Adi Cohen’s- New York-based venture capitalist-  plans to invest in Spanish production company Zip Films through his company GC Corporation and new outfit Regal Entertainment encountered problems out of financial disputes.

American Israeli businessman Adi Cohen established the pan-European media company Regal Entertainment in November last year with the purpose of investing in the production, distribution and exhibition of Spanish and German language films.

Despite Regal’s early claims about major stake acquiring intentions Zip Films now claims that no money ever materialized for either deal.

“We had signed an agreement with the GC Corporation for them to take a 25% stake in our company at a price of $4.6m (€3.7m), with a guarantee of $22.4m (€18m) over five years to invest in three films a year, but we never saw a penny,” Zip Films producer and founder Jordi Rediu tells ScreenDaily.  “Then again we saw no money with the proposed 75% stake in our company from Regal.”

Cohen tells ScreenDaily in response: “After a prolonged period of due diligence and financial probe, we have decided to annul all agreements and discontinue our involvement with Zip Films due to financial irregularities. In accordance with the terms of the letter of intent we have fulfilled our initial responsibilities and obligations but opted to discontinue the partnership and sever all connections with Zip Films and its registered managers.”

A venture capitalist with a background in high-risk, security high-tech stocks, Cohen serves as Regal’s chairman and administers its financial operations.

“I now have to dissolve Regal as a company here in Barcelona because no funds are forthcoming,” explains Rediu Spanish head of operations.

Zip Films had planned to work on a number of high profile co-productions through their relationship with Adi Cohen and his companies, including Betsy And The Emperor with Killer Films, starring Al Pacino, and William The Conqueror, which is being written by Brian Edgar and Derek Wallbank. But they are now no longer involved in these projects.

Despite these set backs, Zip Films is determined to move forward with its own projects, including the English-language $5m thriller The Body, directed by Rediu himself, which will be shooting in Barcelona in October.

“Weare also in the process of trying to set up more international co-productions in the $12.4m (€10m) – $15m (€12m) price range with companies in the UK, US, Canada and Germany.” says Rediu.

Meanwhile, Regal Entertainment’s proposed buyout of leading German distributor VCL Film + Medien has also faltered due to alleged non-payment.

Cohen claims that Regal still intends to buy major Spanish and German exhibitors, as announced in November last year, but he says their focus for now is restructuring the ownership of Regal and looking for potential new distributors to work with.

Source- http://www.screendaily.com/news/europe/us-financier-adi-cohen-pulls-out-of-inves tment-in-spains-zip-films/5014250.article

Channel 4 has said it will increase the budget of its film-financing division, Film4, to £15m per annum for five years from 2011

The anouncement came on the first day of the London Film Festival

Channel 4’s commitment follows the public outcry over the Government’s decision to abolish the UK Film Council, without any consultation, as part of the Department for Culture, Media and Sport’s contribution to the public sector efficiency drive.

The new budget, effective from 2011 onwards, represents a 50% increase on Film4’s current spend on film development and financing, and a spokesman said it was central to the “creative renewal process” launched by Channel 4 earlier this year.

David Abraham, chief executive of Channel 4, said: “Film4 has played a central role in supporting the British film industry and the current team, led by Tessa Ross, has an unrivalled track record of success in developing and supporting British film making.”

The London Film Festival’s opening gala film ‘Never Let Me Go’, starring Keira Knightley and directed by Mark Romanek, and the closing gala film, Danny Boyle’s ‘127 Hours’, are both Film4 films.

Abraham said: “Film has a special and unique role in UK culture, promoting a wealth of extraordinary British talent from storytellers and producers, to directors and actors. I have been determined during the current process of creative renewal to ensure that it plays a commensurate part in Channel 4’s public service delivery.”

In its 10 years of existence, the Film Council invested more than £160m of funding generated by the National Lottery in more than 900 films, and claims to have generated £5 for every £1 it spent.

Ross, controller of Film4 and Channel 4 drama, said: “It’s wonderful to be able to deliver some good news to our industry, most importantly because we believe that there is a wealth of great talent here in the UK that this extra money will allow us to support.”

The campaign to save The UK Film Council is supported by director Mike Leigh and actor Liam Neeson, and a Facebook page called “Save the UK Film Council” has more than 55,000 fans.

Source- www.mediaweek.com.uk/news/103761/Channel-4-boosts-film-investment/

 Investment in new UK film production hit £1.16 billion ($1.85 billion) in 2010, a record for the British film industry, new figures showed.
Data from the UK Film Council showed that inward investment from international filmmakers, typically major Hollywood studios locating productions in Britain, reached £929 million, an increase of 15% over 2009.
These films included Captain America: The First Avenger, Pirates of the Caribbean: On Stranger Tides, Harry Potter and the Deathly Hallows Part Two and John Carter of Mars.
Spending on domestic feature films in 2010 fell to £174 million, however, compared with £224 million the previous year.
Box office takings in the UK and Ireland rose two percent from 2009 to £1.08 billion, with Toy Story 3 in the top slot with earnings of 74 million pounds, ahead of Harry Potter and the Deathly Hallows Part One at 51 million.
The Film Council did not provide admission figures.
The market share of British films, including UK-US productions), hit 23% in 2010, up from 17% the year before. 3D films grossed £237 million last year, a 24% market share up from 16% in 2009.
Tim Cagney, managing director of the UK Film Council, said the figures underlined the importance of the movie business to the British economy. The council is being abolished as part of government cuts aimed at reducing the budget deficit.
“The figures … show how difficult it is to raise finance for making independent British films and, with four of the top 10 grossing UK independent films funded by the UK Film Council, the ongoing value of public investment in new British films and talent,” he said in a statement.

