Film Financing

Government Grants

        A government grant is when the government give money to a organization or company which allows them to finance their firm. It can range from story or project development to production funding or even foreign sales funding. The government provide funds in the hope that the production of a film in a particular area will boost the local economy not only by bringing the production crews but also by raising the profile of the region, which will help a specific are attract more tourists. When the government give out grants they do it in a hope that it will boost certain areas therefore they do not want the grant back otherwise there would be no point in give the grant.

Tax Schemes

        The individuals pay the producer a fee in order to obtain the tax deductions; this means that films that are being invested in by wealthy individuals whose money would otherwise be healthily taxed. In 2007 the United Kingdom government introduced the Producer's Tax Credit which results in a direct cash subsidy from the treasury to the film producer.

Debt Finance

        The primary way in which films are financed is through pre-sales. Pre-sales are when the film company sells the script and cast in advance so they have the funds to make the film. Pre-sales works by film companies purchasing big named actors which almost guarantee a consumer that they will get their money back with interest; this is why big named actors are important, as consumers will be more likely to take the risk. As a result, the borrower stands to make significantly more profit if a successful film is debt-financed.

Equity Finance

        Equity financing requires the filmmaker to sell interests in either the film or Film Company in exchange for the funding. If a filmmaker sells 50% of the corporate interest to an investor, for example, then the investor will lose his entire investment if the film is a complete failure, so investors want the films that they invest in to be a success so that make a ‘huge’ profit. Equity Finance in film is less of a risk than a Dept Finance because Dept Financing relies on everything being a success and investors can put 100% into it however Equity Finance you only get back the money you put in for instance if 10 % is put in 10 % is given back in profit.


Product Placement

        Product Placement is a form of advertising used in television and film. Product Placement is when an actor or actress will use a product of some sort and the film production company will be paid by a product to make their label visible to their viewers gaining them custom, examples of this would be the use of Aston Martin Cars in James Bond films or Nissan Cars in 2 Fast 2 Furious. Sportswear and drinks labels seem to use product placement a lot as viewers are able to see their product in use. Product placement within film is an investment for brands trying to reach a niche audience. There are strong reasons for investors to expect that film product placement will increase consumer awareness of a particular brand.

Wayne's World Product Placement Below :

T.V Funding

          There are many types of ways in which funding can take place in TV industry; if you were a public service broadcaster such as BBC you would make funding by the £145.50 license fee that every television owner pays yearly. Other ways in which public service broadcasters would make funding would be syndication, competitions & merchandising. Syndication is the sale of the right to broadcast radio shows and television shows by multiple radio stations and television stations, without going through a broadcast network. Some programmes have competitions that are hosted at the end of the programme usually this makes them money buy the public phoning in to win a prize. These phone calls are always much more expensive. Public Service Broadcasters also make a lot of funding by merchandising which is when they sell products to a retail consumer. Commercial broadcasters make their money in the same ways as Public Service broadcasters except they do not consume any of the license fee which is paid by the public an example of a commercial broadcaster would be ITV. ITV is commercially funded and BBC are publically funded, some channels such as channel 4 use both of these funding methods to gain funds to keep their channel up and running.

          There are many television companies that receive their funding by subscriptions; this is when their customers pay a monthly subscription to be able to watch the list of channels that they broadcast. Most subscriber based funded companies have channels that are not included in the standard payment that customers have to pay more for an example of one of these channels would be ESPN, subscriber based companies also make money from advertising, competitions and merchandise as well. Sky and Virgin would be examples of subscription funded companies.

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ITV

ITV is the biggest commercial public service TV network in the United Kingdom, Launched in 1955, that started out in London, and it was previously known as Granada. Since the merger of ITV, it has expanded its family of channels with the launch of ITV2 in 1998, ITV3 in 2004, ITV4 in 2005 and CITV in 2006. This is an example of horizontal integration as ITV is concentrated on television.

ITV is made up of 15 regional licenses and in November 2009 ITV secured full ownership of GMTV, the national breakfast-time channel 3 license. ITV is not owned by one single company, the network itself is governed by a regulatory body, Ofcom. ITV is a public service broadcasting organization.        

ITV is primarily funded by advertisements, however sell their programmes by syndication which creates further income, sponsoring and product placement are also other ways which they create money.

Paramount Pictures

Founded in 1912 and currently owned by media conglomerate Viacom, it is America's oldest existing film studio. Paramount was the first successful nation-wide distributor. Before this films were sold on a state-wide or regional basis, not only was this inefficient, but it had proved costly for film producers.

Since the earliest days of the cinema the development of vertical integration—ownership of the means of production, distribution and exhibition by the same company, paramount was one of these companies. Paramount originally owned all there actors, producers etc, this kept the cost of production to a minimum. Paramount was leaders in Vertical integration this meant that the studios created the films, had the writers, directors, producers and actors on staff, owned the film processing and distributed to the theatres they also owned. This meant they controlled what was shown and meant they earned much more money.