Film Investment

When done correctly, a motion picture investment is less risky for investors than a dotcom, bio-tech, or high-tech investment. More money has been lost by investors investing in dotcom, bio-tech, and high-tech investments than has ever been lost by investing in domestic motion pictures.

The three keys in reducing the risk of a film investment to less than twenty percent is to first invest in development funding of motion pictures and not invest in their production funding. Second, to make sure the film has a major US distributor before the movie is made. Third, motion pictures have multiple streams of revenue for each film which lowers the risk and increases the profits to investors unlike other investments that do not have those additional revenue streams.

A motion picture development fund is very much like a real estate feasibility study conducted by a real estate developer to determine the merits of proceeding with a proposed real estate venture. If the venture pencils out the developer will then proceed with the project. If it does not pencil out, then the real estate developer will drop development of that project and move on to develop some other real estate project that does show potential profits.

We do exactly the same thing with a film development company. We develop several film projects of which only the best three are put into production and distribution. If a prospective film investor understands a real estate investment then they most certainly will understand how a film development company operates.

TARGET: TO PRODUCE THREE MOTION PICTURES RELEASED BY MAJOR HOLLYWOOD STUDIOS THAT MAXIMIZE RETURN ON INVESTMENT


To form a writer centric film development company comprised
of top writers from Seattle and Los Angeles.

To produce three audience driven films budgeted at $20 million
to $40 million dollars distributed globally.

To finance these films through Los Angeles entertainment bank
loans fully guaranteed by foreign presales.

To maximize film profits and build audience awareness by hiring
name directors, actors, and actresses.

To recoup 120% of the investors investment within two years
before the films are all made or distributed.

To thereafter split profits from all revenue streams 50/50
with investors and exit the investment in 3 to 5 years.

PROBLEM:

The eight major Hollywood film studios are: 20th Century Fox, Universal, Disney, Paramount, Sony (Columbia), Warner Bros.(New Line Cinema), MGM/UA, and Dreamworks SKG. They all have an insatiable appetite for acquiring and distributing motion pictures. Their films are very costly to produce, (eighty million to two hundred fifty million dollars), and market (twenty-five million to seventy five million dollars). They can no longer develop in-house enough quality movies with mid-range budgets to feed their “distribution pipeline” for theaters, cable, and video/dvd. They now look more to outside independent companies to supplement the development and production of their movies. Currently, twenty percent of Universal studio’s releases are developed in-house while the remaining eighty percent are picked up from independent production companies.

SOLUTION:

Seattle Film Group LLC will help ease the studios pain by jointly creating with local investors Seattle Film Development One LLC to develop audience driven motion pictures utilizing High Definition 24P Digital Cinema at considerable cost savings over traditional studio film budgets. The company’s business is to supply quality films to the major studios and engage in co-ventures with the most successful independent production companies.

Fundamental to this plan is creating a writer centric development company comprised of top writers who possess great talent and excellent execution skills. These in-house writers will be involved in each project developed. This is not common in the film industry, but it is the established basis for the television industry. By devising an environment in which creativity can flourish within well-managed operational constraints Seattle Film Group LLC can successfully deliver higher quality films to the major studios.

The riskiest way to invest in feature films is to first fund the production of an individual movie, then submit the finished film to a major distributor and hope they like it enough to release the movie. The risks are unacceptable with that all too often used method. The safest way, which reduces investors’ risk to less than 20% (twenty percent) and is used by the most successful major independent film companies, is to invest in a film development company creating multiple pictures financed by Los Angeles entertainment banks. A completion bond company insures these bank loans. The production loans are also fully collateralized by foreign distributor presale guarantees and licensing rights with a major domestic cable company (HBO/Cinemax, Showtime, and Starz/Encore). The development company works closely with the eight major U.S. studios and the top seven foreign territory distributors (United Kingdom, France, Spain, Germany, Italy, Australia, and Japan) in developing these movies. This creates a business collaboration that assures each picture's maturing in the major global markets over several months preceding its production, and just as important almost guarantees each film the major distribution that is so essential for profitability.

FINANCIALS:

Seattle Film Group LLC and the up to five active accredited investors will equally own (50/50) Seattle Film Development One LLC. The same executives and personnel at Seattle Film Group LLC will operate both companies.

The investment in this writer centric development company, Seattle Film Development One LLC, is $9,000,000 divided into twenty units of $450,000 for three films. The minimum purchase per investor is four units, or, $1,800,000. This funding will last approximately five years. The up to five active accredited investors receive:

50% (fifty percent) ownership of the development company – Seattle Film Development One LLC

100% (one hundred percent) of the gross cash receipts received by Seattle Film Development One LLC paid to the investors until they have recouped 120% of their original investment, $10,800,000, from the licensing of the three motion pictures worldwide. This milestone is typically reached by the second year from full subscription of the investment.

Thereafter, investors will participate 50/50 in all gross cash receipts returned to the company from each of the three motion pictures released in all media both domestic and foreign. These multiple revenue streams include: theaters, video-on-demand, video-DVD, pay-per-view, pay cable, satellite, TV network, syndication, video/computer games, music, publishing, and merchandising, etc.,

LEVERAGE:

The $9,000,000 raised will fund development of several potential projects of which the best three are “greenlighted” and financed by Los Angeles entertainment banks for $20 million to $40 million each. This leveraged amount totals between $60 million to $120 million in actual production value. These loans are fully guaranteed by foreign distributor pre-sale and domestic pay cable contracts

EXIT STRATEGY:

Other investments, such as biotech, high-tech, and dotcoms, frequently rely on an exit strategy of Initial Public Offering, or Merger & Acquisition, to generate a return on investment. Often this can take five to seven or more years to execute. Unlike them, Seattle Film Group’s plan is NO IPO, or M & A, but instead to create positive cash flow incoming to the active accredited investors during the course of globally releasing three motion pictures over three years or less. Profits earned will continue to flow to investors for several more years from successful films. Upon completion of these three films the investors are done. Seattle Film Group LLC will then initiate Seattle Film Development Two LLC and interested active accredited investors from the first development company may return and reinvest in the second development company. Subsequent development companies will create from three to seven films each.

The key financial objective is market performance in all media. The company’s goal is to return a minimum of five times the investment to these active accredited investors. The lifespan for this development company’s active activity is projected to be three to five years.

STATUS: Seattle Film Group LLC has the majority of the management and development team in position ready to begin operations pending funding of the development company. Other team members and staff as outlined in the business plan will be brought aboard once full operations commence.

ACTION: For the reader to elect whether or not this venture is one he/she wishes to study in more detail. To do so please contact George J. Ladas - President, Seattle Film Group LLC at 206-282-1057, cell 206-369-0749, or e-mail GeorgeL@seattlefilmgroup.com to request a password for client login to download a PDF file of the business plan.



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