Film
making consists of two principals: Venture Capital, production
and distribution. We at Entertainment
Films have strong relationships with major distributors.
The film finance/venture capital market in it self is a
complex maze of investors, attorneys, accountants etc. At
Entertainment Films we have
minimize the risk factors by professionally handling, controlling
with a marketable money making selection of scripts or projects
with A-LIST renowned cast, directors, writers, producers
and union production crew. We like to keep it simple, honest,
and with a solid lucrative percentage returns to our investors.
Production
involves the script (the story) with "A" list talents, Directors,
staffs, legal, completion bond, equipment, locations, transportation,
craft services etc; while the distribution involves advertising,
publicity, P&A, licensing, promotional and physical
reproduction, delivery and exhibition of the completed motion
picture "in the can." We can honestly say from our many
years in film production, that the most exciting and relieving
words on the set are CHECKING THE GATE and THAT'S A WRAP!
YES! (After a 120 to 160 day shoot). The following is a
simplified overview of a complex process for the purpose
of describing how the business model of a completed film
works.
Domestic
Distribution
A domestic theatrical distribution deal refers to the distribution
of a film to theaters in the United States and Canada. It
defines the duration of the agreement, the territories covered,
and which rights are included. Domestic distributors range
in size from major studios like Paramount and Sony/Columbia,
Warner Bros. pictures to smaller midsize independent distributors
such as Miramax (a subside of Disney so Mickey can distribute
R rated stuff), New Line, and many others.
An
independent domestic distribution deal is often a 50/50
split between the producer and the distributor. The principal
difference between this split and the major Studios, 70/30
split is that expenses come off the top and the balance
is split 50/50. In other words, the distributor and producer
share equally in distribution expenses such as prints and
advertising, whereas the major distributor generally takes
30 percent off the top as profit and deducts distribution
expense entirely out of the producer's 70 percent share.
Foreign Exhibition
The foreign theatrical market has become even more important
than the domestic theatrical market. Whereas foreign theatrical
used to account for less than ¼ of a film's theatrical
take, it is now basically 50%. Major studios have their
own distribution offices in many countries, and they also
cooperate with local distributors. In many cases, a film
may see only moderate success in the United States but do
better abroad.
Non-Theatrical
Exhibition
Feature films also receive considerable revenue from non-theatrical
sources. BLOCKBUSTER VIDEO now has its own film production
"B" list type for there own distribution video/DVD markets
now doing 15 films a year! Just like HBO FILMS For domestic
and foreign film rental, also included are the cable networks,
home video, pay-preview, and networks ABC/NBC/ television,
which pay licensing fees to broadcast a feature film to
U.S. networks, which commonly pay 10% of a film's negative
cost for the right to broadcast it for so many runs. Domestic
Syndication usually garners anywhere from 35% to - 45% off
a film's negative cost (the total price of making the film)
of the same, and foreign broadcast traditionally pays approximately
40%. In the past few years, there has been a resurgence
of independent filmmaking. (Ask me for examples of the hits
and Oscar winners!) Along with this growth spur, the specialty
film market has been flourishing, especially with foreign
films. Artsy/Inde theaters all over the U.S. have regular
attendees who enjoy these foreign productions as in colleges
university towns. Often, a film made for $500, 000 or less
can earn back its cost from these artsy theaters and smaller
"Four Wallers" like the film "el mariache" filmed in Mexico
for about $7,500 a Robert Rodriguez director and edited
himself (and it looks like it!) the director used his relatives/friends!
And went to a blood bank to finish his film later did a
remake called blockbuster Hit "Desperado" with Antonio Banderas!
The
Latino market has experienced a tremendous growth in California
And the U.S. Preliminary 2000 census figures put the nation's
Hispanic population at 35.3 million, up from 22 million
in 1990. The Latino market spends more money on entertainment
and advertisement a multi billion-dollar market more than
any other ethnic group in the U.S. More Latin films are
being released in the U.S. than ever before some have gained
notoriety such as last years Academy award winner "Amores
Perros", (Mexico) This year's Golden Globe nominee "Tu Mama
Tambien" and other releases such as "Santitos," and the
most popular of modern times, "Like Water For Chocolate"
also Crouching Tiger from Asia an Oscar winner and many
other films were crossover films that play well in the mainstream
market.
Distribution strategy:
As stated before, the domestic territory includes the U.S.
and Canada. Many of the independent distributors consider
the United States and Canada to be one package and prefer
not to have them separated beforehand. Domestic rights refer
not only to theatrical distribution but also to all other
media such as video, cable, pay-per-view, and television,
When a producer secures in advance from one of these medias
for film production financing, the "deal" becomes less attractive
to potential distributors by fractionalizing the rights.
