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Samantha Traub
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Page 1 of 3 The financing plan for a production may include equity investments by broadcasters, funding agencies like Telefilm Canada or private investors. Generally, the investor pays a recoupable amount to the producer in return for a participation in certain proceeds the producer receives. Usually this participation will involve “net” proceeds made from the exploitation of the production, that is, “gross” proceeds from exploitation minus certain agreed-upon expenses for the distribution and exploitation of the production, as in the sample definition of “net receipts”.
Funding Agencies
Other funding agencies and government entities also invest in film productions. For example, the Harold Greenberg Fund and the Cogeco Program Development Fund are all private funding agencies that make equity investments in film productions. Many provincial agencies, including the Saskatchewan Film and Video Development Corporation, the Nova Scotia Film Development Corporation, and Technology PEI (just to name a few) also provide financing through equity investments.
Broadcasters In addition to licensing the right to broadcast a production, and paying the producer a broadcast license fee, a broadcaster may also choose to make an equity investment. Like a license fee payment, an equity investment may be made in instalments, upon delivery of certain documents (budget, cash flow, production schedule, chain of title documentation, insurance certificates, executed distribution agreement, etc.) or fulfillment of certain milestones (commencement of principal photography, completion of principal photography, etc.).]
In return for the equity investment, the broadcaster is entitled to receive a profit participation and may or may not be also granted a direct ownership interest in the copyright of the production. Typically, the broadcaster has an entitlement to a share of the “net revenue” generated by the producer’s exploitation of the film. “Net revenue” is defined on a case-by-case basis, and generally means all sums derived from the exploitation of the production (“gross revenue”), minus certain agreed-upon deductions such as distribution fees, distribution expenses, and residual payments or royalties.
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