Preparing a Film Package. 
Prepared by HollywoodFunding.com

PRELIMINARY STEPS

The purpose of this guide is to assist producers to successfully develop and present a winning film finance package.
Putting the film package on paper is a valuable tool that will assist the producer to achieve his or her goals.

Independent producers must develop skills to convince potential equity participants, co-producers, distributors, financial institutions, completion bond companies, and others to believe that the proposed film project has merit. Producing motion pictures has never been easy and the competition for available film financing has increased in recent years because of increasing number of independent producers and changes in the marketplace.

Of course, the merit of the film project itself will be an important factor in determining which producers obtain financing. However, the film finance package that demonstrates that the producer is highly organized and capable of producing a successful film may facilitate and enhance the producer’s ability to obtain financing and may save the producer time and avoid unnecessary expense.

Financiers, such as equity investors, lenders, distributors, syndicators, co-producers, and others like you, need film product from independent producers in order to stay in business. They are not doing the producer a favor by financing a film. They make money by investing in film production.

However, film financiers advance funds, which they must safeguard and on which they must return a profit. The two conditions which any financier demands are that: a. the advanced funds are timely repaid; and b. the financier makes money (interest and/or profit) on the transaction. Financiers are in the financial marketplace just as are producers. Financiers are constantly seeking new film projects that meet their criteria.

Producers must convince financiers that the film project satisfies both criteria: a. the producer must establish that the production entity is sufficiently experienced, well organized, and capable of completing the film; and b. that the film project is sufficiently commercial so that projected revenues will return both the principal amount invested plus a return of interest and/or profit. By demonstrating knowledge of film production, including budgeting and an understanding of the producer’s obligations that remains, the producer will enhance his or her chances of obtainment financing.

There are many reasons why film finance packages fail. However, there are three major reasons: a. lack of equity; b. perceived lack of competence; and c. poor oral presentation.

Film finance packages frequently fail because of lack of equity. Equity is the amount that an investor has or will invest in the film. Financiers often feel that a single financier should not be the sole source of financing for the project, and oftentimes will not want to put up more than 50% of the capital needed for the film.

Second, a major reason why film finance packages fail is that potential financiers believe that the producer does not exhibit competence to produce the film. Even if the producer feels that he or she possesses such competence, the producer must impress the financier that the producer has it. Simply stating that the producer is competent is insufficient.

One path to demonstrating competence is to complete a detailed written film package. Each completed part of the film package forms a building block for the producer’s oral and written presentation to the financier. Moreover, by thoroughly understanding the film finance package prior to approaching the financier, the producer can convey the image of self-assurance so necessary for success. The producer must have confidence in himself or herself before that feeling can be conveyed to the financier.

Third, a major reason for the failure to raise necessary funds to finance film production is the oral presentation. The producer will be judged by not merely the written film finance package, but by the impression gained by the financier during the meetings between the financier and the producer. A favorable impression will motivate the financier to support the producer’s request for film financing when it is reviewed by all of the persons necessary to consider it before funding is committed.

Obtaining funds to finance a film project can be a time consuming and discouraging task. The producer can save time and avoid difficulties by following a few simple rules regarding which financiers to approach, and how and when to do so.

How can the producer determine which financier is the best to approach? Financiers vary greatly. The producer needs to screen out those financiers who are not going to help from those who will. Not all financiers want to be the producer’s partner, nor should the producer want just anyone.

To create a list of potential financiers, start with entertainment industry directories and look for large productions companies, small distributors, large distributors, pay television services, foreign sales agents, producer’s representatives, lawyers and others who might have access to potential film funds.

Before telephoning them, producers should plan the phone presentation. The producer should inform the potential contact about the film project and why the producer is interested in contacting them. The producer should ask the name of the proper person to speak with, whether the contact is assisting in financing film production, how long it might take to go through the process of presenting the film package, the financier’s expected returns and other factors (for example if a loan is sought) current interest rates and the need for compensating balances, if any.

Do not drop-in on a potential financier without an appointment. A casual, informal visit may actually significantly decrease the producer’s chances for obtaining film financing because the producer may leave an unfavorable impression with the potential financier. The financier is a business person and so is the producer. The business-like approach is to call for an appointment at a time convenient to both financier and the producer.

