Creative Content Finance (No. 279)

4  3750USD start bounty
3750USD current bounty
posted by josephinga
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White Paper Summary
Creative Content Finance

karlkarl Reputation: 203
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Very interesting, thanks for submitting our first white paper in the TV industry.

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MX10178MX10178 Reputation: 75
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Automatic Claim Number - cla1559852232

Quote - INTERNATIONAL SALES PROJECTIONS SEASON ( 10 EPISODES)

Claim

International sales projections list no precedents (case studies), methodology, or source for arriving at the projected income.

Flags:

International Sales projections are based on industry standard of deriving a value for individual foreign territories in correlation to production budget. Each Foreign territory has a value based on a percentage of the production budget by josephinga on 2019-06-14 08:58:47

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MX10178MX10178 Reputation: 75
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Looking forward to reading this, always liked the concept. btw it appears the wp is in a format that the text can't be quoted in claims. When trying to select text, nothing happens.

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CryptoHunterCryptoHunter Reputation: 18
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hey all I'm still working on getting enough rep to make claims but I have to say this is one of the most credible entertainment industry financing ideas I have seen and I have see a few. The fact that it only applies to green lit shows is a big plus. Some explanation about how net profits will be verified maybe by audit would be helpful though.

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madexcelmadexcel Reputation: 50
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This white paper is boring. Save written, how it should be. Just the ROI does not justify any investment.

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edited June 11, 2019
MathildeMMMathildeMM Reputation: 61
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Automatic Claim Number - cla1560241596

Quote - The entity outside of the US will be organizedin a country with its own favorable tax treatment.

Claim

It is not very clear what the other entity outside the US will do as according to this WP, the US based one will raise the money AND contracts with US TV producer firms.
We underatand that the team seeks tax optimization here but it would need clarification as presented this way it might scares investors who can doubt the legality of such a structure.

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The foreign entity will raise the money. It will have no IP ownership. The US entity will be the agent of the foreign entity. There will be no common ownership between the foreign and the US entity The US entity will enter into the TV network and producer agreements by josephinga on 2019-06-14 09:13:26

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ShortyShorty Reputation: 5
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@madexcel whether or not the white paper is entertaining really isn't the point. It presents a need and a solution. It is up to us to decide if it is viable. I think the wp is credible but not thorough enough. It is not really possible to read this white paper and make an investment decision.

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Automatic Claim Number - cla1560459045

Quote - EXHIBIT A PREAPPROVED EXHIBITORS (INCLUDES US TELEVISION NETWORKS)

Claim

No real explanation of what 'approved' means here, or how or why these networks were approved. It seems to be simply a list of every credible US TV channel that might create original content. There is also the possibility of misunderstanding from the reader, thinking that these networks had somehow approved the Venture, and not the other way around.

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No comment was made that any of the Networks approved the Venture Just the opposite It is the Venture pre approving these networks And yes because the list provided are credible US TV networks that create content by josephinga on 2019-06-14 09:15:53

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MX10178MX10178 Reputation: 75
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Automatic Claim Number - cla1560553498

Quote - With the Financing Model presented here the investor knows that there will be a finished product that will be distributed to the public.

Claim

This statement is pretty generalized. Creative projects like film and TV can get derailed for many reasons -- a star becomes unable to perform due to injury, creative problems/disagreements, production delays due to weather -- these are just a few. Customarily a bond company will guarantee completion and seize control of a project is it is in trouble. There is no mention of this possibility, or contingency for it in the wp. This scenario is not altogether unusual either.83f1f8df8a89402cd85877c4f108aad2
unWEFunWEF Reputation: 1
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This looks like a credible venture and like @cryptohunter said, that it only applies to major greenlit projects is a huge plus. But I think the whitepaper does it a bit of a disservice by lacking thoroughness. This ambiguity leaves doubt where it actually isn't warranted. I'm not saying the wp should not be accredited, but I think it needs another pass with more substantiating information. Entertainment ventures in particular are met with a lot of skepticism, and this one has a lot of merits that are overshadowed by a sense of info lacking. Just my two cents.

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MGlobalMGlobal Reputation: 87
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Although an explanation was provided above about how foreign sales projections were determined, there is no indication of the probability of any given US Show being sold to foreign territories. If a show gets made, what are the chances that it will be sold to at least the 5 biggest markets (UK, France, Germany, Japan, Italy)?

