Film Financing

Film Companies have 4 main ways of getting the funds they need for film production and these are:
.Government Grants
.Tax Schemes
.Debt Finance
.Equity Finance


Government Grants
Sometimes the Government will give grants to a film production company if certain Criteria are met. A lot of the time the government will give grants to films being made in certain areas because they believe that this may attract people to the area and help to stimulate employment and tourism. Government Subsidies are often pure grants meaning that they expect no money in return because in theory the tourism that films could attract shot in certain places is payment enough.


Tax Schemes
A number of countries have introduced legislation that has the effect of generating enhanced tax deductions for producers or owners of films. Schemes are created which effectively sell the enhanced tax deductions to wealthy individuals with large tax liabilities. The individuals pay the producer a fee in order to obtain the tax deductions. The individual will often become the legal owner of the film or certain rights relating to the film, but the producer will in substance continue as the real owner of the economic rights to exploit the film Governments are beginning to recognise that enhanced tax deductions are an inefficient way of supporting the film industry (information from http://en.wikipedia.org/wiki/Film_finance) So basically the film producers sell off the Tax deductions to rich people who then sort of become a part owner of the film but the producers are still the owner and have the rights to the film. so that when the film is released the people who bought the Tax Deductions can make money off the film aswell its like investing in a films success basically.


Debt Financing is based on pre–sales and television pre–sales. The pre sales is based on the script and cast selling the right to distribute a film in other territories before said film is completed. If the film has any big names in it or if the genre of the film is big at the time, they film will be expected to do well once finished. A deposit of 20% is made by the buyer into the film bank account upon the signing of a pre sale and the leftover 80% due to be paid upon the films delivery to the foreign film agent.
It is more usual for a producer to see the TV rights of this film after it’s been produced made, sometimes it can be possible to sell the rights in advance and use the money to pay for production. A television station will be a subsidiary of the movie studio’s parent company.


Equity Finance – This requires the film makers to sell interests to the film or Film Company in exchange for all funding. For example if a film maker sells 50% of the corporate interest to an investor, then the investor will lose his entire investment if the film is a complete failure. And if the film is a success then the investor will receive 50% of every £/$ that the film makes, far more than what a lender would get. So an investor would only receive his/her money back if the film shows a return.

TV Funding

TV Funding

There are many different ways that TV companies Get the funding they need, Each company has its own way of making money dependant on which type of company they are, a Few examples are the BBC who are public service and have the licence fee and Sky who get their money from Subscriptions and Advertising.

The BBC

the BBC are a Public Service Broadcaster meaning that they are government owned and they cannot advertise most of the BBC’S Money comes from the licence Fee which is £145.50 a Year per each household and this is divided out into Each different Service that the BBC has, £7.96 goes to Television, £2.11 a month goes to Radio £0.66p goes to maintaining the online services (BBC Online, BBC iplayer and BBC mobile) and £1.40 goes to other things such as running costs and investments in new technologies. While the Licence Fee is how the bbc mainly make money they have many other ways such as Syndication, Merchandising and Competitions. Syndication is when they Sell their programs to other companies, after theyve been showed originally the companies buy them to re run on their channels. Merchandising and Competitions are pretty obvious and Self explanatory and the BBC are not the only ones to use these methods to get money as they are fairly standard precedure for making money.

Sky and Virgin media


Sky and Virgin Media are Subscription broadcasters which mean that they have an annual fee on Top of the licence fee and provide Hundreds of channels making it seem like its worth the money but Really its not because if you get the full package for Sky you get about 900 channels and it's highly unlikely that you'll use more than 100 channels at most.  Sky and Virgin also Syndicate their programs, Advertise, Sell merchandise and also sell the rights to their licenced programs. The popularity of sky has Risen tremendously over the years with company turnover at £93 million at june 30th 1991 and Company Turnover at £5,912 Million at june 30th 2010.

ITV and Channel 5


ITV and Channel 5 are Commercial broadcasters meaning that they are private companies and most of their funding comes from advertising but they also Syndicate Programs, have call ins and competions and merchandising, theyre pretty standard and dont really have any distinguishable ways of making money compared to the other companies.

Channel 4 

Channel 4 is rather unique in the way that it is part commercial and Part public service, this means that they get a small part of the Licence Fee but they can Still advertise unlike the BBC and of course they have all the standard other ways of making money such as Syndication, Merchandising and Competitions.

