Film financing and budgets can be cut down into four main major ways in which to finance a film. Each of these is different from each other and they are:
v Government Grant is a group of governments who run programs which subsides the cost of producing a film. Funding also can come from the Council to the producers who provide the certain conditions met. The government is willing to provide all of these subsides because they hope that it will attract all the creative individuals to simulate employment. A film shot in a particular location has many benefits as it advertises the location to an international audience which people may like and wish to go visit. The good thing about the government grants is that the government will expect no financial return as the government subsides are mainly pure grants which is beneficial for the producer.
v Tax Schemes are all created as they effectively sell the enhanced tax deductions to many different wealthy individuals with larger tax liabilities. Each of the individuals will pay the producer a fee before they can obtain the tax deductions. The United Kingdom (UK) government introduced the Producer’s Tax Credit in 2007. This means that it results in a direct cash subsidy from the government department to the film producer. British Tax Shelters is more or less a financial arrangement in which investments can be made without paying tax. Also the same copyright of a film can be cold again to another/or a British company for a possible $10 million. However, the UK law insists and makes clear that part of the film being made should be shot in Britain and that the film production employs a fair number of British actors and crew. The British Tax Shelter is an example of why many American films made are shot in the major film studios in Britain such as Pinewood and Shepperton.
v Debt Finance is broken down into two. One in which is Pre-sales and the other Television Pre-sales. The Pre-sales is just based on the script and the cast of the film and even the right to distribute a film in many different territories before the film is even produced. However, the reliance on the pre-sales is huge as it explains about the films industry’ dependence on the three major aspects; the directors, all of the movie stars and even the genre of the film (for example Horror, Romance, Comedy, etc). All of this is the primary means of film finance. Whereas Television Pre-sales is basically all about selling the rights of a film to be put on TV. In some cases, the producer sells’ the rights to a film in advance and will use money from selling the rights towards the production of the film, this method in ways is very unusual then selling the rights of a film which has already been made. Sometimes the TV programs in which the films will be shown on are a subsidiary to a film studio’s parent company.
v Equity Finance is known as the act of raising money for company activities which in this case would be film production. This means for film Private Equity Finance will exist. This means that all investments for film investment for affluent individuals come with a little risk. For the production cost of a film, it has two things combined which is recouped by, these are federal and state tax incentives. This means that most of the risk is eliminated.
