Investing in Movies

10Working the Banks

Summary—The chapter discusses the role of banks in financing the film industry starting with a historical discussion of how the banks began to finance independently produced films. An important distinction is made between cash-flow risk and ultimate risk and what level of financing producers and investors can expect to receive from banks. Collateralized and non-collateralized lending are distinguished from one another. Finally, in particular, mezzanine and gap loans are introduced. Other mezzanine facilities, including finishing funds, and prints and advertising loans are discussed. In addition, preferred equity investments and mezzanine loans are contrasted. The author describes how he structures the gap loans he makes out ...