In 2004, Film Production Capital president Will French went to the Cannes Film Festival and put up a booth with a sign reading “Louisiana Tax Credits Can Save You Money,” hoping he could interest producers in the state’s year-old film and TV production incentive program.
“Just about everybody said, ‘What the heck is a tax credit?, ‘ ” recalls French.
It’s not a question French is likely to hear at today’s Winston Baker Film Finance Forum West panel Soft Monies: Monetizing on New Tax Incentives and Subsidies.
There are 40 U.S. jurisdictions offering film and TV tax credits or rebates, including Puerto Rico and the District of Columbia, and “you’d be hard-pressed to find a major production that doesn’t involve a tax incentive component,” French says.
Incentives paid out by states have shrunk from a record $1.4 billion in 2010 to $1.3 billion in 2011 as popular production destinations such as Michigan and New Mexico have capped their programs.
“I think states are revisiting their programs, but they’re clearly not on the decline,” says panel moderator Joseph Chianese, senior VP of business development and production incentives planning for Entertainment Partners. “States like Arizona (which had a program that closed in 2010) have pending legislation to bring back a more user-friendly incentive program. Similarly, in Washington state, the house voted 8-to-1 (last month) to bring back their incentive.”
If there was any decline in incentives internationally, it was due to exchange rates, says Chianese.
Still, the classic pitfalls remain.
“It’s risky going into a new state that’s not proven,” says panelist Kevin Segalla, CFC Capital president. “Are there really crews avail able or are you going to be shipping everybody in and putting them in hotels? Are they going to take back a credit that they promised you?” New Jersey Gov. Chris Christie did that very thing last year when he vetoed a $420,000 tax credit for the first season of MTV’s “Jersey Shore.”
An increasing trend to watch out for is states staggering the payout of credits over several years, as New Mexico and New York now do.
“It restricts the producer’s ability to pay that loan back in a timely manner and to access its value for production purposes because more of it has to be dedicated to interest carry and things like that,” French says. “Studios can wait many years to get their tax credits, but it’s harmful to the independents.”
12:30 p.m: Workshop registration
1-4 p.m.: Track A: Financier Workshop — The Ins and Outs of the Movie Business. Workshop leaders: Chuck Bush , founder and CEO, Great Road Capital; Robert H. Steinberg , partner, Gipson Hoffman & Pancione
1-4 p.m.: Track B: Filmmaker Workshop — Fundraising Guidelines and Tactics. Workshop leaders: Travis Knox, president, Chapman Entertainment; Peter Trinh, ICM; Douglas Wroan, president, Front Row Media
7:30-8:30 a.m.: Registration & networking breakfast
10:45-11:45 a.m.: Hybrid Options: Utilizing Alternative Methods of Financing to Fill the Gaps
11:45 a.m.-12:45 p.m.: Soft Monies: Monetizing on New Tax Incentives and Subsidies. Moderator: Joseph Chianese , senior VP, Entertainment Partners
1:45-2:15 p.m.: Broadening Finance and Co-Production Opportunities With China.
3:30-4:30 p.m.: Pre-Sale Strategy Session: Talent Acquisition and Management
8-8:30 a.m.: Networking breakfast
8:45-9:15 a.m.: Keynote presentation on the Era
of Digital Innovation. Mitch Singer, chief digital strategy officer, Sony Pictures Entertainment
9:15-10:15 a.m.: The Distribution Evolution: Creating New Revenue Streams in the Multimedia Age. Moderator: Jay Cohen , the Gersh Agency
10:45-11:45 a.m.: From P&A to D&A: Marketing Movies on a Budget
• Platforms key to tapping new revenue streams