Adam Torres, Sandy Climan, Jeff Bowler, and Michael Becker discuss investing in entertainment.
Listen to the Mission Matters Future of Investing in Entertainment – West Hollywood, California, event coverage. In this episode, Adam Torres, Sandy Climan, CEO of Entertainment Media Ventures, Jeff Bowler, Emmy Award-winning Film and Television Producer, Michael Becker, Founder & CEO at Imprint Entertainment, LLC, explore the future of investing in entertainment.
About Sandy Climan
Sanford R. (Sandy) Climan is President of Entertainment Media Ventures, Inc. Founded in 1999 by Mr. Climan, EMV is active in media investment and strategic advisory work, with a particular focus on disruptive technologies and entities currently impacting the traditional boundaries of business, media, and entertainment. He is an investor, producer, and considered a media visionary.
About Jeff Bowler
Jeff Bowler has been working in media executive roles in the entertainment industry for nearly two decades. Bowler operated business development and strategy for World Wrestling Entertainment (WWE) via its New Media Division in previous roles. He was the main contributor to FOX TV Studios’ development and production slate with 25+ TV shows and produced numerous feature films such as THE GRAND and ACROSS THE HALL. Bowler began his career as a business development executive with Bandai, the world’s third-largest toy company, in his early 20s. Following his term with WWE, Jeff moved to Universal Studios, where he became an independent film and TV producer. Most recently, Jeff was the VP of Productions & Acquisitions at The Exchange, an international sales company. During his tenure there, he played an integral role in developing the Steve McQueen biopic and acquiring the Three Stooges franchise scheduled to reboot in 2021.
About Michael Becker
Michael Becker has over 20 years of experience in the entertainment industry. Recognized for his exceptional creativity, talent, and unwavering passion, Michael has consistently delivered distinguished content across all media platforms.
Specializing in development, packaging, financing, and production, Michael’s comprehensive knowledge and expertise extend to all facets of the entertainment industry.
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Full Unedited Transcript
It’s a great night. All right, let’s get through some of these bios. So some of the people in here already know who’s on this panel, some don’t. So, and for the audience at home, we definitely want you to check this out. So we’ll start with Sandy because he, he wanted to go first anyway. So Sandy is a, Sandy Kliman is a producer, investor, and media visionary and CEO of entertainment media ventures.
His productions include U2 3D, the first digital live action 3D film, and the Aviator starting Leonardo DiCaprio and directed by Martin Scorsese. For which he was awarded a Golden Globe and a British Academy Award. By the way, I did not put Malibu Bikini Shop in three 15. The moment of truth on there, they should be there.
There you go. He previously served as part of the senior management at Creative Artist Agency, representing such talent as Robert Redford, Robert De Niro, Kevin Costner, Danny DeVito, and director Michael Mann. Let’s give it up for Sandy.
All right, we’ll go with Michael next. Michael Becker, founder and CEO at Imprint Entertainment. So Michael has 25 years of experience working in the entertainment industry. He began his career as a talent agent representing writers, directors, cinematographers, and producers Throughout his tenure as an agent, Michael orchestrated.
Numerous high profile deals for his clients, including working on iconic projects such as Sex in the City, iRobot, the Notebook, nip Tuck, panic Room, and the West Wing among, among many others. In 2008, Michael founded the production company, imprint Entertainment and his overseen more than 1.8 billion in Worldwide Box Office Success.
Notable credits under Imprint Entertainment banner include the Twilight Saga franchise as well as films such as Stepfather featuring Penn Badley. And Amber Heard pawn starring for Whitaker Ray Tta Common and Michael Chiklis and the Vault starting James Franco Taryn Manning and Wir starring Michael Keaton and Stanley Tucci.
Let’s give it up for Michael. Oh.
Alright, Jeff’s next. Last but not least, Jeff Bowler Emmy award-winning film and television producer. Jeff was a producer and and financier with a diverse career in the entertainment industry. He began as the director of business development for Vandy, then served as Vice President of Business Development at WWE, where he helped launch WWE films and co-produce the Mummy franchise and the Scorpion King.
From 2012 to 2017, Jeff was head of acquisitions and production for the exchange contributing to over 100 films, including Dear White People and Two Guns. He created the hit TV series Inked in 2005 and has produced over 250 million in films and more than 300 hours of television content as co-owner of Wonder Film Media.
Let’s get it up for Jeff
by, by the way, Jeff is also platinum, June. So, you know, there’s an extraordinary success rate, you know, rate of partnering with Michael Day. Yeah, there is, that’s a different side of the business. It, it’s actually interesting to see, because I work on the studio side, like. Sandy said, but also on this independent debt side as well, and two very different businesses.
