In a recent edition of The Wrap, an article appeared titled, Tippett Studio Chief on Layoffs: 'Why the Hell Doesn’t California Do Something?' http://bit.ly/117JMFT

The article starts off, “Award-winning visual effects company Tippett Studio has laid off 50 employees in the latest blow to the embattled industry, and its chief Jules Roman wants California to step in and stop the bleeding”.   Almost more interesting than the article by Lucas Shaw and Brent Lang, are the comments that others made.  All the way from sympathetic support to “Why MUST the state bail you out? Poor business decisions, the economy and technological changes are part of being a freelance/business/independent. Suck it up, merge, close, do whatever it takes...” 

What this article and interview with Ms. Roman tells me is that any industry entrepreneur needs to be careful about how much they are willing to invest in infrastructure here in California.  High union costs, guild residuals and just the unfavorable labor laws here in California make it a challenge to do business in this state.  I love Southern California and I love the motion picture industry, but the free market is against running a studio or effects house here. 

Only the bloated budgets of the studios’ tent pole movies can really afford to do a complete production here in Southern California.  I’m a member of a production company that is making a movie about the last days of Marilyn Monroe.  We’re shooting principal photography in Albuquerque, standing in for Los Angeles in 1962.  We would much prefer to shoot here in Southern California, but with a 25% rebate from New Mexico and a lower operating cost, we had to bite the bullet and go out of town.  We can bank the tax credit and put that $600,000 back into our movie. 

Movie and television production, as well as all the effects and elements included in production, are a global industry.  As a filmmaker I would love to stay here and shoot my movies in Southern California.  As a businessman, I have to go where I can make the best product for the lowest dollar.   Tippett Studio turns out a great product, but they’re going to be waiting a long time before the State of California ‘steps in and stops the bleeding’.

Content Is King: But it serves at the pleasure of Distribution

It is popular to say in Hollywood that “Content Is King”, but if it is, distribution is the king maker. Distributors, whether they are theatrical, television, online, or disk, decide what content the world gets to see and what remains on the shelf.  There are about 15,000 films made in the English language every year, but only about 700 will ever see the inside of a movie theater.   That’s just fine for the hundreds of other films that were never meant for a theatrical release, but are still enjoyed by millions on broadcast/cable or direct to the consumer through Netflix, Redbox, or any of the dozens of other digital or physical distribution points. 

A veteran producer knows that he or she has to package their film according to its intended distribution platform and audience.  This sounds logical, but many producers are so intent on getting their films produced that they lose sight of how the end product will be distributed.  At IFFA, once we find an interesting script, the first thing that we do is determine how the film will be disseminated.  It dictates everything: Your choice of cast, director, CGI, production values, shoot location, even the level of sexuality or violence that would be acceptable.  We also have to consider the way foreign markets will respond to the subject and the actors. 

Movies are essentially stories set to film. But the medium and the method of delivery affects everything to do with how that story is told.  Content distributors play a vital role of selecting the right stories to entertain and enlighten their audiences.  Content is not “King” until a distributor says that it shall be so.

I recently met with the son of a famous photographer who wanted to exchange materials regarding some of his father’s work.  After talking a while, he pulled out a document cataloging a 130 episode NBC televised series from the 1970s, in which his father interviewed and shared images from some of the greatest photographers of the twentieth century.  Turns out his father owned the series outright and had releases to use every part of it.  My mind raced at the marketing potential behind this incredible archive of photography genius.  For 40 years this treasure trove of knowledge has been tucked away in a temperature and humidity controlled vault in Hollywood.  This encounter made me wonder how many other amazing gems in the form of television series, documentaries, specials and even motion pictures are similarly locked away from the consciousness of world. 

Diamonds and Rust was a song written and performed by Joan Baez, released about the same time that this series was aired.  Film and videotape start to “rust” in just a few short years after they are recorded.  The emulsion and substrate material degrades almost no matter what you do.  Preservationists have saved many of our greatest motion pictures and television programs from this fate, but thousands more were neglected and have been lost to time. 

Unlike diamonds, that never lose their luster, film and tape will not last if not carefully preserved and transferred onto a electronic medium.  The price of doing this job right is high, but so too  is the reward to those who make the investment.  DeBeers and the other diamond merchants have millions of carats of diamonds tucked away in vaults around the world.  If you think about it, almost every diamond that was ever mined, cut and polished into a gem quality stone is still around somewhere.  Unlike the film and video tape archives of our culture, they are not rusting away, soon to be lost to oxidation and chemical breakdown.

