Today’s effective development and independent production of branded content and media is critical for the long-term propagation and preservation of creative inspiration, invention and innovation of a very important art form, medium and element. This includes, but not limited to, motion pictures, reality shows, scripted shows, or franchise shows as well as other popular media formats.
Further, based on current global economic conditions and scenario, it is very important to understand and appreciate that Structured Project Finance plays a critical role in the “Development-Production-Distribution” Value Chain of Branded Content / Product Placement and Media Production. This methodology and approach will further enhance the “bankability” of Branded Content and Media as viable Alternative Asset(s).
In particular, for any Branded Content & Media Projects, various combinations and permutations are viable consisting of; total recourse finance, limited recourse finance, and non-recourse finance.
- Total Recourse; Full Balance Sheet exposure and risk of both Promoters and/or Producers by way of existing assets, personal guarantees, security / performance bonds and related security(s) and surety(s).
- Limited Recourse; Asset collateralization / securitization / hypothecation of all existing assets and Intellectual Property Rights (IPR) such as scripts, copyrights, trademarks, service marks etc.
- Non Recourse; All relevant transactional contracts must be “Sacro Sanct” with “Back to Back Arrangements”. These may include; Administration (media production, sales/distribution, tax rebates etc.) and Beneficiaries (studios/cable networks, production company, investors etc.).
In addition, a comprehensive Risks & Mitigation Analysis must be carried out to identify, assess, qualify and quantify all downside risk(s) which must be mitigated via both Limited Recourse and/or Non Recourse Finance.
Based on the above, for each specific Branded Content & Media Project, viable Means of Finance can be structured and syndicated in order to achieve Financial Closure in a timely manner. This may include, but not limited to, following:
- Grants; Federal and/or State
- Equity; Private Equity Funds and/or Family Offices
- Debt (Senior, Subordinate and Mezzanine); Commercial Banks
- All funding via dedicated Escrow Accounts with all funding drawls subject to prior written approval of Promoter/Producer(s) and/or Providers of Equity and/or Debt or their appointed financial and/or legal representatives.
- Percentages (%) of Grants, Equity, and Debt will be determined by Project Budget and Project Financial Proforma (subject to approval of Equity and/or Debt Providers).
- Key Project Financial Parameters may include; Rate of Return on Equity (RROE), Project Internal Rate of Return (IRR), Debt Service Coverage Ratio (DSCR), Payback Period, Break-Even Capacity, and Sensitivity/Scenario Analysis.