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Relativity TV Slate Financing Proposal Summary March 4, 2008

Relativity TV Slate Financing Proposal Summary March 4, 2008. Slate Financing Overview. Relativity to provide financing of 50% of the production budget of scripted series developed during the term plus select existing series, to be negotiated with Relativity.

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Relativity TV Slate Financing Proposal Summary March 4, 2008

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  1. Relativity TV Slate Financing Proposal Summary March 4, 2008 CONFIDENTIAL

  2. Slate Financing Overview • Relativity to provide financing of 50% of the production budget of scripted series developed during the term plus select existing series, to be negotiated with Relativity. • Financials in this package assume all existing series projected to recur are included with the exception of Boondocks and Rescue Me. • Deal reduces upfront production investment and cash needs in exchange for a share of distribution profits. • Deal provides a benefit for short-run, unprofitable series as well as time value of money benefit (both P&L and Cashflow) on long running series. Although, success profit sharing risk is the trade-off. • Deal structure should result in off-balance-sheet accounting treatment • Relativity’s initial proposal misaligns the risk-reward ratio in favor of Relativity. SPT’s counter-proposal re-balances risk between SPT and Relativity.

  3. Relativity Proposed Slate • Relativity has proposed investing in 75% of SPT’s Scripted Primetime Slate for the next 3 years. • Additionally, Relativity has also requested inclusion of any Scripted Primetime show which started air in the last two years. • Given the Budget / MRP production assumptions, Relativity could invest in up to a total of 18 series (if they chose to invest in 100%). • New 07/08 Series • BREAKING BAD • DAMAGES • Assumed New Series: 08/09 – 10/11 • 3 New Broadcast Network Comedies • 5 New Broadcast Network Dramas • 1 New Cable Comedy • 3 New Cable Dramas • Existing Series 07/08 • RULES OF ENGAGEMENT • TIL DEATH • 10 ITEMS OR LESS • MY BOYS

  4. Relativity Proposal SPT Counter Proposal • 50% of Series production costs • 3 years • No Overhead • No Initial Market • 12.5% Distribution • 2.5% Distribution fees deferred to “Studio Fee” • Studio fee Deferral stops at Cash Break-even • Mutually no interest • $500k / series for budgets under $20m • $1m / series for budgets over $20m • See fee deferral above • No “RTF Fee” • Scripted Broadcast and Cable Network Series • All Primetime scripted series including select series which commenced in the prior 2 years. Potentially allow 1 exclusion / year decided at time of pilot order. • No explicit creative approvals • Relativity to be provided with a comprehensive evaluation package including financial projections Investment Term SPT Fees Relativity Producer Fees Financing Fees Included Product Commitment Relativity Approval Relativity Proposal • 50% of Series production costs • 3 years • No Overhead • No Initial Market • 10% Distribution • No Interest charged by SPT, therefore no interest charged by 3rd party debt • $500k / series / season for budgets under $20m • $1m / series / season for budgets over $20m • 2.5% “Studio Fee” • 5% “RTF Fee” • Scripted Broadcast and Cable Network Series • Minimum of 75% of Primetime scripted series including those which commenced in the prior 2 years • No explicit creative approvals • Relativity to be provided with a comprehensive evaluation package including financial projections

  5. Financial Impact - EBIT • Estimated EBIT benefit* is a combination of reduced production deficits on loss series less Relativity’s share of profits on profitable series. Note*: Assumes Relativity invests in all series. Assumes off-balance sheet accounting treatment. FY09 is estimated using current Budget production volume and economic assumptions. FY10 & FY11 are based on current production volume assumptions.

  6. Financial Impact - Returns and Profit Split • Relativity’s proposal results in an uneven sharing of risk and profits with 63% of the profits being retained by Relativity • SPT’s proposal provides a far more beneficial sharing of risk and profits with 32% going to Relativity and 68% being retained by SPT. • More reasonable profit sharing is achieved by reducing the Gross Corridor to 2.5% and increasing SPT’s distribution fees slightly from 10% to 12.5%. Note: Figures assume Relativity invests in 100% of SPT’s series produced during the term rather than the minimum 75%. Given the uncertainty of the network order, no investment is assumed for CANTERBURY’S LAW and CASHMERE MAFIA. .

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