The producer must have sufficient time to make the oral presentation. Be sure to ask for at least 30 minutes, because the financier will probably ask questions and additional time should be allotted to provide detailed answers. It is better to postpone the presentation than to be pressured into giving an abbreviated presentation which might leave a poor impression.

Finally, before making the actual presentation, obtain assurances from the financier that the information which is presented will be kept in confidence.

The first meeting with the financier can leave a lasting impression. Hence, the producer should be sensitive to all factors which affect that impression.

Dress appropriately. Some financiers may feel that the way a producer dresses indicates how much the producer cares. The producer should wear clothes with which the financier can identify in order to enhance the first impression. Since the financier’s participation in the project is essential, the producer should act as if the meeting with the financier is special occasion.

Exude confidence. Many financiers believe that the most important factor is deciding whether to support a film project is the competence of the producer. How well does the producer know the entertainment business? How sure is the producer that the investment/loan can be returned/repaid on time and that a profit can be realized or interest paid? Why does the producer feel that way? Does the producer show confidence in his or her ability to master the many demands placed on the producer to produce the film?

Volunteer negative information. If the producer has something in his or her background that might hurt the chances of obtaining financing, it should be brought up anyway. If the financier discovers the negative information on his own, chances of obtaining financing will be significantly reduced.

Make the presentation personally. The person who makes the presentation to the financier should have helped to develop the film finance package and should e able to respond to the financier’s questions. That person should be the producer. Someone else should not be relied upon to carry the ball. However, someone else can be designated to supply requested information needed by the financier to analyze the film finance package. That person should be available to answer questions only after the initial presentation by the producer.

Anticipate questions. Finally, the most important preparation step is to anticipate questions which will be asked and to write out the answers in advance. The producer should also take time to write out questions to be posed to the financier.

A producer will impress the financier if he or she demonstrates that the producer is a professional in producing film. Hence, the producer should provide a comprehensive view of his or her background and the proposed project without requiring the financier to collect additional information.

It is not necessary to repeat the entire contents of the written film finance package at the oral presentation. Instead, the producer should convey that the producer: a. is thoroughly acquainted with the film finance package and can speak about any of the matters contained therein; b. knows the entertainment business well; c. respects the financier’s ability to understand the project; and d. can and will/repay the investment/loan over time.

Although every meeting with a financier is different, the following checklist help insure that the principal steps are taken.

1. Introduction and exchange of business cards.
2. Review of past conversations in order to put the meeting in context.
3. Brief description of the producer, the project and the profit potential.
4. Brief discussion of the proposed above-the-line and below-the-line costs, and potential sources of revenues.
5. The financier should be invited to pose questions, whereupon the producer should hand the financier the written film finance package.
6. The financier should be permitted to review the film finance package without interruption. After the financier has completed the review, the financier should be invited again to pose questions.
7. The financier should be asked when the first follow-up phone call should be made.
8. Express pleasure at having met the financier, shake hands and leave. The producer should not overstay his or her welcome.

Please note that the film finance package is not shown to the financier until step number 5! If the written package is given to the financier before then, the financier will not listen to a single word of the producer’s oral presentation. Instead, the financier will naturally pick up the film finance package and start leafing through the sections. Hence, keep the film finance package out of sight until the presentation is complete and until after the financier is invited to ask questions.

II. THE FILM FINANCE PACKAGE

1. Cover Sheet

The first page of the film finance package is the white “cover sheet,” which contains basic information about the film project to permit the financier to see at a glance: a. the name, address and phone number of the person to be contacted to obtain additional information; b. the date of request; c. the amount of the budget; and d. a brief confidentiality statement.

2. Summary

In this section, the producer should describe the film and specify the budget requested, state how the loan/investment will be repaid, and identify collateral, if any. All of the foregoing should be set forth in no more than two pages.

Since this is the part of the film finance package that will be read first, the producer might include some of the artwork for the proposed film or a photograph of a key location or planned location, pictures of cast members in wardrobe, or any other information which can be reviewed easily. This is the place to start creating a positive image for the producer and the film project.

