Film tv finance development distribution PDF

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HISTORY Nickelodeon Carl Laemmle - Producer. Created studio tours and the star system. Credited with giving n Florence Lawrence - first actress to receive name credit. Mary Pickford - first female executive and actress to make $1million. First women to mak Adolph Zukor - head of paramount. Verticall...

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FILM/TV/FINANCE/DEVELOPMENT/DISTRIBUTION Monday, October 28, 2019

2:31 PM

HISTORY • • • • • • • •

Nickelodeon Carl Laemmle - Producer. Created studio tours and the star system. Credited with givin Florence Lawrence - first actress to receive name credit. Mary Pickford - first female executive and actress to make $1million. First women to m Adolph Zukor - head of paramount. Vertically integrated the film industry. Production, Mutual Film Corp v. Industrial Commission of Ohio (1915) - film is not given 1st amend protected. Led to hays code, which lead to production code. Hays Code -> Production Code Burstyn v. Wilson (Miracle Case - 1952) - government cannot censor filmmaker.

NETWORK TV HISTORY • • • • • • •

First two networks in 1941, CBS and NBC Supreme courts forces whose blue network to be sold, nbc blue became ABC. Candid camera (1948) - (Allen Funt)- first producer of reality TV shows Milton Berle - known as mr television, first television star. Impacted people buying tele Desi Arnaz & Lucille - created Hollywood. Moved the TV industry to LA. First scripted s camera set up. First show to be shot on film. First to utilize the re-run. First to syndicat Action for Children's Television v. FCC (1995) - safe harbor - 10pm-6am Seinfeld - most syndicated revenue show. Over $4billion. $22million per episode.

FILM FINANCING •

Studio finance is always easier. Distribution is most likely guaranteed. Creative control more creative control. • Other sources of financing a film project: 1. Crowdfunding - many people donate. 2. Angel investor - but want ROI (return on investment) & most likely a completion bond 3. Int'l pre-sales - negotiate a deal with a distributor in a specific territory. A bank will re (cost 3 or 4% of the budget). Give up creative control & the potential of getting kicked Studios often dislike.

name credit. ke a production company. stribution, exhibition ent rights and is not

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The studio is going to want

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1) Tax Incentives: state int’l tax credits, rebates, money saving programs- filmmaker- % particular location. Soft Money and Tax Credit 2) Gap Financing: bank may finance. Repaid with interest; only pays for distribution and (certain person) 3) Negative Pickup

FINANCE • •

1. 2. 3. 4. 5. 6.

Attorney should review all (production/finance/distribution) deals They should include the following: Specific distribution right the distributor will receive. Global or specific territories. Will an advance be paid; how will it recoup its advance? What will be the distribution fee? 30-35%, every dollar goes to distributor, TV 25-35% How much it will spend on P & A? (Prints and Advertising) How was profit defined? Break even? Contractual Be careful of Hollywood accounting. Studio Accounting: charging you for expense, bu with in-house Formula: Production cost + marketing cost multiplied(x) by 3= breakeven

FILM DEVELOPMENT

1) 2) 3) 4) 5) 6)

Idea: writer, producer, director, studio executitve, actor, etc. Where does idea come from?: often a book, comic book, theme park ride, TV program life events, etc. (acquisition costs) A good idea?: artistic or business perspective Studio examine: Similar stories being produced Genre Does it require a major star? Easy to market Can it create other $$ streams International Appeal Film/TV programs with universal appeal tend to perform best (i.e. life and death, love Script is optioned and rewritten

f the project in that marketing part of movie

; music 25% (?)

not really an expense

, sequels, history/real

and sex)

TV DEVELOPMENT Pilot episode is produced Do executives like the pilot Market research (i.e. focus groups) test the pilot. Like? TV development is year-around now (pilots often debut in the fall). Netflix has changed the traditional model (no pilot and support the production) Now, some networks may opt to produce no pilot; because seasons are shorter and s development • TV and cable networks rarely produce independent projects. • • • • • •

DEVELOPMENTAL HELL Original writer replaced by a script doctor. Development can last a long time or go into “turnaround: green light, unsure if they a a show” • A star, director, an executive leaving, or simple anxiety may lengthen the project. • Real danger- a small change may have a ripple effect throughout the story that affect • Weakness: development doesn’t always improve a story • •