Also, would the sales revenue vary significantly between the shorter format episodes or the longer format? The budgets provided are not very clear about this and a quick review of a few articles on popularity of US series in France has indicated that the length of the episodes makes a difference in generating revenue to the French channel.

Finally, I admit that I am very far from being an expert on the film industry, but I could not find a substantiation of "Typically a TV show needs to have
50 completed episodes before it goes into syndication". Without knowing how to look for this exact data, I just see what the internet says: it takes 88 episodes on average.

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BigfoodBigfood Reputation: 2
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I think this whitepaper represents a novel idea that could really take hold and evolve into real-world use. However I would have to agree with @MGlobal that the foreign sales projections are a best case scenario and not the norm. Also, this entire concept seems to be based on the idea of traditional US broadcast TV networks creating their own content, then selling it internationally. Not sure about the viability of that going forward. Streaming is obviously dominating and this venture doesn't appear to address that.

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WeedloverWeedlover Reputation: 0
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@Bogfood how come this concept cannot be used for productions backed by streaming services? It is true that Netflix does not need foreign sales because they are in every country. But the rest of the concept would apply you would just have to adapt the financials a bit

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ETHhupETHhup Reputation: 0
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@weedlover adapting this concept for productions backed by streaming services would require significant changes not only in the area of foreign sales. I agree that the wp should certainly address this though.

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PierreAlexandreHPierreAlexandreH Reputation: 52
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Quote : "Joseph Inga is a CPA"
A quick search on the https://cpaverify.org/ yields two results for Joseph Vincent Inga in California. The first results mentions a cancelled CPA licence and the second one mentions the following statuts CLEAR, PROBATION, RESTRICTED and Enforcement, Non-Compliance or Disciplinary Actions against Joseph Inga. It would seem to be an important information to disclose and to understand actions that led to this measure from the CPA organisation.

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PierreAlexandreHPierreAlexandreH Reputation: 52
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Quote : "The Investors will have an option (on a priority basis) to finance any subsequent season of a TV
Show it provides Season One Financing
The Investors will have an option (on a priority basis) to finance any new ventures that result or
are spin off from this Venture"

It would be interesting to have more details on that part. Will they have priority on full future funding opportunities? How will the future funding be split between investors? Eg if several investors are keen to invest more than total funding required, how much will each of them be entitled to invest? Pro-rata right based on first investment? What will be the financing (/ revenue share) conditions for subsequent seasons? Also will this option be a simple "gentlemen agreement" ( I have seen that before) or contractually binding?

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PierreAlexandreHPierreAlexandreH Reputation: 52
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General comment :
Also mentioning the risks related to the investments would give a better picture for potential investor of whether to invest or not and be aware of what to expect. Here only positive potential outcome are presented which gives a biased view on the opportunity

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PierreAlexandreHPierreAlexandreH Reputation: 52
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Typo in the last page " Less distribution EXPENSES

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PierreAlexandreHPierreAlexandreH Reputation: 52
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There is no mention of any fees paid by the investors (eg. Management fees) which seem unusual and if missing the financials would be a misleading view on possible ROI (which should at minimum read "before Management fees / investment comission)

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PierreAlexandreHPierreAlexandreH Reputation: 52
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From a pure financial analysis standpoint, this could come from a lack of knowledge of the profitability mechanism in the industry, but it could be interesting to understand why the business plan expect margins to be lower with bigger productions (ie 14% annualised return for a 20m budget vs. 11% for a 50 million budget series)
This echoes other commentaries mentioning that the paper would benefit from having more documentation around the hypotheses of the financial BP. Some comparison with the market could also add value and help gaining trust in the offer.

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OrigudeOrigude Reputation: 0
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I agree with others who have expressed that this wp needs a redo. The fundamental concept is quite interesting, but it seems quickly put together. Hopefully the comments from this thread can be put to use and the concept refined. The wp seems to be coming from a place of good faith it just needs much more work and the whole thing modernized and thought through

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PierreAlexandreHPierreAlexandreH Reputation: 52
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Automatic Claim Number - cla1563784360