Source- http://www.dnaindia.com/money/report_uk-film-investment-at-record-in-2010-box-office-up_1497034

Noci Pictures Entertainment allows select global accredited ultra high net worth investors, sovereign wealth funds, Angel Investors, family offices, private banks, pensions, endowments, fund of funds, wealth & financial advisers, hedge funds, and other private equity investors looking to participate in an exclusive opportunity in a market-neutral, non-correlated asset class which is immune to economic conditions, has built in guarantees for global distribution, integrates technology (3D production, digital distribution), and has a structure wherein Assets Under Management (AUM) have a guaranteed ROI prior to revenues using U.S., Canadian, & international tax incentives, and multi-tier exit strategies.

There is a very privileged and sophisticated way of financially participating in a basket of commercial films, which unlike a mutual fund, REIT, hedge fund, oil & gas investment, or other correlated asset class, can in certain instances provide a 60-100% ROI prior to revenues in addition to full transparency and zero quantitative, exotic, or other confusing financial models that have in the last few years proven to be more risk than reward.
With growing demand for 3D Cinema, decreasing costs of theatrical distribution, robust DVD and global Video On Demand markets, new mobile technology, widespread specialized social media and word of mouth marketing, long term library valuation, and multi-tier ancillary revenues, Noci Pictures has developed a very innovative business model and financial product that is scalable to both smaller investors and large institutional capital
The Company also consults, structures, and acts as a strategic advisor on international film finance, film tax credits & rebates, cross border co-productions, film packaging, distribution, branded entertainment, online content creation, digital distribution, 3D cinema, 3D technology, as well as providing logistical and physical production services.
Film Finance
You are an Alist writer, director, or actor who has passion projects that are not being serviced by your agent or manager

Advisory For New Filmmakers
You either have the money but not the casting/distribution connections or you need to raise capital for one film.
3D Cinema
You would like to shoot your next film in 3D and are looking to partner with the top 3D technical producers and 3D video stereographers

Source- www.noci.com

As paradoxical and absurd as it sounds, it’s cheaper for a Hollywood studio to make a big-budget action movie than to make a shoestring art film like Sideways. Consider Paramount’s 2001 action flick Lara Croft Tomb Raider On paper, Tomb Raider’s budget was $94 million. In fact, the entire movie cost Paramount less than $7 million. How did the studio collect over $87 million before cameras started rolling?

Loopholes in Germany’s tax code are responsible for a good portion of Paramount’s profits—an estimated $70 million to $90 million in 2003 alone. Best of all, there’s no risk or cost for the studio (other than legal fees).

Here’s how it works: Germany allows investors in German-owned film ventures to take an immediate tax deduction on their film investments, even if the film they’re investing in has not yet gone into production. If a German wants to defer a tax bill to a more convenient time, a good way to do it is by investing in a future movie. The beauty of the German laws as far as Hollywood is concerned is that, unlike the tax laws in other countries, they don’t require that films be shot locally or employ local personnel. German law simply requires that the film be produced by a German company that owns its copyright and shares in its future profits. This requisite presents no obstacle for studio lawyers.
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The Hollywood studio starts by arranging on paper to sell the film’s copyright to a German company. Then, they immediately lease the movie back—with an option to repurchase it later. At this point, a German company appears to own the movie. The Germans then sign a “production service agreement” and a “distribution service agreement” with the studio that limits their responsibility to token—and temporary—ownership.
For the privilege of fake ownership, the Germans pay the studio about 10 percent more than they’ll eventually get back in lease and option payments. For the studio, that extra 10 percent is instant profit. It is truly, as one Paramount executive told me, “money for nothing.” In the case of Lara Croft: Tomb Raider, Paramount sold the copyright to a group of German investors for $94 million through Tele-München Gruppe, a company headed by German mogul Herbert Kloiber. Paramount then repurchased the film for $83.8 million in lease and option payments. The studio’s $10.2 million windfall paid the salaries of star Angelina Jolie ($7.5 million) and the rest of the principal cast.
Paramount made some more preproduction cash by taking advantage of the British government’s largesse. To qualify for Section 48 tax relief in Britain, the movie had to include some scenes filmed in Britain and employ a couple of British actors. Given Lara Croft’s peripatetic plot, neither condition presented an artistic problem. Again, Paramount entered into a complex sale-leaseback transaction, this time with Britain’s Lombard Bank. Through this legal legerdemain, the studio netted, up front, another $12 million—enough to pay for the director and script.
To pay for most of the rest of the movie, Paramount sold distribution rights in six countries where the Tomb Raider video games were a big hit with teenage boys. These pre-sales in Japan, Britain, France, Germany, Italy, and Spain brought in another $65 million.
Through this triple play, Paramount earned a grand total of $87.2 million. The remaining budget—less than $7 million—would be covered by licensing the film’s U.S. pay-television rights to Showtime (a network owned by Paramount’s corporate parent, Viacom). At no cost to its treasury, Paramount launched a potential franchise—
So it appears that international financing game favors big-budget movies with international appeal.
Of course, it’s not only Paramount that employs these devices—every studio uses them to minimize risk
If studio executives don’t crow in public about such coups, it’s probably out of fear that such publicity will induce governments to stiffen their rules—as, for example, Germany periodically does with its tax code. When you’ve got a golden goose, you don’t want to kill it while it’s still laying eggs.
Source-  http://www.slate.com/id/2117309 by Edward Jay

NRW.GermanFilmFinance.com is a joint undertaking of the Minister for the Media from North Rhine Westphalia (NRW) and the consulting company rmc rinkemeiden consult. The project aims to support national and international film makers in the acquisition of production financing and to encourage them to take advantage of NRW as a media location.
By combining national and regional financing components, it is possible to finance up to 65% of the entire film project budget
Compared to the total production budget, the highest level of financial assistance is available for production budgets from one to ten million euros. For higher budgets, higher absolute amounts of financing are certainly available, but the highest proportion of overall budget is available for the one-to-ten-million-euro range.
 
Their Film Finance Calculator represents a straightforward, anonymous and convenient way to calculate the amount of financing you would receive if your film (or portions of your film) were to be produced in NRW.
 
