1_ Basics of Film Financing

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I'm Skye Moore and I'm here to teach you

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about film financing and creativity and

making your dreams happen and how to

protect yourself in making it happen and

the first thing I want to tell you is

that the most important creative aspect

that you can do if you want to make a

film is learn the financing side learn

the business side learn learn how the

industry works rather than learning how

to write a script or how to shoot a film

what matters now is creativity if you

can bring financing to the table you

will have control over your destiny and

control over your project and the rule

one that you need to know for film

financing is that most films lose money

80% of the films that are made lose

money and why why is that and the answer

is actually fairly simple which is if

you go to a cocktail party and you're

trying to impress your friends or

impress the member of the opposite sex

would you rather say to them hey baby

I'm a Jones or would you rather say hey

baby I make door knob right the answer

is pretty obvious people want to produce

films because it's sexy it's fun it's

sex in the Freudian sense that's maybe

sex in the real sense but whatever it is

it's driven by a primal desire for

people to do what's fun and what's

interesting and so you have a rush to

production and you have this oversupply

on the film production side 600 to 700

films get made every year of those only

about 200 received any distribution at

all of a decent theatrical release and

the rest go hungry the rest chase the

festival circuit and hope to come home

with a Best dramatic category from the

San Sebastian Film Festival but the

truth is that doesn't earn any money and

never will and so the films end up going

director radio and never get released

and everyone that invested on uses their

money it's this blockbuster optimism

that drives the drive film financing so

if you want to make money the short

answer is beyond the distribution side

let's talk about the studio's for a

moment how do they make money they make

money off distribution right they make

money on other people's money and other

people's films the happiest day for a

studio is when someone shows up and

hands them a film that some other

goofball financed and the studio now

gets a distribution fee off the gross so

they have no capital at risk and they

are more than glad to unload economic

risk whoever wants to show up at a

studio store invest Studios are thrilled

to do it so the studio's their power

comes from they have a library they have

the size to deal with the economic

foibles when films go bad and they

control distribution take the opposite

side the independent film companies that

don't control distribution one bad film

that loses money they're done they go

bankrupt they don't control distribution

and they don't have the financing to

stay at the table when they lose money

what are the implications of this well

number one is never invest your own

money in a film all right don't go off

and use your own credit card to make

your special film because you read that

somebody did that made a million dollars

for every story you'll hear that there's

a 99 people out of 100 that lost

everything and went bankrupt so never

invest your own money in the film with

your reading projections and the

projections show that the happy rosy

thing going upstream which they always

do endless profits and you want to know

the truth turn it upside down because

the truth is that's where it ends up it

ends up going the other way here's

another one should you set up a foreign

cash plan because you're going to save

taxes on all the profits and the answer

is no what you should be thinking about

is how do I use the losses that are

inevitably going to occur another thing

is that you be aware that the industry

has a voracious appetite for money

schemers and dreamers know it they're

looking for you because they know that

you need money to make their film let's

look at history let's just see what

actually happened out there

let's start in the early 80s my first

career I was working for the biggest

companies at the time the independents

they financed off the public equity

market at the time we were doing public

raises for probably a billion dollars

that we raised and one of the biggest

companies Carol co-maid Terminator and

Rambo

to some of the most successful films at

the time and who knows what happened to

Carol though it went bankrupt as did

Cannon and all the other independents at

the time bankrupt and if those companies

go bankrupt have your heart out for the

rest of the industry

then came the Japanese financing into

the industry and at the height Matsuda

bought Universal and Sony but what was

then Columbia and lost billions of

dollars message to finally gave up and

sold out billions of dollars the next

wave what came next insurance backed

financing the insurance companies were

going to outsmart everybody and they

came and financially backed three and a

half billion dollars of films all of

which was lost all of which I then came

the German public market and they raised

several billion dollars and that crashed

and burned and then the German tax

shelter market came that's way too much

money in Germany obviously that came and

raised in probably a billion and a half

dollars and that crashed and burned and

then came New York with their Monte

Carlo projections and their financial

calculations and they're so clever and

in the mid-2000s they put in billions of

dollars into Slade financing and that

crashed and burned over and over and

over billions of dollars has been lost

so what does that tell you if you're

trying to raise money what you don't do

is pitch the economics you don't do

black-and-white projections showing this

and that because they're all lies what

you want to sell is sex you want to sell

that the person will get a credit on the

film that they can go to the premiere

that they can go to the party and meet

the stars

alright that's what you're pitching so

be aware that out there in the real

world what people want to know they want

to klosty colored pictures on their

coffee tables they want to know that

they're involved in the industry and and

that's really how you pitch it that's

all for now this is Skyy more your host

to be sure to tune in for the next time

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