Paramount pictures

Paramount pictures is a large film production company that is currently owned as a subsidiary 

of the media conglomerate Viacom and was founded in 1912 as Famous players studios then renamed to paramount pictures in 1914, it is Americas oldest existing film studio and is still consistently ranked one of the top grossing movie studios. Paramount started out as a small production company known as famous players by Adolph zukor, He saw that Films mainly appealed to the working class immigrants so He and his partners Daniel and Charles Frohman planned to make Films that would appeal to the middle class by using the top theatrical players at the time as actors (which lead to the slogan famous players in famous plays) in that same year another budding film director Jesse L Lasky opened his lasky feature show company. Later that year both Zukor and Lasky released their first films through a start up company paramount pictures corporation organized by Utah based theatre owner W. W Hodkinson  who had bought several small firms and merged them together . Paramount was the first company to successfully distribute films nationwide because at the time films were sold state-wide or regionally. Because Zukor believed in stars, he signed and developed many of the leading early stars, including Mary Pickford, Marguerite Clark, Pauline Frederick, Douglas Fairbanks, Gloria Swanson, Rudolph Valentino, and Wallace Reid. With so many important players, Paramount was able to introduce "block booking", which meant that an exhibitor who wanted a particular star's films had to buy a year's worth of other Paramount productions. It was this system that gave Paramount a leading position in the 1920s and 1930s, but which led the government to pursue it on antitrust grounds for more than twenty years. The driving force of paramount was Zukor all throughout the teens and twenties, if it wasn’t for him the company wouldn’t be where it is today; he built a chain of nearly 2000 screens, ran 2 production companies and was one of the early investors in radio.  By sucessfully purchasing the balaban & katz chain in 1926 Zukor Gained the services of three people who would later become important in paramounts rise; Barney Balaban Who would later go on to become president of paramount , A. J Balaban who would later supervise all stage productions and Their Partner sam katz who would run the paramount publix theatre chain from new york city . in 1927 Famous players-lasky took on the name Paramount-Famous Lasky and then 3 years later changed to Paramount-publix Corporation because of the importance of the publix theatre chain.

Important Events:

.By 1917 Zukor had gotten rid of many of his partners including the Frohman brothers, hodkinson and Laskys brother in law samuel goldwyn and then eventually lasky in 1932 when he was blamed for the near-collapse of Paramount in the Depression years.

.Paramount-publix went into bankruptcy in 1935

.in 1936 Barney Balaban became president and Zukor became chairman of the board and sucessfully re-organized the company as paramount pictures inc

. in 1948 the U.S Sepreme court decided that movie studios could not own movie theatre chains which broke up Zukors creation and ended the classic hollywood studio system.

.in 1970 paramount pictures teamed with Universal Studios to make Cinema international corporation.

.in 1993 Viacom made a bid to merge with paramount pictures and ended up in a bidding war but won with the winning bid of 10 Billion dollars

. In 1999, Viacom bought out United Television's interests, and handed responsibility for the start-up network to the newly acquired CBS unit
.in 2005 Viacom wrote off over $28 billion from its radio acquisitions and, early that year, announced that it would split itself in two

.On December 11, 2005, The Paramount Motion Pictures Group announced that it had purchased DreamWorks SKG in a deal worth $1.6 billion

.In 2009, CBS stopped using the Paramount name in its series and changed the name of the production arm to CBS Television Studios, eliminating the Paramount name from television

The BBC

The BBC is Britain’s largest public Service broadcaster; they are funded by the TV Licence as they can’t advertise. The TV licence is basically a yearly fee for the privilege of owning a TV. As of April 1st 2011 the licence Fee costs £145.50 (or £45 for black and white TV’S) which is the equivalent of about 40p per day. The BBC operate  10 Channels; BBC 1,2,3,4, CBBC, Cbeebies, BBC news, BBC Parliament,  BBC HD and BBC red button.  The Government Decide The cost of the licence fee and It has risen £10.50 since 2007. The licence Fee is divided up and spent individually on all BBC Services, some for TV, some for radio, and a little bit for online. £7.96 per month per household goes to Television, £2.11 per month per household goes to radio and £0.66p per month per household goes towards maintaining online services and £1.40 per month per household goes towards stuff such as running costs and investments in new technology.  They are owned by the Government and Run by a board of Directors and Chief executive officer. It was founded in 1927 by Jon Reith and George Villiers. Each channel BBC1 etc are all aimed at a specific audience so that they’re not biased to one group of people to another, if you’re going to pay for a TV License there should be something for you to watch that appeals to you otherwise what would be the point in paying?