All right, so my goal here tonight is these guys are full of stories and stories and this is gonna be a lot of fun. And just to let you know, I’m gonna start us off and we’re, we have a bunch of questions we’re gonna go through, but this is fireside chat style, so have some questions. I’m definitely going to open it up for everybody else to be able to answer some questions too.
And then we’re gonna hang out after as well. So we got a lot to cover. But just to get us kicked off. So we hear stories we’ve been talking about today, investing in films. What does entertainment look like going in the future? We hear stories about winning big, losing big in films. Where does the panel wanna start?
Where do we wanna start with this one? Want me to, alright. Yeah. Yeah. It’s, it’s, it’s a lot easier to lose big than win big for sure in in the film business. I you know, when I, my very first movie, I don’t know, maybe 20 years ago or so. Me and my, my friend he put up $2 million. I packaged the movie and we thought, you just make a movie and it makes money.
It’s definitely not how it works. We ended up selling the movie for a million dollars. My friend lost a million dollars and from that point on I was like, I need to figure out the business of film, financing, the business, how this all works, distribution, sales, all that stuff. The financing, a finance plan, something that makes sense going into it.
And ever since then, you know running the sales company, the exchange for almost seven years really taught me the business behind filmmaking and knowing the numbers, right? You have to know the numbers, you know your value of your films. When you put together a package, you can’t invest in, in a $10 million film if it’s only worth $2 million on its bad day, right?
We always, we always, at least on the independent finance side, we always invest. And make our decision based on what’s the worst case scenario, movie X is worth, and then you deduct 20%. And then that’s kind of where we will finance and that’s how we, we’ve been working. But there’s a lot of people that will spend 10 million on a film that’s worth 1 million and we’ll lose nine.
And they, you know, they should have asked us first. And I get a lot of those calls down, especially with this guy right there. And but you know, on the, on the, the, the winning side of it, you know, our new debt fund that we’re putting together is it de-risks, but it also kind of caps your ceiling.
So, you know, we’re, we’re, we’re not swinging the fences. It’s singles and doubles and it’s, it’s kind of safety. Hmm. Safety first. And you know, and then if, if something that we, we lend against hits. Mm-hmm. We have a, maybe a small upside you know, one of Michael’s friends who just did an independent film long Legs that was exactly it.
They came in in finishing funds for like a quarter of a million dollars on a finished movie that they can see that was really good, that had distribution. Mm-hmm. And they were the first money back. Mm-hmm. But they didn’t get a lot of backend, but the film did go on to make a hundred and something million dollars, so their two 50 ended up making them like 5 million bucks.
Yeah, it’s a rare case, but that’s kind of the model that we’re working on there. Hmm. So you mentioned a couple of things, finishing funds, and maybe let’s take, I wanna do, just take a step back if it’s okay with everyone. And I wanna do a little bit of a primer here. ’cause there’s a lot of investors here that maybe haven’t invested in film or entertainment specifically.
They’ve all invested in maybe in other alternatives. So when we talk about. Finishing funds or development, can whoever would like it to pick this one up? Walk us through that process of what it looks like to make a movie. Can I ask a question? Not yet. No, not yet.
Absolutely. Is the fund still open or is the fund closed? It is open for probably only 60 days. Subscription documents the door as they stand up and he is like, can we continue this conversation? Finish the panel first, then you can continue the conversation finishing funds a little bit more and kind of those, the different, the different types of financing that we will do.
Or just even the process though of making a movie. Let’s take a step back there. That’s a whole different, that’s different than finishing phones. There’s so many different ways to get movies made. Mm-hmm. You can have a rich uncle, you know, just write a check and you’ll probably lose that money. That’s called equity.
You know, that’s not the smartest thing to do. But, you know, typically coming from the independent side you know, the fir Early, early in my career, we would find just a script. Then we’d go find the right director. And then we would go find the right actor and then put together some financing, a mix of equity and debt, and still done that way.
I mean well take a lot of time now we just look for packages that are ready to go. That’s right. And we just look at, and so we can do a quick analysis on the worldwide value and. We can say yes or no. Mm-hmm. But a lot of people, you know, still put together movies that way in, in development. That’s right.
And it takes time and it costs money. And, and it’s a little bit different too on the, on the independent side as far as than the studio side. You know, we kind of work in, in both those worlds. But, but in, on the independent side with the senior lending. It’s you know, the, the senior lending’s great because it’s, it’s essentially, for the most part, it’s, it’s last money and then first money out.
And all you’re doing is banking collateral. You’re banking collateral, essentially people are going out, they’re selling the movie to, to different territories around the world, and they’re getting contracts for those, and they’re using, but they want that money to be able to make their movie to part for part of their financing.
That’s where we come in. We come in and we, we bank those contracts. Lending institutions will take ’em, but it’s, it’s sometimes it’s a little complicated. It’s, it’s a long process. We can move pretty fast on those. And, you know, the equity and the, the gap lending and, and tax credits, you know, those, all, those all those all come into play as well into somebody’s financing structure.
