the derivatives discussion continues

An editorial in today's NY Times (read it HERE) points out that ..."onions are the only commodity for which futures trading is banned."

The majors continue to oppose the market, but there's some pretty broad support out there....

film derivatives

Tipping the hat (again) to the folks at THREsq.com for flagging this piece in the L.A. Times yesterday about the two box office futures trading exchanges that are in the process of getting regulatory approval.  The article is really about the major studios' objections (through their trade/lobbying association, the MPAA) to the trading of box office futures in general.

The main thrust of the argument against regulatory authorization here is that it essentially creates a box office betting book: it's the credit default swap derivatives game, but with box office performance as the variable in question rather than defaults under convoluted contracts.  The public is cautious about unique financial products these days on account of their roll in the great recession....  So should these exchanges be allowed?

The basic economic purpose of the exchanges is (and this is overly simplisitic, but we're just blogging here) to allow film investors to hedge their film financing plays a bit.  If you have an investment in a film and you buy some derivative securities that will pay out if the film does poorly, the bite of your initial investment can sting a little less.  The idea really only works well (with the potential for big profits) on a large scale--which contemplates that the major market for these derivatives would be the major studios in the first place. 

There would definitely be room for indie financiers to get involved, and we'll find out how when and if the products/exchanges get approved--but for now, the MPAA is crying foul.

ultra indie film finance

Cinereach's grants may not be as ultralow as some of the other ultralow budgeting options, but their program is definitely well put-together, and is one of those beacons for film makers all over the world.  Their winter cycle, which was announced today, is a testament to the quality of material--and talent-- that they are able to attract. 

There are a lot of options for setting these programs up in cost-effective, easy to administer ways.  And maybe even self-sustaining ways too.

the financing spectrum

As we work with clients to help them secure financing for their productions, or with investors as they try to make strong decisions about where to put their money, it is helpful to step back once in a while and contemplate the spectrum of the production financing world.  When clients come in with a script- or even an idea for a script- it is difficult to know where to begin advising them about where to turn for capital to get their project made.  Being in a soft money state helps--Michigan's production tax incentive program still remains one of the best options for producers.  But incentive dollars can never be the first dollars in.  Raising private equity for a first-time filmmaker (or for any filmmaker, for that matter) is a daunting task in 2010--and it can be expensive.  Not that there's anything wrong with expensive private placement engagements, but they tend to be better for us than for our clients.

So I find myself encouraging filmmaker clients to get on board with the DIWO/crowdfunding movements that are popping up more and more every day.  Good work is getting done through sites like Kickstarter or IndieGoGo, and clients have been getting results by giving over their projects to their communities and supporting one another.  A big part of making the leap to microbudget filmmaking is reassessing goals.... Make something, get noticed, and the sky is the limit thereafter.

changes in talent pay

It would seem that high-dollar, A-list on-screen talent is having to adjust to the current film financing environment.  I think that this is bringing some folks back to their roots in independent film, since short up front dollars (i.e., at or below guild minimums) is the rule.  This may be a sign of a leveling playing field for indie producers that have great properties that top-notch talent wouldn't consider five years ago.  The NY Times has more to read more about it HERE.