TERMINOLOGY & FINANCE

Helps a producer gauge the value of a project and make calculated decisions on the most profitable way to sell said project. Domestic sales agents negotiate deals with US distributors, and international sales agents coordinate deals with foreign distributors.

The party responsible for marketing and distributing a film in the territory or territories in which they hold the distribution rights. Distributors control details like release date, marketing and publicity materials, and when a film goes to DVD or Blue Ray.

Also known as a producer's rep, this person serves as a liaison who speaks on behalf of a producer and helps them negotiate and sell films directly to studios and networks, typically in the domestic market.

An umbrella term encompassing a variety of different funding options, including tax incentives or rebates, as well as grants and other government funds. Also known as "free money" because it doesn't have to be paid back.

Funds returned to production companies by the state in which a project has paid for qualifying expenses. Usually calculated as a percentage of the production's qualified expenses.

Tax-free payments issued to production companies by film funds; paid by government entities, companies, nonprofits, film institutes, or other organizations.

A way to raise capital that consists of offering a piece of ownership of the rights to a project in exchange for funding.

Benefits offered by cities, states, provinces, and countries designed to entice productions to film in a particular location. Also known as "production incentives" or "film incentives."

Claimed by a production when it files a tax return, these credits are applied to the business's tax liability. Film tax credits can be refundable, transferable, or non-refundable and non-transferrable.

A funding option that allows productions to combine for-profit funds (e.g., equity) with not-for-profit funds.

Utilizing a platform like Kickstarter or Indiegogo to source funds from like-minded people who support your vision.

A debt and equity financing hybrid that gives lenders the right to convert debt into an equity interest in the event of a default. These loans tend to be high risk with higher interest rates.

The difference between a film's total budget and the amount of money that has already been raised. A lender would consider lending against the receivable providing the lender's requirements were met.

An agreement between a studio and a production company that documents the studio's intent to finance a production. Typically, the studio acquires distribution rights and substantial equity in exchange for financing.

An agreement between the producer/financier and the production service company (PSC) that will be hiring and paying for all things on the ground in the jurisdiction where the production activity will take place.

A short form agreement between the commissioning producer/financier and the PSC which gives the PSC a license to make and deliver the film back up to the commissioning producer/financier.

A contingency plan executed by an investor or business owner to liquidate a position in a financial asset once predetermined criteria are met or exceeded.

Columns on a sales estimate used during pre-sale negotiations with distributors that provide guidelines on what deals a sales agent can approve.

A flat fee that a distributor agrees to pay a producer for the exclusive rights to distribute a completed film for a set term in a defined territory.

Amount of revenue received by a producer above and beyond the MG that has already been paid.

All production costs incurred related to adhering to industry and governmental regulations.

Rights producers buy to utilize and legally produce any existing intellectual property as new content.

A type of collaborative joint venture that brings two or more production companies together for the purpose of producing a project.

A nonprofit that agrees to act on behalf of a production as a gateway for receiving funding.

A personal service company that "loans" out the services of actors and crew members – typically utilized by highly compensated individuals.

Amount of money a production must spend in a particular jurisdiction to qualify for a film incentive.

A guarantee that serves as an insurance policy between producers and financiers, stating that the film will be delivered on time and within budget.

A document that a producer creates which includes all the pertinent information about the project for which they are seeking funding.

On an equal basis that's dependent on each individual's level of investment. Typically, 50% of a production's LLC is owned by the producer and the other 50% by investors on this basis.

The film's producers are the Managing Members of the LLC with complete discretion over production, editing, distribution, and exhibition of the film.

A legal document that states the objectives, risks, and terms of an investment involved with a private placement.

Investments made in the form of loans, equity investments, bank deposits, and guarantees used to support projects that fulfill an IRS-recognized charitable purpose.

A loan that stipulates a lender can seize loan collateral in the event of a default but cannot go after the borrower's other assets.

A right exercisable during a certain period of time for a specific amount of money to acquire specific permissions related to a production.

A business entity formed by filing articles of incorporation. C-corps tend to be ideal as production entities, especially in jurisdictions with refundable tax credits.

Can be beneficial in a loan-out situation. A person can become an S-corp to obtain various tax benefits, including the ability to deduct expenses not ordinarily deductible.

Allows a production to be treated as a separate legal entity from its owner(s), thereby separating the liabilities and debts of the business from the business owner.

A partnership made up of two or more equal partners who can contractually bind the partnership with third parties. Each partner is personally liable for all debts.

A partnership with two classes of partners: general partners and limited partners. Limited partners don't have the right to manage or control the affairs.

Charitable organizations eligible to receive tax-deductible contributions. Some producers opt to set up a nonprofit legal entity to raise funds for a film.