But ultimately it’s the senior lending is. Really you know, I like, I like to look at it as you’re just sort of, you’re banking somebody’s invoice that they have. And as soon as, as soon as the, the movie’s delivered, the, the territory pays back. So for us, it did it. The movie doesn’t necessarily have to be a smash hit.
It doesn’t really even make money for the equity investors. We get our money back when the movie delivers. And so it, yeah, we’re, we’re one part of getting a movie made for a filmmaker. We’ve all told you all three have made a lot of movies. Let me make a couple of comments. Firstly, it’s great to see everybody here and, and I actually just want to commend mission matters and actually going IPO because ultimately where it starts as storytelling mm-hmm.
And storytelling is now part of every business, including finance. By the way, if you’ve ever dealt with investment bankers, you’ve ever dealt with anyone in any part of the financial industry. Today’s storytelling is critical to almost every business. And, you know, these are companies that are actually promoting high quality storytelling.
From an investor’s point of view, you’ve gotta then dig in as to whether the story has merit. So, you know, the, the question is to how movies are made is, there’s no answer to that. It can be done any number of different ways. And what I would say from an investor’s point of view, I give you just one.
Sense. And they’re, you know what, what Jeff and Michael are talking about is one level of de-risking. So they’re talking about finishing funds. They’re talking about, you know, e even if the film loses money, they may make money with this model. It doesn’t mean they will, but they, they likely could be because they basically analyze it at that.
If you’re looking at the whole businesses in its entirety, and you wanna look at it from a holistic point of view, because equity doesn’t necessarily mean you lose money. Me, the exercise of the industry is to look at creative excellence and whatever that means, we’ll talk about that in 30 seconds and, and then sort of an appropriate capital structure for what you’re doing.
It’s no different than anything else now where you come in, in the capital structure. So if you look at I remember one of the most compelling discussions of capital structure was canyon Partners investment in Caesar’s Entertainment. And at that point, when Apollo had actually bought the company for a ridiculous amount of money at a hundred dollars a share, and it was collapsing right after, the question was, who in the capital stack lost money?
And actually the Canyon people, Josh Friedman knew most of the other investors, not all of them had read their documents. But the trick with. And company or with a film is to understand the devil is in the details. When I was at CAA, the devil’s in the details as to who makes how much money and under what circumstances.
The biggest question to anyone even looking at the entertainment industry is it’s largely been based unlike any other business, particularly venture businesses, where your success as an entrepreneur rides with the success of the company. And the venture in film, the trick is to transfer as much capital and money into your own pocket no matter how the project works out, which is unfortunately how the business has always worked.
So when someone comes up and says, you know, I don’t say hello for less than $4 million, you say goodbye and that that is a way to do it. But at the end of the day, you’ve got the idea, you’ve got stars, you’ve got directors. And then the bottleneck of how it gets from finance to the audience. And while I’m not gonna go into this now, we can, we may do it later if people are interested.
It, it’s the, it’s, whether it’s Wayne Gretzky or some other great hockey player, skate to where the puck’s going, not where it is because the business is changing. So it’s, what is it today, Monday? Does anybody know what films are opening this weekend? If I asked that question five years ago and you actually paid attention to the industry, you would know exactly what films were opening this weekend.
Mm-hmm. You have no idea. And you know, if it’s, if it’s, you know, Barbie and it’s, you know, Oppenheimer and you’re in a Barb Inheimer weekend, or you know something, yes. But it used to be that you would take a studio, would take a roadblock. Of A B, C-N-B-C-C-B-S and eventually Fox at nine o’clock on Thursday, and everybody had it on their agenda as to what was going on and the diversity of how people are finding films.
You have a, you have a generational issue of people going to the movies. I was just at a conference and someone said, I was talking to my 23-year-old son. They said they don’t go to their 13-year-old, and they said they, they don’t go to the movies at all. Hmm. I said the problem is at 23, they may not either.
And what you have right now is so much competing for people’s time, so much attention. And what you want to do is to figure out what the bottlenecks are, what the new methodologies for getting people into theaters will be, and then hopefully you find both creative genius and on a budget that generates a significant profit, depending, you know, no matter where you are in the capital stack, the exercise.
In terms of finishing films is taking advantage. It’s not taking advantage. It’s helping people finish their project, but making an appropriate economic deal at a time. People may need the money and are willing to make a specific kind of economic return for getting their project done. Most of you will not, you know, that’s one way to invest.
Most of you will be encountering things earlier in the process and with a different particular opportunity set in terms of investment. Hmm. So if we’re skating to where the puck is, h how do we decide on what you’re going to invest in for the fund? I mean, for us it’s pretty simple. It just comes down to metrics and discipline.