This is one of the reasons that Len Grossi, the former president of Sony Television, Tony Friscia, the former VP of contracts at Warner Brothers, and I formed Media Content Group last year.  We are like miners who help content creators and their heirs bring their gems out of the vault and find new markets and new audiences to appreciate them once more.  Google, Yahoo, MSN, YouTube and many other web video outlets have opened up the world to  enjoy for the first time some of these masterworks of film and television.   

If you, or someone you know, owns the rights to entertainment or educational content that is not being seen and earning the creators income, please contact me here and we will help bring these diamonds into the light.       

What is it worth?

The value of anything is measured by its relative worth as compared to all other things of a similar nature.  The value of a diamond is determined by its weight, size and clarity, in comparison to all other diamonds.  Similarly, an office building is valued by its occupancy, location, condition and square footage – in relation to all other office buildings in the area.   You can study appraisal for years, but it always comes down to comparing the present market value of like objects.

My firm was hired to value 61 titles of a copyrighted motion picture library, owned by a local film distributor.  What we had to do was break down each film by its director, stars, genre, original box office success and its relative home media exposure.  This we compared to hundreds of other films of a similar nature.  My firm gave a weight to each factor and eventually assigned a monetary value to each of these factors, and the library in aggregate.  A painting, a television show, a film or an art collection is basically valued by the same methodology.  It requires a lot of research and number crunching, but in the end, the owner of the property is going to have a pretty accurate assessment of what his intellectual property is worth. 

Of course, the value of anything is ultimately determined by what someone is willing to pay for it.  After 23 years in the mergers & acquisitions business I have seen buyers pay what I thought was a high price for a company (or its assets) and sometimes I thought they were getting a real bargain.  But, that tends to be dictated by the laws of supply and demand.  While every company is somewhat unique, the suitors, keen on making a smart acquisition in the industry, will have looked at possibly dozens of other potential companies to buy.  They will compare each company, not just to others of a similar size and business, but to how difficult or easy it will be to buy, assimilate, and monetize the acquired assets/sales/customers and culture of the acquired company.  That’s why it is important that any company putting itself up for sale has their house in order; books and records shipshape, dead inventory and problem assets off the books, sales and marketing at full throttle. 

Remember, ultimately what you are selling is your diamond.  And your diamond is valued by how it shines against all the others. 

Changing Your Trajectory

The changing marketplace for consumer entertainment has left many companies with flat or declining sales, with little prospect of a turnaround.  I’m here to tell you that it doesn’t have to be that way. 

Even though you may be in an area of the business, whether it be production, post-production, or distribution, that has been eroding and you have not been able to keep up with (or afford to invest in) the technological changes affecting your business… there is still time to reverse the trend and pull your company out of the mud.  And, it doesn’t matter whether you are in Hollywood, Houston or Hoboken.

How to effect the BIG BOUNCE.

You need more than just new customers… what you need is a new vision of your business.  A vision of what your company does; a vision of your place in the industry; a vision of who your customers are; a vision of how to attract business, and a vision of what is possible. 

The biggest hurdles that most business owners’ face are their belief that change is not possible and that they can’t get there from here.  There is one thing for certain.  You cannot do it alone. You need a new vision and you need money.  One tends to follow the other.  To change any static property from its state of stasis to a new form, it takes a catalyst.  Whether that is the introduction of another element, heat or cold... a body at rest tends to stay at rest.  Or to quote Newton’s First Law of Motion: a body remains at rest or in motion with a constant velocity unless acted upon by an external force.

There are other people and companies that need your help, and in turn can help you.  They need access to your customers.  They need to put their cash to work.  They need your special know how.  They need to better serve their customers.  Those strategic partnerships and investors in your business can be the catalyst for change that you are looking for.  There is no shortage of money in this world.  There is no shortage of work.  There is no lack of demand for your services.  There is only a shortage of connections.

Collaboration is your key to effecting change at your company.  Upgrade your vision; open up your company to cooperation through strategic alliances; and open up your mind to the possible.  That’s when you will make the Big Bounce.