Being in the film finance business, I hate to write about the many ways that film financiers can get reamed.   Just to make sure that I was not using the word “reamed” in an inappropriate or sexual way, I looked up the definition.  Besides it meaning to be bored or cored out, it also means to have the juice squeezed out of fruit with a reamer.  
That seems appropriate.

This blog was greatly influenced by a conversation that I had a few days ago with the vice-president of  one of the major film, television and home entertainment distributors.  I wanted his opinion on the merits of having a theatrical P&A fund at his disposal, for acquiring and distributing motion pictures.  He said to me, “Stephen, we don’t need to have a P&A fund.  There are so many movies made with “A list” actors that have no distribution – which we can pick up for pennies on the dollar.  Some of those completely finished films had budgets of $10 or even $20 million, and we can acquire them for less than $2 million.  We know that the maximum revenue that we’ll be able to generate out of films like that is probably only $5 to $6 million, but that’s a great pay day for us”. 

My blood ran a little cold at those words.  He was saying that he could pick up a $20 million production for 10% of the cost to make it?  That probably means that the investors aren’t going to see a penny of their money back.  It just reminded me again that the key to success in the motion picture industry is distribution – not production.  As long term executive from the motion picture industry recently said to me.  "The studio bosses take the distribution guys out to dinner, because they’re the only ones on the lot that make them money… everyone else is an expense". 

Before anyone invests in a motion picture, they need to ask how the film is going to be distributed and what those deals look like.  A truly wonderful film can (and probably will) lose money if the distribution plan is poor; while a really bad film can actually make money, simply because it was well positioned and smartly marketed.  Never overlook the importance of marketing.  Once again, distribution trumps creativity.  Don’t let your emotions overtake your judgment, because it is not a great script, or A list actors that make you money – it is box office brilliance.   

No matter whether your company gained or lost in 2012 you probably need to tighten up that flabby bookkeeping, shape up those bulging business records and pump up your net margin.

Unfortunately, just like exercise…getting your business in top form takes hard work.  Are your intellectual property rights well protected, are your accounting standards being followed, is your ship of state leaking cash?  Maybe this is the year to shed some unwanted IP baggage, toxic employees or inventory? Get rid of a costly distribution relationship, dump  non-performing properties, shed those high interest notes, beef up your marketing program and get your assets working again. 

Getting a business valuation done is a lot like getting on the scale.  You might not want to know what you weigh, but if you don’t look now, you’ll never know if your program is working.  We recommend to all our clients that they get a business valuation done every five years, to know where they are at now, and how they can improve the picture next year. 

Think of Business Marketing Consultants as your personal trainer as you work your company back into shape.   We will design a custom program that can help your management team tackle problem areas that may have been hanging on for years.  If you need capital…we can get it.  If you need to make acquisitions…we’ve got them.  If you need to get your debt down and your margins up…we’re on top of that too.  Sometimes we all need a personal trainer to get us back on the right track.  Count on BMC, we're here to help.