We have a formula. We have our internal sales team, think of them as like a home appraiser. They do an appraisal on every film. So every film with a certain actor or director has a certain value of worst case. And then that’s case. Best case, worst case and moderate success. And then what we do is we will lend 70% loan to value on the worst case numbers.
That’s basically, you know, that, that’s the most we’ll do. Mm-hmm. But you’re also not lending 70% of the budget. You’re lending 70%, you’re, you’ve got whatever the slug is and then you’re looking at the valuation. Yeah. So then, you know, the filmmakers will have to come up with the other 30% with either equity tax credits.
Something. But but there was an example. I, I got pitched this movie called MeetQ and Pete Davidson two years ago, and the whole budget was $3 million. And the numbers were six on the worst case, but they needed money tomorrow and it’s hard to go for the extra 3 million tomorrow without doing due diligence and all that stuff.
But I knew someone else who they were gonna call next was my old company to change. They called the next person. The next person wrote a check. They were in production by Friday. They sold the phone for 22 million. And that’s where you can win big, but you have to move fast. But we would’ve done that deal if we had for two weeks to do our due diligence and make sure you know the bond and everything was in place.
Because the worst case it is was it was a Kaylee Co, Pete Davidson great romantic comedy that would’ve sold for at least six, you know, and it would’ve been great. But I, I’ll give you a couple of quick examples because ultimately what, you know, what is being discussed here and Jeff is right, is you have to, it’s if you were going to invest in real estate, you know that they’re gonna send you the worst deals when you’re new until you figure out what a good deal is.
Yeah. And you have to know you gotta do due diligence because you can be dealing with out now thieves. And I’ll give you two good examples. So worst case scenario, I’m an MGM and they want to make a film, which is like Dawn of the Mummy and it had a bunch of penthouse pets in it. And you know the, I would think I was in distribution and, and one of the young production executives and I are analyzing this and.
You know, they’re saying, you know, the pets will come over and pitch you the movie. And I, and I am going, you know, there’s just something wrong here and let’s not do this. At which point we didn’t. And they ran out of money. They ran out of water. They had lawsuits for actually dehydrating the act. It was a mess.
Wow. But if someone came to you and said we’re gonna make a movie on the 1924 British Olympic Track team. And it’s gonna be got the Jewish guy who doesn’t want to be Jewish and becomes a grand old man of British sport. You’ve got the Scottish missionary who won’t run on, run on the Sabbath. You got Lord Lindsay who might be gay and is gonna do hurdles.
And you got this Greek composer no one’s ever heard of, and a director, no one’s ever heard of named Hugh Hudson. Every studio passed on Chariots of Fire. Mm-hmm. Every studio I watched the film and they passed. And lad company picked it up because Sandy Luberon in London had taken it for Fox International, where they thought they could do better and the LAD company picked it up when nobody, I had to watch John Goldwin, who was Ladd’s driver at a Oscar party.
I threw stand on a chair for 11 Academy Awards and scream every time it won an Academy Award everybody passed. So, and in the end, you know, I was with Glen Basner about two weeks ago, and we’re talking about a Nora. And he had such faith in Sean Baker. He said, well, the money, he said we would’ve done it off our balance sheet.
They’re normally, they would de-risk the film. Mm-hmm. But he said in this particular case, if we had to, we would’ve done it because we know him, we know where it’s going. And again, if you have people who are in the middle of the business as opposed to peripheral to the business, and that has something to do with who you guys will back as well, the likelihood is they can make the calls that at least will get.
The potential for distribution will be higher than people no one’s ever heard of who are trying to meet people for the first time. Yeah, that’s absolutely, and and to, to Sandy’s point, the film has to be great. I mean, for us to, for we, we, we’d definitely like to come in, take a look at the whole project, make sure that the, it’s it’s commercial appealing.
But again, we’re only taking a small portion of the, the financing. We’re, we’re just taking the senior lending out of it. We’re not coming in with the equity, we’re not coming in with the gap lending. We’re literally just taking the banking portion for the producers to go off and make it. Now, we’ll try to help ’em if they are looking for distribution.
We don’t want to be associated with a lot of bad projects. Even if we are making money, we, we like to be associated with the chariot fire, you know, all the other, the, the Nora. In great projects, but, but ultimately for us, it’s, it’s just that portion of the senior lending or it could be finishing funds, it could be tax credits, it could be even you know, any type of collateralized debt in, in, in the project.
Well, going back to your question on how, how movies get made, there’s one, there is, like Cindy said, there’s no exact way there’s wave. But one thing that you might find interesting, you know, one of the terms we use development. Which could be hiring a writer, buying an option to a book development.
