FRESH THINKING ABOUT FILM ASSET VALUATIONS

If you think that the value of
​your movie and documentary film library
remains the same year to year,
think again.

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Written by Stephen J. Kerr & Sarah Nean Bruce
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via Wikimedia Commons

PREAMBLE: 
We had a conversation the other day with a prospective new client about the value of a motion picture library that they were looking to acquire – and the comparative value of the company that owns those films.  That conversation reminded us how outmoded the thinking is for many entertainment professionals who see the value of their film assets as unchanging. 
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​As appraisers, we look at valuation differently than the creators of movies and docs do.  We are most interested in the remaining economic life left in the assets, and less interested in the critical success of the film when it was first released in theaters.  Yes, the cast, director and box office success of every film does play a part in its Future Value, but how exploited the film was upon release, and the state of the distribution rights, weighs heavily on its Present Value. 
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Let’s explain by way of an example:  If you have two movies, one was critically acclaimed and sold extensively around the world under long term contracts, it may not be worth as much as a lesser known film of equal quality, that was not widely released.  The reason is that the second film can still be sold in global markets where it has not yet been exposed. And, the first, better known film could have exhausted 90% of its territory avails. 
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​➜ ​The Present Value of any asset is directly proportional to its revenue producing future. ​

Even a great motion picture, or documentary, that has been heavily sold around the world under long-term contracts, can have very little future economic value – just a few years after it was released.
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