentives, thereby eliminating most of the risk.

For example, if a private equity source is found individuals with capital or a private wealth management firm representing personal fundsthe investor pays for the film or TV production, and in return receives an equal amount of capital in tax-incentives, pre-sales, and state tax credits, thereby making the investment and recoup a wash.

These are funds invested by an individual who is looking to possibly add more risk to his investment portfolio, or a high-net-worth individual with a keen interest in films. These elements include marketplace analytics, audience analytics, a bondable schedule and budget, and a distribution plan.

The Bond franchise is notable for its lucrative product placements deals, bringing in millions of dollars. While no money changes hands, the films budget will be lowered by the amount that would have otherwise been spent on such items.

Crowdfunded films With a rising popularity of online crowdfunding more and more films are getting financed directly by their consumers this way. RenegadesManthan and Anomalisa.

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The main factors determining the commercial success of a film include public taste, artistic merit, competition from other films released at the same time, the quality of the script, the quality of the cast, the quality of the director and other parties, etc.

Even if a film looks like it will be a commercial success "on paper", there is still no accurate method of determining the levels of revenue the film will generate.

In the past, risk mitigation was based on pre-sales, box office projections and ownership of negative rights. Along with strong ancillary markets in DVD, cable televisionand other electronic media such as SVOD, or streaming video on demandinvestors were shown that picture subsidies tax incentives and creditsand pre-sales discountable-contract finance from foreign distributors, could help to mitigate potential losses.

As production costs have risen, however, potential financiers have become increasingly insistent upon higher degrees of certainty as to whether they will actually have their investment repaid, and assurances regarding what return they will earn.

Citigroup attempted to wrap the BeverlySony slate with a property and casualty insurance wrapper from the formerly bankrupt Ambac Assurance, Corp.World's leading accredited funding network providing an entrepreneurial community to get funded by angel investors, lenders or crowdfunding.

business plan film financing terms

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Film finance is an aspect of film production that occurs during the development stage prior to pre-production, and is concerned with determining the potential value of a proposed film.

business plan film financing terms

In the United States, the value is typically based on a forecast of revenues (generally 10 years for films and 20 years for television shows), beginning with theatrical release, and including DVD sales, and.

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