3

The Film

The Investor Needs to Know the Whole Story

Project Scope

If you make good films, they will come. Everything starts with the story. The focus of this chapter is narrative theatrical films. Over the years, one thing has not changed. To quote the former head of the MPAA, “A movie-maker’s single indispensable asset—as elementally essential now as it was in the Golden Years—is the Story.”

While the industry is going through many technological changes, who knew a silent film could return and make money? We learned that one could in 2011 with the release of The Artist, which went on to win the Academy Award for Best Picture that year. Whether you are making one film or a slate of films, this chapter looks at what needs to be addressed in terms of the film’s synopsis and its attachments. It demonstrates how to describe them and explains not only the amount of information that you need to include but also what you should leave out.

Discussion of feature documentaries, animated films, and large format (IMAX and other giant screen films) has been moved to Chapter 12, “Breaking the Rules.” The “nontraditional” films, those that don’t go out theatrically primarily but are distributed through various ancillary and new technology methods (Netflix, Amazon Studios, iPhones, iPads, other smartphones, and so on), as well as short films will be discussed in Chapter 7, “Distribution: Nontheatrical and the Wild West.”

Whether you are making one film or a slate of films, this chapter looks at what needs to be addressed about a film. It demonstrates how to describe it and explains not only the amount of information that you need to include but also what you should leave out.

The Right to Know

As your partner, the investor has a right to know the complete storyline and what activities are being contemplated in order to make an informed decision. In a one-film plan, you should have a full script and budget before creating the business plan. In doing a company plan with films planned over more than one year, you may not have all the scripts. Undoubtedly, you know more about some films than others; some of you may not even have specific projects yet. You may have a script to shoot next year but may not have a clue about the script for a film planned four years down the road. Nor can you know what delays may occur along the way. You need to know at least what types of films you plan to make and the estimated budgets. It is less important to be psychic than to be as accurate as possible in terms of intentions and timing. If circumstances alter the original plan, everyone involved will reevaluate it.

Several years ago, a young man came to me with a proposal to create a highly specialized series of films. He planned to sell them in a narrowly segmented market. The plan contained much discussion about the future success of his company, but the only description of the projects was the word “films.” He estimated that millions of people would go to see these unspecified films. Being the curious type, I asked him what kinds of films he planned to make. His answer was, “Good ones.” I pressed on, trying to elicit more information. After all, he guaranteed that millions would clamor to see these films. He replied, “I’m not going to tell anybody anything. They might steal the idea. Besides, it’s no one’s business; all they need to know is that it’s a good investment.”

Don’t laugh too loudly. This story is only one of many, and this young man’s attitude is not unusual. “Films,” as you may have realized by now, is not a sufficient description. Putting yourself in the investor’s shoes, how would this strike you? You would probably insist on knowing the content of these incredible films, which belonged to this guaranteed market, and how the films were going to pay back your investors. The last cannot be determined without having the bare minimum info—genres and budgets.

There are certainly a couple of valid reasons why a filmmaker (or any other entrepreneur) might worry about revealing the details of a proposed project: (1) no identifiable plans exist, or (2) someone might steal the idea. Although theft of concept is not an unknown phenomenon, there is a difference between not telling the general public all about your plans and refusing to tell a potential money source. Prudent filmmakers refrain from describing script details in a loud voice at the local coffee shop or at a crowded party because they know this is the same as putting it on Twitter. They also resist the temptation to ask seven or eight friends to read their projects. However, the prudent do give the right people enough information to prove the advisability of the investment.

Success in any business revolves around the product. In film, where all forward motion to the goal is content driven, the story is crucial. To sell your projects, remember the refrain, “Story, story, story.” Hype has a place also, but it must take a back seat in the context of this plan. The trick is to do some jazzy selling around a solid idea. All the public relations in the world will not save a bad film. From Chapter 2, “The Company,” you know that the first goal for the business plan is to identify your future course of action. The second is to show investors how profitable a film will be. There is no way to forecast your success without specific ideas to evaluate. Does this mean that you must have all your scripts, directors, and stars in tow? Not necessarily, but you do need to have a framework. At the very least, for example, you want to know that you are going to produce X budgets and Y genres over a Z-year period. You must provide enough information to estimate revenues and give the investor a chance to agree or disagree with your forecast.

In this section, you are telling the whole story of the film in one or two pages, endings included. In addition, you are describing what attachments to the film factually exist. Fantasies may play an important part in scriptwriting, but using wish lists in this document can present a problem. Confusing the issue by citing a cast that has never heard of the project or books you do not own or have not optioned may give investors the wrong idea. Whether you create a false impression by accident or on purpose, the result is the same. Investors negotiate contracts based on the information you provide. If they find out that you have not been truthful, they can withdraw their money. Worst-case scenario—they can sue you.