So we are, we are in the business of looking at packages that are ready to go next month, the month after. And we just make a decision. But there are passion projects that people get involved in and they cost, you know, development money. And it’s not cheap a lot of times. But for example myself and, and my partner Michael Bay, have a movie, at Universal and they told us to go find a writer. It’s an original story that, that he and I, we actually fought the rights to a book and they said, go find a writer. So we found this writer Universal, paid him a million dollars, and the script is terrible. And you know, that would put us out of business if we were finance development independently.
That’s one movie, A million dollars. We’re looking for the next writer right now in case there’s any other room. We’ve got seven 50 to pay the next guy or so. But again, you know on the Indy side, especially this debt fund that we’re putting together, we can’t begin a business of development. But, you know, to Sandy’s point, you know, storytelling, it all starts with great stories.
Mm-hmm. And. The people that take the risk on the development ultimately make those great movies mostly. But it is a, it is a big risk independently and you know, even the studios are getting less and less in the development business. They wanna see spec scripts from a-list writers that just write them on their own.
So yeah. Alright, so I’m gonna ask one more question here and then I wanna open it up to the room and like I said, get everybody else involved as well. So you mentioned, you mentioned real estate and I see kind of the connection. So I’m gonna throw this one to you, Michael. Are these collateralized, like the movies, like, explain a little bit of the technical side of what that looks like.
Like if somebody defaults Sure. On, well, on the independent on the independent finance side, the producer will go work with the sales company, international sales company and take the. Take the film out. Let’s say they’ve got a, a movie with Nicholas Cage. The sales company knows what Nicholas Cage is worth in all the different territories for that specific genre of picture.
And they’ll, they’ll give them a, a Germany, they’ll pay a certain amount and they, they, they’re pretty steady wi with the numbers, so, you know, and they, they’ll take it out and they’ll sell to every single territory around the world. They’ll do contracts on those. They’ll bring ’em to us to finance ’cause they want to use the money for.
For the production. So ultimately, you know, they’re, if, if they do default it, it comes in where the. The production finishes, the film turns it into that company in Germany that bought it, and they’re no longer in business. So, and in that case you know that, that, that’s why their letters of credit.
Yeah. Yeah. So, so, you know, it, look, it, it does, it does happen. We also use we, we. Yeah, we, we require a bond company. For the most part. The bond company doesn’t necessarily explain the bond company. So a bond company’s an insurance company, ess essentially that, that comes in, that says, it looks over your production, digs through it, and says, okay, you’re making this for 10 million, that’s fine.
And they oversee the production to make sure it gets delivered on time. The, the big problem is. If somebody goes over budget or and they don’t have enough money to finish the film, so they’ll, they’ll sit there, they’ll analyze it. They, they, they come on board and they bond it. It’s like an insurance policy for your film.
I. We require that in order because for us, we’re looking at to make sure that the film is actually delivered. If the film’s delivered to that territory, we get paid. If it’s not delivered and it goes over budget, it can become a problem. We have a first position lien on the film, so we could essentially, if they do default, we.
I mean, it’s worst things in the world, but we actually own the film until we take it out and, and then can, can monetize it, which isn’t, you know, can be a good thing too, but, but not really for the filmmaker. So, I mean, for us is a, a debt fund maybe, but, but yeah, so the bond company is, is an insurance company that, that we use for, to, to make sure that the production stays on budget and on time.
Just, just a couple of other quick comments. The bond company, if it actually takes over a movie, which you generally don’t let it, they’re not really interested in quality, they’re interested in technical delivery, just delivering it. Yeah. So the, the aesthetic quality may suffer mm-hmm. As opposed to them just shooting the words on the page and holding it a day, which could also impact how the film is received by the people who bought it.
But if, if I were gonna give you one piece of advice as to how you think about film investing. There’s a lot of different ways to approach it. One is you’ve got too much money and you want to have some fun, and that’s okay. I have a lot of friends who actually do films that way, and they do not mind losing money if they enjoy the trip.
You can look at it the way that, that Jeff and Michael are talking as well, which is where do you want to do it as a business and where in the capital structure you do it, and you can look at it from a financial modeling point of view, and that’s another way to do it. There’s nothing wrong with that. You can also do it from an another perspective, which is, I believe in these filmmakers and I’m going to back them.
Because I think that creatively as well as in terms of how they handle their business, they’re good people to back. So instead of being omni numerous and looking at everything that comes in the door that fits a model, you’re looking at a specific creative element. It could be a genre, it could be. A director and sit like Michael Bay.
Mm-hmm. Michael Bay’s got this enormously successful track record and, and, and there’s a lot to be said for that. I would encourage, and again, each one comes with a different level of engagement on your part in this sort of sense of mission matters. I mean, Adam’s giving out poker chips. If anybody really cares.
