BUDGET

How do I estimate my investment?

Why is budgeting important? Must approximate

to get the green light

Overcharges may impact producer’s cut

High production costs might limit funds for promotion

Pre-production Costs Legal Rights Acquisition Music Clearance Feature Film Clips The Script Cast Locations

Above the Line CostsAbove the Line Costs are preproduction Story Rights

Options and Rights to material How much do I pay the author of the idea/material Depends on success, prestige of author, demand

Script Will the author adapt? Writers fees

Treatment First and Final Drafts Polishing and Production Bonuses

Above the Line Costs Producer’s fees

Executive producer Producer Assistants/Associates

Director’s fees Director and AD

Cast Lead Actors Supporting Cast Day Players Location Casting Costs

Above the Line Costs Travel and Living Expenses

Cast and Producers Air Hotels Taxi/Limo/Autos Excess Baggage Phone – set allowances Gratuities – set allowances Per Diem - $100 per day

Yields Total Above the Line Costs

Below the Line Expenses Production Staff – producer, ADs, Production Coordinator,

Script Supervisor and Accountants Extra Talent - $100 per day for extras Wardrobe – size of cast and wardrobe changes Make-up and Hair – lead players expensive Special Effects – ILM Transportation Location Expenses – overseas increases costs Sound and Camera Film and Lab Crew Travel and Living – size of production impacts overall

expense Animals

Budget Overruns Producers generally

argue for a 10% contingency over the going-in budget Without penalty Once exceed – the

penalty is the overrun + 100% penalty

Some producers meet overruns out of pocket i.e., Braveheart

May have a secondary investor

Revenue Distribution Early Percentages

Early First Run – 90% to distributor

90% of box-office minus an allowance for theatre operating costs (nut)

Major theatres can claim $20K for nut

Floors Floor Percentage

Required to offset costs of a bomb

Distributor mandates that it will take no less than 35%-70% of the b.o.

Helps avoid a bomb with a high “nut” killing cost recovery

Box Office vs. Film Rental Is box office the best

measure of performance? NO!

Revenue divided between exhibitor and distributor (90/10 to 50/50)

Film rental what goes to distributor Covers production,

promotion, prints and participations

Tail-End No b.o. reported Fixed fee

Promotions Expenses Media decisions

locked in two – three months prior to release date

Low-end campaign for national media expense $5-6 M

Big Pictures - media $10-20M

Promotions Publicity

6 weeks out Chart availability of cast

for interviews Press Kit

8-15 stills in blk/wht that capture the spirit of the movie

Distribute 6-8 weeks in advance

Press releases Interviews with cast

Press Kits $750K - $3M

Opening Weekend Perform exit interviews

to ballpark WOM Estimate strength of

film Bigger than anticipated

opening Support with more $

in ads, prolong interview cycle

Lesser Opening Spend no more than

intended

Conserving Marketing Costs

Major network audience diminishing Paying more for less

Go off-network Fox Broadcasting

Network reaches movie goers better

Plan without regard to competition!

International Distribution – Timing and Promotion

Certain genres translate better

Consider media mix Play off US media

coverage and minimize expenses Release 3-6 months post

US debut

Japan #2 grossing county

International Distribution Movies are the second

largest export of the US

Advertising and Publicity generate that popularity

New Media Internet

Low cost Global reach