Films

When describing your film projects, the objective is to tell the whole story within one to two pages with a minimum of extra prose. You should disclose each film’s assets (components that may add commercial value to the project) as well as any nonmonetary values that are important to the types of films you want to make.

Show and Tell

The trick is to tell enough to engage readers but not so much that you risk losing them. As we go through the different elements of this section, we will attempt to draw a line between sufficient content and excessive wordiness. Readers who must wade through pages of information that is hard to follow will just go to sleep.

Writers of scripts, books, and other literary pieces have a tendency when writing nonfiction to create a stream of consciousness that is hard to follow. Fiction requires emotional and subjective content that will draw readers into the fictional world. Business writing—and nonfiction of any kind—requires simplicity and directness. Dr. Linda Seger, noted author of books on screenwriting, says:

This is the reason why some genius invented the Appendix. In the business plan, it contains details that may be outside the formula of simple and direct information. As you proceed through the following sections, you will get a clearer picture of what this means. There are no official rules as to how much information you ought to include; but bring your common sense into play; and always try to be alert to the reader’s point of view.

Scripts

Disclose enough material about each script so that readers understand its value. A synopsis is the usual format. For most films, you can tell the essentials of the story in a page and indicate the genre of the film.

A student once questioned whether or not to include the title of his script. He feared that someone would steal it, because it was innovative and catchy. The chances that someone will finance a film for which you won’t give a title are slim. More often, writers fear that someone will pirate their ideas rather than their titles. Nevertheless, you can’t copyright either one of them.

The first step to take to protect yourself from possible theft of your story is to copyright your project. Most writers register their scripts with the Writers Guild of America. An even better procedure is to file for registration with the Library of Congress in Washington, D.C. Once you have done this, you can prove that your story existed as of a particular date, and you can feel free to give it to others. Keep in mind that registration does not prevent theft; it just helps you prove ownership in the event of theft. Unfortunately, you cannot copyright ideas themselves. Michael Donaldson, in his book Clearance and Copyright, says:

You also cannot copyright titles. Well-known book titles, such as The Hunger Games, will have been trademarked. However, there are other reasons your title can change. Distributors often reserve the right to change it, particularly, if they feel it will be confused with another film. If you go through the Motion Picture Association of America process, you may come into conflict with having your title approved. Please don’t email me that you have seen multiple films with the same title. The point is that you want to check the situation for your own film—another good reason for working with a film attorney.

This paragraph does not tell enough about the story to give the reader a true idea of everything that is in the film. Several sample plot synopses have been included on Focal’s companion website for the book. Be sure to read them.

You want to include the entire story line within one page and the ending of the film. You are not trying to get investors to go to the film. If they have money involved, they will go anyway. They need to have enough information so that they do not misconstrue the type of film you plan to make. If the girl is raped or there is a nude scene, be sure to mention it. Failing to mention a scene that affects the nature of the film because you think potential investors might not like it is a sin of omission. If, for example, you let your investor assume that you were making a PG-13–rated film although you know that it will be R-rated, your money source can object and demand his money back.

What if you do not have a specific script or you have one budgeted script but want to do a slate? State this up front. Raising money for one film, you need to have a budget to tell the investor. Even without all the scripts in hand, however, you can define your projects in terms of budget sizes and genres. You may be looking for development money to obtain scripts. Concentrate on what you know about your project. You must tell investors at least the size of the films that you plan to make.

One way to describe this situation is as follows:

This scenario is not as tempting to investors as the first one, but it is doable. For investors, providing money for development is always a greater risk than providing money for well-planned projects. The danger for the investor is that the producer may never find the right project and begin production. Or an agreement made with the source of production money may further dilute the initial investor’s position. However, if you have some experience and a credible team, try for the development money. Rather than writing a full business plan, you can choose to have an attorney write a proposal for development money. It will specify how much money the investors will be paid when production money is raised and what points they will receive in the eventual production.

Suppose that you know neither the subject of your films nor the size of their budgets. In one plan, the company stated: “The producers plan to make low-budget features with the formula that has proved most profitable both in theatrical and video releases … scripts in this area are plentiful.” Seems a little vague, doesn’t it? Aren’t you curious to know what these proven formulas are?