Quote - Joseph Inga is a CPA

Claim

A quick search on the https://cpaverify.org/ yields two results for Joseph Vincent Inga in California. The first results mentions a cancelled CPA licence and the second one mentions the following statuts CLEAR, PROBATION, RESTRICTED and Enforcement, Non-Compliance or Disciplinary Actions against Joseph Inga. It would seem to be an important information to disclose and to understand actions that led to this measure from the CPA organisation.c7a4309a65185ab1c865bbe6a62547c3
PierreAlexandreHPierreAlexandreH Reputation: 52
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Automatic Claim Number - cla1563784522

Quote - The Investors will have an option (on a priority basis) to finance any new ventures that result orare spin off from this Venture

Claim

It would be necessary to have more details on that part. Will they have priority on full future funding opportunities? How will the future funding be split between investors? Eg if several investors are keen to invest more than total funding required, how much will each of them be entitled to invest? Pro-rata right based on first investment? What will be the financing (/ revenue share) conditions for subsequent seasons? Also will this option be a simple "gentlemen agreement" ( I have seen that before) or contractually binding?16654f1dcecf41321c31ee0f8b7a61a2
PierreAlexandreHPierreAlexandreH Reputation: 52
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Automatic Claim Number - cla1563784633

Quote - CREATIVE CONTENT REVENUE MODEL FOR SEASON TV FORMAT (30 OR 60 MINUTES

Claim

There is no mention of any fees paid by the investors (eg. Management fees) which seem unusual and if missing the financials would be a misleading view on possible ROI (which should at minimum read "before Management fees / investment comission)cbb1a3e559395746361f4f998f454aa7
karlkarl Reputation: 203
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@PierreAlexandreH pls provide link or screen shot to claim cla1563784360 as it seems important

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PierreAlexandreHPierreAlexandreH Reputation: 52
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Hi Karl,

Regarding claim cla1563784360, here are the two screenshots found on the website https://cpaverify.org/ .

Sorry if there was a way to directly reply to you message, I could not find it.
Also it seems that I do not get a notification when you mentioned my name and I just saw your message when coming back to the article to check if new answers had been posted.

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edited August 7, 2019
karlkarl Reputation: 203
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@PierreAlexandreH we asked Joseph Inga to comment on this. Thanks for your info.

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marioortizmarioortiz Reputation: 52
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Was the whitepaper pulled?

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karlkarl Reputation: 203
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We are in contact and checking on it.

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henryo85henryo85 Reputation: 53
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A few questions:

1) This seems like an obvious financing need in a very mature market. Are you certain that banks or VC firms in the LA area don't already provide this type of financing? And if they do, how do their rates compare to the 6% up front fee and 20% of net profits.
2) What happens in the event of a cost overage. Does the 35% stay fixed, based on the original expected production cost?
3) If I'm understanding correctly, the venture takes control of the creative content (IP) after financing. Is that what is meant to be said?
4) In what order is the security interest above others? What if the producer gets another investor involved – who has first rights to the money should it go belly up?

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karlkarl Reputation: 203
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Thank You all. The accreditation will close soon

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PierreAlexandreHPierreAlexandreH Reputation: 52
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Hello!
Any update on when this accreditation will close?

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edgardoedgardo Reputation: 201
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@PierreAlexandreH , we appreciate your patience. Due to more information needed from WP owner, the accreditation process for this whitepaper was delayed. It will be closing soon. We apologize for the delay.

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THE JUDGE!!!!!!THE JUDGE!!!!!! Reputation: 0
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Opinion #124: An opinion has been issued in Automatic Claim Number - cla1559852232.

It was decided to release 0% of the funds. The jury voted in their opinion to release an average of 0% of the bounty and a median of 0% of the bounty.

Please see below for the opinion of the jury:
  • Opinion #1 - agree with claim
  • Opinion #2 - i agree with the flag - International Sales projections are based on industry standard of deriving a value for individual foreign territories in correlation to production budget.
    Each Foreign territory has a value based on a percentage of the production budget
  • Opinion #3 - i agree with the flag - International Sales projections are based on industry standard of deriving a value for individual foreign territories in correlation to production budget.
    Each Foreign territory has a value based on a percentage of the production budget

Claim: International sales projections list no precedents (case studies), methodology, or source for arriving at the projected income.

Highlight: INTERNATIONAL SALES PROJECTIONS SEASON ( 10 EPISODES)

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THE JUDGE!!!!!!THE JUDGE!!!!!! Reputation: 0
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Opinion #125: An opinion has been issued in Automatic Claim Number - cla1560241596.

