Peters Friends

1
Peters Friends

• A Case Study in understanding film finance

2
Backstory

• Exhibit A

3
The Backstory

• Jan. 92. Renaissance Films (Ken Brananaghs
  production company) - looking for a cheap
  commerical script from which to make a quick
  money-making movie.
• Script is filmed using actors squeezing between
  other commitments. From first treatment to end of
  principal photography takes only three months.

4
The Backstory

• Members of the cast each worked for flat 15,000
  fee plus points - small percentages of the
  final profits.
• Five Week, six day shoot goes smoothly. Film
  comes in (slightly) underbudget.

5
The Backstory

• Film designed to appeal to the US market which
  had proven receptive to UK comedies.
• HOWEVER
• US hated it and US distributor lost heavily on
  the theatrical release.
• Does unexpectedly well in UK and France and
  performs satisfactorily elsewhere.

6
Dramatis Personae

• Renaissance Films - Ken Branaghs productions co.
• Channel Four - UK television
• Samuel Goldwyn Company - (Relatively) Smallscale
  US production/distribution company
• Entertainment - Again, relatively small-scale UK
  distributor

7
The Basic Financial Facts

• Income Expenditure
• Samuel Goldwyn Co. 1.5m Development 280,500
• Channel 4 600,000 Production 1,218,000
• Renaissance 253500 Post-production 522,000
• Total Income 2,353,500 Direct Costs
  2,020,500
• 
  Contingency 202,050
• 
  Completion bond 52,500
• Total Budget 2,275,050
• Actual Spend 2,260,050

8
The Deal

• Goldwyn - got world distribution rights outside
  the UK. Renaissance retained 66 of all revenues
  once Goldwyn recovered its advance and cost.
• Channel 4 - Spent 600,000 on the UK TV Rights
• Renaissance - threw in 253,500 of its own money
• Entertainment - Agreed to distribute the film
  (but offered no money up front).

9
The Deal

• Entertainment were allowed
• - to recover their pa expenditure
• - to take 30 of theatrical rentals up to
  500,000
• - to take 20 of theatrical rentals above
  500,000
• REST OF UK RENTALS WENT TO RENAISSANCE

10
Actual Performance - Breakdown by Territory

• 1.481m
• 371,000
• 970,000
• 140,000 from UK cinema

• UK
• Box office rental (i.e. after the cinemas have
  taken their first cut)
• MINUS
• Distribution Fee
• PA
• Leaves Renaissance with

11
Actual Performance - Breakdown by Territory

• UK Video Rental Income 1,090,000
• MINUS
• Marketing Costs 282,000
• Distribution Fee 242,000
• Leaves Renaissance with UK video
• earnings of 565,000

12
Actual Performance - Breakdown by Territory

• US
• Box Office Gross 3,200,000
• Rental (Distributors Income) 1,300,000
• Distributors costs
• Distribution Fee 260,000
• Advance to Renaissance 1,500,000
• Interest and costs 500,000
• PA 2,400,000
• Total Costs 4,660,000
• Final Outcome For Goldwyn in US (3,360,000) loss

13
Actual Performance - Breakdown by Territory

• Goldwyn in the Rest of the world
• Rentals 5,100,000
• Fees/Expenses 1,360,000
• Total Income 3,740,000

14
Actual Performance - Breakdown by Territory

• Therefore Goldwyn loses 3.36m in the US on
  Peters Friends but makes 3.74m in other
  territories.
• I.E. Goldwyn has a surplus of 380,000.
• Renaissance gets 66 of this or 250,800.
• (Goldwyn takes home only 129,200)

15
Renaissances Total Income from Ps Fs

• Renaissances Total Income from Ps Fs
• UK Theatrical 140,000
• UK Video 565,000
• US/Rest of the World 250,800
• Channel Four 600,000
• Goldwyn 1,500,000
• TOTAL 3,055,800

16
Renaissances Total Income from Ps Fs

• Total Income 3,055,800
• Negative (Actual Production) Cost 2,260,050
• Leaves 795,750
• Renaissance originally invested 261,000
• (Originally 253,500 before interest accrued)
• Therefore clear profit left of 534,750
• (204 on the original investment)