The New Realities of Financing Film Productions

Although the U.S. motion picture business is one of cycles, some patterns have remained constant over the past several decades, during which studios accounted for the bulk of production and marketing budgets. Last year, the combined production and marketing costs of an average studio film exceeded $100 million. For the most part, only studios could afford to finance sums that large, counting on global revenues from theatrical exhibition, DVD sales, and pay, cable and free television to generate profits. The studios in turn received liberal lines of credit from banks and offset risk (albeit while limiting their upside) by partnering, for individual films or slates of films, with domestic and foreign film investment companies, hedge funds and other sources of financing.