It was decided to release 0% of the funds. The jury voted in their opinion to release an average of 0% of the bounty and a median of 0% of the bounty.

Please see below for the opinion of the jury:
  • Opinion #1 - A good comment but the flag gives an adequate explanation.
  • Opinion #2 - i agree with the flag - The foreign entity will raise the money.
    It will have no IP ownership.
    The US entity will be the agent of the foreign entity.
    There will be no common ownership between the foreign and the US entity
    The US entity will enter into the TV network and producer
    agreements
  • Opinion #3 - i agree with the flag - The foreign entity will raise the money.
    It will have no IP ownership.
    The US entity will be the agent of the foreign entity.
    There will be no common ownership between the foreign and the US entity
    The US entity will enter into the TV network and producer
    agreements

Claim: It is not very clear what the other entity outside the US will do as according to this WP, the US based one will raise the money AND contracts with US TV producer firms. We underatand that the team seeks tax optimization here but it would need clarification as presented this way it might scares investors who can doubt the legality of such a structure.

Highlight: The entity outside of the US will be organizedin a country with its own favorable tax treatment.

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THE JUDGE!!!!!!THE JUDGE!!!!!! Reputation: 0
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Opinion #126: An opinion has been issued in Automatic Claim Number - cla1560459045.

It was decided to release 2% of the funds. The jury voted in their opinion to release an average of 3% of the bounty and a median of 2% of the bounty.

Please see below for the opinion of the jury:
  • Opinion #1 - I agree that the idea of pre-approval is somewhat ambiguous and might be purposely misleading. Should be clarified
  • Opinion #2 - i agree with the flag - No comment was made that any of the Networks approved the Venture
    Just the opposite
    It is the Venture pre approving these networks
    And yes because the list provided are credible US TV networks that create content
  • Opinion #3 - I would agree with the statement of the bounty hunter. The whitepaper is worded in a way that strongly implies that the venture has some kind of pre-approval from its principal licensing partners. These highly misleading representations give the impression that the venture is already successful.

Claim: No real explanation of what 'approved' means here, or how or why these networks were approved. It seems to be simply a list of every credible US TV channel that might create original content. There is also the possibility of misunderstanding from the reader, thinking that these networks had somehow approved the Venture, and not the other way around.

Highlight: EXHIBIT A PREAPPROVED EXHIBITORS (INCLUDES US TELEVISION NETWORKS)

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Opinion #127: An opinion has been issued in Automatic Claim Number - cla1560553498.

It was decided to release 3% of the funds. The jury voted in their opinion to release an average of 18% of the bounty and a median of 3% of the bounty.

