Sample Book Chapters

Chapter 12 - Prints-&-Ads Funds

   The independent-film sector buzzes about the availability of prints and advertising (P&A) funds, which are investment vehicles focused narrowly on covering marketing costs for theatrical releases. P refers to the prints, the bulky reels used by theaters to project films cost about $1,000 per movie to manufacture. A is the advertising expense for newspaper, television, and other media to support theatrical release.
   Ad expenses can range from a hundred thousand to millions of dollars for a true theatrical release. There is a relationship between box office performance an ability to finance wide theatrical release (see Table 12.1 below).
   In reality, such financing vehicles are frequently talked about but are hard to find in Hollywood. But a few have materialized. In the most substantial P&A transaction in recent years, MGM received $175 million in P&A financing in a deal administered by J. P. Morgan in late 2006. Regent Releasing concluded a P&A deal in 2007 from a multimilliondollar fund via investment house Merrill Lynch.
   The major studios find traditional P&A funds too expensive given the studios’ ability to raise capital at low rates and the studios’ unwillingness to give outsiders a cut of downstream video and TV revenue. However, hardscrabble indies, which have few other financing options, will consider daunting financial terms.
   “There are probably five hundred movies a year that get made with average budgets of $500,000 to $1 million,” notes Dave Davis, managing partner of Los Angeles–based media-finance outfit Arpeggio Partners LLC. “They pretty much don’t get a theatrical release and don’t make money. They’re all self financed. Collectively, they’re losing maybe $200 million a year. Of course, that doesn’t mean you don’t strike oil with one of them occasionally.”
   Chapter extracts in this section of the website amount to 4,000 words distilled from 110,000 words in the print book.
   Text copyright © 2009, Robert Marich. All rights reserved. Used here with permission from SIU Press.
Relationship of High Box Office to Wide Theater Release 1998–2002
Box Office ($ mil.)
$100+            68
$75-99.9        27
$50-74.9        66
$30-49.9        79
$25-29.9        15
$20-24.9        16
$10-19.9        48
under $10      7
Note: Figures cover July 1998-March 2002 of all films reaching at least 2,000 screens at some point in their theatrical release
Source: Nielsen EDI, IMDB