Just visit NRW.GermanFilmFinance.com for precisely linked important financing partners. At all times, you have access to the individual companies’ websites and contact details for all of your film project needs.
 
At NRW.GermanFilmFinance.com you will get to know more about their Premium Partners, and can view a comprehensive presentation of potential partners, be it for financing, production, technical or service requirements.

Source- http://nrw.germanfilmfinance.com

Say, one day, you checked your Bank Account, called your family office planner, and after discussion with your financial advisers you decided to invest your proceeds from your latest company’s Merger or Acquisition not into some dubious funds or start-up biotech venture, but into financing Hollywood films because you figure you need the State tax Credits, the Federal tax write-offs, as well as a nice hedge of revenues from a few movies.
Now, this might not sound too well initially with your hedge fund manager or foreign fund investor but those are the same guys who are financing Hollywood movies. And the only question for you, how do you get in the game without feeling like amateur film financier without real profits.
So having done your research, here’s what you discover may be the opportunity to further enrich your affluent lifestyle even more-

*Sergey Brin And Larry Page Of Google, Fred Smith, the CEO of Federal Express, Norman Waitt, the Co-Founder of Gateway Computers, Jeff Skoll Of Ebay, Todd Wagner (formerly of broadcast.com), Max Levchin Of PAYPAL, Marc Turtletaub of The Money Store, Roger Marino Of EMC Corp, former Chicago bulls co-owner Jim Stern, Sidney Kimmel Of Jones Apparel Group, Minnesota Twins owner Bill Pohlad; Real Estate Developers Tom Rosenberg,;  financiers Robert Sturm, Sheikh Waleed Al Ibrahim, Zeid Masri of SilverHaze Partners,Mark Esses, David Larcher, Michael Goguen, Michael Reilly, Rafael Fogel, and Philip Anschutz are just a handful of high net worth entrepreneurs who entered the motion picture finance and production business with successful results.

There are tax credit incentives that would offer a premium based on an equity position. Assuming there is a 10 million dollar budget film, where 50% of it is in equity, and 50% is through international distribution guarantees prior to release. Now assume there is a 20-25% tax credit on the entire amount of $10 million dollars, which mean $2-2.5 million tax credit to an investor.

Numerous hedge funds such as Reed, Conner & Birdwell (DISNEY), Legendary Fund (Warner Brothers), Melrose Fund (Paramount Pictures), Ingenious Media’s 700 Million dollar Float on London’s AIM, Benjamin Waisbren Investments, and a host of other funds and fund managers are entering the film finance arena.
The explosion of international DVD, pay-per-view, home video, cable, megaplex theaters, the future of multi-lingual Internet video on demand downloads, and cross-market digital distribution including low-cost theatrical digital projection, the movie industry is accelerating at an unprecedented growth rate.
*The American Jobs Creation Act of 2004, which amends the Internal Revenue Code of 1986, was signed into law. The Act creates three tax incentives applicable to motion pictures, one of which – § 181 of the Internal Revenue Code – is especially significant to independent film producers
*The filmed and other entertainment sectors are constantly outperforming and beating analyst expectations with regards to growth, and are the only industries resistant to untimely global events and adverse economic conditions.
*Movie Investor returns may be more favorable and more liquid than holding direct equity positions in most public entertainment and other public companies, real estate investments, and other alternative investments.
*There is a huge demand, audience, and growing distribution structure for specialty independent, ,crime, horror, and other low budget films as exemplified by the success of such films as “Brokeback Mountain”, “Sideways”, “Capote”, “Garden State”, “Napolean Dynamite”, “Y Tu Mama Tambien”, bringing millions to investors.

*Studio financed films were unsuccessful The films that have been successful for studios were all externally financed and or co-financed with studios, sold for 2-3 x their costs, and a majority of them retained foreign sales rights to maximize revenues.
So after looking at all the great benefits, how do you actually go about finding a deal or movie project where you are certain that half your money won’t be misused by Hollywood producers?

The key are structured finance, leverage, risk minimization, multiple exit strategies, tax credits, and the ethical consciousness of the filmmaker/producer.

Even you invest in low budget films you may do it wisely combined with tax advantages. Do this over 5-10 films and you can make a very profitable name for yourself among the Hollywood elite.

But let’s really take this a step further and see how the bigger boys leverage film investing because they can get a bigger star which can translate in larger overseas sales.

Let’s say a filmmaker/producer has a $10 million film and you want in on the action. You would park $5 million in equity, receive an 20-30% tax credit on $10 million which will be $2-$3 million, the producer will get the biggest star he can, get a studio to kick in the other $5 million dollars, your DVD profits and international sales will cover your equity position.

Now leverage this with different budgets, genres, stars, distribution, places where you can get high tax credits (Ie Puerto Rico is 40%) other strategies, and you are on your new career path as a sophisticated and educated film financier. Off course, if you want to go even further and guarantee 100% of your capital, there are tricks to that as well.

Source-  www.articlesbase.com/public-company-articles/investor-education-for-global-private-investment-funds-in-film-and-media-finance-private-equity-hedge-funds-section-181-investors-364467.htmlp

This website was launched with the specific purpose of being the bridge between an investor and a film production executive, to finance and produce British Motion Pictures.  

The goal is to encourage investment in the burgeoning UK Film industry by means of public offering of shares under the Government’s Enterprise Investment Scheme (EIS) The scheme’s range of major tax reliefs often act as the initial attraction for potential investors but there are huge additional benefits for those investing into films.

