PRINTS & ADVERTISING FINANCING (P&A)
Since 2010, the Sam Houston Southwest Film Investment Fund has provided tens of millions of dollars in Prints and Advertising (“P&A”) and backstop P&A financing for some of today’s most successful films with production budgets of up to $70 million.
P&A applies when a theatrical motion picture is completed or is in the advanced stages of completion. P&A financing is the key determinant to assuring a picture’s return on investment (ROI) and can run anywhere from 30% to 100% or more of a picture’s total production budget. The P&A addresses a picture’s theatrical release along with its ancillary/subsidiary releases (e.g., Netflix, VOD, cable, DVD/Blu-ray, etc.), both domestic and international. P&A financing is always “last in and first out” on the ROI waterfall. The Sam Houston Southwest Film Investment Fund (SHSWFIF) normally selects and negotiates with the distribution arm of a major studio. SHSWFIF carefully monitors the distribution process to ensure that residuals come back to the right parties.
The placement of P&A through SHSWFIF sometimes allows a partial repayment to the film’s equity investors. When SHSWFIF finances P&A it typically expects a 20% coupon and a maximum of 12 months to repay principal and coupon. After P&A recoupment SHSWFIF is willing to incentivize the producers/talent residual pool. The film’s distributor will normally take 8-12% at the placement of the P&A contract by SHSWFIF, at which time the film is fairly well defined and talent is in place; also, box office projections are much easier to forecast at such time.
SHSWFIF’s cap on P&A financing is $30MM. The P&A financing agreement typically also caps distributor reimbursable expenses at $300,000. Minimum Guarantees cannot be paid out of P&A financing. However, Guild residuals will be honored as part of P&A.
SHSWFIF sometimes splits the distribution revenues between SHSWFIF and the Production Company and its investors on a 50/50 basis after SHSWFIF recoups its investment. The financing of the P&A then allows the Production Company to “pre-sell” to foreign markets. The domestic sales are tied to paying back the P&A. We discourage the pre-sale of domestic revenues, as it is a debt that subordinates all the investors and the residual pool. Pre-sales are practically impossible to obtain without a firm commitment to P&A in place.
Distributors Approved by the Fund
SHSWFIF limits P&A financing to the following established distribution companies, all of whom have a proven track record and the required infrastructure to professionally and properly distribute film releases in the domestic U.S., Canada and Mexico, while providing SHSWFIF with the ability to audit and track valid ticket sales and recoup its investment:
| Warner Bros. | Buena Vista | Universal | Sony / Columbia | NewLine Cinema | Roadside Attractions |
| 20th Century Studios | Paramount | TriStar Pictures | Sony Classics | A24 | Summit Entertainment |
| Walt Disney Pictures | Searchlight Pictures | Focus Features | Lionsgate | Amazon Studios | MGM Studios |
It is important to note that SHSWFIF does not normally subscribe to so-called platform or “four-wall” release plans, focusing instead on major theatrical releases of 1,500 screens or more.
In the event a first time motion picture director is already attached to your proposed project, additional restrictions may apply, such as meeting a minimum test screening threshold of 90%.
P&A Submission Check List
In order for a film to be considered for P&A Financing by SHSWFIF, the following materials must be provided to SHSWFIF electronically (PDF files preferred) by the Production Company at the time of submission so that the project can be thoroughly vetted:
- A screening copy of the completed film (or link thereto);
- The film’s synopsis and/or logline;
- A copy of the film’s final shooting script;
- A comprehensive list of the film’s screen credits;
- The film’s final budget, including any deferrals and/or other contractual obligations to any talent or third parties associated with the production;
- The film’s P&A budget and preliminary marketing & distribution plan;
- Foreign sales estimates, if available;
Other materials that may be requested by SHSWFIF in its sole discretion may include, but may not be limited to, the following:
- “Chain-of-title” for the submitted film, including a legal opinion letter regarding any and all underlying rights from the Production Company’s attorney;
- Copies of any and all third party agreements the Production Company has caused to be executed;
- Any preliminary marketing materials that may be available; and
- Any other relevant items the Production Company believes may assist SHSWFIF in determining the creative and/or commercial viability, as well as the legal encumbrances, of its submission.
Typical P&A Distribution timeline for theatrical release of a movie
Typical Pro Forma P&A Budget and Use of Funds