Any source of future revenue that is taken out of the potential
money pie makes it more difficult for the producer to close
the distribution deal, which is why other structures of
financing are more amendable.
In
terms of foreign sales, there are U.S. based distributors
who specialize in the rest of the world. These companies
deal with networks of sub-distributors in various countries
where it is important to distinguish between a distributor
and a foreign sales agent. If a distribution company is
granted the rights to the film for the foreign markets,
that company is the distributor. Generally, if the ownership
of the foreign rights is retained by the producer, who grants
someone only a percentage of the receipts in exchange for
obtaining distribution contracts in each territory or for
various media throughout the world, that person is actually
a sales agent. If required, we will work with
one of the more established sales agents in securing favorable
presales. It has worked in the past!
Our
intention is to submit our films when needed to multiple
film festivals such as Cannes or Sundance in for competition
and we feel that our films have the potential to receive
awards and therefore increasing its domestic and foreign
value. While domestic distribution contributes a major profit
to our films, the foreign market can be just as lucrative
and sometimes more.
Investment
returns:
An independent film goes through the same process from development
to production and post-production as a studio film. In this
case, however, development and pre-production may involve
only one or two people (general partnership). The investors,
whether it's the executive producer and or director, maintains
control over the final product.
An
independent company is the one that finds its production
financing outside the studios. A studio may distribute it,
but "negative cost" (the actual cost of making the film)
has been funded from other sources. It is not uncommon for
independent films to be financed in very creative ways.
Indeed, this is usually the way most independent films are
funded. Producers will commonly draw upon varied financing
arrangements and structures-sometimes with several partners-for
the complete financing of just one motion picture.
At
ENTERTAINMENT
Films
we work on multi-film production deal, with in conjunction
with the companies or project owners or controller, like
the "creative person", such as a writer/director, or writer/producer,
or creative producer, and in combination with a financial
partner or group. These independents make low-budget pictures
B types that usually starting at $50,000 up to low $3.5millions
range. We can do this as long as we see a mean of MAJOR
returns to our investors.
To
help protect us at ENTERTAINMENT
Films
and its investors from losses, we will endeavor to secure
a combination of financing agreements. Given that the project
is unique, and marketable, an agreement will be entered
into only if it is perceived to benefit all investors. In
a presale agreement, a foreign organization or person buys
the ancillary rights (domestic or foreign) in advance. In
exchange for the presale contract, the U.S. or foreign buyer
obtains the right to keep the revenue (rentals) from a particular
territory and may also seek equity participation. The agreement
can be for a certain length of time, a revenue cap, or both.
A one-year period from start of principal photography to
distribution and release is projected for our film.
The
budget, also known as the film's "negative cost" covers
only the expense that is needed to create the master print
of the film. All marketing costs are included "P&A"
(prints and advertising) often referred to as "releasing
costs" or "distribution expenses." These expenses also include
the costs of making copies of the print from the master,
advertising, video duplication, and other marketing costs.
As of now, we have no way of knowing the details of these
costs until a formal distribution agreement is entered into.
Distribution
fees (the distributor's share of the revenues as compared
to his expenses, which represent out-of-pocket costs) are
based on 34% of all distributor gross revenue, both domestic
and foreign; a generally accepted estimate by industry analysts.
Distribution deals are based on negotiation and vary greatly.
There is no "typical" deal. This estimate takes into account
that filmmakers with moderate experience have little leverage
with distributors; nevertheless, we will seek to negotiate
the most advantageous deal possible. We have strong relations
with the "majors".
Advances
from pre-sales to foreign territories, video, cable, and
fee and syndicated television will be accepted when it is
in every investor's best interest. Because of the timing
of the cash requirements needed to produce and distribute
the film, substantial amount of the initial capital will
be deposited in an interest-bearing account to be drawn
as needed. The finished film will take approximately one
year usually less from pre-production through post-production,
ending with the creating of a master print. The actual release
date depends on the finalization of distribution agreements,
which may occur either before or after the film has been
completed and is an unknown variable at this time. For purposes
of the clash flow, we have assumed distribution will start
within the fist quarter after completion of the film.
The
majority of the revenues will come back to the producers
within two years (at the most) after release of the film,
although smaller amount of ancillary revenues will take
longer to recoup sometimes with huge profits returns to
our investors; returns can be in the 150% to 600% range.
For
current and future investment opportunities:
Dan De Alba CEO - (949)
500 6736
ferraridanela@yahoo.com
In
Europe the annual T.V. demand of program hours has grown from
420,000 hours in 1996 to an expected 620,000 hours in 2000,
covering the period from 1986 to 2000 the growth rate in this
segment was a 260% leap. This present market condition of
an under-supply has worked very favorably for terms and conditions
for pre selling copyrights, which has become a valuable source
of funding for film productions.