Benefits:

- High Profile Film Projects that can and will be sold in each country worldwide

- government tax relief (also loss relief if film does not regain investment)

- you would be one or ‘the’ investor per movie and if wanted also receive a PRODUCER credit

-you will be given the opportunity to be cast in the film

- you will be able to inquire every day where the production films and come by to be on-set and meet with cast/crew if possible

- you will be invited to the Film Premiere

- you will also be listed on the IMDB.com (International MovieDataBase) 

In other words you will receive a tax relief while investing in a UK-based movie project, and in the end also participate on the financial success of the film, which ROI (Return on Investment) could sometimes be several hundred percentT OPPORTUNITIES will match you with the right uk film production executives

 and proposed films in development that best fit your financial situation and needs. Every and each film project will hold high-profile quality on cinematic picture, sound, acting and production value. Film projects referred to you through this website are intended to be released worldwide whether on DVD or theatrically. 

ABOUT YOUR PERSONAL TAX BENEFITS:

According to the EIS there are five current separate EIS tax reliefs for film investments (to read details about each relief choose “Types of Tax Reliefs” from the menu on the left):

Income Tax Relief

CGT (Capital Gains Tax) Deferral Relief

CGT Freedom

Loss Relief

Inheritance Tax Exemption

Source- www.ukfilminvestment.com

Vidia Ramdeen

Once the smoke cleared from the Wall Street pull-out from film financing deals of Hollywood generated movies, the financier market opened up and Indian investment came in.  “If you were in the film business and your eyes were open, you could see the recession coming. The entertainment industry is the first indicator for financial problems. American companies are running out of money to make films.”  – AVT Shankardass

The private equity deals are structured such that a float of > $100mm in US fiat will in turn yield 200 revenue generating projects that include big screen adaptations, syndicated television, and the needed return of stellar live entertainment to Sin City.  The geometric growth in GDP generating from BRIC is ostensibly going to drive the future growth of American industry in aggregate.  As markets open up in the US for outside investors, salivating investors from India, China, Russia, and Brazil will continue to reap revenue generated through investing in a society thriving on consumerism.  The future growth of FDI into Hollywood is expected to rise as a function of time, film financing project opportunities and expected rate of return (MIRR).

Source: http://economictimes.indiatimes.com/news/news-by-industry/media/entertainment-/entertainment/Recession-hit-Hollywood-turns-to-India-for-film-financing-/articleshow/5430607.cms

Tag(s): India, film financing, hedge, fund, invest, private, equity, deal, movie, cinema, Hollywood, FDI,

Vidia Ramdeen

The future of Hollywood will have risk mitigation prominently in mind, and is most likely to have overseas hedge funds facilitate their operations.  FDI into the U.S provides a revenue stream for overseas investors prior to any actual shooting of the movie via tax credits and enables low-income communities to grow and potentially prosper.  Often these deals are backed with hard assets including film repositories to reduce the exposure to non-systemic investment risk.  The global financial crisis had a profound effect on Tinseltown.  In its wake, opportunity was seized by overseas hedge funds that accepted this form of mitigated risk.

That, however, may be a good thing.  The industry’s informal network suggests that the film market, since roughly 2004, has been overheated with an oversupply of films.  In turn, the result has been diminished revenue streams such that class A shares offered to investors are at risk of default.  “Based on the expected cash flows for the film assets, the Class A notes will not be paid in full by their legal final maturity.”  Neil Begley – Analyst, Moody’s Investors Services.

Much like the over heated housing market that gave rise to the tremendous increase in outstanding mortgages that underwent the securitzation process, media investment firms are looking at the same process to separate and repackage the risk/return and sell to investors.  “There are numerous film securitization deals being shopped around right now.” – Ken Schapiro, managing partner – Qualia Capital. FDI into the U.S is the anticipated harbinger, expected to fund film financing in Hollywood.

Source(s)

http://www.reuters.com/article/idUSLNE52103R20090302?pageNumber=2

Tag(s)

Hollywood, FDI, foreign, direct, investment, Qualia, film, financing, risk, cinema, movie, hedge, fund, investor, securitization, tax, credit

Vidia Ramdeen

Film producers and investors were given a treat under the 1986 U.S. Internal Revenue Code, amended in 2004 via the American Jobs Creation Act.  What happened, you ask?  Under the New Markets Tax Credit (NMTC) Program, credits are made available to taxpayers to reduce their aggregate Federal tax if they invest into a vehicle designated to help the less fortunate, which in this case, are Community Development Entities or (CDEs).  The credit to the investor is quite substantial, as 39% of the investment cost is a tax write-off and claimed over a 7 year term.  The percentage breakdown over the seven year period is 5% over the first 3 years and 6% over the final 4 years.  If investing into the CDE market, understand that the investment must be held to maturity.

A qualifying film is one with a  total budget of <$20mm.  When qualifying, these credits prove to be significant to providing funding to indie film producers and to providing a passive income to the investing community.  ”What does that translate to you in a real world scenario. Lets say you want to finance 100% of a $1.5 milion dollar low budget genre film whose worst case  scenario is a DVD release and profits from international sales and perhaps some other equity sweetners in the conversation of the securities that you subscribe for as part of the deal.  Well, if you write a check for $1.5million, and the film is shot in a state that has 30% in tax credits, you get back $450,000 in tax credits + under Section 181, you are able to write off that amount under Federal.”  - Yuri Rutman, CEO Noci Picture Entertainment

Source(s):

http://ezinearticles.com/?An-Investment-Primer-For-High-Net-Worth-Investors-Thinking-Of-Movie-Finance&id=747010

http://www.articlesbase.com/business-articles/investing-in-film-using-irs-section-181-for-federal-tax-credits-vs-new-markets-real-estate-credits-746745.html

Tag(s):

181, IRC, Tax, Film, Finance, Investing, Hedge, Fund, Alternative, Invest, Investment, Movie, Cinema

By: Vidia Ramdeen

The Toronto Film Festival provided Yuri Rutman, his next investment and an opportunity to bring to the big screen a one-of-a-kind film directed by David R. Ellis, whom Rutman considers a prominent film director.  Rutman should know what he is talking about, as he is CEO at Noci Pictures Entertainment, which is a film distribution company.  At Noci, Rutman focus’ on film finance and production prevail to him the emerging film from respected directors.  His most recent film is entitled, “Milwaukee”, is an heart-stopper involving a police officer with a vendetta who eventually falls in love with a stubborn, young widow that assists him to locate the murders of his father in 1950s Milwaukee, WI.

