Investors Fill Film Funding Gap
Film Investing Advice from The Wall Street Journal
The film doesn't have to be blockbuster to bring in returns
Important quotes from this Wall Street Journal to note for yourself, the Film Maker, and your Film Business Plan:
One way to reduce the risk involved with film financing is by securitizing an up-front loan to a film producer against guaranteed future revenue streams, such as tax credits and distribution sales, which are payable once the film is completed.
- In volatile markets, everybody is looking for strong returns that are uncorrelated to other investments. Films, which usually do well when times are hard as people turn to movies for cheap escapism, could fall into this category.
- "Last year, UK box office broke the £1 billion ($1.4 billion) barrier for the first time and cinema admissions were the second highest since 1971."
- "One way to reduce the risk involved with film financing is by securitizing an up-front loan to a film producer against guaranteed future revenue streams, such as tax credits and distribution sales, which are payable once the film is completed. This kind of financing used to be the remit of banks, but the credit crisis has forced them to concentrate on their core businesses."
- There are also riskier funds (besides Aegis, the article topic) which offer equity, but Mr. Swarbrick (director at Aegis) says the film doesn't have to be blockbuster to bring in returns: "We tell our investors that if a film cost $10 million, by the time it's sold $5 million you'll have your money back plus a 15% to 20% premium. You are relying on the film being good quality but you don't need the film to break even for investors to get their money back"
Source and Full Wall Street Journal Article: Investors Fill Film Funding Gap, June 14, 2010 © , http://online.wsj.com/article/SB10001424052748704002104575290453351973536.html
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