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Part II: How to Chase the Movie Money

Part-II-How-to-Chase-the-movie-money-alexia-melocchi

The Wild West of Independent Financing is often the most exciting route to get your project off the ground. Yes, you will work long hours, and you will have to think constantly outside of the box and continuously adjust your course to get you to the finish line, but you will also learn the business of film making inside out. If you can handle making a movie from inception to distribution and all, jump all the hoops in between, you will know how good (or bad) of a producer you are.

Indie Financing is a puzzle game. One piece needs the other, and you need to pursue them all at once. Unless your daddy is Bill Gates, you need to ask for money and services and tax credits. So, you have to learn to be a successful beggar with the personality of a car salesman, the patience of a Buddhist monk, the mind of a mathematician, the tenacity of a Wall Street broker, the creativity of an ad exec, and the fashion style of a Fortune 500 CEO.

This is where you go chase your money…

 

Independent Distributor Financing

 

An Independent Distributor is a distributor, not regularly or substantially affiliated with a major studio. They specialize in foreign distribution, and most are members of the Independent Film and Television Alliance (IFTA). Although more and more of them have production divisions, they do not have The financial resources of a major studio. When submitting a project to Sales Agent/Indie distributor you have to have some equity financing in place (at least 20%) and go to them with a Budget, Business Plan and some attachments (actor, director). If they like your project, they will most likely try to propose it to their distribution clients for pre-sales or at least get commitments from various territories to release the future project. With those agreements in place, if the distribution clients are “bankable,” you can get a loan In the bank for a portion of those future earnings and advances. Sometimes they will gauge the interest of buyers from around the world to see if your film project is viable and they may be able to help you with a letter of credit for a certain amount of dollars against international rights. Most films you see in the major festivals like Sundance, Berlin, TIFF (Toronto) and Venice have been financed or partially funded in this manner.

This avenue of financing will allow you a proactive role in the film making process. You will have a say and opinion on casting, and you will be able to attend the film festivals and network to create a presence for yourself on your merit and talent. This active role is also a good path to becoming an Academy Award nominee if the film gets selected at major film festivals. You will receive more attention and have a better deal for yourself in future earnings though be prepared to cut your fees to be a “Team Player’.

Talent Agency Financing

 

Occasionally, you can obtain assistance in the funding through talent agencies. A talent agency will package your film with two or more of Their clients. If their clients are interested, they are motivated to do the work for you and to set up your project in a studio, and with equity investors, they often have access to. They will do this primarily to increase their packaging fee and the possibility of having the film being made, especially if the film could have strong festival appeal and secure nominations for their clients. For you to ensure the success of the film, it is important to have the right package. Because many actors who create revenue for those talent agencies have their project they’re passionate about, be prepared not to become a priority for them. They want to please their clients first and may drop you like a hot potato if they do not see any traction or interest on your film even when their clients are attached to it.

End-User Financing

 

End-User financing is when a Digital Studio, cable or television station will put up money in exchange for equity percentage participation in the film’s revenue stream for specific markets. This method is very similar to pre-sale financing. It is called a negative pick up. With pre-sale financing, the end-user does not put up any money until after the film is delivered. The actual production money will come from a lender (i.e. investor, bank, independent distributor) much like Independent Distributor financing. With the growth of digital studios like Amazon Studios and Netflix, the competition is fierce. You will be required to have a strong package, and you are going up against show runners of major television hit shows wanting to break into Film. An End User deal will allow you to keep some territories and revenues for yourself splitting the pie into a few slices and therefore mitigating your risk in case one of the revenue avenues goes on a loss or shady accounting.

Completion Funds

 

Completion funds are designed to provide partial production financing or post-production financing. These funds can be provided for films that Meet the following requirements:

a) have completed principal photography;

b) Are complete except for post-production, or

c) are complete through post-production, but can not be released from the lab due to unpaid lab fees.