I actually have a Dropbox with the last 12 years of scripts because. You know, the, the academies decided to send them out electronically. I said, let’s just drop it off Dropbox. So if anybody wants access, can read a bunch of scripts. Read the scripts, because sometimes it helps to actually know what it, what something looks like on paper, and then what it looks like when you make and what changes.
And what I remember in Witness I was working with David Gerber at the time and we passed on witness because David read the script. And he said, I made this on police story. And so it was, and when you think about that film and you think about barn raising, in the script it says barn raising. I have watched entire orchestras live against that scene, which is 15 minutes in the film, which is one of the most beautiful epic.
Moments in the film or when Harrison Ford and Kelly McGillis are dancing in front of the, the car’s headlights. Those are, those are, you know, the film itself is very much police story. It’s with a shootout and the ground, but everything in between is based on the genius of the director, the actors, the editing, and the fact that they knocked it out of the park creatively.
All right, let’s open it up for questions. Thank you three for and Rogan Adam a de-risk question and a Wayne Gretzky played to where the puck is going. Question I presume that sales companies are all kind of using the same sort of data, data in this age metadata. Yeah. So just hypothetical, set the volleyball for you.
Could you utilize better metadata to outpace Comerica and its other bank’s indications for debt as well as just de-risk in the sense of less and less opacity for potentially equity participants, not just debt. I think a lot of things come down to data. Obviously Netflix holds its data very close, but as financial providers towards creatives, if you’re providing data for the creatives, for the investors for distributors, but at a, at a faster pace, at a less opaque pace, like, has that ever crossed your mind?
I ask that also because mission matters. I know them through all the technology entrepreneurs. You know, there’s not really a there’s not a, a database of you know, it’s funny ’cause the sales and distribution in these countries is still phone calls. It’s very archaic. You know, they’re, I’m not aware of.
Any, you know, technology, I mean there’s all kinds of stuff that track local box office and ancillaries and all that stuff. But you know, it’s the sales teams they still just call the buyer in that country and say, what did you pay as a license fee for the last $10 million Nicholas Cage movie?
Yeah. And they’ll be like, the same as we paid the year before. The year before. And, you know, the market’s changed a lot last five years. And I was talking to Sandy earlier, you know, we used to sell, make this cage action movie. We would make ’em for. Eight to 10, we’d sell ’em for 12 and we know the margin and we do five a year.
And it was a nice business. And now those same films are selling for 4 million and you can’t make ’em for 4 million because you gotta pay the star three. And you know, and so those new Bells movies, that’s maybe, maybe. And now that the bottom is fallen out on those movies, now it’s back to quality, you know?
But to your comment, like on, you know, Comerica Bank of California. And we worked with them. Mm-hmm. In the, in the other, in other, another business, in the studio business. But on the independent side, you know it’s still, it’s a long time to close with commercial banks and the film packages that, that we see, like Mecu, you know, you don’t have three months to do a closing with a bank.
So that’s why you come to lenders like us or we, we, you know, for years we were the buy, we were, we were the borrowers. We borrowed hundreds of millions of dollars over the years at 20%. Sometimes more so, you know, with, with, with my background in sales and distribution and the numbers, I was like, Michael, we should probably go on the other side of the business and become the bank and lend out to all the other filmmakers.
That also creates jobs. It creates you know, a family. And we maybe discover some new filmmakers that we really back and we believe in, and maybe there’s some type of equity participation that we look at at fund number two for certain specific. You know, movies, but there is no that I aware of no technology that we use.
Let’s just pick up the phone and you know what, what will you pay? Well, you know, the, the question about data and where the business is going is, is the right question. It’s early. Mm-hmm. But it’s the right question. Mm-hmm. Absolutely. And you know, by the way, at least they’re borrowing from you. I have one for Sandy Howard.
I remember there’s one great story. Now you guys are, know Sandy. I did very bad low bunch of movies in the 1970s and sixties. And my friend Dick St. Johnie called him. He had just left the meeting because he had actually gotten the film famous by the New York Mob and it was not going well. And he had left the meeting with, I forget which mob bosses, and he was at a paid phone and, and he said, what do I do, Dick?
And he said, get on a. Plane. We don’t go back to the hotel. You come back to California now. So, you know, films get financed all kinds of ways, but, but the thing about data is this, and you talk about where the, where the business is going. Firstly, it used to be that there were stars. Now people say Tom Cruise is, is maybe one of the last stars.
But it used to be if you were in a movie, you could open the movie. Because people would go to see who it was. Mm-hmm. There’s fewer and fewer of those opportunities. Television’s get got smarter. It’s actually about to get dumber again, which is a longer discussion because if you look the top streaming series.
Or out of the top, I forget how many, most of them are old TV series because, and there are lots of reasons for that. People are the one, they’re closed ended. Two, there’s a reason they made a hundred or 200 episodes. They had to be good at something. Three, you know, when you’re done with, I mean, if I, if we were just talking about this earlier, if I didn’t get an email that I read.
