Project funding deals are a big part of every film project, you can’t make a move on hopes and dreams. You need financing. When a deal is signed, the producer is paid a small amount, to cover the period until the film is either green-lighted, or put in turn-around.

From: Negotiations in the Entertainment Industry

By: Marjorie DeHey, JD/MBA

For over 15 years, Ms. DeHey has held high-level positions in marketing, business development and corporate strategy for a number of small and large companies, including MGM Studios, the Miss Universe organization, MEF (formerly the Mobile Entertainment Forum), MediaMojos, the Irish government, and LexisNexis.

Ms. DeHey has been named one of “The 25 Women to Watch” by Mobile Marketer Magazine (http://www.mobilemarketer.com/cms/lib…) and was recently inducted in the Academy of Television Arts & Sciences.

In the CLE class clip, Ms. DeHey discusses Financing A Film Project.

Phase 2 of the deal, if the project is green-lighted, the producer is paid the remainder of his compensation as scheduled. For example. 20% over pre-production, 60% over principal photography, or production. The final payment disbursements are usually 10% on deliver of the first cut of the picture and 10% on deliver of the film when it goes out to distribution.

When the film is put in turnaround, the production costs are declared a loss on the studio’s tax return. The studio cannot exploit the property any further, and rights can then be sold to another studio in exchange for the cost of development, plus interest.

Equity in the film, is considered hard cash investments made to your project by a single investor, a group of investors, and personal investments. Equity investments require that the investor own a stake in the film, specifically the LLC or operating structure, and must be paid back. This typically happens on their principal investment +20% before profit is seen on the side of the filmmakers.

For more on Financing A Film Project, by Ms. DeHey, check out the full CLE video clip by myLawCLE.com