Although the Summary appears at the beginning of the film finance package, the producer should complete all other sections of the package first, and then return to the Summary to answer the following questions:

1. Description of Project

To what audience is the film addressed? How long has the project been in existence? How long has the producer or the production team been working on the project? Why does the producer think that the film is a good project? Describe the potential returns from marketing the film worldwide.

2. Amount of Budget Requested from Financier

Explain why the production funds are needed. Describe how the proceeds will be used. State the total amount the producer wants and for how long.

3. How Does the Producer Propose to Repay the Loan/Return Investment?

If a loan will be repaid in a lump sum, in installments (state how many), and when will they be made. Where will the funds come from to make the payments on the loan? If a return on investment, state when payments can be expected based upon gross receipts.

4. Collateral

If a loan, what will the producer put up as collateral? What is the value of the collateral? How is that value determined?

DESCRIPTION OF PRODUCTION ENTITY

All feature film projects are produced within the context of the entertainment industry. The general health of the industry is important in evaluating the prospects for a specific feature film project. Therefore, the financier should be informed of the current and future prospects of the entertainment industry and how revenue sources are developing. This section will also help the financier to verify the producer’s understanding of current trends.

1. Market for the Proposed Project

The producer may feel that since the film project is unique that it cannot be specifically identified. This is untrue. In order to sell the film to distributors and exhibitors, the producer must identify a primary market which will be served and a particular type of filmgoer to be catered to.

Since the film has or will have competition, describe the segment of the market which may be identified as the film’s share of the market. If the film will have particular appeal in certain territories as opposed to others, specify them. Identify the competition and why filmgoers will come to view the film rather than the competition. Describe intended marketing strategies such as media campaigns and potential advertising. Such a description might include artwork for both print and television advertisements.

Does the project have any other competitive edge in the entertainment industry? Are costs lower for some reason, such as low overhead, non-union labor, foreign locations, foreign co-financing, etc? Describe costs for the project and compare them with others in the industry.

2. Present Production Activities

Assume that the person reading this part of the film finance package has no knowledge of what is being produced in the entertainment industry or what the production entity is presently producing. Describe it as if to a total stranger, but be factual and clear. All items listed below need not be addressed, but be certain that the reader can develop a good mental image of current production activities:

1. Describe the current or planned legal form of the production entity – partnership (general or limited), corporation or other.
2. Describe the producer’s current productions.
3. Describe the potential audience, including age group, sex, education and income level. 
4. Identify the locations where the production entity has produced films?
5. Identify the members of the production team, including writers, directors, and above-the-line and below-the-line members of the cast and crew.
6. Describe the major problems to be faced by the production entity.

Keep the description to two to three pages unless the complexity of the production activities requires more space. Do not overkill.

3. Future Production Plans

If the production entity is an ongoing business, state its long and short-term goals. Goals can be expressed in terms of total sales and/or revenue, total number of films sold or produced, number of employees, profitability, market share, size and location of offices, and position in the business.

Long-term goals are an expression of the short-term decision the producer needs to make in order to meet those goals. Hence, goals help the financier to better evaluate the wisdom of investing/lending with this producer. 

Other types of goals which might be described include: a. locating certain types of creative personnel; b. literacy property development goals; and c. production objectives. The financier will be impressed that the producer has objectives and that this project is part of an overall strategy.

4. Production Activities and Suppliers.

If the actual or potential production activities in which the producer has already engaged have not been adequately described in the preceding sections, do it here. Identify any buyers of filmed entertainment who have purchased past productions, including distributors, television networks, videocassette distributors, etc. Indicate what factors where of particular interest to those buyers regarding past productions which were acquired by them. 

If the producer is seeking to raise additional production monies after having already secured a commitment from a distributor or another financier, explain exactly what has been agreed upon as well as what is needed. Provide written proof, if any, of any agreements which will be exercised if the additional financing is raised. 

Since suppliers can be of many types, sizes and importance, list suppliers by name and category which the producer feels are important for the success of the production. If the identity of the suppliers is sensitive information which the producer does not wish to disclose, attempt to describe the suppliers in general terms. Next, describe the items or services which they provide which are important to the film and evaluate the business relationship between the production team and the supplier. 