DEVELOPMENTAL (3 Depts.) 1. Production: decide what ideas get produced. High pay but long hours, knowledge of f of TV and film, knowledge of current and future trends 2. Business Affairs: negotiate deals with writers, actors, directors, producers, etc. 3. Legal: develops deals into a long-form contracts, which covers every single contracte • A production-finance-distribution (PFD) agreement lays out the details. • Production and Post-Production Executives- oversee production and post-production • Difference-Network TV: regulated by FCC, Basic Cable, Premium Cable: both of these • Network TV: face heavy fines under Broadcast Decency • Enforcement Act of 2005: $325,000- per incident; up to $3 M if aired by more th Standards & Practices: critical • Basic Cable: no FCC regulation of content; self-regulate: target audience (i.e. kids); ad viewer’s expectations= nudity, violence, profane language • Premium Cable: much greater freedom- sex, profane language, violence, etc. • Use TV Parental Guidelines 1997

end less on

e actually going to make

it negatively

m business, knowledge

element.

are NOT an one station. ertisers’ expectations;

• Use TV Parental Guidelines- 1997

DISTRIBUTION • Distribution can be more expensive than production • Jaws changed marketing and distribution- opening #1 became important; became na ad. & distribution) happened AFTER Jaws • Buying awareness (dom. & int’l)- because theatrical drives other ancillary revenue (DV • Market research- use tracking studies and test screening • Windowing- maximize revenue; direction distribution points • Piracy- combat by releasing films on other platforms simultaneously (i.e. streaming) • No distribution deal- four- wall or Internet • Four-Wall: no distribution deal; rent out on of the theaters, distributor become produ money back • Pay attention to “Studio accounting”

DISTRIBUTION (DUTIES) 1. 2. 3. 4. 5. 6.

Distribution get your film into theaters. Selevt the appropriate release date Subtitle/dub your film into a different language. Negotiate deals with dom.int'l exhibitors, sub-distributors, dom./int'l television networks, Exchange int'l money into dollars. They place all of the film's advertisements. 1. Film rental - 50/50 deal (or close to it). Portion of money received by distributor 2. Asia/pacific - #1 territory. 3. Trend - expensive spectacles (25 and under) & avoid riskier content.

EXHIBITION 1. 2. 3. 4. 5. 6. 7.

Paramount Consent Decree AMC - trendsetter & largest chain currently Determine how many screens, # of screens, # of showtimes, # of weeks. 25-39-frequent movie goer (25%). (MPAA) Summer months - most lucrative Box office & concessions Ticket prices up to $9.11

MPAA RATING SYSTEM (1968)

on-wide (frontloading of D, PPV, TV, etc.)

cer and hope you make

tels, and airplanes.

MPAA RATING SYSTEM (1968) • • •

Must clearly explain the rating level. Should a film receive an "R" rating for a smoking scene? Cara rates content of movies

TV DISRTIBUTION • 1. 2. 3. 4. 5. 6. • • • •

•

Affiliates only receive a few programs from the network: A morning show 3 hrs. of prime time programming Evening nat'l news. A late night shows Sports programming Maybe a news oriented program Ad. $ - depends on age & size of the audience who is watching. Measured by Nielsen. (1.19 = all TV turned on). A vital $ stream. Carriage fees- how much TV network charges a cable/satellite company, especially importan Subscription Fees - charge monthly fees (i.e. HBO). Syndication - first run, off-net (i.e. reruns) sold on a market-by-market basis in order to reco Stripping. Important - deficit financing & removal of financial syndication rules (TV network in syndication. Int'l licensing & internet distribution - other ways recouping production costs.

PROFIT & DEFINED GROSS • • 1. 2. 3. 4. 5.

What is profit? Actual/cash breakeven; contractual breakeven; floating breakeven Defined Gross (revenue pot): Theatrical revenue Tv & internet licensing revenue 20% of home entertainment - single greatest revenue generator; but studios hold on to the o % of Soundtrack revenue % of merchandising revenue (often 50%)

PARTICIPATION (GROSS PROCEEDS) • 1. • • • •

Two different types of participation: Gross Proceeds - more difficult to secure (track record). "First Dollar" - most powerful get paid first and receive a % of what the distributor collects. ( Cash breakeven zero = actual breakeven/no distribution fee (D.F.) on talent payments. Cash breakeven 10- D.F. of 10% (i.e. 5% of $50 M; Distributor charges $ 5 M; talent =$2.25 M Cash breakeven 20 D F of 20% (i e 5% of $50 M; Distributor charges $ 10 M; talent =$2 M)

rating point; share = % of or cable networks. production costs. Dramas tend to be better

80% videocassette deal.

e. 5% of $100 M = $5 M)

• • 2. • • • 1. 2. 3. 4. 5.

Cash breakeven 20- D.F. of 20% (i.e. 5% of $50 M; Distributor charges $ 10 M; talent =$2 M) HIGHER THE CBE AMOUNT, LESS THE TALENT GETS. Net Proceeds (after these deductions) Distribution fee - 30-35%; other territories? Distribution expenses - P & A costs + 10% overhead Negative Costs Movies development, pre-production, production, post - production costs Overhead fee of 15% Paid to gross participants Deferments (i.e. bonuses - a specific B.O. dollar amount) Interest...