Film Finance

FINANCING YOUR BLOCKBUSTER MOVIE – DISTRIBUTION TACTICS AND ALTERNATIVE METHODS.

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Films are quite expensive to make. Usually, there are costs implications that arise during the marketing and promotion stage before the final screening/exhibition of the movie. Every film planning process begins with the development and production plan, which most times would involve proper budget estimation, royalty and film distribution plans.?

But just before you get into film finance, you ought to have established certain finance structures in your business.

The first is to get your film production business registered as a corporate entity. No one partners or invests in a business that has no legal structure in place. Register the film production business and keep all relevant records such as a Certificate of Incorporation, Memorandum of Association, Articles of Company, Tax Identification No, Records of Directors and Staffs, relevant organizational policies and company profile or memo.

In addition to keeping legal records, please ensure you also keep a clean chain of title to your film works. This is quite important! The film is essentially a bundle of rights, copyrights, trademarks, and good will. So before you start any tv series, production or movie, get a release of rights from every-one on your team, except if there is a contrary arrangement to this. If you are using an existing screen play, draft an option or acquisition agreement to obtain valid rights to use the screenplay. To have a concise chain of title to your work, engage an attorney to help you with due diligence. The due diligence process is quite important, especially if you are working on a big movie with co-producers, partners and investors. You want to be sure that there is no legal right?hanging somewhere over your creative production. Do your due diligence and have a clean chain of title for your work.

Work with other professionals in the industry, seek help from entertainment attorneys, insurance agents, and accountants’ e.t.c. All of these constitute the structure to put in your business, so that you can position for other amazing opportunities to come your way.

Now, let’s get into proper finance structuring for your entertainment project.

There are different ways to source for finance

Film Festival Grants: There are different types of filmmaking grants and fellowships available to filmmakers, from government grants to grants offered by non-profit organizations, film festivals, and film institutes. While government film funds are usually lottery-based or only require basic criteria, most other film grants are merit-based, meaning that aspiring grantees need to go through an application process to receive the grant money. Many grants require specific criteria; for example, there are grants for first-time filmmakers, women,?new-media storytellers, and?documentary filmmakers. There are also grants for every stage of the film process, including development grants, production grants, post-production grants, and distribution grants. Major grants are Academy of Motion Picture, Arts, Science Film Grants, Creative Capital Foundation, Women in Film Foundation. There are also other fellowship opportunities, awards, and scholarships aids to aid your chances of getting grants

Networks: Look through your networks to identify potential prospects and financial partners for your next big move. Don’t forget to negotiate well, check core values, and research previous works of potential partner’s e.t.c Draft relevant contracts here such as production contracts, co-producers contracts or joint venture agreement as the case may be.

Investment Financing: investors agree to give money to a producer in exchange for the possibility of a future return on their investment. In the film industry, the equity investment agreement points out relevant conditions the investment would be subject to, how the equity investor will recoup investment and premium, and what share of net profits the investor will receive if the film is financially successful.?

Loan/debt financing: Loans are gotten from third party banks or agents who want to finance the film production. At this point, you will need a loan agreement or service contract (as the case may be), that states the condition for recovery of loans with interests from the firm’s revenue generated through distribution –( theatre, DVD and licensing)

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Others are:

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Pre-sales: This is one of the smartest way to make money from your film. It’s about selling content rights to third parties or distributors even before you create the content. Pre-sale is a commitment made by a distributor to purchase the right to sell your intellectual property in a territory for a given period of time. Sometimes, you could take the PP documents, copyright and other relevant documents to the bank, and use them as a collateral to raise funds for your business.?

Merchandizing: Many major studio blockbusters such as “Starwars” series and the Marvel superhero films, make their presence felt on store shelves as much as in movies theatres. Licensed merchandize such as toys, T- shirts, unique products, e.t.c can bring much attention and live to a movie, especially if it’s targeted to the right audience. In order to create a win-win situation, producers and distributors and manufacturers enter into contracts, and studios will license characters to manufacturers in exchange for up-front fees and percentage of sales.??

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Product placements: this is where a brand or product owner supply samples of their products, and sometimes money and promotion fees to a producer in return for having its product shown in a film. This is a very unique way to actually raise finance for your movie. One way to secure this kind of deal is work closely with product placement agents. In negotiating a product placement agreement, care should be taken to carefully define the scope of the license, agreement should specify the terms, territories and particular items for product placements.

?It takes a lot of creative thinking to decide the type of financing structure to adopt for your movie, this is why it is important to seek honest advice from professionals and engage with industry experts to get the right funding and to put your content before the right audience too.

OLONIYO OLOLADE (LLB, B.L, Aciarb,uk)

Lead, Starfield Advisory.

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