Specify suppliers can be useful to establish credibility in the industry since some suppliers are well recognized and known, and  the producer’s relationship with the suppliers may facilitate establishing his credit worthiness and position. 

PRODUCTION TEAM 

1.      Key People  

Key people are the individuals in the project who would be difficult to replace or would have a negative effect on the success of the project of they were no longer involved with it. Key people are important to the financier because their presence or absence may affect the producer’s ability to return the financier’s investment, or repay any loans. Those identified for inclusion should be the director, any chief cast members, writers, cinematographers, or any other co-producers. 

The overview should provide the following information for each person: a. name; b. a brief statement of experience or credits; and c. ownership or financial involvement in the production. 

More detailed information should be resented in the resume for each key person, but this overview allows the producer to enhance the presentation by repetition. This is an opportunity for the producer to demonstrate that qualified people are involved in the production. 

Unless there are an unusually large number of people involved in the production, this section should consist of no more than one page. In addition, individual resumes of approximately one page in length should be prepared for each of the key people described in this Section.

2.      Personal Financial Statements 

Depending upon the relationship with the financier and the history of the producer’s prior activities, personal financial statements may be irrelevant. However, if the production plan calls for a personal guarantee of any loan, and it often does, personal financial statements may be required both in connection with any presentation to a financier. A balance sheet and income statement should be completed by each person who is required to guarantee any loan.

3.      Personal Insurance 

Some financier or lenders will require life insurance to be obtained on key people for the amount of the investment/loan. For each key person listed previously for which such life insurance is required, state the following: a. name; b. amount of whole life insurance and beneficiary; c. amount of any term life insurance and beneficiary; and d. amount of liability insurance with the production entity listed as beneficiary. 

 FINANCIAL 

1.      Financial Status and History 

Start by giving the potential financier a snapshot of the production entity’s current financial position. By submitting a balance sheet, the producer answers the question, “Where are we now.” It may be unnecessary to provide an income statement. 

However, it is essential to prepare a production budget which addresses several crucial questions: How much money do is needed? When is the money needed? Why is the money needed? How will the financier be repaid? Careful presentation of the budget is absolutely necessary to increase the producer’s chances for success.

2.      Justification for the Investment/Loan

This is the part of the proposal where the best arguments for the investment/loan should be presented. The financier has already received information about the project, its past, present and future operations. The producer has already stated how much cash is needed, and/or has explained why additional funds are needed and how the money is to be repaid to the financier. 

If the producer has done a conscientious job of completing the preceding parts of the film finance package, the financier will have a favorable opinion of the producer and the project already. Hence, the section regarding the justification for the investment/loan is the producer’s opportunity to “close the sale” with accurate and logically presented financial facts. 

Note that the justification for the investment/loan should not be prepared until after the balance sheet and the cash budget is completed. This section should be brief, but complete. Provide answers to the following: 

1.      Exactly how much money is needed. 

2.      Explain how the money will be used, when it will be used, and when additional monies will be required pursuant to the budget. 

3.      Describe where funds will come from as well as the length of time needed to return the investment or repay the loan. Referring to the available cash flow will allow the producer to state when the production entity will have funds and how much of said funds can be used for returning the investment or repaying the loan. It is vital that the producer clarify the intent and ability to return the investment and/or repay the loan. 

4.      Describe the collateral for the investment/loan. Explain how the value of the collateral was arrived at. Provide copies of appraisal statements or letters. Include copies of evidence of ownership and value of whatever collateral is proposed to be used. 

Financial Statements 

Financial statements include a current balance sheet and an income statement. These statements help explain to a financier/lender what the production entity’s present financial situation is like. If financial statements have not yet been prepared, they should be. If financial statements are not included, an unfavorable impression may be created. 

SUPPORTING DOCUMENTS 

In this section, the producer should attach documents which will be of interest to the investor/lender such as: a. organization papers for the production entity; b. letters of intent and/or agreements with key member of the cast and crew; c. option agreements; d. literary property acquisition agreements; e. distribution agreements; f. letters of credit, and/or letters of intent from other financiers and/or distributors; g. insurance policies; and/or h. any other documents evidencing important legal commitments and rights.

This is only an example and was prepared by HollywoodFunding.com

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