Noci Pictures and Mind’s Eye Entertainment are jointly funding this movie that Rutman says is only one in a series of of films, much like how a pharmaceutical firm manufactures many drugs in the pipeline.  This sentiment is evident in the following quote from Yuri Rutman, “This film is just one of many in our pipeline which is supporting a robust and healthy private equity investment environment for A-level films which is creating a window for many hedge funds, family offices, and private equity groups to be our long term partners which is allowing us to finance and produce ‘Milwaukee’ as we as several other films over the coming year.”  Rutman considers the Toronto Film Festival as a measuring stick to determine the market between active buyers and sellers of original films and to track the ROI on studio projects.  Additionally, he feels global investors seeking opportunity have increased their knowledge and awareness in film financing and are aware to the upsides and risks associated with investing into a market neutral non-correlated asset class.

“I think the current Toronto Film Festival has been a great guage in terms of whats been going on between privately financed films by companies such as ours, investors, as well as the ROI with a lot of active studios and buyers eager to buy original content.”  - Yuri Rutman, CEO – Noci Pictures Entertainment

“I think between global investors educating themselves on the upside of film as a market neutral non-correlated asset class, our internal risk minimization strategies, as well as a lot of institutional and retail capital sitting on the sidelines looking at new alternative investment strategies, there will be more players in this space including investors and new companies similar to us that will be popping up that will be fully capable of developing, financing, and producing films within a portfolio.” – Yuri Rutman, CEO – Noci Pictures Entertainment

Source: http://www.pressreleasepoint.com/investment-opportunities-film-private-equity-investors-amp-hedge-funds-allows-one-company-greenlight

Tag(s): Hedge, Fund, Film Financing, Toronto, Entertainment, Milwaukee, Noci, Alternative, Investment, Strategies, Cinema

The American Film Industry has entertained and provided the world with provocative, thought provoking cinema since the late 19th century. From these humble beginnings of silent black and white films, incorporating subtitles and narrative editorials, the industry has blossomed into a diverse offering of commercial and independent titles from the viewpoint of foreign and domestic directors.  Todays’ film offerings now include a list culturally diverse mix of entertainment and intrigue originating from India’s Bollywood to Germany and Belgium.  Broadly speaking, the hedge fund industry recently has found film funding investments both attractive and profitable in the short & long run.  Tax advantages and the revenue stream provides short-run returns long-before the film is launched and the added bonus of being affiliated with a “metaphor for reality” is indeed a sought after privilege.  The revenue stream created from domestic and international distribution rights stemming from DVD’s and other distributable formats provides a cash flow after the investment is pulled from the ‘Big Screen’.

The case can now be made to invest into European generated films with the same earnest as investments into American cinema.  The hedge fund, Aramid Capital Partners, has experience investing in U.S. and British film and is scouting potential deals in mainland Europe.  According to Simon Fawcett of Aramid, Germany and Belgium epitomize the type of mainland European country ripe with opportunity.  Additionally, he says the French market for films poses tougher barriers to entry due to the interrelationship that French banks and state subsidies currently have on that market.  Aside from France, the international film investment market is inviting, facilitated by increasing interest in lending and burgeoning indie and commercial film development and release.  The idea is the same as it is in the U.S., and that is to invest into a broad dynamic of international film offerings.  If the studio is not releasing a large number of films on the year, then the idea is to either take a calculated risk or buttress by grouping that single investment into a pool of additional films from alternative studios either in the same country or within a region into one single investment.  Fawcett looks at dozens of projects and invests into 30 to 40 deals on the year.  Projects can be single or multiple films and a deal can be on a single film or multiple films.

“It (film finance) is a very specialised form of finance and you do need the expertise that the Aramid partners provide to be able to judge the risks involved.” Simon Fawcett, Aramid Capital Partners

Source:  http://uk.reuters.com/article/idUKNOA52995420070125

Tags: United Kingdom, UK, Film, Finance, Germany, Belgium, Continental, Mainland, Europe, Hedge, Fund

Cavalier Films, Inc. (the “Production Company”) is engaged in the development, production, and financing of motion picture films intended for theatrical release. The Production Company’s goal is to
produce story-driven and thought-provoking feature films with mainstream appeal on a low-budget. The Company intends to produce and finance feature films with limited and controlled budgets, and
considers investment in films principally produced by others. Emphasize is on the predictable, business-like return on investments, while positioning for the real possibility of windfall results

Management Team Relevant (Film) History

Mr. Sisson co-financed and worked with the production of a 2003 Sundance award-winning and widely loved feature film, “The Station Agent” (TSA). TSA was produced for under $1,000,000 and sold to
Miramax for theatrical release As part of the process of developing and testing the Cavalier Films business plan, the Managers worked together to produce a low-budget digital feature film, “Charlie’s
Party” (CP). CP is a comedy driven by its appealing subject matter and character development, and the comedic tension it creates. The film was completed on time and on budget for approximately $200k and is now in digital release, (download and DVD).
The first film to be produced under the Cavalier Films Banner, “Familiar Strangers”, was filmed  in the fall of 2006. This film stars Shawn Hatosy, DJ Qualls, Cameron Richardson and Tom Bower among
others.

Because of their experience with these films and their previous successes in the entertainment and business worlds, the Managers are confident in their ability to create moving, intelligent films using
good business practices, which fill the niche market of art house cinema that the Hollywood Studio System typically acquires from outsiders.

