Monday, March 04, 2013

Building a billion-dollar enterprise, 16 - Notes in preparation for a really big week, 2


In my last post, I explained that I have a meeting scheduled in Los Angeles this Thursday that could lead to Luminaria Productions producing its first major project, and said that of the possibilities in my mind, I would prefer to do a TV series. First, to create more jobs over a longer period of time. Second, because of financing.

This is about the financing.

I've made a passing reference to this: the "fiscal cliff" legislation passed at the beginning of the year included the extension of Bush-era tax credits for film and television production. The tax credits were created to stem the tide of productions leaving the country to take advantage of tax credits in other places, especially Canada.

Film and television production typically involves investment by people or companies other than the production company itself. As I understand it (and I am still learning) the tax credit means that a qualified investor in a film or TV project can get some of their money back in the form of reduced taxes, even if the project itself makes no money. Say you are in the 35% tax bracket - a $100,000 investment in a qualifying project will let you take $35,000 off your tax bill (this is for people with more money than I've ever seen).

In case you didn't click that last link, here's the line from The Hollywood Reporter that jumped out at me:

"As extended through 2013, the credit allows deduction of production costs up to $15 million and as much as $20 million for shoots that occur in sites that meet the bill’s criteria for an economically disadvantaged area."

One criteria is that the site be an area that is eligible for designation as a low-income community under the New Markets Tax Credit program. Homewood - North, South and West - is eligible (type "15208" in the search box here to see for yourself). So I am going to say something now about what is possible. Not about what I'm gonna do, but about what is possible. It is possible for a film shot primarily in Homewood to receive up to $20 million from investors whose investment will be at least partly guaranteed by federal tax credits.

Please take 60 seconds to imagine $20 million flowing into a Homewood-based company to produce a film that is mostly shot here. Most of the money doesn't stay in the company. Most of it goes back out to the dozens or hundreds of people employed in making the film.

"But you said you would prefer to do a TV series. Why do you keep talking about a film?"

To establish the basic concept. Now, hold on to your hat while I add this to the mix:

With a TV series, the tax credit can be applied to each individual episode, up to a total of 44 episodes. So, again stating what is possible, without saying anything about what will happen: It is possible for a TV series shot primarily in Homewood to receive up to $20 million per episode from investors whose investment will be at least partly guaranteed by federal tax credits.

None of the above takes into account the Pennsylvania tax credit for film and TV production, which would return even more of an investor's money to their pocket, regardless of how the project fares financially.

I have just written stuff that I find patently ridiculous. I cannot imagine what lawmakers were thinking. But since the law is there, I want to make use of it.

I also cannot imagine producing a TV show that costs $20 million per episode. But I can easily imagine that a TV show with a union cast and crew, plus management, would run a half-million per episode, or $6 million for a 12-episode season. If ONE-FOURTH (not all, not even half) of that went to Homewood residents, that would be $1.5 million. For one season.

To be clear: I am not talking about revenue FROM the TV series. I am talking about investment IN the TV series. Up front money.

So that's why, if I have the opportunity to produce something for and/or with Punch TV, and if I have a choice in what, I would prefer a TV series. That's why I'm up past 3:30 a.m., just thinking about this. That's why I'm asking folks on Facebook, and will ask folks via other networks, to pray big on my behalf this week. For this week could bring the a fulfillment of a prayer I began praying years ago:

Lord, please make me one of the righteous in whose prosperity the city rejoices. (Proverbs 11:10) 
Post a Comment