If you are obtaining financing through a lender, they will require a completion bond which will ensure the project will be finished. These funds rarely put up all the money needed to produce a film. They are sharing the risk with other investors and are often the FIRST MONEY OUT as you need them the most if you want to be able to release your Film and pay back your investors.

 

Tax Credit and Co Production Financing

 

Around the world, there are deals to be made if you shoot in particular location and countries. Do your homework as to what percentage of those “tax credits” will be. Many think this is financing, but it truly is not in the real sense of the world. You get this money back (credit) months after you have done your film so really, is more of a guarantee to your investor will make some part of their investment back through the tax credit even if the movie tanks. There are some lenders that cash flow against tax credits but the paperwork is gigantic as are the costs of legal fees to get these papers executed and the loans processed. Sometimes you will need to have a local producer to process these tax credits. They will want to be co-producers in exchange, and this will be their investment, the time they put in. The fact that they are eligible for these tax credits as they live in the location and have to show tax returns, company records, etc. Of course, they will also be able to spear head the production in the foreign country or different US state, as they have access to vendors and can contribute to strong deal making skills and knowledge of the location you are shooting in.

Every week, the landscape for film and television financing changes. Once again, this is just general information on the process of chasing the movie money. I urge you to assemble a strong Team that knows not only how to make a movie, but also how to package it, develop it, market it and ultimately sells it. No matter how you get your funding, make your investors happy by delivering an excellent product, be it banks, sales agents, equity investors, co producers, buyers and the next time around will be easier. If you can make a film that gives even a small profit margin like 10%, you will be considered a good producer and creative talent with a future.

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What Drives Actors to Switch to Directing?

alexia melocchi

Audiences know Clint Eastwood for his role as Dirty Harry, but his directing career should be considered just as noteworthy. Actors and actresses like Sofia Coppola, George Clooney, and Ben Affleck have an undeniable presence on the silver screen, but they are also powerhouses behind the scenes in the director’s chair. While it may seem that these two skills may go hand in hand, it requires actors to draw from a different wheelhouse to successfully direct a film.

 

So why do all these actors turn to directing?

The quick answer for some actors: control. Although they may be captivating on screen, some want the ability to take their films in different directions that go beyond conventional. Crispin Glover, who played the loveable George McFly character in Back to the Future, explored different avenues of his creativity by moving to writing, music, and directing after establishing himself as an actor. His debut film in 2005 titled What is It?pushed the envelope by including racist tropes and went far beyond what is considered to be a mainstream film.

 

Other actors who have a significant following, may naturally make the shift to directing because they are such a success in the entertainment industry already. Stars like Mel Gibson and Ben Affleck had national fan bases and prestigious accolades before moving to filmmaking, having accrued years of experience working on sets of movies. The move to directing was natural and fans from around the world were eager to see what they were able to create, and they proved themselves to be incredibly talented both on and off the screen.

 

Moving to directing could also give an actor the boost he or she needs to jettison their acting career to the next level in the industry. Proving that they have talent in filmmaking can give them more notoriety and increase the number of future opportunities they have. Billy Bob Thornton had appeared in several films in the ‘80s and early ‘90s, but it wasn’t until he directed Sling Blade in 1996 that his acting career took off. Following his directorial debut and after receiving an Oscar for the best-adapted screenplay, Thornton began starring in blockbuster films, and he has ever since.

 

Some actors turn to directing because they prescribe to the adage, “if you want something done right, you need to do it yourself.” One such actor is Sofia Coppola, who made her debut as a baby in her father’s film The Godfather. Sofia prospered as an actor and even directed a short film, but it wasn’t until she heard that The Virgin Suicides was to be adapted to film that she took on directing a full-length movie. Since it was one of her favorite books, she couldn’t bear the thought this book not being translated to the big screen correctly. She has proven to be a powerhouse director in her projects since, having won awards at the Cannes Film Festival, Academy Awards, and Golden Globes.

