Finance: Show me the money

Everybody knows there is no exact formula to raise the funds necessary to produce a film or television program, but it doesn’t hurt to ask those who have done it successfully, using both traditional and new methods.

(note from the editor: this article was originally published in the November issue of Encore, before Screen Australia released the Drama Production Report for 2009/10)

According to the most recent National Survey of Feature Film and TV Drama Production, in 2008/09 thirteen features were financed mainly by film/TV industry sources (including cash flow against the Producer Offset); 11 were financed “substantially” by Screen Australia, State agencies and the Adelaide/Melbourne festival funds; seven (including three co-productions) were financed mainly from  foreign sources; and one was financed mainly from private sources. Private investment dropped from $40m in 2007/08 to $5m in 2008/09, mainly due to the disappearance of the 10BA model.
Under Screen Australia’s revised Terms of Trade,  the Commonwealth Government will only fund up to 65 percent of the production budget (Screen Australia and Producer Offset). The other 35 percent tends to be a combination of State funding bodies (5-10), industry (distributor, sales agent, presales, gap funding, overseas studios, etc.) and private investment Animal Kingdom producer Liz Watts says her basic formula for a feature will always follow the notion that there’s a certain amount of Producer Offset available if the film qualifies as Australian, and a certain amount of equity through Screen Australia and State agencies.
“That gives you around 60-70 percent of the finance, and then beyond that, it’s a bit of an open canvas,” she says. “Australia has a tradition of handing over the rights for the rest of the world to an agent, and for some projects that works really well, but for others it may not be necessary – when you have a more experienced director who has a name and some kind of track record overseas, you wouldn’t bother selling off the rest of the world; you might just pre-sell a few territories.

“It all depends on the project, but there’s always a certain amount of market participation. Sales estimates are very important, and will also allow you to gap finance if necessary, based on the returns that are coming in terms of sales,” she explains.
In the same financial year, direct Government funding for TV accounted for 14 percent of the total spend; the screen industry (including commercial and public free-to- air broadcasters, pay TV,  distributors and production companies, as well as cash flowing of the offset) funded 74 percent of the total, and private (six percent) and foreign investment (10 percent) provided the rest.
There may now be more television channels in Australia, but that doesn’t mean there’s more money.