That said White Lotus three was opening Sunday night. I might think it was happening two years from now. ’cause who remembers? So you’ve got these series that are six or eight episodes. They’re really brilliantly done, which may be too taxing for some people too. If you don’t watch every episode, you know, you don’t know what you’re watching.
As opposed to Seinfeld, which. Yeah, you can watch ’em out order and, and three is that, you know, it is 18 to 24 months between seasons and I don’t know when those dragons are coming back. Yeah. But what I would say is this, is that the biggest impediment to movies is the, although these days I’m just talking with Neon about this and Filmation.
You, you can now open movies for $8 million before you spend 20, but you still have to spend a lot of money to open them. Yep. Mm-hmm. It used to be you would ask what some of this Q score was. Mm-hmm. Which today is how many in info, you know, how many followers you have. Yeah. And the question is, social media is becoming that much more important.
And eventually what’s going to happen is you’re going to be able to, with data target moviegoers who are amenable to a certain type of film. Coalesce them, turn them into a community rather than an audience market to them. And if you reverse engineer the economics of the production to meet that size of that audience, you’re almost guaranteed a profitable business, which we’re not there yet.
But I’ll give you an example. If you’ve been flying JetBlue or certain other airlines, there’s an A 24 channel and. The fact that people identify an 8 24 audience is one step away from being able to monetize an 8 24 audience. Yeah. You’ve got the eight 20 fours, you got like the, even like Blumhouse that you know that that’s coming out.
So they, you know, they’ll, they’ll target as what you said, you know, they’ll target their audience and, and they’re doing a really good job. You nailed it. We have a movie. So I’ll plug the movie. It’s called Drop. Mm-hmm. The trailer came out a few weeks ago and it comes out April 11th with Universal.
And when Universal gave us the, the trailer was seen by a hundred something million people, the first $40, and they sent us the data, and 76% of those views came from TikTok. From TikTok. Oh, yeah. Targeted. Yeah, targeted. I was like, wow. 76% came from TikTok. You know, I went on the YouTube where Universal, you know, on their, their YouTube channel when they put it out and how our partner of theirs, I’m like, okay, 10 million there, 10 million there.
And then Universal was like, it was 117 million. So, wow. And if people speak favorably about it, I mean most music discovery and in the absence of TikTok, the music business changes its economics. Mm-hmm. Which is kind of crazy. And we’re gonna see new platforms launched, but the, the nature of how information is shared can hurt you or help you, but it’s essential at this point.
Yeah. My name’s Dave Bianchi. I recently just created a series. I’m a writer, creator, executive producer, was nominated for primetime Emmy and currently have it’s all good. Thank you. We have two feature films that are currently being sold at EFM. Week complete a future film. So from a domestic perspective and from a foreign perspective, when it comes to debt financing, number one what are your, what are the premiums?
Are you buying a 92 cents a dollar? That’s one. I think one important question probably is that also domestic and also foreign. I mean, Budapest is doing a lot of that kind of stuff as long as it’s liquid, I would imagine. The, the other question is, I’d like to make sure I connect with you guys.
Yeah, sure. I can, I can take it. Yeah, so we can do a hundred percent. Yeah, I mean there, there’s a couple different things. So, so it’s, it’s a little bit different. So if you’ve already finished the film and you’re taking it out in and sign it, that that’s sort of a different stage than, than, than we’re at.
You know, we’re, we’re more on the. You know, as you start, but we could, but we could loan against domestic. Yeah, totally. We could loan against domestic. Absolutely. You know, and then in each territory, if you were loaning on the tax credit, yeah, that’s probably 89 cents or something on the dollar or something around there.
But, but, but ultimately on you know, on, you know, foreign paper, I mean, it’s, it’s, it’s a percentage rate that, that we, that we charge, you know, so it could be, you know, it just depends on, on. The, the particular project where, where we’re at and who the, who the buyer. Who The buyer sky in the uk. Mm-hmm.
You have a sale for, you know, 2 million we’re Okay. Probably doing, you know, 1.9. Yeah. And, and, and, and, we’ll, we will loan a hundred percent as well on, on it. So Sky Sky’s good. Sky’s really good. You know, paper, they’ve been around a list, like we’re gonna be working with Amazon. Mm-hmm. On this as well with Amazon.
New partner in this. And we’re gonna be cash flowing a lot of their paper for their production. But they were great. You know, they’re, you know, they aa credit, so Amazon International, they do the same thing. You, you, a lot of times Amazon will pick up, gonna be around, oh. So a am Amazon will do the same thing though.
They’ll, they’ll take it out and they sell different territories around the world. They, they, they finance the same way. They, they, they have a sales team. They, they lay it off in, in different countries and, and and they need somebody to bank the paper as well. So, alright, last question and then we will then we’ll hang out and keep talking.
