Meeting of The Wallets: Money And Productions.

Author:Serafini, Dom

It seems that the money people are actually in search of producers as an alternative to producers selling out to streamers. Apparently, there is a pool of money in Hollywood for producing independent movies and TV shows that is available for the asking. Banks (debt), private investors (equity), film commissions (rebates, cash back, and tax credits), crowdfunding, distribution advances, pre-sales, product placement, revenue sharing commitments from key actors, foundations' grants, coproductions, and contributions from brands, all account for this cash. Plus, if the production has some foreign elements, money can even be gotten from various government programs.

The concept of brands contributing to TV financing isn't new. Red Bull, for example, has its own content-investment division. Brands have also been part of film financing for years. There is also a growing tendency to use distributors as commissioners. Today distributors often put more money into productions than broadcasters.

Tony Friscia, a Los Angeles-based financial consultant, added three extra forms of financing. The first is P&A funding. Capital is invested in marketing costs instead of production costs. This is attractive to investors because it is the last money in and the first money out of theatrical film rentals.

The second is leveraging the "Ultimate." This allows producers to borrow money against an estimate of a movie's gross over its lifetime, a figure that analysts calculate about two months after a picture's theatrical release. It looks at the lifespan of a film (roughly 10 years) and includes major income factors beyond theatrical box office.

The third is receivables financing. This uses a hit movie as collateral to fund other movies. "Lenders," explained Friscia, "are more generous with estimates from studios than indies." However, he added: "Gone are the days of gap loans, in which banks would lend money based on what sales agents projected a film was worth before it opened theatrically. Only a handful of banks (half the number of 10 years ago) will do gap loans now."

According to Friscia, 50 percent of the movies produced will lose money, 20 percent will break even, and 30 percent will be profitable.

To leverage the various tax credits there are specialized companies. Explained Rachel Swearingen of the Los Angeles-based The Forest Road Company: "FRC specializes in tax-credit lending. We are active in Canada and in all U.S. states with a film tax credit program...

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