The Independent Film Industry

The astonishing success of such low-budget films as “The Blair Witch Project” and “My Big Fat Greek Wedding”, $141 million and $241 revolutionized new independent film industry. Today, the major
Hollywood studios spend more and more of their resources on films produced by independents. This allows them to get more predictable return on their “intelligent market fare”.
This strategy makes perfect sense and is good business for them, while providing an opportunity for independent producers capable of producing quality work.
Independent films can vary widely in budget, from as low as $30,000 up to multi-million dollar productions. Small independent film producers prioritize crafting and producing their lower-budgeted, intelligent dramas and comedies. Unlike the Hollywood studios, the independent production companies are able to avoid substantial overhead. Investment Opportunity The Managers are seeking equity investment totaling approximately two million dollars to be for investment in films produced by others.
Shares shall be valued at $100,000. Full, half, and one quarter shares will be available to select subscribers. Investments shall be made to a Cavalier Film Fund, the sole funding source for Cavalier Films, Inc. Non-Financial Benefits for Investors Investments provide managers with the opportunity to experience the creativity and pride inherent in the production of feature films in many of its various aspects.

Financial Return on Investment

After the investors have received their preferred returns, additional income will be allocated 50% to investors and 50% to Cavalier Films, Inc

Source-  www.cavalierfilms.com

New investing realities are often a function involving the quantification of operational definitions such as insight, determination, and speculation.  The power deals in Hollywood appear to be brokered by a few major firms.  Frank Yablans, the so-called “Warren Buett” of Tinseltown and his own production and distribution company has partnered with investment advisory firm Bluebay Capital.  This merging of monoliths has created one massive megalith that has financed $4 billion into Hollywood in th past three years.  Notice I didn’t say “gave” or “poured in” or some other “synonym” that indicates a transfer of funds.  Financing is the operative word here.  Financing is why funds choose to enter into this industry.  Financing means give now, get back ALL plus some later.  That is.. if the project pays dividends, so to speak.  These days of high finance, funds are looking to get a return from financing and from securing deals providing financial rights to the subsequent revenue stream(s).  The potential revenue driven from financing just one blockbuster can  be the home run that makes up for that 0 for 13 slump with 5 k’s.    However, this was not always the case.

Hollywood has a rather dark and sketchy reputation when speaking of investment risk to return ratio’s.  It has a vixen’s type of reputation, if you will, of luring in those with “visions of grandeur”, romancing, promising, and then dashing away with investor dreams in the form of investments.  This is to say, in the past, if you invested into Hollywood films, it is unlikely you would see a return or even get your money back!  Well..times do change, or so they say.   “Everyone wants a piece of Hollywood – whether financing a film with the hope of rubbing shoulders with stars, or because of advantageous tax breaks.  So Hollywood has taken their money and moved on, leaving a lot of people burnt.”  says Rupert Laszio, responsible for structuring the financing deal for Promenade and Director at Bluebay Capital.  He further adds, “Returns were almost secondary to them.  The following quote from a banking professional points to slate investing, or the act of investing into a large pie of homogeneous or heterogeneous films where if a few “hit” the revenue stream created will more than make up for the “misses”.  ”Across a slate of 20 films, just two of three hits will all but ensure a positive return for investors, based on over 30 years of historical performance data from the film industry.”  - Paul Kent, Senior Vice-President, Structured Corporate Finance, Citibank.

“Over the years top actors have gone from making $1 million to $2 million for a picture to $20 million to $25 million.”   – Bob Darwell, Partner & Head of the transactions entertainment practice at law firm Sheppard Mullin Richter and Hampton.

“They may seek to exclude sequels to movies that pre-date the deal, or will exclude movies where they have an existing relationship with a director or producer.”  - Bob Darwell, Partner of Law

“If you’re going to do a deal with a studio, you should make sure there is no adverse selection.  You need all the movies.” – Anonymou Investment Banker

“I produced Willy Wonka & the Chocolate Factory, Charlotte’s Web and The Little Prince too.  We had 15 to 20 films on the go at once and they were all very different.”

“Over the last 10 years family films have had the highest rate of return and have been the least costly to make.” – Frank Yablans, Promenade Pictures

Tags: Film, Financing, Revenue, Stream, Asset, Movie, Cinema, Hollywood

Source: http://www.outofobscurity.com/downloads/Euromoney-Hedge_funds_and_film_finance-Oct06.pdf

When it comes to financing your feature film, Certainly you think about opportunities to make appealing movie to the audiences all over the world.

Would you like to receive money to go towards your production budget, and have a guarantee that it will be shown to an audience? If so, then welcome to the world of film distributor advances and pre-sales.
Presales are based on the script and cast selling the right to distribute a film in different territories before the film is produced. This is a primary means of film financing, especially when it comes to making bigger budget movies. Once the deal is made, the distributor will insist the producers of the film project deliver on certain elements of content and cast.
You can receive a worldwide presale, domestic presale or foreign presale deal, but usually independent producers are most successful at attempting the presale of foreign rights.
independent producers are most successful at attempting the presale of foreign rights.
The amount given to filmmakers in the form of distribution advances varies depending on the selected actors, director and the specific film genre. As a general rule, producers can expect to raise 60% to
70% of their budget from foreign presales and 30% to 40% from domestic advances. If you live in America it can be a challenging task to secure domestic rights for a film project that is in development.
Independent filmmakers usually have better success financing their films with a combination of equity money and foreign presales.

One of the keys to successfully securing a presale deal is working with a competent international sales agent or producers rep. An international sales agent is someone who travels the world in search of new and original ways to sell, license and finance movies. Their role is to create relationships with qualified film buyers and distributors in all of the major territories throughout the world.
They are informed agents for the producer. Agents increase filmmaker’s chances for success by tenfold.  So what will all this potentially cost you? Generally speaking, international sales agents will charge
from 10% to 35% of the gross receipts from each territory your movie sells in. A producers rep usually earns a flat fee or a commission fee ranging from 5% to 20% of your films budget or revenue generated from the movie.
Getting the interest of a distributor in your project while it is in the development or pre-production stage will increase the opportunity of your film becoming a financial success. What is an effective method for contacting film distributors. What is an effective method for contacting film distributors?  Email. You can
email a few film distributors, attaching a production budget top sheet, financing scenario and a one-page synopsis of your proposed film project.
If the distributor is interested in the film project they will request that you send them a copy of the films script to further evaluation the project. If they are attracted to the film project they will then discuss
details about investing money into the project i.e. casting and talent, distribution rights, contracts

When it comes to financing your feature film, Certainly you think about opportunities to make appealing movie to the audiences all over the world.

