The present and future of post production business and technology | Philip Hodgetts

Mar/13

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Why don’t we have more capital investment in productions?

Production is a business but it seems that we only “allow” financing by the distribution channel. I wonder why other forms of capital investment aren’t being used. Well, one example is the recent purchase by Content Partners of a 50% interest in the CSI franchise.

When Content Partners said that it had bought a 50% interest in the CSI television franchise, the announcement marked a major milestone for a specialty financial firm that is quietly transforming the way that producers, artists, directors, and even major financial firms buy and sell the rights to future cash flows from film, television, and music.

I guess what makes it interesting is that Content Partners are buying the stake from another financial entity with no direct production expertise - Goldman Sachs’ private equity arm. Although the terms aren’t disclosed Goldman Sachs is expected to walk away with $400 million from the deal.

Even at that price tag, Content Partners may have gotten a bargain. It now shares with CBS (CBS) the rights to all of the revenue generated by past and future episodes of the blockbuster series. CSI, now in its thirteenth year, is one of television’s most profitable properties. The New York Timesreports that the worldwide audience for CSI has surpassed 70 million; and the spinoff CSI Miami ranked as the most-watched show in the world before the last season aired last year. The CSI franchise (which also includes CSI New York) so far includes 724 episodes, which can be sold on DVD and syndicated many times over.

It’s a business after all, and capital investment can come from anyone who runs the numbers on a show. Of course doing it after it’s a success is much easier to see where the return comes from. Investing in an unknown series might not be what most capital investment would be looking for: risk is too high.

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1 comment

  • christopher · March 13, 2013 at 12:15 pm

    Seems this is more about investing in distribution rather than production.

    “…buy and sell the rights to future cash flows from film, television, and music.”

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