Procuring financing for films is difficult, and has become even more challenging given the current economic climate. The process becomes increasingly difficult when the project is independent and has no studio backing. Sources for independent film financing include equity investors, individual investors, and pre-selling theatrical and non-theatrical distribution rights in exchange for financing. The distribution rights approach can benefit the filmmaker because various rights are sold separately, each with its own financing guarantee; this means there is no sharing of profits and losses across all of the rights. However, films are becoming more expensive to make, non-theatrical rights are diminishing, and bank financing is becoming less accessible.
The most crucial element of an independent film's financing is being assured domestic theatrical distribution from an American distributor who will finance the cost of the film's prints and advertising before the film even enters production. This kind of negative pick-up benefits the film because it guarantees crucial financing, and it benefits the distributor by filling a gap in its distribution calendar. Because the costs of independent films tend to be significantly lower than major studio releases, these types of arrangements are more widely available for independent productions.
A common tool for independent projects is pre-selling foreign theatrical rights to a foreign distributor. The producer can sell distribution rights for each individual country, which allows the producer to acquire various funding sources and guaranteed distribution worldwide from reputable distributors. However, the growth of the international market, while increasing the number of foreign distributors who are willing to provide financing in advance to acquire theatrical rights, has resulted in studios that will only finance and distribute independent films if they can acquire worldwide rights.
While home video, pay, and broadcast television rights were formerly viable sources of pre-sell financing, they are no longer widely available sources of funding. Similarly, American banks are generally unwilling to lend financing to risky independent film projects. Foreign pre-sales generally result in about 60 percent of financing, and acquiring the remaining 40 percent can be difficult. Depending on the production structure of the film, various European subsidies may be available.
Hamrick & Evans, LLP has an Entertainment and Intellectual Property practice group located in the heart of the Los Angeles film industry. This team works tirelessly for the firm's entertainment clients to secure financing in any way possible. The firm has relationships with corporations worldwide and assists independent film productions in obtaining financing and distribution pre-sales that will allow a project to proceed. Additionally, this practice group's attorneys can assist your project with guild agreements, securing talent, equipment and transportation agreements, music licensing, and coordination of these various agreements.
Producing an independent film is a difficult but rewarding process. In order to make sure the project proceeds smoothly and has necessary funding, an independent producer needs an experienced team of attorneys working together to procure financing and negotiate the necessary agreements. The Entertainment and Intellectual Property practice group at Hamrick & Evans, LLP has the requisite experience and relationships to help your project realize its potential. Contact us today to discuss your independent project.