Yeah. It was. So when, when it comes to the production of making the things right, we we know may know it costs a lot of money and we’ve seen in the last 20 years a lot of production going overseas because it’s cheaper to sell than in the market. The cost of labor is cheaper. But given that entertainment historically has been one of America’s biggest exports in Hollywood, is Hollywood, you know, for a reason and there’s magic to that and all that.
Yet more and more we’ve seen production leave America as a whole, certainly California, certainly Los Angeles. And now on the other side of the fires, there’s a lot of conversations about this push of staying in LA and keeping production here. And how do we do that in a way that makes economic sense since obviously the cost of shooting here is astronomical ’cause and all of that, so.
And any like off the top of your head suggestions on how we can continue to create a sustainable business. Certainly everyone wants to profit whether financially or ethically or emotionally what for whatever their why is they decide to invest in film. But nurturing and supporting and incubating the pipeline of talent that’s here behind the scenes as well is just as important.
To turning a, a, a, you know, a buck and making that ROI and investing in the future of the industry. So it’s a very, like, I don’t know. Yeah. Esoteric question, but how do you solve that? You know, you know, it’s we talk about this all the time. We would love to work here in la. I, I can’t tell you the last time I made a movie here, I dunno, maybe it’s been seven, eight years.
But I don’t. I don’t, I mean, unfortunately, you know, I know they’re talking about raising the ceiling, the 750 million a year, but it’s still not a big percentage of a tax credit. Yeah. So you could call it 2 billion a year, but if, if you could still get 30% in Georgia and it’s like 15 or whatever it is here now, and there’s a lottery, you have to apply for the lottery and they’re getting, they’re, all of the lottery tickets are going to all the network television shows.
And I just don’t think, I don’t see it being fixed anytime soon until we make that change you know, the state and the city and the county to, to be proactive, to keep talent at home and nurture that pipeline. It’s unfortunate, but you know, it, yeah, it is unfortunate because, you know, there’s, there’s, like, I’ve shot a couple movies recently in Mississippi.
Their economy needs it more than. Los Angeles’s economy and they got really aggressive to bring us there. You know, we, it was a Morgan Freeman movie and you know, I think we got 30% of the tax credit then if you. If one of your three stars is a war veteran, you get another 10%. Morgan’s a Mississippi resident, so we ended up getting over 40%.
So it helped our small movie that, so we as the 200, you know, people on the team could get that movie made and, and created 200 jobs. And I just don’t see California making that change. You’ve got a very, very, very specific question, which is why are. And it’s not that you can’t really look at it on a positive side.
We’re on a global platform today. Mm-hmm. And there are extraordinary businesses set up all around the world. And effectively, when you’re looking at a, whether you are a major studio or you’re an independent company, you’re gonna do the following calculus. Where do I need to shoot it? If I’m shooting in the desert, I’m not gonna shoot it in Canada.
And if I’m gonna shoot, you know, Brooklyn, it’s gonna be Toronto as opposed to Saudi Arabia. Mm-hmm. Or Dubai. But you’re gonna look at where you need to shoot it. You’re gonna look at what the incentives are. So here, I don’t think they give above the line incentives here, which is probably the biggest competitive in terms of a rebate you’re gonna look at.
Is there local crews that, are there local crews that are good, or do I have to import them? And what is the cost of importing crew? I have to do that. You’re gonna look at equipment and say, okay, you know, and you’ve got you know, Manhattan Beach Studios and Hackman, or they, they can move lighting equipment around the world.
At the drop of the hat, you’re gonna say, okay, what equipment do I need to move? And you’re gonna do a creative and an economic model, and then you’re gonna figure out where you can go. And then the only impediment to that is somebody who actually matters is I don’t want to be there. And you know, so if you’re gonna shoot at some remote location, you know, you will look at the safety of your crew because there are places that are now too dangerous to shoot because of street crime and other instabilities you’re gonna look at is it a fun place to be, which could be Dubai.
And frankly, you know, as an example, technology will be a, an an added factor there. So Saudi Arabia is about to open the most advanced light stage in the world in Riyadh. So they bought Sony’s new technology in partnership with Sony and Pixo, which is Sony’s company that they acquired, will be staffing it.
And you’re gonna be comparing what the costs are to shoot in Riyadh versus somewhere else with the most advanced technology in the world. And the difference between Riyadh and remote locations is. Other than the fact that eventually you’ll be able to drink in restaurants, you can’t really drink in restaurants.
There’s something fun going on literally every week in Riyadh. I mean this festival, music, whatever. And it’s not the Saudi Arabia that, you know, people have in their stereotype. It’s kind of really a fun place. So you will look at all those factors and make a decision. Alright, well let, let’s give it up to the panel.
Let’s chat.