Please see below for the opinion of the jury:
  • Opinion #1 - The finance model is applied for TV production projects.It is applied alongside other conditions which have been set for the management of TV projects as well as other programmes which require funded. The model is as well suitable for other investors, persons seeking to partner with or invest in key projects are sure of meeting targets or results because the model is deemed as a suitable tool criteria for appropriate finance management.We agree with the assertion that the model requires to provide concise and appealing information to the investor for proper decision making.Investors will be ready to provide funds for the running of these projects. The Claim is laid against the quotation made by the author because there are several unexpected or impromptu instances which will curtail the prescriptions of the model.There are several questions to be posed in terms of the applicability of this model in certain circumstances.The first question is To what extent will this model inspire investors to plough funds for the management of Tv Projects? The second questions is the number of investors who’re actually giving in or approving allocation of funds for the running of the projects.The third question is a comparison between the results of TV projects and the initial agreement, are both commensurate to enable the enhancement of the investors objectives. It will be of importance for the author to present key set backs about the model.The features and benefits of the model are presented with facts.However it will be important to identify loop holes. The three facts presented in the claim are facts which are against the authors proposition of the model as a suitable model for the running of the projects.He asserts that the model is vital for the financing and management of the budget for TV projects and serve as a guarantee for the acquisition of finance from investors. Constraints may emerge because the propositions made for the application of the model are not suitable for other TV projects.This is in terms of the manner in which the model is applied for the sourcing and managing of funds which are allocated for projects/Programmes. Secondly time management may also pose constraints.It will be important to consider the impact of time management in regards in regards to finance allocation and key deadlines which have been set.Sometimes the funds will not be sufficient to cover all requirements for the completion fo a project. Thus investors cannot guarantee the feasibility of the model only on the grounds of details within the content of a request for funds.For example if a TV star gets an injury, the course of the project will not be pursued in the same manner, the project will be delayed.This may in certain cases require more funds.There are other steps to be completed after the project has been summised. These include editing, patenting , publishing and other legal procedures which may impede or create loop holes. So the model is subject to evaluation because there must be room for some precision.The project managers must create room for the management of challenges which may arise in the course of organizing a TV project.They cannot complete the projects only on the grounds of the functionality of the model. They will be required to conduct regular analysis on the progress of the project in regards to goals which had been set.Management of the projects who are responsible for budgeting, allocation and other financial responsibilities will need to conduct this analysis and rectify where needed. In other circumstances they may experience shortfalls, overheads , inconsistency in running costs.This may arise due to unexpected circumstances.Thus when planning for the budgeting of TV programs room must be made for the analysis and identification of such circumstances. Investors will be required to ensure that funds allocated are sufficient for the running of the TV projects .They will need to use their judgement as well as other tools before approving the allocation of suitable funds.They will be required to analyse the nature of the project in terms of the category of the Tv project, the value in the market, quality of the end product, customer appreciation and several other factors. In other circumstances, the project may fail to be managed in the manner in which it was planified. Shortfalls may hamper the development of the project.This has usually led to abrupt closure of several TV projects.Unexpected circumstances may create the need for other parties to be invited so as to resolve financial and other constraints. Usually bond companies are bond companies are invited to fund and coordinate the completion of TV projects which were delayed , terminated before completion because of lack of funds.The contribution of the initial investor is not sufficient in such circumstances creating room the intervention of bond companies.They subsidize the projects and ensure funds are sufficient to enable the completion of the project.In these instances , profits are not only allocated to the investors because some of the funds are used for the payment of bonds. It is thus important for the investor to consider several other factors before allocating funds.The management will be required to provide more feasible plans which do not only cover the propositions of the model but provide allowance for other factors which will guarantee the repayment of loans and other sources funding according to terms which had been set. The profitability of these programmes requires evaluation because the quality and feasibility of certain TV projects are overrated in terms of the value of the end product.They are as well devalued by the end users because of the quality.In other instances, the end product does not produce the desired profit (In terms of sales) which may affect profitability.This will hamper the initial; financial goal of the investors who might have set certain targets which are not realizable. TV producers and other collaborators who’re responsible for the sourcing of funds will need to design suitable financing models for key categories of projects.They must be aligned with the financial plan as well as other strategies set for the management of a TV project.TV projects may fall under several categories for example soapies, documentaries, advertisements and more.They may not all be properly financed by applying this financial model.The strategies which are applicable for budgeting and fund allocation are not the same.
  • Opinion #2 - Agree, this seems like a guarantee. " the investor knows that there will be a finished product that will be distributed to the public"
  • Opinion #3 - it might be too declarative as a statement, could be rephrased to be softer

Claim: This statement is pretty generalized. Creative projects like film and TV can get derailed for many reasons -- a star becomes unable to perform due to injury, creative problems/disagreements, production delays due to weather -- these are just a few. Customarily a bond company will guarantee completion and seize control of a project is it is in trouble. There is no mention of this possibility, or contingency for it in the wp. This scenario is not altogether unusual either.

Highlight: With the Financing Model presented here the investor knows that there will be a finished product that will be distributed to the public.

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Opinion #128: An opinion has been issued in Automatic Claim Number - cla1563784522.

It was decided to release 0% of the funds. The jury voted in their opinion to release an average of 0% of the bounty and a median of 0% of the bounty.

Please see below for the opinion of the jury:
  • Opinion #1 - More information is needed, this doesn't mean the whitepaper has any wrong in what they stated. I believe the whitepapers statement, though general, is not harmful nor shows any wrongdoing
  • Opinion #2 - i agree that more clarity could be added here but its not misleading
  • Opinion #3 - This is not a claim

Claim: It would be necessary to have more details on that part. Will they have priority on full future funding opportunities? How will the future funding be split between investors? Eg if several investors are keen to invest more than total funding required, how much will each of them be entitled to invest? Pro-rata right based on first investment? What will be the financing (/ revenue share) conditions for subsequent seasons? Also will this option be a simple "gentlemen agreement" ( I have seen that before) or contractually binding?

Highlight: The Investors will have an option (on a priority basis) to finance any new ventures that result orare spin off from this Venture

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