Would you like to receive money to go towards your production budget, and have a guarantee that it will be shown to an audience? If so, then welcome to the world of film distributor advances and pre-sales.
Presales are based on the script and cast selling the right to distribute a film in different territories before the film is produced. This is a primary means of film financing, especially when it comes to making bigger budget movies. Once the deal is made, the distributor will insist the producers of the film project deliver on certain elements of content and cast.
You can receive a worldwide presale, domestic presale or foreign presale deal, but usually independent producers are most successful at attempting the presale of foreign rights.
independent producers are most successful at attempting the presale of foreign rights.
The amount given to filmmakers in the form of distribution advances varies depending on the selected actors, director and the specific film genre. As a general rule, producers can expect to raise 60% to
70% of their budget from foreign presales and 30% to 40% from domestic advances. If you live in America it can be a challenging task to secure domestic rights for a film project that is in development.
Independent filmmakers usually have better success financing their films with a combination of equity money and foreign presales.

One of the keys to successfully securing a presale deal is working with a competent international sales agent or producers rep. An international sales agent is someone who travels the world in search of new and original ways to sell, license and finance movies. Their role is to create relationships with qualified film buyers and distributors in all of the major territories throughout the world.
They are informed agents for the producer. Agents increase filmmaker’s chances for success by tenfold.  So what will all this potentially cost you? Generally speaking, international sales agents will charge
from 10% to 35% of the gross receipts from each territory your movie sells in. A producers rep usually earns a flat fee or a commission fee ranging from 5% to 20% of your films budget or revenue generated from the movie.
Getting the interest of a distributor in your project while it is in the development or pre-production stage will increase the opportunity of your film becoming a financial success. What is an effective method for contacting film distributors. What is an effective method for contacting film distributors?  Email. You can
email a few film distributors, attaching a production budget top sheet, financing scenario and a one-page synopsis of your proposed film project.
If the distributor is interested in the film project they will request that you send them a copy of the films script to further evaluation the project. If they are attracted to the film project they will then discuss
details about investing money into the project i.e. casting and talent, distribution rights, contracts

Source- www.filmmaker.com

Author: Vidia Ramdeen

This article is in response to the film industry’s momentary collapse at the hands of the financial crisis among Wall Street banks and hedge funds.  At a time just prior to the Mortgage Backed Securities  fallout from 2005 through 2008, some hedge funds aligned with top investment banks (before the collapse of Lehman), to invest approximately $15 billion, replacing the risk borne on Sony Pictures and 20th Century Fox Division of Rupert Murdoch’s News Corporation in exchange for cash flow profits.  Ostensibly, the Goldman led asset-backed financial derivatives market fallout opened up new opportunities for financiers to enter into Hollywood.  The blockbuster Avatar is a function of this syndicate relationship.  The “triangle” comprised of joint financing arms, hedge fund(s) + investment bank(s), and the film studio is better able to absorb risk through distribution.  The alternative to the triangle would be for a single hedge fund to invest into a diverse portfolio of films; whereas, investment A through C, F, H, etc; with the function, C(x) = X, R(x) = X; with P(x)  = X is > all combined alternative investment choice(s).

However, the argument against such slate deals has been that the movies that do not do well at the box office become massive liabilities that ruin the MIRR on the pooled assets.  This is likely due to agreements with certain Hollywood Studios that may “negotiate” i.e., require that a financier accept certain movies, perhaps movies that the studio is passionate about but does not fully believe in its ability to produce a revenue stream along with movies anticipated to be more movie-goer friendly.  The investment banks rather the hedge funds have been more sensitive to slate financing disasters, with many having reduced their portfolio presence in Hollywood woith others reducing position in slate dealing.  But where one party leaves, another party that sees potential where others do not will quickly jump in.

A second market has also become quite active in film financing as the writing down of film asset backed securities has enabled a secondary market where buyers are buying the risk of the underwritten security that represents the underlying investment, or the movie.  Strong interest exists for movie assets from film industry specialists that see value in the valuation.  The Mark Cuban backed Content Partners LLC is a visionary in the venue of secondary market film acquisition from hedge funds, private equity firms, and large investment/commercial banks.  ”Not only are we buying from financial sellers, but we’re also looking at transactions for the first time with studios and networks for participation in TV shows and film profits.”  - Steven Kram, President -Content Partners

The film financing industry is akin to finding gold out in the old west.  It is out there, it’s just for someone to set out to look specifically for, and to find it.

“The good thing about investing in film is that you have an asset that continues to generate revenue on pay TV, free TV and in every country around the world.” – Ken Schapiro, Managing Partner – Qualia Capital

Source: http://thestockmasters.com/node/1190

Tags: Hedge, Fund, Private, Equity, Film, Financing, Movie, Hollywood, Mark, Cuban, Investment, Bank, Morgan, Goldman, Citi, Lehman, Merrill, TV, Television, Cinema

Vidia Ramdeen

New investing realities are often a function involving the quantification of operational definitions such as insight, determination, and speculation.  The power deals in Hollywood appear to be brokered by a few major firms.  Frank Yablans, the so-called “Warren Buffett” of Tinseltown and his own production and distribution company has partnered with investment advisory firm Bluebay Capital.  This merging has formed one massive monolith that has financed $4 billion into Hollywood over the past three years.  Notice I didn’t say “gave” or “poured in” or some other “synonym” that indicates a transfer of funds.  Financing is the operative word here.  Financing is why funds choose to enter into this industry.  Financing means give now, get back ALL plus some later.  That is.. if the project pays dividends, so to speak.  These days of high finance, funds are looking to get a return from financing and from securing deals providing financial rights to the subsequent revenue stream(s).  The potential revenue driven from financing just one blockbuster can  be the home run that makes up for that 0 for 13 slump with 5 k’s.  However, this was not always the case.

