Industry Report: Focus: Asia & Oceania
Super fund to support Australian film and television industry
by Michael Bodey, The Australian
12/07/2010 - "This is a big vote of confidence in the sector and in the viability of the film and television industry," said producer Emile Sherman, whose Fulcrum group of companies will facilitate the finance through a special purpose vehicle with Media Super.
One of the key issues the film and TV sector has had with the offset is finding the money to fill the 40 per cent of the budget before the government refunds that rebate at the end of the project (the government essentially provides 40 per cent of a film's budget -- or 20 per cent for TV -- for qualifying productions under the financing scheme).
Financiers have been wary of providing the funds to producers, or have done so at restrictive interest rates, despite the assurance of the government rebate.
"For us it marks a very significant moment for Australian film and TV in that a blue-chip financial service is coming in to support the sector," said Sherman.
"We've spent a lot of time giving them comfort in the industry and for them to come in and in some ways legitimise the producer offset will hopefully spark a beginning of maturation of the industry."
Fulcrum has previously supplied limited producer offset cashflow to productions but Sherman said this deal enabled it "to go to the next level" and use some resources on other areas, including bridging finance and cashflow for presales.
Media Super's debt facility is secured primarily by the producer offset, so it is not dependent on the success of projects. Fulcrum will not make creative judgments on the suitability of projects, either.
"But for Media Super to feel comfortable, they have to feel this is not a risk proposition, so the returns are commercial but not onerous," said Sherman.
He added that finding capital for the film industry had been onerous as the corporate sector was nervous about dealing with the film world, particularly after the free-wheeling days of the 10BA tax incentive.
Sherman said this facility now had enough money to be able to represent most of the production in Australia and New Zealand.
"There's now absolutely no shortage of finance to cash-flow the producer offset in this country at reasonable cost," he said.