 

While there’s no guarantee that a great actor will make a great director, and there are certainly cases of ones who fail, actors are already familiar with the process of being on set. They have had an opportunity to absorb knowledge from being a working actor and an advantage to those who have recently graduated from film school.

Part I: How to Chase the Movie Money

How-to-Chase-the-Movie-Money-Alexia-Melocchi

Everybody thinks that to be a producer, all you need is a good script or good story. However, no matter how great your material is or who you know, the Film and Television Industry is still rooted in the world of finance.

When approaching a financing source, in any of the below categories, you have to be prepared to show your “Buyer” a clear path that your project has some good chances to bring ROI (return on investment). More often than not, young producers try to chase the movie money by promising unrealistic distribution expectations and projections, dreams of Festival Awards, Oscars, Emmy and the chance to hobnob with the famous and walk the “Red Carpet” so they can show off to their friends. That’s all very fun but ultimately, making a movie is hard work and securing financing is a long uphill road. It is VITAL that you have a Team of knowledgeable professionals with you prior to approaching Investors that knows how to answer the right business related questions and can help you have the most financially accurate presentation of your project.  Show Business contains the word BUSINESS. The viability of whatever it is your selling is the key to the new producer’s success.
Over the years, film financing has become one the most complex and risky investments, so here are a few things you need to have ready for your journey.

The Business Plan

Once you choose a script to produce, you must immediately decide upon a distribution platform (i.e. theatrical, digital or cable). This decision impacts every element of your production from your budget to your casting decisions.  After you determine a distribution platform, it’s time to do some research.

Who will see my film?

An average of 50-100 films that are similar to your own that have been released within the past 5 years. How may of them actually made money? And in what time frame? You will see that you will probably end up with a handful of films only.  Determine the distributor for each film, their success or failure with films similar to yours and their requirements for distributing films.  This research is imperative.  Who is your audience? What is the demographic you are trying to reach? Showing a potential investor a clear, detailed business plan along with enthusiasm, you will make them feel More comfortable in investing in your project.

The Myth of the Studio Deal

The most obvious choice for film funding is industry financing. Wrong. If you do not have previous credits as a producer or have a movie with an A-list actor or director, or in your hands a best seller book that everyone has talked about, you are most likely going to waste your time trying to get into a Studio. Find a champion producer, someone who has the track record with Studio films, and you will be able to at least get in the door. However, you also have to be willing to wait for years for your movie to get green lit. You are better of getting a US Distribution commitment as a vital piece to your financing puzzle first. Then you can look for independent distributor financing, talent agency financing, end-user financing, and completion funds.

Studio Development Production Deals

Should you hit the jackpot with your project and actually get a Studio deal, you are in no way an overnight success. An in-house studio production will usually start as a development deal. As a filmmaker, you will first have to pitch the concept to multiple creative executives, do a sleuth of rewrites based on the notes of the Studio executives, often losing creative control to your material and being considered the last voice in the room. If the Studio decides to finance the development, production, and the distribution of your project, then the studio will ultimately own most of the rights associated with your film.
When a studio gets involved in your project, you can expect a challenging and ego filled road ahead of you. The first phase will be a “Development Deal Memo,” which is a
short form written contract between you and the Studio. The agreement will mention salary, time schedules, screen credit, and percentage points. Most likely there will be bigger and more experienced producers on the project so your salary will be a fraction of what the other producers make. Most studios will give points of the net profit to unknown talent. Which means ZERO In your bank account. Typically, net profit deals do not pay-off. Most Studio films have the same budget of P&A (print and advertising) as the production budget so it will be a long time coming before net revenue kicks in. Studios not only recoup their 30 percent distribution fee, but also recoups the extra money spent on the advertising, and their bookkeeping most of the time show a deficit to eliminate virtually any chance of the Studio having to pay net profit participants their due.

The “Step Deal.”