Hollywood has a rather dark and sketchy reputation when speaking of investment risk to return ratio’s.  It has a vixen’s type of reputation, if you will, of luring in those with “visions of grandeur”, romancing, promising, and then dashing away with investor dreams in the form of investments.  This is to say, in the past, if you invested into Hollywood films, it is unlikely you would see a return or even get your money back!  Well..times do change, or so they say.   “Everyone wants a piece of Hollywood – whether financing a film with the hope of rubbing shoulders with stars, or because of advantageous tax breaks.  So Hollywood has taken their money and moved on, leaving a lot of people burnt.”  says Rupert Laszio, responsible for structuring the financing deal for Promenade and Director at Bluebay Capital.  He further adds, “Returns were almost secondary to them.”  The following quote from a banking professional points to slate investing, or the act of investing into a large pie of homogeneous or heterogeneous films where if a few “hit” the revenue stream created will more than make up for the “misses”.  ”Across a slate of 20 films, just two or three hits will all but ensure a positive return for investors, based on over 30 years of historical performance data from the film industry.”  - Paul Kent, Senior Vice-President, Structured Corporate Finance, Citibank.

“Over the years top actors have gone from making $1 million to $2 million for a picture to $20 million to $25 million.”   – Bob Darwell, Partner & Head of the transactions entertainment practice at law firm Sheppard, Mullin, Richter, and Hampton.

“They may seek to exclude sequels to movies that pre-date the deal, or will exclude movies where they have an existing relationship with a director or producer.”  - Bob Darwell, Partner of Law

“If you’re going to do a deal with a studio, you should make sure there is no adverse selection.  You need all the movies.” – Anonymous, Investment Banker

“I produced Willy Wonka & the Chocolate Factory, Charlotte’s Web and The Little Prince too.  We had 15 to 20 films on the go at once and they were all very different.”  ”Over the last 10 years family films have had the highest rate of return and have been the least costly to make.” – Frank Yablans, Promenade Pictures

Tags: Film, Financing, Revenue, Stream, Asset, Movie, Cinema, Hollywood

Source: http://www.outofobscurity.com/downloads/Euromoney-Hedge_funds_and_film_finance-Oct06.pdf

Lions Gate Entertainment Corp (LG) filed a lawsuit yesterday against Carl Icahn (LG’s largest stakeholder), Icahn Partners LP, and Brett Icahn for “secretly plotting” to merge LG with Metro-Goldwyn-Mayer Inc (MGM). LG makes the following claims in the lawsuit:

• Icahn wanted to delay the merger with MGM until he had enough stake in both companies for maximum profits from the merger. Icahn’s stake in LG rose 14 percent between March and June 2010.
• Informed that he may lose his stake in LG by June 2010 with the news that LG was negotiating with two other studios, Icahn took “drastic and improper action,” which includes making a tender offer to other shareholders for all of LG’s shares on the basis that he would oppose any merger with another studio, receiving millions of LG shares, and then trying to merge LG and MGM, violating SEC rules.
• Mark Cuban tendered his entire 5.4 percent stake in LG to Icahn for $7 / share after Icahn coerced him with special business interests, even after LG told Cuban that another buyer was willing to buy his shares at a higher price. (Cuban denies this claim, stating that there were / are no special business interests, that he simply wanted the liquidity.)

In so doing, LG wants to take back all of its shares acquired by Icahn, bar him from buying more shares, and is seeking damages.

“Icahn opposed a merger with MGM not because it was bad for Lions Gate shareholders, but because it was good — so good, in fact, that he wanted to postpone it until he could buy as much of both companies as he could and thus extract for himself as much of the value stemming from the merger as possible…”

Source: http://www.bloomberg.com/news/2010-10-28/lions-gate-entertainment-sues-billionaire-carl-icahn-over-mgm-studio-deal.html

Vidia Ramdeen

Hedge funds have the option of investing into whatever they wish.  They find qualified investors, define the risks, receive the investment, and invest into assets.  Many do not even adhere to the basic tenet of running a hedge fund, establishing zero correlation with the market indices.  Financial instruments and their derivatives aside, the newer hedge funds are even looking to invest into only a few if not just one asset  class.  Film funding is the topic and is of focus to a number of hedge fund managers.  Anthony Scaramucci of SkyBridge Capital says he would also be willing to look at new hedge fund firms that are focused on film financing.  However, he’s not thinking about directly financing production because that involves too much of a risk if invested films fail to make it at the box office.  This is contra to the investing methodology of many hedge funds that opt to engage and invest into this industry.

Scaramucci continues, “This would be funds that supply for film industry financing towards marketing the film, for example.”    Kevin Frakes, co-founder of PalmStar Media Capital has opted to engage the industry in the same manner, financing the marking of select films.  ”Diversification is key to help spread risk.  But we’re approaching diversification in a different way rather than a slate of films.” says Frakes.  He is attempting to run his operation more in line with a classic hedge fund, by diversifying his risk/reward.  ”We’ve identified  different products within the films themselves, such as tax credits, distribution financing.  We gap fund which means we come in and loan money toward production financing and the collateral on the loan are the various distribution rights on the content.”  This provides a a new niche market for funds to invest into.  The diversification is rather “weak”, if you only opt to invest into 1.) the finance marketing and 2.) the production cycle.  However, barring new innovation, and the potential for hedging on movies futures, those two areas of film investing are where asset management firms can get a foothold on movie returns.

“I’m trying to avoid a YouTube moment these days” – Anthony Scaramucci

Tags: films, hedge, fund, gap, tax

Source: www.hedgefund.net/publicnews/default.aspx?story=11819