Table Of Content

INVESTING IN MOVIES In this second edition of Investing in Movies, industry veteran Joseph N. Cohen provides investors and producers with an analytical framework to assess the opportunities and pitfalls of film investments. The book traces macroeconomic trends and the globalization of the business, including the rise of streamers, as well as the impact these have on potential returns. It offers a broad range of guidelines on how to source interesting projects and advice on what kinds of projects to avoid, as well as numerous ways to maxi- mize risk-adjusted returns. While focusing primarily on investments in independent films, Cohen also provides valuable insights into the studio and independent slate deals that have been marketed to the institutional investment community. As well, this new edition has been updated to fully optimize the current film industry climate including brand new chapters on the Chinese film market, new media/ streaming services, and the effects of COVID-19 on the global film market. Written in a detailed and approachable manner, this book is essential for stu- dents and aspiring professionals looking to gain an insider perspective against the minefield of film investing. Joseph N. Cohen, a graduate of Yale and Oxford, held senior positions at Salomon Bros. and Lehman Brothers before he became president of Largo En- tertainment, a joint venture between JVC and producer Lawrence Gordon, in 1989. During Cohen’s tenure, Largo produced such hits as Point Break and Malcolm X. Cohen founded American Entertainment Investors (AEI) in 1996, which is best known for advising independent production companies, including Alcon, River Road and Black Label. AEI advised Goldman Sachs and As- sured Guaranty in restructuring the Weinstein Company in 2010. Cohen is a member of the Motion Picture Academy and has taught film finance at the Peter Stark Producing Program at the University of Southern California. INVESTING IN MOVIES Strategies for Investors and Producers 2nd Edition Joseph N. Cohen Cover image: © Shutterstock First published 2022 by Routledge 605 Third Avenue, New York, NY 10158 and by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business © 2022 Joseph N. Cohen The right of Joseph N. Cohen to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging-in-Publication Data Names: Cohen, Joseph N., author. Title: Investing in movies : strategies for investors and producers / Joseph N. Cohen. Description: 2nd edition. | New York, NY : Routledge, 2022. | Includes bibliographical references and index. | Identifiers: LCCN 2021022031 (print) | LCCN 2021022032 (ebook) | ISBN 9780367721619 (hardback) | ISBN 9780367721596 (paperback) | ISBN 9781003153702 (ebook) Subjects: LCSH: Motion pictures—Production and direction. | Motion picture industry—Finance. Classification: LCC PN1995.9.P7 C57 2022 (print) | LCC PN1995.9.P7 (ebook) | DDC 791.4302/32—dc23 LC record available at https://lccn.loc.gov/2021022031 LC ebook record available at https://lccn.loc.gov/2021022032 ISBN: 9780367721619 (hbk) ISBN: 9780367721596 (pbk) ISBN: 9781003153702 (ebk) DOI: 10.4324/9781003153702 Typeset in Bembo by codeMantra To my late mother, Matilde, and the sweetest dog, Daisy, anyone could ever have, who together never let me get discouraged in the early years of American Entertainment Investors’ existence when I was struggling to turn the corner financially. And to my daughter Catriela, whom I can always rely on for some well-thought-out advice on new film projects. CONTENTS Acknowledgments ix Introduction 1 1 Pros and Cons of Motion Picture Investment 13 2 Macroeconomic Trends and Studio Co-Financing 33 3 Tax and Other “Soft Money” Benefits and Limited Partnerships 40 4 Welcome to the World of Independents 50 5 The Evolution of Revenue Streams 59 6 COVID and Post-COVID 68 7 The Rise of the Streamers 77 8 Cast of Characters 97 9 Globalization of the Business 120 10 How to Have Fun and Not Lose Your Shirt 137 viii Contents 11 Managing Risk 154 12 Working the Banks and Non-Bank Lenders 167 13 How to Beat the Odds: Niche Strategies 188 14 Evaluating Projects and How to Pitch Them 200 15 Where You Should Be in the Food Chain: Distribution versus Production 213 16 The Sinkhole of Development 228 17 Exit Strategies: The Value of Film Libraries 234 18 New Directions: The Digital World 241 19 Art versus Commerce 249 Index 261 ACKNOWLEDGMENTS I want to thank all my colleagues at American Entertainment Investors (AEI), pres- ent and past, for their strong support and willingness to search for data I directed them to. Past colleagues who assisted me on the first edition include Christopher Howland, Myriam Bocobza, David Chasmar and, in particular, I want to offer special thanks to my late colleague John Smith for his many valuable comments on the first edition and his invaluable collaboration in preparing the charts and graphs interspersed throughout the book. John was an exemplar of the adage, “The good die young”, and I greatly miss his presence. I continue to benefit from the counsel of my long-standing colleagues, my brother Charles, Andra Gordon, Luiz Tassi and a more recent addition to the team, Amelia Brain. I also want to thank my previous editor at Taylor & Francis, Emily McCloskey, and her editorial assistant, John Ma- kowski and my current editor, Katherine Kadian Lowe, and her editorial assistant, Alyssa Turner, for their much- appreciated guidance in making both editions more accessible to the broadest possible readership. I want to thank Emily and John in particular for persuading me not to go with a “sexier” but less-Googleable title, So You Want to Walk the Red Carpet? I want to acknowledge Katherine and Alyssa’s sage advice in suggesting how the second edition would benefit from various up- datings, including addressing the effects of COVID and changes in the industry post-COVID and the meteoric rise of the streamers. I want to especially thank my peer reviewer, Milena Grozeva-Levy, who clearly spent many hours reading my first edition draft and greatly contributed to reducing its opacity and reliance on technical jargon. Since the book was inspired by the course on film finance I taught for 16 years in the Peter Stark Producing Program at the USC Graduate School of Cinematic Arts, I would be remiss if I did not thank the longtime program direc- tor, Larry Turman, for his strong support of my teaching efforts during my tenure there. Finally, I want to thank all of AEI’s clients who kindly allowed me to com- ment on their business strategies in such a public forum.