Jan 30

Financing independent films and theatre projects is more difficult in the current economic climate. Myth or Reality?

By firemark Film Finance, Theatre law 2 Comments »

In recent weeks, I’ve had a number of clients express their view that the current down economy means that they won’t be able to find investors to finance their films and/or shows.   As a consequence, they’re sitting back, waiting things out.. not trying to make it happen.

Meanwhile, I’ve had others tell me that investors are good to go.

What’s really going on?

I think that folks looking for money from investors are operating from fear, uncertainty and doubt, and basing their expectations on the news of the economy as a whole.  But I believe that the economic outlook for the entertainment industry is a bit less dire than that for other market segments.

Entertainment has historically performed reasonably well in weak economies.  Audiences need the escape of good entertainment, and divert their discretionary spending dollars from the big-ticket expenses like overseas travel in favor of movies, sporting events, and domestic vacationing.

Meanwhile, the kinds of risk-tolerant investors who’ve traditionally financed indie films and theatre projects  are, in many cases, STILL risk tolerant.  In fact, following the second half of 2008 in which many of us saw our  more conservative, “safe”  investments in the stock markets drop precipitously, less risk-averse investors may view entertainment as a reasonably good bet, all things considered.

Ultimately, a good project will attract the money needed… it may involve tougher negotiations or more time, but I believe the funding is there for the right material.

So… go out and find the right material…

Agree?  Disagree?  Let’s have your comments.

Feb 20

IRS eliminates tax breaks for some independent films

By firemark Film Finance, entertainment law No Comments »

3 years ago, partially in response to runaway production, Congress developed tax incentives which gave independent filmmakers tax breaks on films up to $15 Million. In a ruling earlier this month, the IRS imposes new requirements that will eliminate this incentive for many independent films

Under th American Jobs Creation Act of 2004, domestically made films budgeted at under fifteen million dollars were able to take advantage of several tax breaks. Under the Act, filmmakers could write-off the entire cost of a movie during the year of its production, if the budget was below the $15 million threshhold. As written, the provision excluded future participations and residuals from the $15 Million budget figure.

Now, the IRS has ruled that these P&R payouts must be included in the budget, in order to prevent producers from manipulating the productio cost figures by re-characterizing regular compensation as participation and/or residuals, in order to stay under the $15 Million mark.

Congressional staffers who worked for years on the bill in question were incensed by the ruling, which will become final in a few weeks. Now, in order to give the intended effect to the law, Congress will have to pass new legislation to restore the tax incentive.

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