Typically, the information in a proposal of this type is not enough. The right mix of ingredients is always a balancing act, but you probably would have to be a known filmmaker with an impressive track record to get away with this proposal. Even for an experienced moviemaker, this pitch would be hard to sell. Most people want to see specifics to which they can attach a value, either monetary or personal. Anyone with a modicum of business sense understands that handing out money to someone with no real plans except “to make a film” would appear to be foolish.

No doubt you can find an exception to this rule somewhere. Perhaps you’ve heard about an eager young filmmaker who, with his toothy smile and youthful enthusiasm, convinced a jaded deal-maker to hand over money. Nothing is impossible, but the odds are against it happening. This scenario sounds too much like movie fiction and not enough like real life.

At this point, you may also want to think about the potential audience for your flick. It does not hurt to add a qualifying sentence to your plot synopsis—for example, “Films about Wisconsin, such as Walter from Wisconsin and Cheeseheads Reign Supreme, have been popular lately. We plan to capitalize on this phenomenon.” On the other hand, you may be shooting the film in Wisconsin and raising your money there. In that case, add “Director Buffy Angel was born and raised in Milwaukee, where the film will be shot.” However, save the discussion of the distribution and financial ramifications of your films for later sections of the plan. If your readers follow custom, they would have read the Financing section before this one anyway. It is easiest for readers to follow your plan if you group all of the project descriptions together and do not digress with long discussions on other subjects.

Attachments and Their Values

In this balancing act, any person, place, or thing that adds value to the script is important. You want to give your project every chance to see the light of day, so recount any attachment with a perceptible value. Here are five examples of attachments: (1) options, (2) books, (3) stars, (4) director, and (5) dollars. Notice that your favorable opinion is not one of the choices.

Options

An option is a written agreement giving the producer exclusive rights to a project over some specific length of time. If the option is exclusive, it ensures that no one else can make the project while the producer holds the option. Obviously, if you are the writer, it is your project. However, if you are representing other writers’ scripts as part of your package, you must declare the ownership status. Representing films as your own when they are not is clearly a no-no.

Not only the script itself but also the subject may need an option. If you are dealing with true stories of living people (or deceased persons whose estates own the representation of their likeness and life), you may need to seek permission to do the story. Getting the option (rights) after the fact can be a costly process.

You do not want to be in the position of having a deal on the table for a film and having to go back to obtain the rights to it. After the fact, the subject can and often will deny having given verbal permission. If you have not done your homework, it is the subject’s right to stop the production, which sometimes leads to an expensive payoff or a court injunction.

Books

A published book adds value to a film in several ways. The sales history adds clout to your project, the specialized market it represents provides a ready-made audience, and the book usually furnishes additional ways to hype the film. Unless it is your book and copyright, the first step to take is—you guessed it—an option. The cost of the option depends, again, on the person you are dealing with and the relative fame of the book. It would be useless to even try to give you prices. As soon as the ink is dry in this book, the market will have changed. In truth, a book option, like a script option, can cost anywhere from nothing to millions of dollars.

An author (or the representatives of an estate) may have a subjective reason for you to make the book into a film and be very generous in making an agreement with you. On the other hand, if money is the primary focus, the author will drive as hard a bargain as possible. This area is one of the few in which your sparkling manner can have a concrete impact. On occasion, deals have been done because the author liked the filmmaker and wanted to see the project get made. Passion for the project counts for a lot in negotiating with authors. One way to be sure that you cannot use the book, however, is to refrain from seeking the rights to it.

Options can be obtained for a reasonable price if the timing and people involved are right. For example, two producers bought the rights for a paperback mystery novel plus the author’s next two books for a few thousand dollars. No one else had approached the author, and the books were not the type to make the best-seller lists. Nevertheless, the author had a large audience among mystery fans. With no competitive bidders, the producers were able to make a good deal.

Another producer optioned several books of women’s stories. The books had a large following, but the subject was still “soft” at major studios. She couldn’t get the deals that she wanted and the films deserved. After Best Picture nominees Brooklyn, Room, and Philomena, as well as Carol, Amy, Zero Dark Thirty, and The Iron Lady were released to critical acclaim and/or significant box office results, studios and independent companies were falling all over themselves to make similar deals. It’s all in the timing. A change in the attitude of the trendmakers (studio executives, agents, and distributors) increased the value of the producer’s optioned books.

Being able to read manuscripts before they are published gives you an advantage over other filmmakers. Agents have access to unpublished manuscripts all the time. If you happen to know about a book that is about to be published by an unknown author and you can strike a deal prior to publication, it may work to your advantage financially.