A Step Deal is when the people working on the development of your project are paid incrementally as the project develops. In addition, the development work is reviewed and evaluated at each stage. This may sound great as you can tell all your friend you have a Studio as your Partner, but the real deal is that the studio has the right to stop development of your project at any given point and then you have to start from scratch all over again and perhaps wasted a couple of years in the process making your project the “unwanted child”. And when your project is in “turnaround”, you will owe the Studio all the money they spent in the development of your now “unwanted child”.
And now, it’s time to add some hustle to your hassle, roll up your sleeves and learn about the “puzzle piece” way of chasing the money..which I will cover in my next blog. Your Business Plan will be your best friend for the “puzzle piece” way….

Making Your Ideas Shine as a Screenwriter

Making your ideas shine - alexia melocchi

So you wanna be a screenwriter?

 

If you have woken up one morning with the inspiration to write for film and television, and have decided to forego film school, you are in for an adventure and you must be fully committed to a journey of learning, practice, and falling down more times than you get up.

 

There is this myth that if you have a good idea, and nine times out of ten accompanied by the belief if it originality that Hollywood will come knocking at your door and hand you a big check you can retire with. Unfortunately, I must ground you to the reality of selling your idea to Hollywood. Much like a desire to be a doctor, or lawyer or free lancer, you must sell your experience first. Your talent and personality come after you have proven yourself to know how to write and have gotten the accolades for your writing and have built your client base.

 

As a screenwriter, you have to compete with the ideas of many talented writers and thousands of screenplays already from established professionals and pitching yours to a producer or studio can be intimidating. Even the most confident writers can trip up on their pitch and ultimately ruin their chances of seeing their idea on the silver screen.  Assuming you have studied the craft (taken classes, read multiple successfully produced screenplays, gotten coverage, and feedback from the top script doctors in Hollywood etc) and have a professional screenplay in standard format ready to take out, so that you make the best impression possible, it’s important to follow these steps when pitching your next screenplay.

Come up with a fantastic intro

The first two minutes of the pitch should be exciting and grab the Producer’s  attention right off the bat. The intro should be the strongest part of your entire speech, so don’t bog down the listener with a detailed synopsis of the story in its entirety. Think simplicity and just include the main points and let your ideas shine.

Prepare

Just because you know the story well and just because you created it, doesn’t mean you’re necessarily ready to speak to someone about it who will be deciding whether or not it’s a sound investment. You may have a killer screenplay, but if you aren’t ready to sell it, you’re going to fall flat with the buyer. Preparing means working on the delivery of your pitch and being ready for a myriad of questions that are sure to follow. Do let us know immediately the name of the screenplay, the genre, your experience as a writer or story behind your writer’s journey, and why do you feel there is an audience for it.

Practice

Once you feel like you’ve prepared adequately for the actual delivery of the speech, it’s time to practice it to anyone who will listen.  Remember the most you will get “in the room” or over a conference or skype call with an executive is ten to fifteen minutes.  Make the time you are given count. It’s best to practice with people who you aren’t completely comfortable with, such as acquaintances or co-workers. Invite a few people over for dinner and test out your pitch with your visitors.  They are the people who are buying the tickets to the movies and download the films online. Ask them to be brutally honest. If they seem bored and uninspired by your pitch, it’s time to rework the delivery.

Be Clear when answering questions

After you’ve pitched your idea, be ready for any questions the buyer has for you. Listen carefully to each question and be able to respond with crisp, concise answers that are a minute or less, if possible. Try not to stray off topic with your answers. Ask also for any advice or feedback, it will make the producer or Studio executive feel appreciated for the time he or she has given you.

Don’t give up

If your idea is shot down by the buyer, it could be that your pitch just needs some more work, or the buyer isn’t interested in that sort of project at the time of the pitch. If your idea is dismissed, ask for clarification as to why and so that you can improve it moving forward. Also, its time may not have come yet so it is wise to have at least a couple of other completed screenplays ready to go. Always remember that Studios rejected some of the most beloved movies, even with well-known actors or directors on the board, so adjust your pitch and try again!