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EntertainmentIndustry.name
The producing entity must also raise (or fund from its own coffers) production financing for the film. This can happen before development or at any point during or even up to (or ill-advisedly, after) the first day of Principal Photography.
The number and combination of financing sources and vehicles is limited only by one’s imagination. Most common are: studios, bank financing, private investors, publicly or privately raised pools of investment capital. Supplemental sources of revenue include: pre-sales of ancillary rights or merchandising and licensing contracts — all of which may be cross-collateralized to secure bank production financing along with along with the studio’s distribution contract and/or dividing the international distribution rights up into different geographic territories and pre-selling foreign territory commitments.
Independent production companies typically finance their production activities from discrete sources with the goal of completely financing their motion pictures before the commencement of principal photography. Producers who use bank financing for production often use private funding for development.
Development funding is usually accomplished through subscribing investors in multi-picture development company offerings. The development company is typically owned by the production company and its investors. There are a variety of development offering scenarios but most of them deliver the investors’ returns from the development sale until they recoup their investment and allows them to participate thereafter in the completed pictures' earnings.
This structure frees the development company to option literary properties, attach directing and acting talent and determine territory presale potential for their pictures before committing to a bank loan or creating an actual production entity. Critically, this funding structure also allows them to simultaneously develop and produce multiple pictures and control the copyrights to their entire slate.
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