Real-Life Stories

As documentaries and films based on true stories have become more popular and successful at the box office, it is important to understand that all the options talked about above apply. Many times over the years, people have approached me to write a business plan for a film about a famous athlete or someone else in the news. When I have asked if they have an option on the story, the reply often has been, “He told me to go ahead.” Not good enough. You must get the agreement in writing. It is best to have an attorney draw up the agreement but, at least, have something written that is signed by both of you. The same goes for stories about nonhumans.

If you want to make a film about the horse that wins the Kentucky Derby, talk to the people involved and get their agreement in writing. How many people have to give their permission to be portrayed in the film is best discussed with an attorney. As happens with partners, more than one client has had a verbal agreement for a free option with the subject of their biographical film only to have money demanded before a formal agreement was signed.

Stars and Other Fantasy People

Attaching star actors, star directors, and famous producers is the fantasy of many independent filmmakers. Having Jennifer Lawrence, John Boyega, or Ryan Gosling in your $500,000 film might be a recurrent dream of yours, but, unfortunately, their salaries include several more zeros. Nevertheless, you can have attachments that add value to your project, as long as they are real. No wish lists.

With lower budgets, “bankable” stars (the actors whose names ensure a certain level of box office revenue when the film opens) are probably not an option, but you still can have a name that interests an investor. The value of the name is often in the eye of the beholder. Foreign buyers may put value on names that are only a moderate attraction on a U.S. movie marquee.

Directors who command high salaries will also be out of the reach of very low-budget filmmakers. As the budget gets higher, the experience of the director becomes more important. Emphasize your director’s previous experience, but do not fabricate it. If you are planning a $15 million film and your director has never helmed a feature film, the inexperience may be a hindrance in obtaining financing but possibly could be damaging to complete a good film on budget. You want the director to be able to handle the film and, especially, the actors. In addition, experienced actors often are unwilling to work with an unseasoned director, and investors become more nervous about spending their money.

All the elements in a film are relative to one another. Because the producer has the major responsibility for keeping the budget on track, previous experience with feature films is important. In independent filmmaking, the producer is often the only connection between investors and their money. Once the cash has gone into the film’s bank account, investors must depend on the producer to protect its use. Not only does the producer watch the money, but she also has to have enough clout with the director to stop him from going over budget. Always keep in mind that this process is a balancing act of all the different elements.

Money

“Well,” you say, “of course, money adds value.” It seems redundant but really is not. Clearly, hard cash for development and production has a straightforward relationship to your project, but what about any partial funds attached to your project? For some reason, newer producers do not think to mention them as part of their project’s description, but they should. If any money at all is attached to your project, announce it here. If you have paid money for any option, include that information in the details about the option. Keep in mind that it always impresses investors that you have put your own money into securing an option. If you have taken development money without an agreement, get one. Development money should not impact the value of production money shares. If you already have the money, you can mention it here; however, refer the investor to the Investor Offering, which will have the details.

All of the elements in a film are relative to one another. A few years ago, I was asked for an advice by a producer who had been having trouble raising money for several years. He had a totally unknown cast that would cost little money, a director with no feature experience, a simple plot with few locations and a $15 million budget. I suggested that he should lower the budget for which there seemed to be no reasonable explanation, except that he wanted to film in 3D. He didn’t like the advice, and he still hasn’t raised the money.

You will discuss it at greater length in the Financing section. Remember that all attachments are of value to the film and belong in this section. You want to depict any ingredients of this mix that will positively influence someone to make your film. In addition to hard cash, you should mention any coproduction agreements, below-the-line deals, negative pickups, or presales. But make sure you have your deals in writing before putting them in the business plan.

Budget

For prospective investors to evaluate your films completely, they need to know the size of the budget. Again, we have two types of films: those with complete scripts and those that are just a gleam in the producer’s eye. When real scripts exist, real budgets should exist as well.

To save money, many filmmakers pass a tuning fork over their script and say, “One million dollars.” Do not just make up a figure. Anyone who contemplates financing your film will take this number seriously. So should you.

Many independent films have been delayed because the money ran out during either principal photography or post-production. The investors have said, “You told me $800,000, so that is all you are getting.” Studios often have reserves for a certain amount of budget overruns; equity investors do not.

Some filmmakers develop only the two top sheets of the budget—this is just one step ahead of the tuning fork method—and figure out the complete cost later. However, you should calculate the total cost now to save explanations later. Estimating the cost of the general categories (cast, location, wardrobe, and so on) can be very dangerous, no matter how experienced you are. Break down the script. Production managers, line producers, and unit production managers often work freelance. Be sure to hire one who has experience with budgeting independent films, however. Calculate the entire amount and be careful to have enough money. It is always better to keep your budget forecast a little high rather than cutting it too close to the bone.

