THE BLOG
11/07/2016 06:37 am ET Updated Nov 08, 2017

Funding Films Today

On Sunday the American Film Market (AFM) hosted the second Finance Conference of their market. Topics included 'Producing Studio Films with Independent Budgets' and 'The Film Finance Matrix: From Script To Screen,'

During the session, a panel of experts were presented with five film packages - each with partial or limited funding - with the aim of exploring and disclosing how each film could be fully financed.

Paul Hanson, who is CEO of Covert Media expressed the following sentiments regarding funding films today:

"There's a lot of doom and gloom but our experience has been that if we have something that's real and its rational in terms of the pricing and budget then we're still getting business done. There's a great thirst at international distribution level for high quality content. The bar is higher than before.

Certainly form a casting standpoint - there's a whole other access point to consider in new media platforms, where you might not get a key star, but someone with an immense social media following, which gives you huge embedded marketing tool.

These new platforms, whether Netflix or Amazon, it's a double edged sword. Its great news in the short term for a lot of us because you have very credible, well-heeled buyers which creates a useful auction environment for projects. The downside is in some cases, the upside is limited. For those of us that have investors, the film & TV industry is a hit-based business - no matter how good the script and execution, we're exposed to risks at the distribution level. You pick a bad date or there's a snowstorm on the date of your release - you may have had a kick-ass film but it doesn't work out. Your capping your upside but in the long-run, you're not getting your Blair Witch Project or your District 9 which help you create a portfolio."

Michael Ryan, who is a Partner at GFM Films remarked:

"It's been depressing to be doing what we're all doing in the past 5 years - but there's been a tick up over the last 6 months or so. You can only go so long without buying movies - If you don't have them then you're out of business. It's very cyclical and I get the feeling that it's back again, but the bar is very high. Genre pictures are easier to sell and don't rely on big star names, but it's still all about the package. In any independent financial structure you're going to need 3-4 pre-sales.

It helps to give us more platforms to go to, but then if you are successful, if you do a deal with Amazon or Netflix and you're using that as part of your collateral to make your film, they usually pay you over 4 years. So if you work out what the interest cost is, that's difficult to do. You've got to be realistic about what it's worth. I'm talking about them making your film, not just acquiring it."

Adrian Ward , who is SVP & Division Manager for the Entertainment Industries Division at Pacific Mercantile Bank, added:

"We're not going to fund anything until 100% of the budget is committed. So while we're very happy to look at projects, the second question I'm going to ask is where is the piece of equity? Our advice is work that angle - obviously as a producer you're pushing forward on many different fronts but the equity is out there, it's just difficult to get. The days of dumb money are long gone and you have to get people engaged early on in the process.

One of the territories we've seen a lot of activity in recently is Puerto Rico, but it's a small area - the government there seems to be pinning some hopes on the tax credits to make movies and create jobs. Georgia also continues to be the main one we're seeing. And then we've seen a few more multi-party co-productions - Canada seems to be in there. It's literally all over the map."

Lastly, Brian O'Shea, who is CEO of The Exchange, shared:

"Locations of a film is very important. Our lead film here is Lady and the Panda - it's an official Chinese co-production, which is very rare. From my standpoint, it was perfect because it's a very commercial story that allows a global marketing strategy, and the financing is sizeable. Being shot in China means it's very positive."