Smash Music & Film Financing

Film Financing - Theatrical/DVD Distribution - Music - Production

Film Financing

Film Financing

Film Financing is a very secretive and little understood aspect of film production. It is a subset of project finance, meaning the film project's generated cash flows are used to repay investors, and generally not from external sources.

The main challenge of film finance for many people in the film business it is difficult to predict with any accuracy the revenues that any one film will generate. The main factors determining the commercial success of a film include public taste, artistic merit, competition from other films released at the same time, the quality of the script, the quality of the cast, the quality of the director and other parties, etc. Even if a film looks like it will be a commercial success "on paper", it takes a very sophisticated and knowledgeable person in film forecasting to accurately determine the levels of revenue the film will generate.

Often due to the uncertain cash flows financiers are faced with a high degree of uncertainty as to whether they will actually have their investment repaid, and if it is repaid, what return they will earn. This where I come in.

Another challenge is securing a clean "chain of title". Since the collateral for any film financing arrangement is based on the ownership of intellectual property rights, film financing transactions should always commence with a very accurate title analysis.

Methods of raising finance are:

There are four main methods of raising finance for the production of a film: (i) equity finance; (ii) tax incentives; (iii) debt finance; and (iv) governmental grants.

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