When describing your film in the Executive Summary and Company sections, you should simply state the size of the budget along with its attachments. A paragraph or two on the entire project will be sufficient. Consider the following example:

In this paragraph, the writer has explained the essentials. Here we learn the size of the budget, the location (much of the cost in this example is predicated on the film being shot in a right-to-work state), and the experience of the lead actors and director. One investor already has an equity position, but all of the sales markets are available. Note that the writer has saved any discussion on the implications of adding another equity investor for the negotiation. All relevant information belongs to the Investor Offering (see Chapter 9), which is always written by an attorney, not the filmmaker.

Do not worry about repetition; it is part of the building-block formula. You give an overview of the film. Then, in the Distribution and Financing sections, you go into greater detail about pertinent elements.

What if you do not have a full script or any actors and you have little or no experience? Do not lose heart. You can still explain what you are planning to do. Look at this example:

A Word about Incentives

Always seek the entire budget of your film without deleting the potential value of incentives. In most cases, this money is not guaranteed and is dispensed only after the film has been made. You first have to raise the entire budget and make the film, before incentives can be considered.

Common sense will tell you that this package has less substance than the first one. It may be harder to find financing, but not impossible. If you find yourself in a similar situation, all you can do is try to create as many advantages for yourself as possible. The worst approach you can take is to say, “We are nobody with no plans. We plan to find no one experienced in anything, but we want your money anyway.” It’s true that no one is going to be this truthful, but on many proposals, it is not difficult to read these words between the lines. You have to learn to make realistic compromises to reach your goals. And above all, don’t lie.

Too Much Can Be Harmful

One of the biggest nightmares that financial folks have is to receive a 10-pound business plan that includes every piece of paper in the producer’s desk. Your goal is to have people read your proposal; therefore, you want to give them enough information without making the plan too heavy to lift. Suppose you have a complete budget for each of your projects. Do not put them anywhere in this business plan. An interested party will ask for them soon enough and you can have the dubious thrill of explaining every last nickel. If you have a strong desire to show detail, you can put the top sheets of the budgets in your Appendix for perusal at the reader’s convenience.

The same goes for the full biographies of the stars, director, producer, and anyone else involved with your projects with extensive experience. A few paragraphs describing each principal’s background are sufficient. The three-page bios do not need to be in the body of the plan. If you feel strongly that someone will have a burning need for this information, the Appendix is the place for it.

Don’t make potential investors guess about the applicable credits by including newspaper reviews in your business plan. Summarize the essentials. If you are bursting at the seams with your wonderful reviews, you know where they go—the Appendix.

As far as I am concerned, photocopies of any kind should be forbidden by law from appearing in business plans. When you are trying to separate investors from their money, a well-typed, neat page counts; it shows that you care enough to give them the very best.

One finished plan given to me a few years ago weighed in at two pounds. Thrown in with the appropriate and readable text were nine pages detailing every industrial and commercial film that the director made. Later sections included photocopies of numerous charts and articles from various publications. The investor was presumably supposed to wade through all this paper and reach a conclusion. Not wise. By filling your plan with extraneous paper, you might appear to be covering up an absence of fact, or you might give the impression that you do not understand the proposal yourself. Personal impressions are intangible, but they count. Always keep in mind that the human beings who read your treatise will have human failings. Once they are distracted or annoyed, their attention may be lost and your package may be tossed in the “forget it” pile. Some rules are made to be broken, but the one about brevity and clarity is not.

Start Small and Think Big

Since the first edition of this book, business strategies have worked with filmmakers with all kinds of experience, from none to 40 years. Trying to have a start-up company with more than one film is difficult. Often clients want to do films, distribution, video games, and music—all at the same time. My advice is to start small and expand as the company becomes successful. If it is your first film (or all your previous experience is short films), make one film. After that film is finished and released, then put together a plan for a company with several films. If you already are experienced and insist on handling your own distribution, I recommend adding an experienced distribution executive rather than all the expenses of a division. Either way you go, don’t start out with that much overhead.

Harvey and Bob Weinstein of The Weinstein Company (who many clients want to emulate) started Miramax in the 1960s as a small domestic distributor of videos. They produced their first feature film in 1986. Many successful years later, the company became the proverbial “800-pound gorilla” in the indie world. (See Chapter 4 for more on the brothers and their emergence from the Disney fold as The Weinstein Company.) The point is that they started small and grew to multiple films per year and assorted ancillary divisions through making profits over time.

For a new company, you need to have focus. A business plan is great, with the operative word being plan.