Hey All,
How do film studios value their project for a new movie or a show? Trying to understand how, say for an instance acquisition of a script for a movie, the financial modeling differs from that done by typical TMT group.
Does anyone have any experience in this are?
Thanks you
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interested in this as well.
which fund?
Film Finance (Originally Posted: 06/15/2006)
Anyone here know about financing film?
Smartest Guys in the Room -- a good first course of what not to do.
Financing Independent Movies (Originally Posted: 02/26/2009)
Can someone help me find a list or provide me with firms, either Hedge funds, Private Equity's, or VC's that would finance a independent slate of movies?
Search results: //www.wallstreetoasis.com/forums/why-dont-more-i-banks-finance-hollywood-…
It will be hard to get a specific list now given a lot of funds, banks and individuals are out of this specific asset class. Some because they are down a significant amount of capital, got burned investing in film, the publicity some funds got around film financing made them get out of the space, etc.
In the past, you had DB Zwirn, Societe General Quebec, M/C Ventures, Stark, ABRY, Aramid, Dune Capital, Ingenious, Cryte. Abu Dhabi area had some investment in the field, forget by who, but it was associated with their film festival and just growing the Hollywood and glamour side to the region. Also, you have some agencies who raised their own funds for client films, i.e. William Morris used JPM to raise a $100 mm fund, announced in Cannes in 2008.
You can go to an alternative route of gap financing or tax credits, some firms I've seen there, Grosvenor Park, Relativity, etc.
Yes, Relativity Media is one of the biggest players in the film financing space.
Independent Film Financing (Originally Posted: 07/28/2013)
Bloody Bobby, the feature length film, has been appraised at $300,000 and Black Pumpkin Pictures has agreed to open this production up for private partners for 49% of the movie. Black Pumpkin Pictures LLC will be managing partner and own 51% of the movie. The other 49% of the Bloody Bobby film will be owned by private partners, built up from Investors who will have the opportunity to buy points in the movie. Each point is $3,000 and will equal 1% of Bloody Bobby the movie. Forty-nine points will be available to Investors for a total of $147,000.
http://www.blackpumpkinpictures.com/Bloody%20Bobby%20PPM%2071012.pdf
Found this as I was searching for motion picture industry primers, thought some of you would get a kick out of it.
P.S. - Haven't found any recent primers on the film industry or any equity research reports on companies like LGF or SKG. Any help would be greatly appreciated!
I guess that's one way to do it. sounds like a more legit version of kickstarter. I wouldn't be surprised if more and more films do this. the industry is becoming more and more dominated by the big studios and its about time indie films got their financing together.
good luck getting distribution though.
Tangentially related:
http://www.slate.com/blogs/browbeat/2013/07/29/spike_lee_s_kickstarter_…
Investing into movie production (Originally Posted: 03/14/2009)
I was always curious about this topic.
Good $100 mil budget movie could easily make over $150 - 200 mil under two years. That's 30 - 50% yearly return for two years. Also there are some very good movies with just $10 - 20 mil budgets that gross over $50 mil after DVD Releases. 300% return on investment in less than 2 years. Best recent example is The Strangers (2008 thriller w/ Liv Tyler), $9 mil budget and $81 mil in worldwide grosses in 8 months.
I guess from income statement point of view budget of movie = cost of making goods. There are also operational expenses, but it's not like Hollywood needs to invent new procedures/models for every new movie. I am sure the process of releasing and distributing movies to theaters (domestic & foreign) and DVD is automatized and polished by now.
Who finances projects like that? Film studious (Universal, 20th Centery)? Do they just have huge amount of cash on hands at any given moment?
The Strangers: $9 mil budget and $81 mil in worldwide grosses in 9 months. That's 1,200% yearly return. Even if we take in account operational expenses (I cannot see OPEX be any > $3 mil), the yearly return is still well over 1,000%.
My older brother owns an independent film company, and I can assure you that movie financing is wildly different than you've portrayed it. Firstly, op ex is MUCH larger than you're assuming. A portion of the gross has to go to theaters, a portion has to pay for distribution, you have to pay for advertising, etc. Certainly, a successful movie can give a healthy return, but it is a VERY risky field to be in. You're certainly not likely to see a 1000% return unless you happen to make the blair witch project. Many, many movies lose money, and substantial amounts. Please note that you've simply cherry picked the best returns as well - you should do well not to confuse anecdotes with statistical truth. I could point to the stock market and find a few stocks that have done exceptionally well, and then argue you'd be well to invest in the market as a whole. I may be right, but I'd be obfuscating just as surely as you are now.
As for who provides the financing, that varies. Most blockbusters are paid for by studios - however, the studios may seek out direct investments in the movie (something they used to do more than they do now). As for how independent movies are financed, it is mostly independent investors, typically friends or acquaintances. My older brother spends much of his time golfing trying to get people to invest in his movies - they make commitments to provide funding just like someone investing in PE would.
If you want to run with the investing in movies idea, I certainly won't dissuade you. However, be clear that it is a very easy way to get blown up, and killer returns are not as frequent as you'd like. Remember, Babe Ruth was sold to pay off a debt from investing in the theater.
I was peripherally involved in the production (financing) of this movie:
http://www.imdb.com/title/tt0250636/
All the money came from individual investors, and they never saw a dime. I think that was kinda the point though, in that there is an explosive upside in movies that can't be quantified, but there is also the near-guarantee of a huge tax write-off. In other words, it's a win-win for someone who needs to offset large capital gains. Plus I guess there's the supposed prestige of telling your friends you're in the movie business.
It's not a place for serious investors, though. The studios are absolute pros at the business and they get their asses handed to them more often than not.
On the other hand, a buddy of mine was the wallet for a movie with Coolio in it, and he made pretty good money. So I guess you never know.
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