Finance Lab – Report
- Financing is simple but complex, and dependent on a variety of deals and factors
- Development, production, distribution and banking bodies can all help raise funds so that projects can go ahead
- Financial and emotional decisions aren’t mutually exclusive!
Lunchtime on the last day of the conference? A time to unwind and say goodbye? No sirree. Time to talk FINANCE!
Edward Galton (MD of Cake) led a panel of nine, count them, NINE industry experts to break down the financial journey a producer faces to get their TV project off the ground.
Anne Brogan from Kindle played the role of ‘Innocent Anne’, a new producer on the scene with a hot new project she’s keen to develop.
So, as Innocent Anne takes her project to market (i.e: our panel of experts), the first exec she meets is Tim Patterson from Nickelodeon UK. For him at this stage, it’s all about the pitch and the story, but from a business perspective he’s also thinking about the project’s wider appeal. He’s willing to offer Innocent Anne 20% of the budget with 50% back end. It gives Innocent Anne a starting point and momentum to talk to other potential investors.
Innocent Anne goes to Sioned Wyn Roberts from S4C in Wales to see if there’s anything she can do. Sioned has a commissioning pot, typically for small budgets, but there could be possibilities with the S4C co-production fund, and Pinewood Studios have a space in Wales, too, so that adds to the potential. Essentially though, Sioned’s looking at the project from a Welsh point of view (especially with regard to the Welsh language), but would certainly be interested in helping out Innocent Anne.
This gives Innocent Anne a lot to think about. It’s becoming clear that she’ll probably need a co-producer.
James Stevenson Bretton from Blink Industries points out that the UK tax credit is a big incentive, and he could invest the tax credit into the project if necessary. Harvey Shackleton, Head of Finance at Compact Media Group, says he could find 7.5% of the budget as a regional grant.
How about money from Europe? Alison Warner from Technicolour tells Innocent Anne about the Barem point system, where production elements are broken into 21 points, and the project needs a minimum of 14 points to qualify as French content. She also encouraged Innocent Anne to think bigger with her project – 26 x ’30 rather than 6 x ’30. The Centre National Cinema (CNC) in France could put in €1m. Nickelodeon and Cartoon Network don’t qualify for CNC but Disney does.
Sounds promising, if a bit complex, but Innocent Anne is hanging in there.
She turns her attention to distribution. Edward Galton from Cake steps in with his advice. Cake would want to simplify. They can help with packaging, or when the production is complete they can help distribute. Harvey from Compact Media Group mentions ‘soft money’ – repayable business finance capital investment based on 10% of local spend assumed to be £1m of overall £1.5m budget. To get the money. Innocent Anne would need to provide evidence of her business’s own funds and private resources before regional money could be agreed. And that funding is needed for the project to happen.
Whoa, whoa, whoa there Nellie. Let’s not get too ahead of ourselves. Simon Flamank from Bob & Co, and Kirsty Bell from Goldfinch want to talk equity and tax, and discuss the right mix of potential money that’s on the table. Simon points out that the tax credit for live-action and animation means that 15% of budget might be eligible. But financial and emotional decisions are made in tandem; basically you’ve got to choose what’s right for you.
Innocent Anne does a tot up of her percentages and she reckons she’s got around 70% of funding. How does she close the rest? Private/equity funding and EIS. Kirsty recommends having an Information Memo to show that you’re investor ready. Innocent Anne is feeling a little overwhelmed by the deluge of information and advice. Can she get any help? Kirsty/Goldfinch can help Innocent Anne navigate her way through it all for a fee between 5% and 9% of the money.
OK, some finance and investors are beginning to emerge. When’s the best time open the production bank account? Judith Chan (Media Banking Office of Coutts & Co) recommends as soon as the production company starts to incur costs so as to maximise the tax credit. The bank can also provide cash flow against pre-sales and the tax credit. The bank will require collateral when funding a production. The bank’s fees are reasonable (single digit percentages), and they don’t make back end arrangements.
It’s nearly the end of Innocent Anne’s journey into the financial aspect of her project, so what’s her next step? Well, she has to go back to everyone to discuss all the various permutations and percentages and deals, and sort a way forward with them all. Innocent Anne has reached a high percentage of her budget, so she’s optimistic of getting the necessary deals done. Phew! It’s been a long and complex road, but it’s only now that the real journey begins…
For full details of the panel check the Session Guide.
Nyman Libson Paul
Coutts & Co
Executive Director, Media Banking Office
Bob and Co
Senior Certification Analyst
VP, Director of Programming
Compact Media Group
Head of Finance Services
James Stevenson Bretton
Blink Industries Ltd
Founder / Executive Producer
Sioned Wyn Roberts
Commissioning Editor, Children’s
Compact Media Group
Group General Counsel
Compact Media Group
Head of Kids and Factual, Rights.tv